<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1996
REGISTRATION NO. 333-12977
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------
IMPSAT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4899
(STATE OR OTHER JURISDICTION (PRIMARY INDUSTRIAL 52-1910372
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) (IRS EMPLOYER IDENTIFICATION
NUMBER)
IMPSAT S.A.
(REGISTRANT WITH RESPECT TO THE GUARANTEE)
ARGENTINA 4899
(STATE OR OTHER JURISDICTION (PRIMARY INDUSTRIAL
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
RICHARD HORNER
ALFEREZ PAREJA 256 (1107) IMPSAT USA, INC.
BUENOS AIRES, ARGENTINA ONE FINANCIAL PLAZA
(541) 362-4240 FT. LAUDERDALE, FLORIDA 33394
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (954) 779-7171
INCLUDING (NAME, ADDRESS, INCLUDING ZIP CODE, TELEPHONE
AREA CODE, OF EACH REGISTRANT'S PRINCIPAL EXECUTIVE NUMBER, INCLUDING AREA CODE, OF AGENT FOR
OFFICES) SERVICE FOR EACH REGISTRANT)
</TABLE>
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Please send copies of communications to:
NEIL M. GOODMAN, ESQ.
ARNOLD & PORTER
555 TWELFTH STREET, N.W.
WASHINGTON, D.C. 20004-1202
(202) 942-5191
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES
TO THE PUBLIC:
As soon as possible after the Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
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- -----------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE PER OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED NOTE(1) PRICE(1) FEE(2)
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<S> <C> <C> <C> <C>
12 1/8% Senior Guaranteed Notes due 2003... $125,000,000 $102.63 $128,281,250 $44,235
- -----------------------------------------------------------------------------------------------------------
Guarantee of the Notes..................... -- -- -- (3)
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Total...................................... $125,000,000 $102.63 $128,281,250 $44,235
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</TABLE>
(1) Pursuant to Rule 457(f) under the Securities Act of 1933, the registration
fee has been calculated based on the average of the bid and asked prices in
the PORTAL market on September 24, 1996 of the 12 1/8% Senior Guaranteed
Notes due 2003 of the Company, for which the securities registered hereby
will be exchanged.
(2) The filing fee was paid on September 25, 1996.
(3) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is
payable for the Guarantee (as defined herein).
------------------
THE REGISTRANTS HEREBY AMEND THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY STATE.
PROSPECTUS
SUBJECT TO COMPLETION, DATED NOVEMBER 20, 1996
OFFER TO EXCHANGE
ALL OUTSTANDING
12 1/8% SENIOR GUARANTEED NOTES DUE 2003
FOR
12 1/8% SENIOR GUARANTEED NOTES DUE 2003
OF
IMPSAT CORPORATION
GUARANTEED BY
IMPSAT S.A.
---------------------
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1996 UNLESS EXTENDED
---------------------
IMPSAT Corporation, a Delaware corporation (the "Company"), hereby offers
(the "Exchange Offer"), upon the terms and subject to the conditions set forth
in this Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), to exchange its outstanding 12 1/8% Senior Guaranteed Notes due
2003 (the "Old Notes"), of which an aggregate of $125,000,000 in principal
amount is outstanding as of the date hereof, for an equal principal amount of
newly issued 12 1/8% Senior Guaranteed Notes due 2003 (the "New Notes"). The
form and terms of the New Notes will be the same as the form and terms of the
Old Notes except that (i) the New Notes will be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and hence will not bear legends
restricting the transfer thereof and (ii) the holders of the New Notes will not
be entitled to certain rights of holders of the Old Notes under the Registration
Rights Agreement (as defined herein), which rights will terminate upon the
consummation of the Exchange Offer. The New Notes will evidence the same debt as
the Old Notes and will be entitled to the benefits of an indenture dated as of
July 30, 1996, governing the Old Notes and the New Notes (the "Indenture"). The
Indenture provides for the issuance of both the New Notes and the Old Notes. The
New Notes and the Old Notes are sometimes referred herein collectively as the
"Notes" or the "Senior Notes."
(Continued on next page)
---------------------
FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED BY ELIGIBLE
HOLDERS IN EVALUATING THE EXCHANGE OFFER. SEE "RISK
FACTORS" BEGINNING ON PAGE 20.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS
PROSPECTUS IS , 1996
<PAGE> 3
The Notes will bear interest at the rate of 12 1/8% per annum and interest
will be payable semi-annually in cash on January 15 and July 15 of each year,
commencing January 15, 1997, to holders of record on the immediately preceding
January 1 and July 1. See "Description of the New Notes."
The Notes have the benefit of a guarantee (the "Guarantee") issued on a
senior unsecured basis by IMPSAT S.A., the Company's Argentine operating
subsidiary ("IMPSAT Argentina" or the "Guarantor"). The Notes and the Guarantee
will be unsecured, unsubordinated obligations of the Company and the Guarantor,
respectively, will rank pari passu in right of payment with all existing and
future unsecured, unsubordinated obligations and will be senior in right of
payment to all subordinated indebtedness of the Company and the Guarantor,
respectively. The Company is a holding company. As an equity holder of its
subsidiaries, the right of the Company to receive assets from a subsidiary upon
the bankruptcy, liquidation or reorganization of such subsidiary (and therefore
the right of the holders of the Notes to participate in those assets) will be
effectively subordinated to all liabilities, including trade payables, of the
Company's subsidiaries (other than the Guarantor) except to the extent that the
Company is recognized as a creditor of the subsidiary. Although the proceeds of
the Old Notes have been or will be distributed to the Company's subsidiaries in
the form of intercompany loans (thereby creating a creditor-debtor relationship
between the Company and its subsidiaries), there are no restrictions upon the
Company's ability to capitalize such amounts at a later date. On September 30,
1996, on an as adjusted basis and excluding inter-company payables to the
Company or the Guarantor, the Company's subsidiaries (other than the Guarantor)
had approximately $47.3 million of liabilities, including approximately $32.4
million of indebtedness. At such date and on such an as adjusted basis, the
Company's operating subsidiaries (including the Guarantor) had a total of
approximately $22.3 million of secured indebtedness. The Notes would also be
subordinated to certain statutorily created preferences in the countries in
which the Company's subsidiaries operate with respect to certain liabilities of
the Company's subsidiaries, such as accrued tax liabilities and accrued salary,
severance, social security and pension liabilities.
At any time on or prior to July 15, 1999, the Company may, at its option
from time to time, redeem Notes having an aggregate principal amount of up to
$25 million at a redemption price equal to 112.125% of the principal amount
thereof on the redemption date, together with accrued and unpaid interest
thereon, with the net cash proceeds of one or more public or private issuances
of common stock of the Company ("Equity Offerings"); provided that (i) Notes
having an aggregate principal amount of at least $100 million remain outstanding
after each such redemption and (ii) each such redemption occurs within 180 days
after consummation of such Equity Offering.
Prior to the Exchange Offer, there has been no public market for the Notes.
The Company does not intend to list the New Notes on any securities exchange or
to seek approval for quotation through any automated quotation system. There can
be no assurance that an active market for the New Notes will develop. To the
extent that a market for the New Notes does develop, the market value of the New
Notes will depend on market conditions (such as yields on alternative
investments), general economic conditions, the Company's financial condition and
other conditions. Such conditions might cause the New Notes, to the extent that
they are actively traded, to trade at a significant discount from face value.
See "Risk Factors -- Lack of Public Market."
The New Notes will be available initially only in book-entry form. The
Company expects that the New Notes issued pursuant to the Exchange Offer will be
issued in the form of one or more fully registered global notes that will be
deposited with, or on behalf of, the Depository Trust Company ("DTC") and
registered in its name or in the name of Cede & Co., as its nominee. Beneficial
interests in the global note representing the New Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the DTC
and its participants. After the initial issuance of such global note, New Notes
in certificated form will be issued in exchange for the global note only in
accordance with the terms and conditions set forth in the Indenture. See
"Description of the Notes -- Book Entry; Delivery and Form" and "Description of
the Notes -- Certificated Notes."
The Company will accept for exchange any and all Old Notes which are
properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time,
on , 1996 (if and as extended, the "Expiration
2
<PAGE> 4
Date"). Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange. Old Notes may be tendered only in integral multiples of $1,000. In the
event the Company terminates the Exchange Offer and does not accept for exchange
any Old Notes, the Company will promptly return all previously tendered Old
Notes to the holders thereof.
Based on a previous interpretation by the staff of the Securities and
Exchange Commission (the "Commission") set forth in no-action letters to third
parties, the Company believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold, and otherwise
transferred by a holder thereof (other than (i) a broker-dealer who purchases
such New Notes directly from the Company to resell pursuant to Rule 144A or any
other available exemption under the Securities Act or (ii) a person that is an
affiliate of the Company (within the meaning of Rule 405 under the Securities
Act)) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that the holder is acquiring the New
Notes in its ordinary course of business and is not participating, and has no
arrangement or understanding with any person to participate, in the distribution
of the New Notes. Holders of Old Notes wishing to accept the Exchange Offer must
represent to the Company that such conditions have been met.
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter," within the meaning of the Securities Act, in connection with
resale of New Notes received in exchange for Old Notes where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 180 days after
the Expiration Date, it will make this Prospectus available to any broker-dealer
for use in connection with any such resale. See "Plan of Distribution."
The Company believes that none of the registered holders of the Old Notes
is an affiliate (as such term is defined in Rule 405 under the Securities Act)
of the Company. The Company has not entered into any arrangement or
understanding with any person to distribute the New Notes to be received in the
Exchange Offer, and to the best of the Company's information and belief, each
person participating in the Exchange Offer is acquiring the New Notes in the
ordinary course of business and has no arrangement or understanding with any
person to participate in the distribution of the New Notes to be received in the
Exchange Offer.
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to bear the expenses of the Exchange Offer. No underwriter is
being used in connection with the Exchange Offer.
3
<PAGE> 5
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the New Notes offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain information, exhibits and undertakings contained in the Registration
Statement. For further information with respect to the Company and the New Notes
offered hereby, reference is made to the Registration Statement, including the
exhibits thereto and the financial statements, notes and schedules filed as a
part thereof. The Registration Statement (and the exhibits and schedules
thereto), as well as the periodic reports and other information filed by the
Company and the Guarantor with the Commission, may be inspected and copied at
the Public Reference Section of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of
the Commission located at 7 World Trade Center, New York, New York 10007 and
Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such materials may be obtained from the Public
Reference Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and its public reference facilities in New
York, New York and Chicago, Illinois at the prescribed rates. The Commission
maintains a site on the World Wide Web ("WWW") which contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The Commission's WWW site is
http://www.sec.gov. Statements contained in this Prospectus as to the contents
of any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
During such times as the Company is not subject to the reporting and
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company has agreed that for so long as any of the
Notes remain outstanding to furnish to the holders of the Notes all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Company were required
to file such Forms. In addition, the Company has agreed to make available to any
prospective purchaser of the Notes or beneficial owner of the Notes in
connection with any sale thereof the information required by Rule 144A(d)(4)
under the Securities Act, until such time as the Company has either exchanged
the Old Notes for New Notes or until such time as the holders thereof have
disposed of such Old Notes pursuant to an effective registration statement filed
by the Company. From and after the time the Company files a registration
statement with the Commission with respect to the New Notes, the Company will
file such quarterly and annual information with the Commission.
No person is authorized in connection with any offering made hereby to give
any information or to make any representation other than as contained in this
Prospectus or the accompanying Letter of Transmittal, and, if given or made,
such information or representation must not be relied upon as having been
authorized by the Company. Neither this Prospectus nor the accompanying Letter
of Transmittal or both together constitute an offer to sell or a solicitation of
an offer to buy any security other than the New Notes offered hereby, nor does
it constitute an offer to sell or a solicitation of an offer to buy any
securities offered hereby to any person in any jurisdiction in which it is
unlawful to make such offer or solicitation to such person. Neither the delivery
of this Prospectus or the accompanying Letter of Transmittal or both together,
nor any sale made hereunder shall under any circumstances imply that the
information contained herein is correct as of any date subsequent to the date
hereof.
------------------------
All but one of the directors and executive officers of the Company and the
Guarantor (as well as certain experts named in this Memorandum) reside outside
of the United States. Virtually all of the assets of such persons, the Company
and the Guarantor are located outside the United States. As a result, it may not
be possible for investors to effect service of process within the United States
upon such persons or to enforce against them judgments of U.S. courts predicated
upon civil liability provisions of the U.S. federal or state securities laws.
The following discussion with respect to the enforceability of certain U.S.
court judgments in Argentina is based upon advice provided to the Company and
the Guarantor by Nicholson & Cano, Argentine counsel to the Company and the
Guarantor. The United States and Argentina currently do not have a treaty
providing for
4
<PAGE> 6
the reciprocal recognition and enforcement of judgments (other than arbitration
awards) in civil and commercial matters. Consequently, a final judgment for
payment rendered by any federal or state court in the United States based on
civil liability, whether or not predicated solely upon U.S. federal securities
laws, would not automatically be enforceable in Argentina. In order to enforce
any U.S. judgment in Argentina, proceedings must be initiated by way of a common
law action before a court of competent jurisdiction in Argentina. In such a
common law action, an Argentine court generally will not (subject to the
following sentence) reinvestigate the merits of the original matter decided by a
U.S. court and will order summary judgment on the basis that there is no defense
to the claim for payment. The entry of an enforcement order by an Argentine
court is conditioned upon the following: (a) the U.S. court had jurisdiction
over the original proceeding; (b) the judgment is final and conclusive on the
merits and is for a definite sum of money; (c) the judgment does not contravene
Argentine public policy; (d) the judgment is not for a tax, penalty or judgment
arrived at by doubling, trebling or otherwise multiplying a sum assessed as
compensation for the loss or damage sustained; (e) the judgment has not been
obtained by fraud; (f) the defendant against whom the enforcement of the
judgment is sought was duly served with a summons in the original proceeding;
and (g) the judgment is not contrary to a prior or simultaneous judgment of an
Argentine court. Subject to the foregoing, purchasers of Notes may be able to
enforce in Argentina judgments in civil and commercial matters obtained from
U.S. federal or state courts; however, there can be no assurance that such
judgments will be enforceable. In addition, there is doubt as to whether an
Argentine court would accept jurisdiction and impose civil liability in an
original action predicated solely upon U.S. federal securities law. The Company
and the Guarantor have appointed CT Corporation System as agent for service of
process in any suit, action or proceeding with respect to the Indenture or the
Notes and for actions brought under federal or state securities laws brought in
any federal or state court located in The City of New York, and the Company and
the Guarantor have submitted to the jurisdiction of such courts in connection
with such suits, actions or proceedings.
------------------------
The terms VSAT(R), Dataplus(R), Teledatos(R), Regional Teleport(R),
Difusat(R), Interplus(R) and Global Fax(R) are service marks or trademarks of
the Company or its subsidiaries that are registered or otherwise protected under
the laws of various jurisdictions.
5
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless the context otherwise requires, the term
"Company" refers to IMPSAT Corporation and its combined subsidiaries. Financial
data for the Company and the Guarantor are presented in accordance with United
States generally accepted accounting principles. Certain of the information
contained in this summary and elsewhere in this Prospectus, including that set
forth under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and information with respect to the
Company's plans and strategy for its business and related financing, are
forward-looking statements which are based on a number of assumptions and are
subject to significant business, economic and competitive uncertainties which
are beyond the control of the Company. For a discussion of important factors
that could cause actual results to differ materially from the forward-looking
statements, investors should carefully consider the information set forth under
the caption "Risk Factors." Certain information contained herein is derived from
industry research data which the Company has not independently verified. See
"Glossary" for the definition of certain terms used in this Prospectus.
THE COMPANY
The Company is a leading provider of private telecommunications network
services in Latin America. The Company provides private network integrated data
and voice telecommunications services for national and multinational companies,
financial institutions, governmental agencies and other business customers in
Latin America. The Company believes that it operates one of the largest shared
hub VSAT networks in Latin America. A substantial majority of the Company's
revenues currently are derived from Argentina and Colombia. The Company is an
established provider of such services in Venezuela and Ecuador and recently has
commenced operations in Mexico and the United States. Services are provided
through the Company's advanced telecommunications networks comprised of owned
teleports, earth stations, fiber optic and microwave links, and leased satellite
and fiber optic capacity.
The Company has grown rapidly since the commencement of its operations in
Argentina in 1990. Its customer base has expanded from 125 customers in two
countries as of December 31, 1992 to 656 customers in six countries as of
December 31, 1995. During the same period, total revenues on a combined basis
have grown from $20 million to $106 million, and EBITDA (as defined) has grown
from $7.9 million to $27.5 million. Contracts with customers are generally
denominated in, or tied to the value of, U.S. dollars, with terms that range
from six months to five years, but generally are for three years in duration.
Contracts generally may be terminated by customers without penalty.
The Company's goal is to become the leading provider of private
telecommunications network services in Latin America. The key elements of the
Company's strategy include: (i) providing tailor-made solutions to meet the
particular telecommunications needs of its customers; (ii) delivering premium
services using state-of-the-art telecommunications technology that is updated
and improved on an ongoing basis, as well as round-the-clock customer support;
(iii) expanding the Company's revenue base by taking advantage of increasing
demand for new services from existing customers, increasing the customer base in
each of the countries in which it operates and, potentially, expanding its
operations into Brazil; and (iv) utilizing a mix of technologies and suppliers.
The Company anticipates continued growth in the demand for private
telecommunications network services in Latin America. Continued deregulation of
the telecommunications market throughout the region should lead to growth in the
telecommunications sector, which is relatively limited as compared with more
developed countries. As the Latin American telecommunications sector matures,
the Company believes that the proportionate share accounted for by data
transmission services will also increase, as it has in more developed countries.
The Company also expects that continuing economic growth in Latin America will
bring greater opportunities for expansion and that economic integration of the
Latin American countries should add to the demand for private network services
in the region.
6
<PAGE> 8
The Company believes it has significant advantages over its competitors as
a result of its: (i) operating experience as a pioneer in providing shared hub
VSAT services; (ii) ability to provide diverse, cost-efficient networking
solutions; (iii) superior marketing skill, knowledge of the customer's needs and
responsiveness; and (iv) position as a market leader and its significant
existing network infrastructure in its markets.
The Company is a privately-held corporation, with two stockholders.
Seventy-five percent of the common stock of the Company is controlled by the
Pescarmona group, a prominent Argentine industrial group, and the remaining 25%
is controlled by STET International Netherlands NV ("STET International"), a
wholly-owned subsidiary of STET International SpA, the international
communications affiliate of the Italian telecommunications holding company STET
SpA ("STET"). The Company's business commenced in 1990 in Argentina. In 1991 and
1992, operating companies were established in Colombia and Venezuela. IMPSAT
Corporation was organized in 1994 as a Delaware holding company and the capital
stock of the operating companies (other than IMPSAT Argentina) was contributed
to IMPSAT Corporation in 1995. On July 5, 1996, 51% of the capital stock of
IMPSAT Argentina was contributed to IMPSAT Corporation.
In 1990 the STET group invested $10 million for a 25% equity stake in
IMPSAT Argentina; and in 1994 STET group invested a total of $65.9 million for a
25% equity stake in IMPSAT Corporation (which, at that time, did not hold an
equity interest in IMPSAT Argentina). STET International employees are seconded
to the Company and its subsidiaries from time to time. The Company believes its
relationship with STET International provides it with additional expertise and
opportunities in the telecommunications business. STET is the holding company
for one of the world's largest telecommunications operators, Telecom Italia,
S.p.A. ("Telecom Italia"), through which STET operates the Italian national
telephone company.
STET International owns 25% of Corporacion Interamericana de
Telecomunicaciones, S.A. de CV, a company that holds 49% of Empresa de
Telecomunicaciones de Cuba, S.A. ("ETECSA"), the public telecommunications
operator in Cuba. Volante de Comercio, an indirect subsidiary of STET, owns 49%
of Sociedad Cubana de Telecomunicaciones, S.A., a Cuban company established for
the manufacture and sale of telecommunications equipment. SEAT, Divisione STET
S.p.A. has assembled and printed the 1996 edition of the Cuban telephone
directories for ETECSA. The Company does not conduct any business with the
government of Cuba or with any person or affiliate located in Cuba. This
information is accurate as the date hereof. Current information with respect to
such holdings may be obtained from the Florida Department of Banking and
Finance, The Capital, Tallahassee, Florida 32399-0350; telephone number (904)
488-9805.
The Company's principal offices are located at Alferez Pareja 256 (1107),
Buenos Aires, Argentina and its telephone number is (541) 362-4240.
THE EXCHANGE
THE EXCHANGE OFFER............ The Company is offering to exchange $1,000
principal amount of New Notes for each $1,000
principal amount of Old Notes that are
properly tendered and accepted. The Company
will issue the New Notes on or promptly after
the Expiration Date. There are $125,000,000
aggregate principal amount of Old Notes
outstanding. See "The Exchange Offer."
Based on an interpretation of the staff of the
Commission set forth in no-action letters
issued to third parties, the Company believes
that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred
by any holder thereof (other than (i) a
broker-dealer who purchases such New Notes
directly from the Company to resell pursuant
to Rule 144A or any other available exemption
under the Securities Act or (ii) any such
holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the
Securities Act) without compliance with the
registration
7
<PAGE> 9
and prospectus delivery provisions of the
Securities Act, provided that such New Notes
are acquired in the ordinary course of such
holder's business and that such holder has no
arrangement or understanding with any person
to participate in the distribution of such New
Notes. In the event that the Company's belief
is inaccurate, holders of New Notes who
transfer New Notes in violation of the
prospectus delivery provisions of the
Securities Act and without an exemption from
registration thereunder may incur liability
thereunder. The Company does not assume or
indemnify holders against such liability. The
Exchange Offer is not being made to, nor will
the Company accept surrenders for exchange
from, holders of Old Notes (i) in any
jurisdiction in which the Exchange Offer or
the acceptance thereof would not be in
compliance with the securities or blue sky
laws of such jurisdiction or (ii) if any
holder is engaged or intends to engage in a
distribution of New Notes. Each broker-dealer
that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a
result of market-making activities or other
trading activities, must acknowledge that it
will deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resale of such New Notes.
See "Plan of Distribution."
EXPIRATION DATE............... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1996,
unless extended, in which case the term
"Expiration Date" shall mean the latest date
and time to which the Exchange Offer is
extended. The Company will accept for exchange
any and all Old Notes which are properly
tendered in the Exchange Offer prior to 5:00
p.m., New York City time, on the Expiration
Date. The New Notes issued pursuant to the
Exchange Offer will be delivered on or
promptly after the Expiration Date.
CONDITIONS TO THE EXCHANGE
OFFER......................... The Company may terminate the Exchange Offer
if it determines that its ability to proceed
with the Exchange Offer could be materially
impaired due to any legal or governmental
action, any new law, statute, rule or
regulation, any interpretation by the staff of
the Commission of any existing law, statute,
rule or regulation or the failure to obtain
any necessary approvals of governmental
agencies or holders of the Old Notes. The
Company does not expect any of the foregoing
conditions to occur, although there can be no
assurances any such conditions will not occur.
PROCEDURES FOR TENDERING
NOTES......................... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date
the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal,
or such facsimile, together with such Old
Notes and any other required documentation to
The Bank of New York, as Registrar, at the
address set forth herein. By executing the
Letter of Transmittal, each holder will
represent to the Company that, among other
things, the New Notes acquired pursuant to the
Exchange Offer are being obtained in the
ordinary course of business of the person
receiving such New Notes, whether or not such
person has an arrangement or understanding
with any person
8
<PAGE> 10
to participate in the distribution of such New
Notes and that neither the holder nor any such
other person is an "affiliate", as defined in
Rule 405 under the Securities Act, of the
Company.
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS............. Any beneficial owner whose Old Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other
nominee and who wishes to tender such Old
Notes in the Exchange Offer should contact
such registered holder promptly and instruct
such registered holder to tender on such
beneficial owner's behalf. If such beneficial
owner wishes to tender on such owner's own
behalf, such owner must, prior to completing
and executing the Letter of Transmittal and
delivering his Old Notes, either make
appropriate arrangements to register ownership
of the Old Notes in such owner's name or
obtain a properly completed bond power from
the registered holder. The transfer of
registered ownership may take considerable
time and may not be able to be completed prior
to the Expiration Date.
GUARANTEED DELIVERY
PROCEDURES.................... Holders of Old Notes who wish to tender their
Old Notes and whose Old Notes are not
immediately available or who cannot deliver
their Old Notes or the Letter of Transmittal
to The Bank of New York, as Exchange Agent,
prior to the Expiration Date, must tender
their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS............. Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time,
on the Expiration Date.
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS................ For a discussion of certain federal income tax
considerations relating to the exchange of the
New Notes for the Old Notes, see "Certain
United States Federal Income Tax
Considerations."
EXCHANGE AGENT................ The Bank of New York is the Exchange Agent.
Its telephone number is (212) 815-6333. The
address of the Exchange Agent is set forth in
"The Exchange Offer -- Exchange Agent." The
Bank of New York also serves as trustee under
the Indenture.
SHELF REGISTRATION
STATEMENT..................... Under certain circumstances described in the
Registration Rights Agreement, certain holders
of Notes (including holders who are not
permitted to participate in the Exchange Offer
or who may not freely resell New Notes
received in the Exchange Offer) may require
the Company to file, and use best efforts to
cause to become effective, a shelf
registration statement under the Securities
Act, which would cover resales of Notes by
such holders. See "Description of
Notes -- Registration Rights."
CONDITIONS TO THE EXCHANGE
OFFER......................... The Exchange Offer is not conditioned on any
minimum principal amount of Old Notes being
tendered for exchange. The Exchange Offer is
subject to certain other customary conditions,
each of which may be waived by the Company.
See "The Exchange Offer -- Certain
Conditions."
9
<PAGE> 11
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except for certain transfer restrictions relating to the Old Notes.
Whenever defined terms of the Indenture not otherwise defined herein are
referred to, such defined terms are incorporated herein by reference. In the
Event that the Exchange Offer is not consummated and a Shelf Registration
Statement is not declared effective on or prior to January 30, 1997, the annual
interest rate borne by the Notes will be increased by 0.5%. If the Exchange
Offer is not consummated and the Shelf Registration statement is not declared
effective by July 30, 1997, the annual interest rate borne by the Notes will be
increased by an additional 0.5%. Upon consummation of the Exchange Offer or the
effectiveness of the Shelf Registration Statement, the interest rate on the
Notes will revert to the rate set forth on the cover page of this Prospectus.
The New Notes will bear interest from the most recent date to which interest has
been paid on the Old Notes or, if no interest has been paid on the Old Notes,
from July 30, 1996. Accordingly, registered holders of New Notes on the relevant
record date for the first interest payment date following the consummation of
the Exchange Offer will receive interest accruing from the most recent date to
which interest has been paid on the Old Notes or, if no interest has been paid,
from July 30, 1996. Old Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange Offer. Holders
whose Old Notes are accepted for exchange will not receive any payment in
respect of interest on such Old Notes otherwise payable on any interest payment
date the record date for which occurs on or after consummation of the Exchange
Offer.
THE NEW NOTES
SECURITIES OFFERED............ $125,000,000 Senior Guaranteed Notes due 2003.
See "Description of the Notes."
MATURITY...................... July 15, 2003.
INTEREST...................... 12 1/8% per annum payable semiannually in cash
on January 15 and July 15 of each year,
commencing January 15, 1997.
GUARANTEE..................... The Notes will have the benefit of a guarantee
issued on a senior, unsecured basis by IMPSAT
Argentina, the Company's 51%-owned Argentine
operating subsidiary.
ADDITIONAL AMOUNTS............ Any payments in respect of the Notes made by
the Guarantor pursuant to the Guarantee will
be made without withholding or deduction for
or on account of any present or future taxes,
duties, levies or other governmental charges
of whatever nature imposed by or on behalf of
the Republic of Argentina or any political
subdivision or taxing authority thereof
("Argentine taxes"), unless such Argentine
taxes are required by law or the
interpretation or administration thereof, in
which case the Guarantor will pay such
additional amounts as may be necessary so that
the net amount received by the holders after
such withholding or deduction will not be less
than the amount that would have been received
in the absence of such withholding or
deduction. See "Description of the
Notes -- Additional Amounts."
RANKING....................... The Notes and the Guarantee will be unsecured,
unsubordinated indebtedness of the Company and
the Guarantor, respectively, will rank pari
passu in right of payment with all existing
and future unsecured, unsubordinated
indebtedness and will be senior in right of
payment to all subordinated indebtedness of
the Company and the Guarantor, respectively.
At September 30, 1996, on an as adjusted
basis, after giving effect to the Offering (as
defined herein), the defeasance and repayment
of the Guarantor's
10
<PAGE> 12
$30 million 9.5% Negotiable Obligations due
1996 and the repayment of $61.5 million of
other short-term obligations of the Company's
subsidiaries with the proceeds of the
Offering, the Company (on an unconsolidated
basis) and the Guarantor (on a consolidated
basis and excluding inter-company payables to
the Company) had $4.4 million of indebtedness
other than the Notes (which represents a
guarantee of certain subsidiary indebtedness
described below) and $31.1 million of
indebtedness (other than the Guarantee),
respectively, all of which were senior
indebtedness. The Company is a holding
company. As an equity holder of its
subsidiaries, the right of the Company to
receive assets from a subsidiary upon the
bankruptcy, liquidation or reorganization of
such subsidiary (and therefore the right of
the holders of the Notes to participate in
those assets) will be effectively subordinated
to all liabilities, including trade payables,
of the Company's subsidiaries (other than the
Guarantor) except to the extent that the
Company is recognized as a creditor of the
subsidiary. Although the proceeds of the Old
Notes have been or will be distributed to the
Company's subsidiaries in the form of
intercompany loans (thereby creating a
creditor-debtor relationship between the
Company and its subsidiaries), there are no
restrictions upon the Company's ability to
capitalize such amounts at a later date. On
September 30, 1996, on an as adjusted basis
and excluding inter-company payables to the
Company or the Guarantor, the Company's
subsidiaries (other than the Guarantor) had
approximately $47.3 million of liabilities,
including approximately $32.4 million of
indebtedness. At such date and on such an as
adjusted basis, the Company's operating
subsidiaries (including the Guarantor) had a
total of approximately $22.3 million of
secured indebtedness. The Notes would also be
subordinated to certain statutorily created
preferences in the countries in which the
Company's subsidiaries operate with respect to
certain liabilities of the Company's
subsidiaries, such as accrued tax liabilities
and accrued salary, severance, social security
and pension liabilities. The Company and its
subsidiaries are expected to incur substantial
amounts of additional indebtedness in the
future, subject to compliance with the
limitations contained in the Indenture. See
"Risk Factors -- Significant Capital
Requirements" and "Holding Company Structure:
Effective Subordination of Notes to
Obligations of Subsidiaries."
CERTAIN COVENANTS............. The Indenture contains certain covenants
which, among other things, restrict the
ability of the Company and its restricted
subsidiaries, including the Guarantor, to:
incur additional indebtedness; create liens;
engage in sale-leaseback transactions; make
restricted payments; sell assets; create
restrictions on the ability of restricted
subsidiaries to make certain payments; issue
or sell stock of certain subsidiaries; enter
into transactions with stockholders or
affiliates; and, with respect to the Company,
consolidate, merge or sell all or
substantially all of its assets. See
"Description of the Notes -- Covenants."
11
<PAGE> 13
REDEMPTION WITH PUBLIC OR
PRIVATE EQUITY PROCEEDS....... At any time on or prior to July 15, 1999, the
Company may, at its option from time to time,
redeem Notes having an aggregate principal
amount of up to $25 million at a redemption
price equal to 112.125% of the principal
amount thereof on the redemption date,
together with accrued and unpaid interest
thereon, with the net cash proceeds of one or
more public or private issuances of common
stock of the Company ("Equity Offerings");
provided that (i) Notes having an aggregate
principal amount of at least $100 million
remain outstanding after each such redemption
and (ii) each such redemption occurs within
180 days after consummation of such Equity
Offering.
CHANGE OF CONTROL............. Upon a Change of Control (as defined herein),
the Company is required to make an offer to
purchase the Notes at a purchase price equal
to 101% of their principal amount, plus
accrued interest. However, certain
transactions with affiliates may not be deemed
to be a Change of Control. See "Description of
the Notes -- Certain Definitions" and
"-- Repurchase of Notes upon a Change of
Control."
RISK FACTORS.................. See "Risk Factors," immediately following this
Summary, for a discussion of certain risks
that should be considered when evaluating an
investment in the Notes.
12
<PAGE> 14
CORPORATE STRUCTURE AND SUMMARY OF INDEBTEDNESS
The following chart summarizes the Company's corporate structure and the
indebtedness at September 30, 1996 of IMPSAT Corporation and each of its
operating subsidiaries (other than inter-company indebtedness) on an as adjusted
basis after giving effect to the Offering (as defined herein) and the defeasance
and repayment of IMPSAT Argentina's $30 million of 9.5% Negotiable Obligations
due 1996 and the repayment of $61.5 million of other short-term obligations of
the Company's subsidiaries with the proceeds of the Offering.
IMPSAT FLOWCHART
- ---------------
(1) Does not include a guarantee of $4.4 million of indebtedness of IMPSAT
Venezuela. See "Description of Certain Indebtedness."
13
<PAGE> 15
USE OF PROCEEDS
On July 30, 1996 the Company issued $125 million principal amount of Old
Notes (the "Offering"). The Old Notes were sold by the Company to a limited
number of institutional investors pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. The Old Notes were priced at par and are
guaranteed on a senior unsecured basis by IMPSAT Argentina. The Company has
distributed and/or will distribute the net proceeds of the Offering, which
totalled approximately $120 million, to its operating subsidiaries through
inter-company loans. Such subsidiaries will in turn use the proceeds to repay
certain other existing indebtedness in the amount of approximately $91.5 million
and will use the remainder of such proceeds for working capital purposes
including debt service obligations on their outstanding indebtedness.
14
<PAGE> 16
SUMMARY FINANCIAL DATA
The following summary financial and other data are for the Company on a
combined basis and separately for IMPSAT Argentina and its consolidated
subsidiaries in each case in accordance with U.S. GAAP. The Company's
subsidiaries use the U.S. dollar as their functional currency. The Company owns
less than a 100% equity interest in certain of its operating subsidiaries,
including a 51% equity interest in IMPSAT Argentina, a 74% equity interest in
IMPSAT Colombia and a 75% equity interest in Telecomunicaciones IMPSAT
Venezuela. The financial data for the Company on a combined basis (including
EBITDA) generally reflect 100% of the revenues and expenses for each of the
Company's subsidiaries in operation during the relevant period, with the amounts
of net income (loss) and stockholders' equity attributable to the minority
interests in such subsidiaries deducted as a separate line item. The combined
financial data contained herein are presented as if IMPSAT Corporation owned its
current percentage of the capital stock of its subsidiaries during all periods,
and as of all balance sheet dates, presented.
The fiscal year of the Company and all of its subsidiaries, other than
IMPSAT Argentina, ends on December 31, and IMPSAT Argentina's fiscal year ends
on November 30. The combined financial results of the Company for the years
ended December 31, 1993, 1994 and 1995 incorporate IMPSAT Argentina's results
for the twelve months ended November 30, 1993, 1994 and 1995, respectively; and
the combined financial results of the Company for the nine months ended
September 30, 1995 and 1996 incorporate IMPSAT Argentina's results for the nine
months ended August 31, 1995 and 1996, respectively.
The summary financial data for the Company and for IMPSAT Argentina set
forth below have been derived from the Company's combined financial statements
and IMPSAT Argentina's consolidated financial statements, audited by Deloitte &
Touche LLP and Deloitte & Touche, Argentina, respectively, independent auditors,
whose reports thereon are included elsewhere in this Prospectus. The summary
financial data for the Company for the nine months ended September 30, 1995 and
1996 and for IMPSAT Argentina for the nine months ended August 31, 1995 and 1996
have been derived from the unaudited financial statements of the Company and
IMPSAT Argentina included elsewhere in this Prospectus and, in the opinion of
management, include all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the information set forth therein.
15
<PAGE> 17
The information set forth below should be read in conjunction with, and is
qualified in its entirety by reference to, the combined financial statements of
the Company and the notes thereto and the consolidated financial statements of
IMPSAT Argentina and the notes thereto included elsewhere in this Memorandum and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
THE COMPANY
-------------------------------------------------------------------
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- ----------------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- ---------------
(IN THOUSANDS, EXCEPT FOR RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues from services............................ $ 37,695 $ 77,679 $105,641 $ 75,324 $ 93,393
Operating expenses(1)............................. (35,355) (66,054) (98,758) (68,082) (80,203)
Operating income.................................. 2,340 11,625 6,883 7,242 13,190
Interest expense, net............................. (6,220) (8,231) (15,677) (10,725) (16,849)
Minority interest................................. (1,218) (5,464) (1,712) (976) (1,509)
Net income (loss)................................. (2,836) 3,036 (7,417) (4,889) (5,378)
OTHER FINANCIAL DATA:
Capital expenditures.............................. $ 36,172 $ 87,541 $ 67,060 $ 57,075 $ 37,301
EBITDA(2)......................................... 8,664 24,499 27,536 21,991 32,383
Cash flow from (used by):
Operating activities.......................... 4,821 17,257 18,894 18,025 2,563
Investing activities.......................... (35,261) (87,603) (66,910) (56,443) (31,086)
Financing activities.......................... 33,994 95,351 22,097 14,558 116,170
Ratio of earnings to fixed charges(3)............. -- 1.38x -- -- --
Ratio of earnings to pro forma fixed
charges(3)(4)................................... -- -- -- -- --
Ratio of EBITDA to interest expense............... 1.30x 2.90x 1.67x 1.77x 1.82x
Ratio of EBITDA to pro forma interest
expense(4)...................................... -- -- 1.42x -- 1.92x
Ratio of total debt to EBITDA(5).................. 5.36x 4.39x 4.64x 4.14x 5.76x
Pro forma ratio of total debt to EBITDA(4)(5)..... -- -- 6.13x -- 4.37x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30, 1996
---------------------------------- ----------------------------
1993 1994 1995 ACTUAL AS ADJUSTED(6)
-------- -------- -------- -------- ---------------
(IN THOUSANDS)
<CAPTION>
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 7,130 $ 32,135 $ 6,216 $ 93,863 $ 33,663
Total assets...................................... 111,283 222,684 249,095 363,135 302,935
Total debt........................................ 46,398 107,484 127,710 248,651 188,451
Total long-term debt, net......................... 35,152 59,437 30,200 159,240 159,240
Minority interest................................. 19,614 24,893 28,476 29,985 29,985
Stockholders' equity.............................. 26,794 62,780 55,363 49,985 49,985
OTHER FINANCIAL DATA:
Total debt as a percentage of total
capitalization(7)............................... 50.0% 55.1% 60.4% 75.7% 70.2%
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
---------------------------------- ----------------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- ---------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
VSAT microstations installed...................... 931 1,925 2,841 2,710 3,311
Dataplus earth stations installed................. 129 271 443 347 609
Satellites linked(8).............................. 3 4 4 4 6
Leased satellite capacity (Mhz)................... 51.5 128.4 198.3 196.25 261.58
Teleports......................................... 2 3 4 4 4
Teleport antennas................................. 10 16 22 20 21
Regional Teleports................................ 6 9 10 10 10
Teledatos Networks................................ 6 12 12 12 12
Customers......................................... 262 445 656 564 850
</TABLE>
(footnotes appear on page 19)
16
<PAGE> 18
<TABLE>
<CAPTION>
IMPSAT ARGENTINA
------------------------------------------------------------------
NINE MONTHS ENDED
YEAR ENDED NOVEMBER 30, AUGUST 31,
---------------------------------- ---------------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------------
(IN THOUSANDS, EXCEPT FOR RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues from services............................ $ 34,672 $ 63,999 $ 80,346 $ 58,352 $ 62,939
Operating expenses(1)............................. (21,946) (50,113) (66,019) (46,968) (49,328)
Operating income.................................. 12,726 13,886 14,327 11,384 13,611
Interest expense, net............................. (5,453) (4,556) (10,384) (7,607) (9,173)
Minority interest................................. -- (3) 6 6 14
Net income........................................ 6,805 12,464 4,472 3,722 3,031
OTHER FINANCIAL DATA:
Capital expenditures.............................. $ 23,699 $ 70,350 $ 38,248 $ 32,446 $ 16,746
EBITDA(2)......................................... 18,296 24,605 30,394 23,083 27,505
Cash flow from (used by):
Operating activities.......................... 8,225 22,298 27,697 22,380 6,365
Investing activities.......................... (22,762) (69,832) (37,984) (31,814) (16,483)
Financing activities.......................... 19,864 41,299 10,933 9,821 53,182
Ratio of earnings to fixed charges(3)............. 2.24x 2.92x 1.37x 1.50x 1.69x
Ratio of earnings to pro forma fixed
charges(3)(4)................................... -- -- 1.48x -- 1.38x
Ratio of EBITDA to interest expense............... 3.22x 5.17x 2.90x 3.03x 3.41x
Ratio of EBITDA to pro forma interest
expense(4)...................................... -- -- 3.15x -- 2.79x
Ratio of total debt to EBITDA(5).................. 1.93x 3.12x 2.62x 2.79x 3.76x
Pro forma ratio of total debt to EBITDA(4)(5)..... -- -- 2.97x -- 2.71x
<CAPTION>
AS OF NOVEMBER 30, AS OF AUGUST 31, 1996
---------------------------------- ---------------------------
1993 1994 1995 ACTUAL AS ADJUSTED(6)
-------- -------- -------- -------- --------------
(IN THOUSANDS, EXCEPT FOR RATIOS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 6,749 $ 514 $ 1,160 $ 44,224 $ 5,524
Total assets...................................... 83,650 144,504 165,945 213,035 174,335
Total debt (includes advances from Parent
Company)........................................ 35,343 76,884 79,703 138,029 99,329
Total long-term debt, net (includes advances from
Parent Company)................................. 31,476 39,609 8,705 75,970 75,970
Minority interest................................. -- 9 3 (11) (11)
Stockholders' equity.............................. 33,000 43,964 48,436 51,467 51,467
OTHER FINANCIAL DATA:
Total debt as a percentage of total
capitalization(7)............................... 51.7% 63.6% 62.2% 72.8% 65.9%
<CAPTION>
AS OF NOVEMBER 30, AS OF AUGUST 31,
---------------------------------- ---------------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
VSAT microstations installed...................... 756 1,462 1,951 1,935 2,042
Dataplus earth stations installed................. 114 236 355 347 394
Satellites linked(8).............................. 3 4 4 4 4
Leased satellite capacity (Mhz)................... 31.0 96.0 148.0 148.0 161.0
Teleports......................................... 1 1 1 1 1
Teleport antennas................................. 8 11 12 12 12
Regional Teleports................................ 5 6 6 6 6
Teledatos Networks................................ 6 7 7 7 7
Customers......................................... 200 292 319 320 363
</TABLE>
(footnotes appear on page 19)
17
<PAGE> 19
The following supplemental summary financial data are for IMPSAT Argentina
for the fiscal years ended November 30, 1993, 1994 and 1995 and for each of
IMPSAT Colombia and IMPSAT Venezuela for the years ended December 31, 1993, 1994
and 1995 and have been derived from the consolidating schedules prepared by the
Company for the combined financial statements for the years ended December 31,
1993, 1994 and 1995. The following supplemental financial data for IMPSAT
Argentina, IMPSAT Colombia and IMPSAT Venezuela for the first nine months of
1995 and 1996 have been derived from the Company's and IMPSAT Argentina's
unaudited financial statements for the nine months ended September 30, 1995 and
1996 and August 31, 1995 and 1996, respectively.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues from services:
Argentina............................ $ 34,672 $ 63,999 $ 80,346 $ 58,352 $ 62,939
Colombia(9).......................... 2,777 12,756 22,417 15,068 25,021
Venezuela(10)........................ 246 910 2,204 1,524 3,105
Other(11)............................ -- 14 674 380 2,328
-------- -------- -------- -------- --------
TOTAL........................... $ 37,695 $ 77,679 $105,641 $ 75,324 $ 93,393
======== ======== ======== ======== ========
Operating expenses(1):
Argentina............................ $(21,946) $(50,113) $(66,019) $(46,968) $(49,328)
Colombia............................. (5,570) (10,757) (17,627) (10,300) (15,367)
Venezuela............................ (7,839) (3,699) (4,257) (2,139) (3,931)
Other................................ (1,485) (10,855) (8,675) (11,577)
-------- -------- -------- -------- --------
TOTAL........................... $(35,355) $(66,054) $(98,758) $(68,082) $(80,203)
======== ======== ======== ======== ========
Net income (loss):
Argentina............................ $ 6,805 $ 12,464 $ 4,472 $ 3,722 $ 3,031
Colombia............................. (970) (80) (135) (1,602) 1,587
Venezuela............................ (7,455) (2,582) (1,723) (1,717) (1,482)
Other................................ (1,216) (6,766) (10,031) (5,292) (8,514)
-------- -------- -------- -------- --------
TOTAL........................... $ (2,836) $ 3,036 $ (7,417) $ (4,889) $ (5,378)
======== ======== ======== ======== ========
OTHER FINANCIAL DATA:
EBITDA(2):
Argentina............................ $ 18,296 $ 24,605 $ 30,394 $ 23,083 $ 27,505
Colombia............................. (2,038) 3,739 8,748 5,922 11,576
Venezuela............................ (7,592) (2,373) (1,675) (1,140) (822)
Other................................ (2) (1,472) (9,931) (5,874) (5,876)
-------- -------- -------- -------- --------
TOTAL........................... $ 8,664 $ 24,499 $ 27,536 $ 21,991 $ 32,383
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30, 1996
-------------------------------- --------------------------
1993 1994 1995 ACTUAL AS ADJUSTED(6)
-------- -------- -------- -------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets:
Argentina......................... $ 83,650 $144,504 $165,945 $213,035 $174,335
Colombia.......................... 22,308 51,640 59,929 65,389 65,389
Venezuela......................... 5,801 8,015 11,192 17,516 17,516
Other............................. (476) 18,525 12,029 67,195 45,695
-------- -------- -------- -------- --------------
TOTAL........................ $111,283 $222,684 $249,095 $363,135 $302,935
======== ======== ======== ======== ===========
Stockholders' equity:
Argentina......................... $ 33,000 $ 43,964 $ 48,436 $ 51,467 $ 51,467
Colombia.......................... 12,811 22,498 10,467 17,525 17,525
Venezuela......................... 4,006 1,312 7,072 18,865 18,865
Other............................. (23,023) (4,994) (10,612) (37,872) (37,872)
-------- -------- -------- -------- --------------
TOTAL........................ $ 26,794 $ 62,780 $ 55,363 $ 49,985 $ 49,985
======== ======== ======== ======== ===========
</TABLE>
(footnotes appear on page 19)
18
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(1) Operating expenses consist of direct cost of services, selling expenses,
general and administrative expenses and depreciation and amortization.
(2) EBITDA as presented consists of operating income (loss) plus depreciation
and amortization. EBITDA is presented because it is a measure commonly used
in the industry and to enhance an understanding of the Company's operating
results and is not intended to represent or be a substitute for cash flow
under generally accepted accounting principles. See the Company's combined
financial statements contained elsewhere in this Prospectus, which include
a statement of cash flows. If EBITDA had been calculated excluding the
depreciation, amortization, interest expense and net losses allocable to
the minority interest in non-wholly-owned subsidiaries (other than the
Guarantor), it would not have produced material differences from EBITDA as
presented because the Company's non-wholly-owned subsidiaries (other than
the Guarantor) had losses or relatively small net income for the periods
indicated.
(3) The ratio of earnings to fixed charges is computed by dividing operating
income before fixed charges (other than capitalized interest), by fixed
charges. Fixed charges consist of interest charges and amortization of debt
expense and discount or premium related to indebtedness. Earnings of the
Company were insufficient to cover fixed charges by approximately $4.3
million, $9.6 million, $5.2 million, $4.6 million and $12.4 million for the
years ended December 31, 1993 and 1995, for the nine months ended September
30, 1995 and 1996 and for the pro forma year ended December 31, 1995,
respectively.
(4) Pro forma ratios are presented for the year ended December 31, 1995 and for
the nine-month period ended September 30, 1996 as if the Offering and the
application of the proceeds thereof to repay $91.5 million of short-term
indebtedness had occurred at the beginning of the relevant period.
(5) This figure represents the ratio of debt at the end of the period to EBITDA
over the preceding four quarters, except that for the nine-month periods
EBITDA has been annualized.
(6) As adjusted balance sheet data is presented as if the Offering and the
application of the proceeds thereof to repay $91.5 million of indebtedness
had occurred on the balance sheet date.
(7) Total debt is the sum of short-term and long-term debt. Total
capitalization is the sum of total debt, minority interest and
stockholders' equity.
(8) "Satellites linked" refers to satellites with respect to which the Company
has leased transponder capacity. The Company does not own any satellites.
(9) IMPSAT Colombia commenced operations in December 1992.
(10) IMPSAT Venezuela commenced operations in January 1993.
(11) The category "Other", as it relates to revenues, operating expenses, total
assets, and EBITDA, consists of (i) amounts relating to IMPSAT Ecuador;
IMPSAT Mexico; IMPSAT USA; International Satellite Capacity Holding, Ltd.
("ISCH"), a wholly-owned subsidiary that leases satellite capacity on
behalf of the Company's operational subsidiaries; and Resis Ingenieria,
S.A. ("Resis"), a wholly-owned subsidiary that provides management services
for the Company; (ii) parent company amounts, including overhead expenses;
and (iii) the elimination of inter-company balances and transactions. As it
relates to net income (loss) and stockholders' equity, the category "Other"
also includes the allocation to minority interest.
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RISK FACTORS
Holders of the Old Notes should consider carefully all of the information
set forth in the Prospectus and, in particular, should evaluate the following
risks before tendering their Old Notes in the Exchange Offer, although the risk
factors set forth below (other than "-- Consequences of Failure to Exchange")
are generally applicable to the Old Notes as well as the New Notes.
SUBSTANTIAL INDEBTEDNESS
As of September 30, 1996, on an as adjusted basis after giving effect to
the Offering, the defeasance and repayment of IMPSAT Argentina's $30 million
9.5% Negotiable Obligations due 1996 and the repayment of $61.5 million of other
short-term obligations of the Company's subsidiaries to be repaid with the
proceeds of the Offering, the Company on an unconsolidated basis and the
Guarantor (on a consolidated basis but excluding inter-company payables to the
Company) had approximately $4.4 million of indebtedness other than the Notes
(which represents a guarantee of certain indebtedness of IMPSAT Venezuela) and
$31.1 million of indebtedness (other than the Guarantee), and the Company's
other subsidiaries had approximately $32.4 million of indebtedness. Total
stockholders' equity of the Company on a consolidated basis as of September 30,
1996 was approximately $50.0 million. At the same date, total stockholders'
equity of the Guarantor was $51.5 million. At September 30, 1996, on an as
adjusted basis, IMPSAT Colombia and the Guarantor would have had approximately
$15.6 million and $6.7 million, respectively, of secured indebtedness. The Notes
would also be subordinated to certain statutorily created preferences in the
countries in which the Company's subsidiaries operate with respect to certain
liabilities of the Company's subsidiaries, such as accrued tax liabilities and
accrued salary, severance, social security and pension liabilities.
After giving pro forma effect to the Offering as if it had occurred at the
beginning of the period, the Company would have had interest expense of
approximately $19.3 million and $16.9 million, respectively, for 1995 and for
the nine months ended September 30, 1996. As of September 30, 1996 on an as
adjusted basis, the Company's total debt was 70.2% of total capitalization. In
addition, for 1995 and as of September 30, 1996, on a pro forma basis the
Company's debt to EBITDA ratio would have been 6.13 times and 4.37 times,
respectively. Earnings of the Company were insufficient to cover fixed charges
by approximately $4.3 million, $9.6 million, $5.2 million, $4.6 million and
$12.4 million for the years ended December 31, 1993 and 1995, for the nine
months ended September 30, 1995 and 1996 and for the pro forma year ended
December 31, 1995, respectively. The Company and its subsidiaries are expected
to incur substantial amounts of indebtedness in the future subject to compliance
with the limitations contained in the Indenture.
The levels of the Company's and the Guarantor's indebtedness could have
important consequences to holders of the Notes, including the following: (i) the
debt service requirements of any additional indebtedness could make it more
difficult for the Company and the Guarantor to make payments on the Notes; (ii)
the ability of the Company and the Guarantor to obtain any necessary financing
in the future for working capital, capital expenditures, debt service
requirements or other purposes may be limited; (iii) a substantial portion of
the Company's and the Guarantor's cash flow from operations must be dedicated to
the payment of principal of and interest on its indebtedness and other
obligations and will not be available for other purposes; (iv) the Company's and
the Guarantor's levels of indebtedness could limit their respective flexibility
in planning for, or reacting to changes in, their businesses; (v) the Company
and the Guarantor will be more highly leveraged than some of their competitors,
which may place them at a competitive disadvantage; and (vi) the Company's and
the Guarantor's high degrees of indebtedness will make them more vulnerable in
the event of a downturn in their businesses.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
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<PAGE> 22
offered or sold, unless registered under the Securities Act and applicable state
securities laws. The Company does not currently anticipate that it will register
Old Notes under the Securities Act. See "Exchange Offer"; "Description of the
Notes -- Registration Rights". Based on interpretations by the staff of the SEC,
as set forth in no-action letters issued to third parties, the Company believes
that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold or otherwise transferred by holders thereof
(other than any such holder which is an 'affiliate' of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such holders'
business and such holders, other than broker-dealers, have no arrangement or
understanding with any person to participate in the distribution of such New
Notes. However, the SEC has not considered the Exchange Offer in the context of
a no-action letter and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the Exchange Offer as in such other
circumstances. Each Holder, other than a broker-dealer, must acknowledge that it
is not engaged in, and does not intend to engage in, a distribution of such New
Notes and has no arrangement or understanding to participate in a distribution
of New Notes. If any Holder is an affiliate of the Company or is engaged in or
intends to engage in or has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such Holder (i) may not rely on the applicable interpretations of the staff of
the SEC and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes pursuant to the Exchange Offer must acknowledge that such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities and that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution". In addition, to comply with the securities
laws of certain jurisdictions, if applicable, the New Notes may not be offered
or sold unless they have been registered or qualified for sale in such
jurisdictions or any exemption from registration or qualification is available
and is complied with. The Company has agreed, pursuant to the Registration
Rights Agreement, subject to certain limitations specified therein, to register
or qualify the New Notes for offer or sale under the securities laws of such
jurisdictions as any holder reasonably requests in writing. Unless a holder so
requests, the Company does not currently intend to register or qualify the sale
of the New Notes in any such jurisdictions. See, "The Exchange Offer".
SIGNIFICANT CAPITAL REQUIREMENTS
The expansion of the Company's business, including working capital
requirements, and the further development of the Company's products and services
will require capital substantially in excess of amounts currently available.
After application of the net proceeds of this Offering, the Company anticipates
that it will require approximately $45 million of new capital during 1997, of
which approximately $25 million would contemplate refinancing of short-term
indebtedness, including under IMPSAT Argentina's Global Commercial Paper
Program, and $20 million would be additional indebtedness for the Company's
subsidiaries outside of Argentina for capital expenditures and working capital
purposes. During 1995 and the nine months ended September 30, 1996, the
Company's cash flow from operations amounted to $18.9 million and $2.6 million,
respectively and capital expenditures during the same periods amounted to $67.1
million and $37.3 million, respectively. In addition as of December 31, 1995,
approximately $8.4 million of long-term debt is scheduled to mature under the
Company's debt and credit facilities in 1997, approximately $8.8 million in
1998, approximately $6.5 million in 1999 and approximately $6.5 million
(excluding the Notes) in the year 2000 and thereafter. While the Company has had
discussions with certain potential lenders, it currently has only
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minimal commitments for additional financing, and there can be no assurance that
required financing will be available.
The Company's projected capital requirements do not take into account the
establishment of operations and development of private telecommunications
network systems in Brazil. The Company is currently studying the establishment
of operations in Brazil, and any such operations would require significant
additional financing beyond that already contemplated by the Company.
Failure to obtain such financing on a timely basis would have a material
adverse effect on the Company and its ability to make payments of principal and
interest on the Notes. Additional sources of capital may include public and
private equity and debt financings by the Company or its subsidiaries. The
incurrence of additional indebtedness could subject the Company to additional or
more restrictive financial covenants. There can be no assurance that additional
financing will be available on acceptable terms or at all. Failure to obtain
such financing could result in the delay or abandonment of some or all of the
Company's development and expansion plans and expenditures, which could have a
material adverse effect on its business, results of operations and financial
condition and could limit the ability of the Company to make principal and
interest payments on the Notes. The ability of the Company to satisfy its
obligations on its indebtedness, including the Notes, is subject to various
factors beyond the Company's control, including general economic conditions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Liquidity and Capital Resources."
HOLDING COMPANY STRUCTURE: EFFECTIVE SUBORDINATION OF NOTES TO OBLIGATIONS OF
SUBSIDIARIES
IMPSAT Corporation, the issuer of the Notes, is a holding company with no
business operations of its own. IMPSAT Corporation's assets consist solely of
its ownership interests in its subsidiaries, the most significant of which are
not wholly-owned. IMPSAT Corporation will use substantially all of the net
proceeds from the Offering to make loans to certain of its subsidiaries, for use
by the subsidiaries to repay certain existing short-term indebtedness and to
finance the expansion and development of their operations. IMPSAT Corporation
must rely upon debt service payments, dividends and other payments from its
subsidiaries to generate the funds necessary to meet its obligations, including
the payment of principal of and interest on the Notes. The subsidiaries,
however, are legally distinct from IMPSAT Corporation and (except for IMPSAT
Argentina) have no obligation, contingent or otherwise, to pay amounts due
pursuant to the Notes. IMPSAT Corporation's subsidiaries (except for IMPSAT
Argentina) will not guarantee the Notes and the most significant of such
subsidiaries have minority investors. The ability of IMPSAT Corporation's
subsidiaries to make such payments to IMPSAT Corporation will be subject to,
among other things, availability of funds, the terms of such subsidiaries'
indebtedness and applicable local laws, including withholding taxes and foreign
exchange controls. The maximum withholding tax on interest payments abroad from
Argentina, Colombia, Venezuela, Ecuador and Mexico is 4.5%, 30%, 34%, 0%, and
35%, respectively. In addition, proposed legislation being considered by the
Argentine legislature would increase the maximum withholding tax rate on
interest payments abroad to 12%. The Company expects to be able to reduce the
applicable withholding tax rates by taking advantage of certain exemptions and
financing structures available to it. The maximum withholding tax on dividends
remitted abroad from Argentina, Colombia, Venezuela, Ecuador and Mexico is 0%,
7%, 0%, 25%, and 0%, respectively. Such withholding tax rates could change at
any time. The laws governing all of the Company's subsidiaries, except IMPSAT
USA, permit companies to pay dividends only out of positive retained earnings
determined in accordance with local generally accepted accounting principles and
also require companies to allocate a minimum percentage of each year's net
income to a legal reserve until the total amount of such reserve equals a
certain percentage of their authorized and outstanding capital stock, and to pay
dividends only out of excess income after allocation of such percentages to
legal reserves. As a result of such requirements and in light of the accumulated
net losses incurred to date by IMPSAT Colombia, IMPSAT Venezuela, IMPSAT Ecuador
and IMPSAT Mexico, the Company does not believe that any of its subsidiaries
other than IMPSAT Argentina would be able to pay dividends to the Company in the
foreseeable future.
Claims of creditors of the subsidiaries, including trade creditors, will
generally have priority as to the assets of such subsidiaries over the claims of
IMPSAT Corporation and the holders of IMPSAT Corporation's
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indebtedness, including the Notes. As an equity holder of its subsidiaries, the
right of the Company to receive assets from a subsidiary upon the bankruptcy,
liquidation or reorganization of such subsidiary (and therefore the right of the
holders of the Notes to participate in those assets) will be effectively
subordinated to the liabilities including trade payables, of the subsidiaries of
IMPSAT Corporation except to the extent that the Company is recognized as a
creditor of the subsidiary. Although the proceeds of the Old Notes have been or
will be distributed to the Company's subsidiaries in the form of intercompany
loans (thereby creating a creditor-debtor relationship between the Company and
its subsidiaries), there are no restrictions upon the Company's ability to
capitalize such amounts at a later date. In addition, although IMPSAT Argentina
is guaranteeing the Notes, it will receive only a portion of the proceeds
thereof. The Company has been advised by Nicholson & Cano, Argentine counsel to
the Guarantor, that the Guarantee will be a valid and binding obligation of
IMPSAT Argentina, subject to the usual qualifications regarding bankruptcy and
similar circumstances. At September 30, 1996, on an as adjusted basis after
giving effect to the defeasance and repayment of IMPSAT Argentina's $30 million
9.5% Negotiable Obligations due 1996 and certain other short-term debt of the
Company's subsidiaries with the proceeds of the Offering; the subsidiaries of
IMPSAT Corporation (other than the Guarantor) had approximately $47.3 million of
liabilities (excluding intercompany payables to IMPSAT Corporation or the
Guarantor), including $32.4 million of indebtedness. Such liabilities (other
than indebtedness) include customer advances, accrued taxes, accrued insurance
and accrued obligations for salaries, severance, social security and pensions,
and satellite band lease payments. Certain of these liabilities, such as accrued
tax obligations and accrued obligations for salaries, severance, social security
and pensions, may be afforded a statutory preference in the countries in which
the Company's subsidiaries operate over the obligations of the Company with
respect to the intercompany loans disbursed by the Company to its subsidiaries
with the proceeds of the Notes.
SHORT OPERATING HISTORY; RISKS OF EXPANSION STRATEGY
The Company, which commenced commercial operations in Argentina in 1990,
has a relatively short operating history and has experienced rapid growth,
increasing revenues from $8 million in 1991 to approximately $106 million in
1995. Although IMPSAT Argentina has recorded annual net income since 1992, the
Company has incurred net losses in every year except 1994. The Company currently
conducts significant operations in Argentina and Colombia, is an established
provider of private telecommunications network services in Venezuela and Ecuador
and has limited operations in Mexico and the United States. The Company intends
to expand its business in Latin America and is actively considering the
possibility of beginning operations in Brazil.
The Company's ability to manage its expansion effectively will require it
to continue to implement and improve its operating, financial and accounting
systems and to hire, train and manage employees. The continued expansion and
development of the Company's business will also depend upon, among other things,
the Company's ability to design integrated private telecommunications networks,
secure financing, install facilities, acquire rights-of-way and building access,
obtain any required government authorizations and assess potential markets, all
in a timely manner, at reasonable costs and on satisfactory terms and
conditions. In addition, such expansion may involve acquisitions, which, if
made, could divert the Company's resources and management and would require
integration with the Company's existing operations. The inability to manage its
planned expansion effectively could have a material adverse effect on the
Company's business, growth, financial condition and results of operations.
COMPETITION
The private telecommunications network industry in Latin America is highly
competitive and is generally characterized by low barriers to entry. The Company
expects that competition in the industry could substantially increase. The
Company competes on the basis of price, quality, customer service and range of
services offered.
Although the Company to date has been able to charge its customers premium
prices, the Company has faced and expects to continue to face declining prices
in the future as the public telephony operators (the "PTOs") modernize their
facilities and adapt to a competitive marketplace. These price and margin
declines
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may be accelerated if new competitors enter its markets. The Company believes
that as its markets become less regulated, there will be increasing demand for
private network services and that such increased demand should offset any
decline in prices, but there can be no assurance in this regard.
In most of its markets, the Company's principal current competitor is the
local PTO or an affiliate of the local PTO. The PTOs generally have significant
competitive advantages (which may decrease as deregulation progresses),
including their close ties with national regulatory authorities, their control
over connections to local telephone lines, their ability to subsidize
competitive services with revenues generated from services they provide on a
monopoly basis and the reluctance of some regulators to adopt policies and grant
regulatory approvals that will result in increased competition for the local
PTO. The Company faces competition from Startel, S.A. ("Startel"), a joint
venture formed in 1990 by Telecom Argentina Stet-France Telecom S.A. ("Telecom
Argentina") and Telefonica de Argentina S.A. ("Telefonica"), the PTOs in
northern and southern Argentina, respectively. Startel uses the infrastructure
of its PTO owners to deliver its services to its customers. Since the
commencement of Startel's operations, its total revenues from all services,
including data transmission, have increased to approximately $100 million in
1995. In the future the PTOs may devote substantially more resources to the
sale, marketing and provision of services that compete with the Company's
services.
The Company also competes with private operators of VSAT networks, other
satellite data transmission networks and terrestrial telecommunications links,
as well as with companies that sell the equipment for data transmission networks
that are privately owned and maintained by the user. The Company could face new
competition in the future from large international long distance carriers, such
as AT&T Corporation, MCI Communications Corporation and Sprint Corporation, or
from other industry participants. While these companies have in the past focused
on long distance telephony services, they may focus on the private
telecommunications network systems segment of the telecommunications market as
deregulation continues. For example, when Argentina authorizes full competition
in long distance telephony, these large long distance carriers may decide to
enter the Argentine telephony market and to provide data transmission services
as well. These potential competitors have financial and other resources
substantially greater than those of the Company. If any of such competitors or
potential competitors were to devote significant additional resources to the
provision of private network services to the Company's core customer base, there
could be a material adverse effect on the Company's business, results of
operations and financial condition. In addition, consolidation of
telecommunications companies and the formation of strategic alliances within the
telecommunications industry, as well as the development of new technologies,
could give rise to significant new competitors to the Company. The Company's
private telecommunications services also could face future competition from
entities using or proposing to use new or emerging voice and data transmission
services or technologies which currently are not widely available in Latin
America, such as personal communications services (PCS) and digital cellular
radio. While the Company does not foresee significant near-term competition in
its existing markets from such new technologies, there can be no assurance that
such competing technologies will not be successful and, as a result, provide
significant competition that could adversely affect the Company's results of
operations in the longer term. See "-- Technological Considerations" and
"Business -- Competition."
DEPENDENCE ON CERTAIN CUSTOMERS
Direct sales of services to the Company's ten largest customers (which are
also the ten largest customers of IMPSAT Argentina) represented approximately
30% of the Company's total revenues and approximately 40% of IMPSAT Argentina's
revenues in 1995. Revenues from Banco de la Nacion Argentina, IMPSAT Argentina's
largest customer, accounted for approximately 9.1% and 7.1% of revenues from
services in 1995 for IMPSAT Argentina and the Company, respectively. In
addition, the ten largest customers of IMPSAT Colombia represented approximately
35% of IMPSAT Colombia's total revenues in 1995. A loss of any of these
customers or any significant reduction in sales to them could adversely affect
the Company's results of operations. See "Business -- Customers."
A number of the Company's largest customers are governmental agencies, and
such public sector customers have been and continue to be a significant part of
the Company's business. Such public sector customers have considerable ability
to force the renegotiation of the terms of a contract upon other parties and
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frequently are significantly slower in paying outstanding accounts than are
private sector entities. Forced renegotiation of contracts with the Company's
public sector customers or delays in payments from public sector entities could
have a material adverse affect on the Company's financial condition and results
of operations.
AGING OF RECEIVABLES
The Company's subsidiaries provide trade credit to their customers in the
normal course of business. Prior to extending credit, the customers' financial
history is analyzed. As of December 31, 1995, approximately 7.0% of the
Company's gross accounts receivable were past due more than six months but less
than one year and approximately 5.4% of gross accounts receivable were past due
more than one year. Substantially all of such receivables are IMPSAT
Argentina's. The Company established an allowance for doubtful accounts of
approximately $1.1 million at December 31, 1995. During 1996, the level of such
past due receivables has increased. As of August 31, 1996, approximately 17.3%
of IMPSAT Argentina's gross accounts receivable were past due more than six
months but less than one year and approximately 16.3% of gross accounts
receivable were past due more than one year. Accordingly, the related allowance
has also been increased to $2.8 million at September 30, 1996, of which all but
$20,000 related to IMPSAT Argentina. See Note 3 to the Company's combined
financial statements. The Company's current policy is to reserve 30% for
accounts receivable in excess of 180 days but less than one year, and 100% for
all accounts receivable in excess of 360 days; except with respect to Empresa
Nacional de Correos y Telegrafos S.A. (ENCOTESA), the Argentine national postal
service, as to which the Company as of August 31, 1996 had reserves for
uncollectible accounts receivable of $500,000 with respect to a total of $3.4
million in accounts receivable in excess of 180 days at such time. While the
Company believes that its credit and collection policies and allowance for
doubtful accounts are adequate and that it is not at risk of substantial
customer defaults, there can be no assurance in this regard.
Of IMPSAT Argentina's receivables past due in excess of six months as of
August 31, 1996, governmental agencies accounted for 57% of the total of such
past due receivables. One customer, ENCOTESA, accounted for 47.9% of IMPSAT
Argentina's receivables past due more than six months but less than one year and
for 51.0% of IMPSAT Argentina's receivables past due in excess of one year.
ENCOTESA, which was the Company's fifth largest customer as of December 31,
1995, is experiencing financial and operating difficulties, and the Argentine
legislature is currently debating the means to address ENCOTESA's difficulties,
including the possible privatization of the agency. In November 1996, IMPSAT
Argentina filed suit against ENCOTESA for amounts due and arising under IMPSAT
Argentina's contracts with ENCOTESA totalling $5.1 million, plus interest on
such amounts. IMPSAT Argentina believes that its contracts with ENCOTESA should
be recognized by the Argentine courts and intends to pursue its claims against
ENCOTESA to the fullest extent. IMPSAT Argentina is currently discussing with
ENCOTESA modifications to the amount of services being provided under ENCOTESA's
contracts with IMPSAT Argentina, which currently result in monthly invoices of
$218,000. As of September 30, 1996, the Company was providing ENCOTESA with 200
VSATs and 7 Dataplus earthstations, under contracts which are scheduled to
expire in August 1997 and 1999, respectively. The Company will continue to
assess the effect that the ENCOTESA receivables situation will have on its
results of operations, liquidity or capital resources.
RISKS RELATING TO OPERATIONS IN LATIN AMERICA
Substantially all of the Company's combined revenues are derived from
operations in Latin America. During 1995, approximately 76% and 21% of the
Company's combined revenues were derived from IMPSAT Argentina and IMPSAT
Colombia, respectively. The Company also currently has operations in Latin
America in Venezuela, Mexico and Ecuador, and is actively considering expanding
its operations to Brazil. While the Company believes that such geographic
diversification provides the benefit of ameliorating potential economic and
political risks associated with operating in any single Latin American country,
an investment in the Notes is subject to certain risks common in the conduct of
business in Latin America. Other than the United States, where the Company does
not have material operations, each country where the Company operates, or
intends to operate, has experienced political and economic instability in recent
years. Moreover, as
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recent events in the Latin American region have demonstrated, negative economic
or political developments in one country in the region can lead to or exacerbate
economic or political crises elsewhere in the region. The economies of Latin
America are characterized by extensive government intervention in the economy;
inflation and hyperinflation; currency devaluations, fluctuations, controls and
shortages; troubled and insolvent financial institutions; capital flight;
political instability, turmoil and violence; and economic contraction and
unemployment.
Argentina. While the Company intends to increase the concentration of its
business outside Argentina, Argentina is expected to remain the Company's most
significant market for the foreseeable future. Developments in Argentina are
accordingly of particular importance to the Company.
For several decades prior to the 1990s, the Argentine economy was plagued
by erratic, interventionist and generally unsuccessful economic policies. The
Argentine government had nationalized substantially all public utilities as well
as the country's leading producers of steel, oil, gas and petrochemicals. These
businesses were operated in a highly inefficient manner, contributing to
increased fiscal deficits that were financed through uncontrolled expansions of
the money supply as well as national and international financing arrangements
that were ultimately rescheduled, resulting in substantial losses to Argentina's
creditors. In addition, the government imposed capital and exchange controls and
levied heavy tariffs that distorted the country's production costs and impaired
its export competitiveness.
These difficulties culminated in a period of severe hyperinflation and
currency devaluation. In 1988, 1989 and 1990 the Argentine consumer price index
increased by approximately 388%, 4,924% and 1,344%, respectively. For many years
before December 1989, the Argentine foreign exchange market was subject to
exchange controls. Under current law, Argentine currency is convertible into
U.S. dollars without restrictions and Argentina has a free exchange market for
all foreign currency transactions. However, there can be no assurance that this
will continue. Any foreign exchange restrictions could prevent or restrict the
Guarantor's, and indirectly the Company's, access to U.S. dollars to meet their
obligations under the Notes.
Although Argentina has, since 1991, enjoyed a period of relative economic
stability and prosperity, Mexico's 1994 devaluation heightened investor concerns
that Argentina would be forced to devalue its currency which could have provoked
a renewed bout of inflation. These concerns promoted capital flight in early
1995 which resulted in the depletion of Argentina's international currency
reserves and imperiled both the Argentine banking sector and the Convertibility
Plan that underlies the Argentine peso's parity with the U.S. dollar. According
to the Central Bank of Argentina, gross international reserves fell to $12.5
billion as of March 31, 1995 from $17.9 billion as of December 31, 1994.
Consequently, banks and other financial intermediaries contracted credit,
Argentina's real gross domestic product ("GDP") experienced a 4.4% decline in
1995 and unemployment reached a peak of 18.4%.
Based on recently reported economic data by the Argentine government and
the apparent return of "flight" capital and increasing international reserves,
there are a number of signs that indicate that the Argentine economy is in the
process of recovering from the recession experienced in 1995 and that the
financial sector crisis has eased. The Argentine government reported preliminary
estimates of a decline in GDP for the first quarter of 1996 of 3.2%, an
improvement over the third and fourth quarters of 1995, when GDP declined by
8.1% and 7.7%, respectively, compared to the same periods in 1994. In addition
gross international reserves as of August 31, 1996 had increased to $18.9
billion. However, due to its history of instability and to inherent structural
weakness, especially in the public sector, Argentina's economy is susceptible to
pressures, including devaluation, inflation, recession and other adverse
economic effects. Any of the foregoing could have a material adverse effect on
the business, results of operations and financial condition of the Company.
Colombia. While Colombia is the Company's second largest market, the
percentage of the Company's revenues derived from its business in Colombia is
currently significantly less than in Argentina. This disparity, however, is
expected to decrease over time.
The Colombian government exercises significant control over the Colombian
economy. Accordingly, Colombian governmental actions concerning the economy
could significantly affect private sector entities in
26
<PAGE> 28
general, and the Company in particular. Colombian law permits the Colombian
government to impose foreign exchange controls in the event that foreign
currency reserves fall below a specified level. Any such imposition of controls
could adversely affect the Company's access to U.S. dollars to meet its
obligations under the Notes.
Colombia has continuously experienced periods of criminal violence,
primarily relating to leftist guerilla groups and drug-related and other
criminal activities. There have been persistent allegations that President
Ernesto Samper knowingly received election campaign contributions from members
of the Cali cocaine cartel, which have led to the resignation of a number of
members of Mr. Samper's cabinet and to calls for Mr. Samper's resignation. On
June 12, 1996, Mr. Samper was exonerated of these charges by the Colombian
legislature. In recent months, leftist guerilla activity has increased, creating
both political and economic instability which in turn has led to a decline in
the rate of growth of Colombia's gross domestic product. Continued political
instability in Colombia could have an adverse effect on the Colombian economy
which could have an adverse effect on the Company. In addition, in March 1996
President Clinton declined to certify Colombia as a country that was taking
sufficient steps to prevent international drug trafficking. Such action has the
effect of reducing the U.S. foreign assistance available to Colombia and may
discourage future trade with and investment in Colombia, any of which could have
an adverse effect on the Company.
Venezuela. The Company's operations in Venezuela are currently relatively
limited. The Venezuelan government exercises significant control over the
Venezuelan economy. Such control has included extensive regulation, including
price controls. In addition, the Venezuelan government experienced two attempted
coups d'etat in 1992. In the last 15 years, Venezuela has experienced periods of
slow or negative growth, high inflation, currency devaluations and limited
availability of foreign exchange.
Venezuela is currently experiencing a recession occasioned in part by a
widespread crisis among financial institutions that began in 1994. In that year,
banking institutions holding approximately 70% of total deposits in Venezuela
were acquired by the government or were closed. The cost to the Venezuelan
government of the acquisition of or assistance to financial institutions has
been estimated at 13% of the country's 1994 GDP. After contracting by 2.8% in
1994, Venezuela's real gross domestic product ("GDP") is estimated to have
increased in 1995 by 2.2% (or 0.8% without regard to the oil economy).
As a result of inflationary pressures, the bolivar has suffered substantial
devaluation since 1989. Capital flight resulting from the financial crisis led
to a significant drop in the value of the bolivar and led the Venezuelan
government to impose exchange controls to stem the depletion of Venezuela's
foreign currency reserves and fix the value of the bolivar against the U.S.
dollar at Bs. 170 per $1.00. In December 1995, the Venezuelan government
devalued the bolivar to Bs. 290 per $1.00. The government of Venezuela announced
a series of further economic adjustment measures in April 1996 aimed at
improving the country's fiscal situation. On April 22, 1996, the Venezuelan
government removed all exchange controls and permitted the bolivar to float
against the U.S. dollar. As of November 15, 1996, the exchange rate between the
bolivar and the U.S. dollar was Bs. 466.0 = U.S.$1.00.
The Venezuelan consumer price index registered increases of 38.4%, 70.8%
and 56.6% for the years 1993, 1994 and 1995, respectively. The effect of the
economic adjustment measures announced by the Venezuelan government in April
1996 is expected to result in inflation for 1996 of in excess of 100%.
Continued adverse macroeconomic conditions in Venezuela, including high
rates of inflation, the continuation of exchange controls and a decrease in the
country's international reserves, or political instability could have an adverse
effect on the Company's operations and prospects in Venezuela.
Mexico. Although its business in Mexico is currently very limited, the
Company expects Mexico to constitute a larger portion of its business in the
future. Since 1994 Mexico has experienced an economic crisis characterized by
exchange rate volatility and devaluation of the Mexican peso against foreign
currencies, increased inflation, high domestic interest rates, negative economic
growth, reduced consumer purchasing power and high unemployment. The economic
crisis resulted in part from a series of internal disruptions and political and
economic events that adversely affected the Mexican economy, combined with a
large current account deficit (7.8% of gross domestic product in 1994),
reduction of international investments and an increase in U.S. interest rates.
Mexico experienced a rate of inflation of 52.0% in 1995 (as compared to 11.9%
27
<PAGE> 29
in 1992, 8.0% in 1993 and 7.1% in 1994) and 8.4% during the first three months
of 1996, and a liquidity crisis which, among other things, affected the ability
of the Mexican Government and the banking system and other borrowers to
refinance or refund maturing debt and also adversely affected consumer spending.
Gross domestic product for 1995 was approximately 7% lower than it was for 1994.
Mexico experienced sharply higher interest rates in 1995, both domestically
and internationally, on Mexican public- and private-sector debt and sharply
reduced opportunities for refinancing or refunding maturing debt issues. The
value of the Mexican peso sharply declined since December 1994 as compared to
the U.S. dollar and may be subject to further significant fluctuations in the
future. The value of the Mexican peso declined by 60.8% against the U.S. dollar
during the period from December 31, 1993 to December 31, 1994, with a decline of
42.9% from December 19, 1994 to December 31, 1994. In 1995 the Mexican peso
depreciated an additional 53.6% and equalled Ps. 7.69 = U.S.$1.00 at December
31, 1995. As of November 15, 1996, the value of the Mexican peso against the
U.S. dollar equalled Ps. 7.89 = U.S.$1.00.
In response to the adverse economic developments in 1994, the
administration of President Ernesto Zedillo announced in 1995 a series of
emergency economic recovery and stabilization plans, which sought to stabilize
the exchange rate and maintain the present floating rate exchange policy,
stabilize and strengthen the Mexican banking sector, increase public-sector
revenues and increase the minimum wage.
No assurance can be given that the Mexican government's economic plans will
be successful in reversing the crises that have plagued Mexico's economy.
Continued adverse economic conditions in Mexico, such as high rates of
inflation, currency devaluations and a decrease in the country's international
reserves, or political instability could have an adverse effect on the Company's
operations and prospects in Mexico.
Brazil The Company is actively considering plans to expand its operations
into Brazil which, if implemented, could subject its financial condition and
results of operations would to various additional economic and political risks.
Throughout the 1980s and into the 1990s, Brazilian economy has suffered from
periods of extremely high rates of inflation and recession. In December 1993,
the Brazilian government announced the Plano Real, an economic stabilization
plan designed to reduce inflation by, among other things, reducing certain
public expenditures, collecting debts owned to the Brazilian government,
increasing tax revenues and continuing the national program of privatizing
certain state-owned enterprises.
On July 1, 1994, as part of the Plano Real, the Brazilian government
introduced a new currency, the real. Since reaching its highest quotation of
R$0.829 per U.S. dollar on October 14, 1994, the real has experienced a
cumulative devaluation of 23.2%, reaching R$1.0215 per U.S. dollar on September
30, 1996. There can be no assurance that the real will not again be devalued
relative to the U.S. dollar, or that the real will not fluctuate significantly
relative to the U.S. dollar. Recently, the Brazilian economy has shown
improvement in a number of other areas. Inflation, as measured by the general
price index domestic supply, was approximately 1,158% in 1992, 2,709% in 1993,
909.6% in 1994 and 14.8% in 1995. Average monthly inflation for the first nine
months of 1996 was 0.84%. GDP grew in constant real terms by 4.1% in 1995, 5.8%
in 1994 and 4.2% in 1993, compared with a decrease of 0.8% in 1993. Unemployment
decreased to 4.6% in 1995 from 5.1% in 1994. There can be no assurance, however,
that the Plano Real will continue to be successful in controlling the level of
inflation, stabilizing the real or maintaining economic growth in Brazil.
The Brazilian political scene has been marked by high levels of uncertainty
since its return to civilian rule in 1985 following two decades of military
governments. Mr. Fernando Henrique Cardoso, Brazil's Finance Minister at the
time of the implementation of the Plano Real, was elected President of Brazil in
October 1994 by a coalition of political parties. As a result, his
administration may not have alone have the votes required to secure the passage
of economic reform or other legislation necessary to further implement the Plano
Real. In addition, under Brazilian Constitution, the President is not eligible
for re-election when his current term expires in 1998. There can be no assurance
that any of the administration's policies, including the Plano Real, will be
supported by Brazil's legislature or future administrations. Present or future
governmental actions or continued political instability in Brazil could trigger
an increase in inflation, currency fluctuation or other negative economic
developments in that country that could, in turn, have a material adverse effect
on the Company's ability to successfully establish operations in Brazil.
28
<PAGE> 30
CURRENCY FLUCTUATIONS, DEVALUATIONS AND RESTRICTIONS
A substantial portion of the Company's costs, including lease payments for
satellite transponder capacity, purchases of capital equipment and interest on
the Notes, is payable in U.S. dollars. To date, the Company has not hedged its
currency risks with third parties. The Company's contracts with its customers
generally provide for payment in U.S. dollars or for payment in local currency
linked to the exchange rate at the time of payment between the local currency
and the U.S. dollar. Such contractual provisions are structured to protect the
Company against the risk of fluctuations in currency exchange rates. However,
the revenues of customers of the Company are generally denominated in local
currencies, and although the Company's customers include governmental agencies
and some of the largest and most financially sound companies and financial
institutions in their markets, substantial or continued devaluations in such
currencies relative to the U.S. dollar could have a negative effect on the
ability of customers of the Company to absorb the costs of a devaluation. This
could result in the Company's customers seeking to renegotiate their contracts
with the Company or, failing satisfactory renegotiation, defaulting on such
contracts. The Company is therefore affected by currency fluctuations. The
Company's competitors and potential future competitors, including the PTOs and
large, multinational long distance companies, may be less exposed to currency
risk or may be better able to hedge their currency risk and could thereby gain a
relative competitive advantage in the event of a currency devaluation. In
addition, from time to time, Latin American countries have experienced shortages
in foreign currency reserves and restrictions on the ability to expatriate local
earnings and convert local currencies into U.S. dollars. Currency devaluations
in one country may have adverse effects in another country, as in late 1994 and
1995, when several Latin American countries were adversely impacted by the
devaluation of the Mexican peso. Any devaluation of local currencies in the
countries where the Company operates, or restrictions on the expatriation of
earnings or capital from such countries, could have a material adverse effect on
the business, results of operations and financial condition of the Company.
GOVERNMENT REGULATION; REGULATORY UNCERTAINTY
Local laws and regulations differ significantly among the jurisdictions in
which the Company currently operates and in which the Company may operate in the
future, and the interpretation and enforcement of such laws and regulations vary
and are often based on the informal views of the local ministries which, in some
cases, are subject to influence by the PTOs. The current conditions governing
the Company's service offerings may be altered by future legislation or
regulation. In certain of the Company's principal existing and target markets,
there are laws and regulations that prohibit or limit certain of the
transmission methods by which the Company's services can be provided as well as
the provision of certain of the Company's services. For example, IMPSAT
Argentina's license for the provision of data transmission services permits
IMPSAT Argentina to offer ancillary voice channels but does not specify what is
meant by "ancillary" voice channels. While the Company believes that IMPSAT
Argentina's services are in accordance with the terms of the license, a
significant minority of IMPSAT Argentina's revenues are derived from voice
transmission, and an adverse interpretation of what constitutes "ancillary"
voice channels could have a material adverse effect on the Company. The Company
is prohibited by law from providing Interplus services to or from Argentina
during the term of a monopoly granted to Telecomunicaciones Internacionales de
Argentina S.A. ("Telintar"), which is jointly owned by Telecom Argentina and
Telefonica, with respect to international telecommunications services to or from
Argentina, unless the Company obtains Telintar's consent. Telintar's monopoly is
due to expire in 1997, with a possible extension through the year 2000.
The Company's business is dependent upon the procurement and maintenance of
licenses to provide private telecommunications network services in the various
countries in which it operates. The Company believes that it currently has all
licenses required for the conduct of its operations in its existing markets and
expects that those of its licenses that are subject to expiration will be
renewed in due course upon application by the Company. However, due to the
political and economic risks associated with the countries in which the Company
operates, there can be no assurance that the Company will be able to maintain
its licenses in force or that they will be renewed upon their expiration. The
loss of, or substantial limitation upon the terms of the Company's licenses
could have a material adverse effect on the results of operations of the
Company. For specific details of the Company's licenses in the various countries
in which it operates, including the expiration
29
<PAGE> 31
date of such licenses, see "Business -- Description of Country Operations."
There can also be no assurance that the Company will succeed in obtaining all
requisite regulatory approvals to operate in those countries which the Company
may desire to enter, including Brazil.
TECHNOLOGICAL CONSIDERATIONS
The telecommunications industry is subject to rapid and significant
technological advancements and the related introduction of new products and
services. The Company does not possess significant intellectual property rights
with respect to the technologies it uses and depends on third parties for the
development of and access to new technology. While the Company believes that it
will be able to acquire and commercialize necessary technologies, the effect of
technological changes on the business of the Company cannot be predicted, and
there can be no assurance that the Company will be able to obtain access to
appropriate technologies on a timely basis or on acceptable terms or that new
technologies will not render the Company's services out of date. In addition,
the Company (not its customers, with the exception of YPF S.A.) owns the
equipment, such as VSAT microstations, used by the Company in providing its
services. Therefore, technological changes that render the Company's equipment
out of date could require substantial increases in capital expenditures to
update such equipment.
Substantially all of the Company's VSAT microstations and related
technology are supplied by Hughes Network Systems ("Hughes"). If for any reason
Hughes were unable or unwilling to continue supplying the Company (an
eventuality the Company does not foresee), the Company could incur substantial
costs and delays, principally in relation to the use of another manufacturer's
VSAT equipment, in the growth and expansion of the Company's business.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant degree on members of the
Company's senior management and certain key employees, none of whom is bound by
employment contracts with the Company, although Mr. Ricardo Verdaguer (President
and Chief Executive Officer) and Mr. Roberto Vivo (Deputy Chief Executive
Officer) are indirect shareholders of the Company. The success of the Company
also depends in part upon its ability to hire and retain highly skilled and
qualified operating, marketing, financial and technical personnel. Competition
for qualified employees in the telecommunications industry is intense, and
accordingly, there can be no assurance that the Company will be able to hire or
retain necessary personnel. See "Management."
CONTROL BY EXISTING STOCKHOLDERS
The Company and the Guarantor are privately held corporations. Seventy-five
percent of the common stock of the Company is held by Nevasa Holdings Ltd.
("Nevasa"), and the remaining 25% is held by STET International. The Company,
Nevasa and STET International hold 51%, 29.7% and 11.5% of the common stock of
the Guarantor, respectively. Nevasa is a holding company controlled largely by
the Pescarmona family interests; Mr. Vivo, Deputy Chief Executive Officer of
IMPSAT Corporation; and Mr. Verdaguer, President and Chief Executive Officer of
IMPSAT Corporation. See "Principal Stockholders." As a result of such stock
ownership, these shareholders can effectively control the affairs and business
policies of the Company, including the election of directors.
The Company has been advised that the Pescarmona group intends to conduct
all of its Latin American telecommunications business through the Company
although from time to time such interests may initially be pursued by an
affiliate of the Company. STET currently has interests in other
telecommunications businesses in Latin America. STET holds a 32% share in Nortel
Inversora, S.A. ("Nortel"), a holding company that owns 60% of the equity of
Telecom Argentina, and through such investment in Nortel has interest in Startel
and Telintar. In addition, STET owns interests in telephone companies in Chile
and Bolivia and in a paging company in Brazil, and STET can be expected to make
further investments in the region through vehicles other than the Company.
Certain of those interests, particularly STET's indirect interest in Startel
through Nortel, pose potential conflicts of interest with IMPSAT Argentina.
30
<PAGE> 32
LACK OF PUBLIC MARKET
The New Notes are being offered to the Holders of the Old Notes. The Old
Notes were sold by the Company on July 30, 1996 to a limited number of
institutional investors and are eligible for trading in the Private Offerings,
Resale and Trading through Automated Linkages (PORTAL) Market. To the extent
that Old Notes are tendered and accepted in the Exchange Offer, the trading
market for the remaining untendered Old Notes could be adversely affected. There
is no existing trading market for the New Notes, and there can be no assurance
regarding the future development of a market for the New Notes, or the ability
of Holders of the New Notes to sell their New Notes or the price at which such
Holders may be able to sell their New Notes. If such a market were to develop,
the New Notes could trade at prices that may be higher or lower than their
principal amount or purchase price, depending on many factors, including
prevailing interest rates, the Company's operating results and the market for
similar securities. Therefore, there can be no assurance as to the liquidity of
any trading market for the New Notes or that an active public market for the New
Notes will develop. The Company does not intend to apply for listing or
quotation of the New Notes on any securities exchange or stock market.
Historically, the market for noninvestment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for the New Notes will not
be subject to similar disruptions. Any such disruptions may have an adverse
effect on Holders of the New Notes.
31
<PAGE> 33
CAPITALIZATION
The following table sets forth as of September 30, 1996: (i) the historical
cash and cash equivalents, short-term debt and capitalization of the Company,
and (ii) the as adjusted cash and cash equivalents, short-term debt and
capitalization after giving effect to the Offering and the application of the
net proceeds thereof to repay approximately $91.5 million of existing
indebtedness, including the defeasance and repayment of IMPSAT Argentina's $30
million of 9.5% Negotiable Obligations due 1996, which mature in November 1996,
and the repayment of $61.5 million of other short-term obligations of the
Company's subsidiaries with the proceeds of the Offering. This table should be
read in conjunction with the financial statements of the Company and the notes
related thereto included elsewhere in this Memorandum.
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1996
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
CASH AND CASH EQUIVALENTS.............................................. $ 93,863 $ 33,663
======== =========
SHORT-TERM DEBT AND CURRENT PORTION OF LONG-TERM DEBT:
Short-term debt................................................... 52,001 21,801
Current portion of long-term debt................................. 37,410 7,410
-------- -----------
Total short-term debt and current portion of long-term
debt....................................................... 89,411 29,211
-------- -----------
LONG-TERM DEBT:
Old Notes......................................................... 125,000 125,000
Other long-term debt, net of current portion...................... 34,240 34,240
-------- -----------
Total long-term debt, net.................................... 159,240 159,240
-------- -----------
MINORITY INTEREST IN COMBINED SUBSIDIARIES............................. 29,985 29,985
-------- -----------
STOCKHOLDERS' EQUITY:
Common Stock, $1.00 par value
77,750,640 shares authorized, issued and outstanding............ 77,750 77,750
Accumulated deficit............................................... (27,765) (27,765)
-------- -----------
Total stockholders' equity................................... 49,985 49,985
-------- -----------
Total capitalization.................................... $328,621 $ 268,421
======== =========
</TABLE>
32
<PAGE> 34
SELECTED FINANCIAL AND OTHER DATA
The following selected financial and other data are for the Company on a
combined basis and separately for IMPSAT Argentina and its consolidated
subsidiaries, in each case in accordance with U.S. GAAP. The Company's
subsidiaries use the U.S. dollar as their functional currency. The Company owns
less than a 100% equity interest in certain of its subsidiaries, including a 51%
equity interest in IMPSAT Argentina, a 74% equity interest in IMPSAT Colombia
and a 75% equity interest in IMPSAT Venezuela. The financial data for the
Company on a combined basis (including EBITDA) generally reflect 100% of the
revenues and expenses for each of the Company's subsidiaries in operation during
the relevant period, with the amounts of net income (loss) and stockholders'
equity attributable to the minority interests in such subsidiaries deducted as a
separate line item. The combined financial data contained herein are presented
as if IMPSAT Corporation owned its current percentage of capital stock of its
operating subsidiaries during all periods, and as of all balance sheet dates,
presented.
The fiscal year of the Company and all of its subsidiaries, other than
IMPSAT Argentina, ends on December 31, and IMPSAT Argentina's fiscal year ends
on November 30. The combined financial results of the Company for the years
ended December 31, 1991, 1992, 1993, 1994 and 1995 incorporate IMPSAT
Argentina's results for the twelve months ended November 30, 1991, 1992, 1993,
1994 and 1995, respectively; and the combined financial results of the Company
for the nine months ended September 30, 1995 and 1996 incorporate IMPSAT
Argentina's results for the nine months ended August 31, 1995 and 1996,
respectively.
The selected financial data for the Company and for IMPSAT Argentina have
been derived from the Company's combined financial statements and IMPSAT
Argentina's consolidated financial statements audited by Deloitte & Touche LLP
and Deloitte & Touche, Argentina, respectively, independent auditors, whose
reports thereon are included elsewhere in this Prospectus. The selected
financial data for the Company for the nine months ended September 30, 1995 and
1996 and for IMPSAT Argentina for the nine months ended August 31, 1995 and 1996
have been derived from the unaudited financial statements of the Company and
IMPSAT Argentina included elsewhere in this Prospectus and, in the opinion of
management, include all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the information set forth therein.
33
<PAGE> 35
<TABLE>
<CAPTION>
THE COMPANY
-----------------------------------------------------------------------------
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- ----------------------
1991(1) 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- -----------
(IN THOUSANDS, EXCEPT FOR RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues from services........................ $ 8,166 $ 20,449 $ 37,695 $ 77,679 $105,641 $ 75,324 $ 93,393
Operating expenses(2)
Direct cost of services................... (3,036) (15,371) (22,256) (32,999) (43,051) (28,501) (35,470)
Selling expenses.......................... (1,153) (1,185) (3,284) (9,714) (16,962) (11,467) (11,703)
General and administrative expense........ (3,371) (3,230) (3,491) (10,467) (18,092) (13,365) (13,124)
Reorganization costs -- severance......... -- -- -- -- -- -- (713)
Depreciation and amortization............. (2,123) (3,699) (6,324) (12,874) (20,653) (14,749) (19,193)
-------- -------- -------- -------- -------- -------- -----------
Operating income (loss)....................... (1,517) (3,036) 2,340 11,625 6,883 7,242 13,190
Interest (expense) income, net................ (1,518) 37 (6,220) (8,231) (15,677) (10,725) (16,849)
Net gain on foreign exchange.................. -- 340 1,518 1,352 1,838 (9) 1,166
Other income (expenses), net.................. (38) 1,032 (684) 599 511 (543) 1,119
-------- -------- -------- -------- -------- -------- -----------
Income (loss) before taxes.................... (3,073) (1,627) (3,046) 5,345 (6,445) (4,035) (1,374)
Benefit (expense) for income
taxes -- foreign............................ -- 1,977 1,428 3,155 740 122 (2,495)
-------- -------- -------- -------- -------- -------- -----------
Income (loss) before minority interest........ (3,073) 350 (1,618) 8,500 (5,705) (3,913) (3,869)
Minority interest............................. -- (1,315) (1,218) (5,464) (1,712) (976) (1,509)
-------- -------- -------- -------- -------- -------- -----------
Net income (loss)............................. $ (3,073) $ (965) $ (2,836) $ 3,036 $ (7,417) $ (4,889) $ (5,378)
======== ======== ======== ======== ======== ======== =========
OTHER FINANCIAL DATA:
Capital expenditures.......................... $ 12,332 $ 24,630 $ 36,172 $ 87,541 $ 67,060 $ 57,075 $ 37,301
EBITDA(3)..................................... 606 663 8,664 24,499 27,536 21,991 32,383
Cash flow from (used by):
Operating activities...................... 4,199 (3,091) 4,821 17,257 18,894 18,025 2,563
Investing activities...................... (12,332) (27,548) (35,261) (87,603) (66,910) (56,443) (31,086)
Financing activities...................... 6,073 26,021 33,994 95,351 22,097 14,558 116,170
Ratio of earnings to fixed charges(4)......... -- -- -- 1.38x -- -- --
Ratio of earnings to pro forma fixed
charges(4)(5)............................... -- -- -- -- -- -- --
Ratio of EBITDA to interest expense........... 0.20x 4.22x 1.30x 2.90x 1.67x 1.77x 1.82x
Ratio of EBITDA to pro forma interest
expense(5).................................. -- -- -- -- 1.42x -- 1.92x
Ratio of total debt to EBITDA(6).............. 14.56x 22.51x 5.36x 4.39x 4.64x 4.14x 5.76x
Pro forma ratio of total debt to
EBITDA(5)(6)................................ -- -- -- -- 6.13x -- 4.37x
<CAPTION>
AS OF SEPTEMBER 30,
1996
AS OF DECEMBER 31, ----------------------
---------------------------------------------------- AS
1991(1) 1992 1993 1994 1995 ACTUAL ADJUSTED(7)
-------- -------- -------- -------- -------- -------- -----------
(IN THOUSANDS, EXCEPT FOR RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 279 $ 1,426 $ 7,130 $ 32,135 $ 6,216 $ 93,863 $ 33,663
Total current assets.......................... 5,093 13,657 26,344 57,948 36,906 129,994 69,794
Net property, plant and equipment............. 26,996 47,926 77,970 152,909 199,701 218,094 218,094
Total assets.................................. 32,270 67,139 111,283 222,684 249,095 363,135 302,935
Total current liabilities..................... 7,176 25,528 24,796 68,984 128,813 119,662 59,462
Total short-term debt and current portion of
long-term debt.............................. 4,853 14,924 11,246 48,047 97,510 89,411 29,211
Total long-term debt, net..................... 3,972 2 35,152 59,437 30,200 159,240 159,240
Minority interest............................. -- 1,345 19,614 24,893 28,476 29,985 29,985
Stockholders' equity.......................... 20,914 22,579 26,794 62,780 55,363 49,985 49,985
OTHER FINANCIAL DATA:
Total debt as a percentage of
capitalization(8)........................... 29.7% 38.4% 50.0% 55.1% 60.4% 75.7% 70.2%
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
---------------------------------------------------- ----------------------
1991(1) 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
VSAT microstations installed.................. 282 558 931 1,925 2,841 2,710 3,311
Dataplus earth stations installed............. 13 42 129 271 443 347 609
Satellites linked(9).......................... 2 3 3 4 4 4 6
Leased satellite capacity (Mhz)............... 17.0 30.0 51.5 128.4 198.3 196.25 261.58
Teleports..................................... 1 2 2 3 4 4 4
Teleport antennas............................. 2 5 10 16 22 20 21
Regional Teleports............................ 1 2 6 9 10 10 10
Teledatos Networks............................ 1 3 6 12 12 12 12
Customers..................................... 71 133 262 445 656 564 850
</TABLE>
(footnotes appear on page 37)
34
<PAGE> 36
<TABLE>
<CAPTION>
IMPSAT ARGENTINA
---------------------------------------------------------
YEAR ENDED NOVEMBER 30,
---------------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT FOR RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues from services........ $ 8,166 $ 20,379 $ 34,672 $ 63,999 $ 80,346
Operating expenses(2)
Direct cost of services... (3,036) (8,242) (13,186) (25,420) (30,721)
Selling expenses.......... (1,153) (1,185) (1,279) (7,027) (11,036)
General and administrative
expense................. (3,371) (3,073) (1,911) (6,947) (8,195)
Reorganization
costs -- severance...... -- -- -- -- --
Depreciation and
amortization............ (2,123) (3,667) (5,570) (10,719) (16,067)
-------- -------- -------- -------- --------
Operating income (loss)....... (1,517) 4,212 12,726 13,886 14,327
Interest (expense) income,
net......................... (1,518) 37 (5,453) (4,556) (10,384)
Other income (expenses)....... (38) 1,032 (468) (83) 523
-------- -------- -------- -------- --------
Income (loss) before taxes.... (3,073) 5,281 6,805 9,247 4,466
Benefit (expense) for income
taxes....................... -- -- -- 3,220 --
-------- -------- -------- -------- --------
Income before minority
interest.................... (3,073) 5,281 6,805 12,467 4,466
Minority interest............. -- -- -- (3) 6
-------- -------- -------- -------- --------
Net income (loss)............. $ (3,073) $ 5,281 $ 6,805 $ 12,464 $ 4,472
======== ======== ======== ======== ========
OTHER FINANCIAL DATA:
Capital expenditures.......... $ 12,332 $ 16,936 $ 23,699 $ 70,350 $ 38,248
EBITDA(3)..................... 606 7,879 18,296 24,605 30,394
Cash Flow from (used by):
Operating activities...... 4,199 11,977 8,225 22,298 27,697
Investing activities...... (12,332) (16,936) (22,762) (69,832) (37,984)
Financing activities...... 6,073 6,101 19,864 41,299 10,933
Ratio of earnings to fixed
charges(4).................. -- 2.26x 2.24x 2.92x 1.37x
Ratio of earnings to pro forma
fixed charges(4)(5)......... -- -- -- -- 1.48x
Ratio of EBITDA to interest
expense..................... 0.20x 4.22x 3.22x 5.17x 2.90x
Ratio of EBITDA to pro forma
interest expense(5)......... -- -- -- -- 3.15x
Ratio of total debt to
EBITDA(6)................... 14.56x 1.89x 1.93x 3.12x 2.62x
Pro forma ratio of total debt
to EBITDA(5)(6)............. -- -- -- -- 2.97x
<CAPTION>
AS OF NOVEMBER 30,
---------------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT FOR RATIOS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..... $ 279 $ 1,422 $ 6,749 $ 514 $ 1,160
Total current assets.......... 5,093 10,664 24,441 22,169 20,776
Net property, plant and
equipment................... 26,996 40,264 58,393 118,024 140,205
Total assets.................. 32,270 51,666 83,650 144,504 165,945
Total current liabilities..... 7,176 21,157 14,245 54,331 102,557
Total short-term debt and
current portion of long-term
debt........................ 4,853 14,924 3,867 37,275 70,998
Total long-term debt, net
(includes advances from
Parent Company)............. 3,972 2 31,476 39,609 8,705
Minority interest............. -- -- -- 9 3
Stockholders' equity.......... 20,914 26,194 33,000 43,964 48,436
OTHER FINANCIAL DATA:
Total debt as a percentage of
total capitalization(8)..... 29.7% 36.3% 51.7% 63.6% 62.2%
<CAPTION>
AS OF NOVEMBER 30,
---------------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
VSAT microstations
installed................... 282 543 756 1,462 1,951
Dataplus earth stations
installed................... 13 40 114 236 355
Satellites linked(9).......... 2 2 3 4 4
Leased satellite capacity
(Mhz)....................... 17.0 25.0 31.0 96.0 148.0
Teleports..................... 1 1 1 1 1
Teleport antennas............. 2 4 8 11 12
Regional Teleports............ 1 2 5 6 6
Teledatos Networks............ 1 3 6 7 7
Customers..................... 71 125 200 292 319
<CAPTION>
NINE MONTHS ENDED AUGUST
31,
--------------------------
1995 1996
--------- -----------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues from services........ $ 58,352 $ 62,939
Operating expenses(2)
Direct cost of services... (20,473) (22,878)
Selling expenses.......... (8,621) (6,845)
General and administrative
expense................. (6,175) (4,998)
Reorganization
costs -- severance...... -- (713)
Depreciation and
amortization............ (11,699) (13,894)
-------- --------
Operating income (loss)....... 11,384 13,611
Interest (expense) income,
net......................... (7,607) (9,173)
Other income (expenses)....... (61) 563
-------- --------
Income (loss) before taxes.... 3,716 5,001
Benefit (expense) for income
taxes....................... -- (1,984)
-------- --------
Income before minority
interest.................... 3,716 3,017
Minority interest............. 6 14
-------- --------
Net income (loss)............. $ 3,722 $ 3,031
======== ========
OTHER FINANCIAL DATA:
Capital expenditures.......... $ 32,446 $ 16,746
EBITDA(3)..................... 23,083 27,505
Cash Flow from (used by):
Operating activities...... 22,380 6,365
Investing activities...... (31,814) (16,483)
Financing activities...... 9,821 53,182
Ratio of earnings to fixed
charges(4).................. 1.50x 1.69x
Ratio of earnings to pro forma
fixed charges(4)(5)......... -- 1.38x
Ratio of EBITDA to interest
expense..................... 3.03x 3.41x
Ratio of EBITDA to pro forma
interest expense(5)......... -- 2.79x
Ratio of total debt to
EBITDA(6)................... 2.79x 3.76x
Pro forma ratio of total debt
to EBITDA(5)(6)............. -- 2.71x
AS OF AUGUST 31, 1996
--------------------------
AS
ACTUAL ADJUSTED(7)
-------- --------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..... $ 44,224 $ 5,524
Total current assets.......... 66,984 28,284
Net property, plant and
equipment................... 143,057 143,057
Total assets.................. 213,035 174,335
Total current liabilities..... 81,346 42,646
Total short-term debt and
current portion of long-term
debt........................ 62,059 23,359
Total long-term debt, net
(includes advances from
Parent Company)............. 75,970 75,970
Minority interest............. (11) (11)
Stockholders' equity.......... 51,467 51,467
OTHER FINANCIAL DATA:
Total debt as a percentage of
total capitalization(8)..... 72.8% 65.9%
AS OF AUGUST 30,
--------------------------
1995 1996
-------- --------
<S> <C> <C>
OPERATING DATA:
VSAT microstations
installed................... 1,935 2,042
Dataplus earth stations
installed................... 347 394
Satellites linked(9).......... 4 4
Leased satellite capacity
(Mhz)....................... 148.0 161.0
Teleports..................... 1 1
Teleport antennas............. 12 12
Regional Teleports............ 6 6
Teledatos Networks............ 7 7
Customers..................... 320 363
</TABLE>
(footnotes appear on page 37)
35
<PAGE> 37
The following supplemental selected financial data are for IMPSAT Argentina
for the fiscal years ended November 30, 1993, 1994 and 1995 and for each of
IMPSAT Colombia and IMPSAT Venezuela for the years ended December 31, 1993, 1994
and 1995 and have been derived from the consolidating schedules prepared by the
Company for the combined financial statements for the years ended December 31,
1993, 1994 and 1995. The following supplemental financial data for IMPSAT
Argentina, IMPSAT Colombia and IMPSAT Venezuela for the first nine months of
1995 and 1996 have been derived from the Company's and IMPSAT Argentina's
unaudited financial statements for the nine months ended September 30, 1995 and
1996 and August 31, 1995 and 1996, respectively.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- ---------------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues from services:
Argentina.................................. $ 34,672 $ 63,999 $ 80,346 $ 58,352 $ 62,939
Colombia(10)............................... 2,777 12,756 22,417 15,068 25,021
Venezuela(11).............................. 246 910 2,204 1,524 3,105
Other(12).................................. -- 14 674 380 2,328
-------- -------- -------- -------- --------------
TOTAL................................. $ 37,695 $ 77,679 $105,641 $ 75,324 $ 93,393
========= ========= ========= ========= ==============
Operating expenses(2):
Argentina.................................. $(21,946) $(50,113) $(66,019) $(46,968) $(49,328)
Colombia................................... (5,570) (10,757) (17,627) (10,300) (15,367)
Venezuela.................................. (7,839) (3,699) (4,257) (2,139) (3,931)
Other...................................... -- (1,485) (10,855) (8,675) (11,577)
-------- -------- -------- -------- --------------
TOTAL................................. $(35,355) $(66,054) $(98,758) $(68,082) $(80,203)
========= ========= ========= ========= ==============
Net income (loss):
Argentina.................................. $ 6,805 $ 12,464 $ 4,472 $ 3,722 $ 3,031
Colombia................................... (970) (80) (135) (1,602) 1,587
Venezuela.................................. (7,455) (2,582) (1,723) (1,717) (1,482)
Other...................................... (1,216) (6,766) (10,031) (5,292) (8,514)
-------- -------- -------- -------- --------------
TOTAL................................. $ (2,836) $ 3,036 $ (7,417) $ (4,889) $ (5,378)
========= ========= ========= ========= ==============
OTHER FINANCIAL DATA:
EBITDA(3):
Argentina.................................. $ 18,296 $ 24,605 $ 30,394 $ 23,083 $ 27,505
Colombia................................... (2,038) 3,739 8,748 5,922 11,576
Venezuela.................................. (7,592) (2,373) (1,675) (1,140) (822)
Other...................................... (2) (1,472) (9,931) (5,874) (5,876)
-------- -------- -------- -------- --------------
TOTAL................................. $ 8,664 $ 24,499 $ 27,536 $ 21,991 $ 32,383
========= ========= ========= ========= ==============
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30, 1996
---------------------------------- ---------------------------
1993 1994 1995 ACTUAL AS ADJUSTED(6)
-------- -------- -------- -------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets:
Argentina.................................. $ 83,650 $144,504 $165,945 $213,035 $174,335
Colombia................................... 22,308 51,640 59,929 65,389 65,389
Venezuela.................................. 5,801 8,015 11,192 17,516 17,516
Other...................................... (476) 18,525 12,029 67,195 45,695
-------- -------- -------- -------- --------------
TOTAL................................. $111,283 $222,684 $249,095 $363,135 $302,935
========= ========= ========= ========= ==============
Stockholders' equity:
Argentina.................................. $ 33,000 $ 43,964 $ 48,436 $ 51,467 $ 51,467
Colombia................................... 12,811 22,498 10,467 17,525 17,525
Venezuela.................................. 4,006 1,312 7,072 18,865 18,865
Other...................................... (23,023) (4,994) (10,612) (37,872) (37,872)
-------- -------- -------- -------- --------------
TOTAL................................. $ 26,794 $ 62,780 $ 55,363 $ 49,985 $ 49,985
========= ========= ========= ========= ==============
</TABLE>
(footnotes appear on page 37)
36
<PAGE> 38
- ---------------
(1) Financial and other data presented for the Company on a combined basis for
1991 include information only for IMPSAT Argentina since IMPSAT Argentina
was the only one of the Company's operating subsidiaries in existence in
1991.
(2) Operating expenses consist of direct cost of services, selling expenses,
general and administrative expenses and depreciation and amortization.
(3) EBITDA consists of operating income (loss) plus depreciation and
amortization and income taxes. EBITDA is presented because it is a measure
commonly used in the industry and to enhance an understanding of the
Company's operating results and is not intended to represent or be a
substitute for cash flow under generally accepted accounting principles.
See the Company's combined financial statements contained elsewhere in this
Prospectus, which include a statement of cash flows. If EBITDA had been
calculated excluding the depreciation, amortization, interest expense and
net losses allocable to the minority interest in non-wholly-owned
subsidiaries (other than the Guarantor), it would not have produced
material differences from EBITDA as presented because the Company's
non-wholly-owned subsidiaries (other than the Guarantor) had losses or
relatively small net income for the periods indicated.
(4) The ratio of earnings to fixed charges is computed by dividing operating
income before fixed charges (other than capitalized interest), by fixed
charges. Fixed charges consist of interest charges and amortization of debt
expense and discount or premium related to indebtedness. Earnings of the
Company were insufficient to cover fixed charges by approximately $4.3
million, $9.6 million, $5.2 million, $4.6 million and $12.4 million for the
years ended December 31, 1993 and 1995, for the nine months ended September
30, 1995 and 1996, and for the pro forma year ended December 31, 1995,
respectively. Earnings of IMPSAT Argentina were insufficient to cover fixed
charges by approximately $4.5 million for the year ended November 30, 1991.
(5) Pro forma ratios are presented for the year ended December 31, 1995 and for
the nine month period ended September 30, 1996 as if the Offering and the
application of the proceeds thereof to repay $91.5 million of short-term
indebtedness had occurred at the beginning of the relevant period.
(6) This figure represents the ratio of debt at the end of the period to EBITDA
over the preceding four quarters, except that for the nine month periods
EBITDA has been annualized.
(7) As adjusted balance sheet data is presented as if the Offering and the
application of the proceeds thereof to repay $91.5 million of indebtedness
had occurred on the balance sheet date.
(8) Total debt is the sum of short-term and long-term debt. Total
capitalization is the sum of total debt, minority interest and
stockholders' equity.
(9) "Satellites linked" refers to satellites with respect to which the Company
has leased transponder capacity. The Company does not own any satellites.
(10) IMPSAT Colombia commenced operations in December 1992.
(11) IMPSAT Venezuela commenced operations in January 1993.
(12) The category "Other", as it relates to revenues, operating expenses, total
assets, and EBITDA, consists of (i) amounts relating to IMPSAT Ecuador,
IMPSAT Mexico, IMPSAT USA, ISCH and Resis; (ii) parent company amounts,
including overhead expenses; and (iii) the elimination of inter-company
balances and transactions. As it relates to net income (loss) and
stockholders' equity, the category "Other" also includes the allocation to
minority interest.
37
<PAGE> 39
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with the Company's
combined financial statements and the notes thereto and with IMPSAT Argentina's
consolidated financial statements and the notes thereto, each of which are
included elsewhere in this Prospectus, and with the other financial data also
included elsewhere in this Prospectus. IMPSAT Argentina's financial statements
are presented as of November 30, the end of its fiscal year, and as of August
31, the end of the first three quarters of its fiscal year, and the combined
financial statements of the Company incorporate IMPSAT Argentina's fiscal year
and first three quarters of its fiscal year results. The Company's fiscal year
and that of all of its other subsidiaries end on December 31.
The Company owns less than a 100% equity interest in certain of its
subsidiaries, including a 51% equity interest in IMPSAT Argentina, a 74% equity
interest in IMPSAT Colombia and a 75% equity interest in IMPSAT Venezuela. The
financial data for the Company on a combined basis generally reflect 100% of the
revenues and expenses for each of the Company's subsidiaries in operation during
the relevant period, with the amounts of net income (loss) and stockholders'
equity attributable to the minority interests in such subsidiaries deducted as a
separate line item. The combined financial data contained herein are presented
as if IMPSAT Corporation owned its current percentage of the capital stock of
its subsidiaries during all periods, and as of all balance sheet dates,
presented. The following discussion of the Company's combined financial
condition and results of operations reflects primarily the results of IMPSAT
Argentina, which was the first subsidiary of the Company and which as of the
date hereof constitutes, and for all periods discussed in this Prospectus has
constituted, the Company's largest subsidiary.
Certain of the information with respect to the Company's plans and strategy
for its business and related financing included herein are forward-looking
statements which are based on a number of assumptions and are subject to
significant business, economic and competitive uncertainties which are beyond
the control of the Company. For a discussion of important factors that could
cause actual results to differ materially from the forward-looking statements,
investors should carefully consider the information set forth under the caption
"Risk Factors."
The Company's revenues are derived principally from fixed monthly fees from
its customers, as well as from initial engineering and installation charges. The
installation charge generally is structured to cover the Company's actual costs
of installation of customer site-based equipment and represents an insignificant
percentage of the total revenues. Depending on the complexity of the services to
be provided to a customer, the period between the date of signature of a
contract and the commencement of actual services (and receipt of monthly fees)
typically ranges from 45 days to four months. The Company's contracts with its
customers range from six months to five years but generally are for three years.
The monthly fee is based on the number of VSAT microstations or Dataplus earth
stations utilized, and/or the number of connections into the Company's Teledatos
networks. The Company generally charges its customer a fee denominated in U.S.
dollars, although most of the customers have the option of paying either in U.S.
dollars or in their respective local currencies (based on the exchange rate
between the respective local currency and the U.S. dollar on the date of
payment). The Company records revenues upon the submission of an invoice to a
customer.
The Company generally has been able to maintain premium prices in each of
the countries in which it operates, in part due to its position as a market
leader in providing high quality private telecommunications network services.
The Company recently has experienced, and anticipates that it will continue to
experience, downward pressure on its prices as it continues to expand its
customer base and as competition for private telecommunications network services
grows. Upon the renewal and/or expansion of its contracts with existing
customers, the prices charged to such customers have generally declined. In
addition, the prices charged to new customers generally are lower than the
prices charged in past years. See "Risk Factors -- Competition." The Company to
date has been able to counterbalance to some extent decreases in prices by
increasing the amount of services provided to its customers, and the Company's
business plan contemplates that as its prices decline due to competition, the
volume of services to be provided to particular customers, and the total
38
<PAGE> 40
number of customers served, should increase. See "Business -- Customers." For a
discussion of important factors that could prevent the Company from sufficiently
increasing its customers and the volume of services to the degree necessary to
offset declining prices, see "Risk Factors -- Significant Capital Requirements,"
"-- Short Operating History; Risks of Expansion Strategy," "-- Competition," and
"-- Risks Relating to Operations in Latin America."
The Company's direct cost of services include principally (i) satellite
lease payments for transponder capacity, (ii) costs relating to the installation
and removal by the Company of VSAT and Dataplus earth stations at its customers'
premises, (iii) sales commissions paid to third party sales representatives with
respect to customer contracts, and (iv) personnel costs for the design and
engineering of its private telecommunications network systems infrastructure
and, once such infrastructure is installed and operating, personnel costs for
the maintenance thereof. General and administrative expenses for the Company
consist of personnel costs other than for selling and engineering, design and
maintenance of the Company's infrastructure, insurance, professional and legal
fees and general overhead.
Certain management, sales and administrative services are performed on
behalf of IMPSAT Corporation and its operating subsidiaries by Resis Ingenieria
S.A., a wholly-owned subsidiary of the Company. Resis was formed as an Argentine
corporation for reasons of administrative convenience and efficiency to employ
the executive officers of the Company, most of whom are Argentine nationals. See
"Management."
RESULTS OF OPERATIONS
The following table presents the Company's results of operations as a
percentage of revenues:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- ----------------------------------
1993 1994 1995 1995 1996
--------------- --------------- ---------------- ---------------- ---------------
(IN THOUSANDS OF U.S. DOLLARS AND AS A PERCENTAGE OF COMBINED REVENUES)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............ $37,695 100.0% $77,679 100.0% $105,641 100.0% $75,324 100.0% $93,393 100.0%
Direct cost of
services.......... 22,256 59.0 32,999 42.5 43,051 40.8 28,501 37.8 35,470 38.0
Selling expenses.... 3,284 8.7 9,714 12.5 16,962 16.1 11,467 15.2 11,703 12.5
General and
administrative
expenses.......... 3,491 9.3 10,467 13.5 18,092 17.1 13,365 17.7 13,124 14.1
Depreciation and
amortization...... 6,324 16.8 12,874 16.6 20,653 19.6 14,749 19.6 19,193 20.6
Interest expense,
net............... 6,220 16.5 8,231 10.6 15,677 14.8 10,725 14.2 16,849 18.0
Net gain (loss) on
foreign
exchange.......... 1,518 4.0 1,352 1.7 1,838 1.7 (9) 0.0 1,166 1.3
Benefit (Expense)
for foreign income
taxes............. 1,428 3.8 3,155 4.1 740 0.7 122 0.2 (2,495) (2.7)
Net income (loss)... (2,836) (7.5) 3,036 3.9 (7,417) (7.0) (4,889) (6.5) (5,378) (5.8)
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995
Revenues. Revenues for the nine months ended September 30, 1996 totalled
$93.4 million, an increase of $18.1 million, or 24.0%, from the nine months
ended September 30, 1995. The increase in revenues reflects principally a growth
in revenues of IMPSAT Colombia, which totalled $25.0 million, representing an
increase of $10.0 million, or 66.1%, from the nine months ended September 30,
1995. In addition, revenues at IMPSAT Argentina for the nine months ended August
31, 1996 totalled $62.9 million (an increase of $4.5 million, or 7.7%, from the
nine months ended August 31, 1995), revenues at IMPSAT Venezuela totalled $3.1
million for the nine months ended September 30, 1996 (an increase of $1.6
million from the nine months ended September 30, 1995), and revenues at IMPSAT
Ecuador totalled $1.9 million for the nine months ended September 30, 1996 (an
increase of $1.5 million from the nine months ended September 30, 1995). Revenue
growth for the nine months ended September 30, 1996 is attributable to an
increase in the number of customers and services provided.
39
<PAGE> 41
IMPSAT Colombia's customer base increased from 188 at September 30, 1995 to
373 at September 30, 1996. During the first nine months of 1996 IMPSAT Colombia
installed 252 VSAT microstations and 88 Dataplus earth stations for new and
existing customers. IMPSAT Venezuela also experienced growth in the number of
customers and services provided. In Venezuela, the number of customers increased
from 33 at September 30, 1995 to 71 at September 30, 1996, and IMPSAT Venezuela
installed 56 VSAT microstations and 30 Dataplus earth stations for new and
existing customers during the nine months ended September 30, 1996. In Ecuador,
the number of customers increased from 11 as of September 30, 1995 to 33 as of
September 30, 1996, and IMPSAT Ecuador installed 34 VSAT microstations and 7
Dataplus earth stations during the nine month period ended September 30, 1996.
The operations at IMPSAT Argentina experienced slower growth than that
registered in the other principal countries in which the Company operates. The
number of customers at IMPSAT Argentina as of August 31, 1996 totalled 363,
compared with 320 customers as of August 31, 1995. During the nine months ended
August 31, 1996, IMPSAT Argentina installed 91 VSAT microstations and 39
Dataplus earth stations for new and existing customers, as compared to 473 VSAT
microstations and 119 Dataplus earth stations installed for the nine month
period ended August 31, 1995. The significant diminution in the level of growth
of IMPSAT Argentina's revenues and customer base is related to the recession
experienced in Argentina during 1995 and the first six months of 1996. See "Risk
Factors -- Risks Relating to Operations in Latin America -- Argentina."
During periods of economic uncertainty certain customers of the Company in
Argentina and in other countries in which the Company operates have deferred
major corporate expenditures and business decisions, such as the contracting of
their telecommunications services. The Company anticipates that its geographic
diversification will provide some protection against economic downturns in any
particular country, although there can be no assurance in this regard. See "Risk
Factors -- Risks Relating to Operations in Latin America."
The Company's contracts with its customers generally provide for payment in
U.S. dollars or for payment in local currency linked to the exchange rate at the
time of payment between the local currency and the U.S. dollar. Accordingly,
inflationary pressures experienced in the Company's country of operations did
not have direct effect on the Company's revenues for 1995 and the first three
quarters of 1996. Nevertheless, inflation has in the past, and could in the
future, adversely affect the economies of the Company's countries of operations
by, among other things, increasing the cost of local capital and deterring
capital inflows from the United States and elsewhere. There can be no assurance
that, in the future inflation will not produce such negative macroeconomic
consequences in the Company's countries of operations which, in turn, could have
a material adverse effect on the business, results of operations and financial
condition of the Company. See "Risk Factors -- Risks Relating to Operations in
Latin America."
Direct Cost of Services. The Company's direct cost of services for the
nine months ended September 30, 1996 totalled $35.5 million, an increase of $7.0
million, or 24.5%, from the Company's direct cost of services for the nine
months ended September 30, 1995. Of total direct cost of services, $22.9 million
related to the operations of IMPSAT Argentina and $6.9 million related to the
operations of IMPSAT Colombia, compared to direct cost of services of $20.5
million at IMPSAT Argentina for the nine months ended August 31, 1995 and direct
cost of services of $4.4 million at IMPSAT Colombia for the nine months ended
September 30, 1995.
Of the Company's total direct cost of services for the nine months ended
September 30, 1996, satellite lease payments totalled $10.5 million, or 29.6% of
total direct cost of services. Satellite lease payments for the nine months
ended September 30, 1995 totalled $8.9 million, or 31.1% of total direct cost of
services for such period. The Company's costs for satellite capacity are
directly related to the increase in the Company's customer and revenue bases,
and the Company has acquired additional leased satellite capacity as needed to
meet current and projected levels of business. Total leased satellite capacity
has increased from 196.25 MHz as of September 30, 1995 to 261.58 MHz as of
September 30, 1996. The Company believes that it has adequate leased satellite
capacity and does not anticipate acquiring additional capacity until at least
1998. The Company anticipates that satellite lease payments will represent the
major subcomponent of direct cost of services in the foreseeable future. The
Company believes that such trend is anticipated and that such an
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increase has not had and is not likely to have a material effect on the
Company's results of operations, liquidity or capital resources. See
"Business -- Infrastructure -- Satellites."
Installation costs totalled $7.2 million for the nine months ended
September 30, 1996, or 20.3% of total direct cost of services. The Company
utilizes the services of outside providers of installation services in Argentina
and Colombia and intends over time to expand the practice of using outside
providers in the other countries in which it operates.
Sales commissions paid to third party representatives totalled $6.8 million
for the nine months ended September 30, 1996, or 19.2% of the Company's total
direct cost of services during such period. The overwhelming amount of such
sales commissions ($6.0 million, or 88.2% of total sales commissions) were paid
with respect to customers of IMPSAT Argentina. To date, the practice of
utilizing third party sales representatives in connection with the generation
and servicing of customer contracts has been employed predominantly in the case
of IMPSAT Argentina, although third party sales representatives have also
recently been utilized in connection with IMPSAT Colombia's customer generation.
See "Business -- Sales, Marketing and Customer Service."
Finally, personnel costs for the engineering, design and maintenance of the
Company's network infrastructure for the nine months ended September 30, 1996
totalled $5.3 million, or 15.0% of the Company's total direct cost of services
during such period. In the second quarter of 1996, IMPSAT Argentina reduced its
technical support staff by 17 persons. Such terminations resulted in the payment
of legally required severance payments for such personnel of $250,000 in the
second quarter of 1996. However, the Company anticipates future savings in the
direct cost of services relating to personnel as a result of such decrease in
workforce.
Selling Expenses. Selling expenses for the Company consist of personnel
costs of the Company's sales force, advertising and publicity costs. The Company
incurred selling expenses of $11.7 million for the nine months ended September
30, 1996, an increase of $0.2 million or 1.7%, from selling expenses incurred by
the Company during the nine months ended September 30, 1995. Selling expenses at
IMPSAT Argentina for the nine months ended August 31, 1996 totalled $6.8
million, a decrease of $1.8 million, or 20.9%, from selling expenses incurred by
IMPSAT Argentina for the nine months ended August 31, 1995. Selling expenses at
IMPSAT Colombia for the nine months ended September 30, 1996 totalled $2.5
million, a increase of $0.8 million, or 47.1%, from selling expenses incurred by
IMPSAT Colombia for the nine months ended September 30, 1995. Such increase was
related to increased personnel and publicity costs incurred by IMPSAT Colombia
in connection with its growth in customer revenues and base.
As described below under "-- 1995 Compared to 1994 -- General and
Administrative Expenses," the Company has taken steps beginning in the first
quarter of 1996 to reduce selling expenses. As a percentage of revenues, selling
expenses have been reduced for the nine month period ended September 30, 1996 to
12.5% of total revenues from 15.2% of total revenues for the nine month period
ended September 30, 1995. During the second quarter of 1996, IMPSAT Argentina
decreased its sales workforce by 16 people. This reduction in workforce, which
was made possible by increases in productivity realized as a result of IMPSAT
Argentina's organizational restructuring in 1995 (see "-- 1995 Compared to
1994 -- General and Administrative Expenses"), resulted in legally required
severance payments of approximately $406,000 in the second quarter of 1996.
However, the Company expects future savings in selling personnel costs as a
result of the decrease in workforce.
General and Administrative Expenses. The Company recorded general and
administrative expenses of $13.1 million for the nine months ended September 30,
1996, a decrease of $241,000, or 1.8%, from general and administrative costs
incurred by the Company during the nine months ended September 30, 1995. General
and administrative expenses incurred by IMPSAT Corporation and Resis for the
nine month period ended September 30, 1996 totalled $4.2 million, an increase of
$261,000, or 6.6%, from such expenses incurred for the none month period ended
September 30, 1995, reflecting the effect of the establishment in the second
quarter of 1995 of a holding company management tier to coordinate the Company's
operations in the different countries in which it operates. General and
administrative expenses at IMPSAT Argentina for the nine months ended August 31,
1996 totalled $5.0 million, a decrease of $1.2 million, or 19.4%, from general
and administrative expenses incurred by IMPSAT Argentina for the nine months
ended August 31, 1995.
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The Company has commenced efforts to decrease and rationalize its general
and administrative expenses. Those steps included a small decrease in the number
of employees at Resis, a decrease in administrative expenses such as corporate
travel expenses and a more efficient use of space requirements. IMPSAT
Corporation has moved its executive offices from the office space which it
leased in the business district in downtown Buenos Aires and has centralized its
personnel at IMPSAT Argentina's new facility at its Buenos Aires Teleport. The
move of IMPSAT Corporation's headquarters personnel to the Buenos Aires Teleport
is anticipated to result in a savings of $300,000 annually in reduced rental
expense. Also, as part of the general reduction in workforce described in the
preceding paragraphs, IMPSAT Argentina reduced its administrative personnel
workforce by 11 persons in the second quarter of 1996, which resulted in legally
required severance payments of $57,000 in that quarter.
The Company's reserve for uncollectible receivables, principally relating
to IMPSAT Argentina, totalled $2.8 million as of September 30, 1996, an increase
of $1.7 million, or 149%, from the reserve maintained as of December 31, 1995.
Over 99% of the reserve for uncollectible receivables relates to the operation
of IMPSAT Argentina. The Company has increased its reserve for uncollectible
accounts as a result of certain payment arrears experienced by a number of
customers in Argentina. The Company's current policy is to reserve 30% for
accounts receivable in excess of 180 days but less than one year, and 100% for
all accounts receivable in excess of 360 days; except with respect to ENCOTESA,
as to which the Company as of August 31, 1996 had reserves for uncollectible
accounts receivable of $500,000 with respect to a total of $3.4 million in
accounts receivable in excess of 180 days at such time. As a percentage of gross
total revenues, the Company's reserve of uncollectible receivables has increased
from 1.1% of total revenues for the nine month period ended September 30, 1995
to 3.0% of total revenues for the nine month period ended September 30, 1996.
The single largest delinquent customer as of September 30, 1996 was
ENCOTESA, the Argentine national postal service. ENCOTESA accounted for 47.9% of
IMPSAT Argentina's receivables past due more than six months but less than one
year and for 51.0% of IMPSAT Argentina's receivables past due in excess on one
year. ENCOTESA, which was the Company's fifth largest customer as of December
31, 1995, is experiencing financial and operating difficulties, and the
Argentine legislature is currently debating the means to address ENCOTESA's
difficulties, including the possible privatization of the agency. In November
1996, IMPSAT Argentina filed suit against ENCOTESA for amounts due and arising
under IMPSAT Argentina's contracts with ENCOTESA totalling $5.1 million, plus
interest on such amounts. IMPSAT Argentina believes that its contracts with
ENCOTESA should be recognized by the Argentine courts and intends to pursue its
claims against ENCOTESA to the fullest extent. IMPSAT Argentina is currently
discussing with ENCOTESA modifications to the amount of services being provided
under ENCOTESA's contracts with IMPSAT Argentina, which currently result in
monthly invoices of $218,000. As of September 30, 1996, the Company was
providing ENCOTESA with 200 VSATs and 7 Dataplus earthstations, under contracts
which are scheduled to expire in August 1997 and 1999, respectively. The Company
will continue to assess the effect that the ENCOTESA receivables situation will
have on its results of operations, liquidity or capital resources.
Depreciation and Amortization. The Company's depreciation and amortization
for the nine months ended September 30, 1996 totalled $19.2 million, an increase
of $4.4 million, or 29.7%, compared to depreciation and amortization for the
nine months ended September 30, 1995. Depreciation and amortization for IMPSAT
Argentina totalled $13.9 million for the nine months ended August 31, 1996, an
increase of $2.2 million, or 18.8%, compared to the nine months ended August 31,
1995.
The increase in depreciation and amortization is related principally to the
growth in the Company's private telecommunications network systems and the
expansion of its facilities. Depreciation and amortization will continue to
increase in future periods as the Company anticipates continued expansion of its
private telecommunications network systems.
Interest Expense, Net. The Company's net interest expense for the nine
months ended September 30, 1996 totalled $16.8 million, comprising interest
expense of $17.8 million and interest income of $1 million. Net interest expense
increased $6.1 million, or 57.0%, from net interest expense for the nine months
ended September 30, 1995. IMPSAT Argentina's net interest expense for the nine
months ended August 31, 1996 totalled $9.2 million, an increase of $1.6 million,
or 21.1% from net interest expense for the nine months ended
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August 31, 1995. Net interest expense at IMPSAT Colombia for the nine months
ended September 30, 1996 totalled $5.6 million, an increase of $1.4 million, or
33%, from IMPSAT Colombia's net interest expense for the nine months ended
September 30, 1995.
The increase in net interest expense reflects primarily increased
indebtedness of the Company, which increased from $121.3 million as of September
30, 1995 to $248.6 million as of September 30, 1996. As of August 31, 1996,
total outstanding indebtedness at IMPSAT Argentina equalled $138.0 million
(including parent company advances of $68.2 million from the proceeds of the
Notes), compared to $77.0 million as of August 31, 1995. Of the amount of total
indebtedness of IMPSAT Argentina outstanding on August 31, 1996, a total of
$38.7 million has been or as of November 30, 1996 will be repaid from the
proceeds of the Offering. Total outstanding indebtedness at IMPSAT Colombia as
of September 30, 1996 equalled $45.1 million, compared to $40.8 million as of
September 30, 1995. Of the amount of total indebtedness of IMPSAT Colombia
outstanding on September 30, 1996, a total of $18.0 million has been or as of
November 30, 1996 will be repaid through the proceeds of the Offering. However,
during the period between the consummation of the Offering and the maturity
dates for the indebtedness being refinanced with the proceeds of the Offering,
the Company has been required to incur the interest expense on the existing
indebtedness as well as that on the Notes, which additional interest expense has
been offset only partially by the receipt of interest income on the Company's
cash balances being held pending repayment. The average interest rate on the
Company's indebtedness for the nine months ended September 30, 1996 was 14.4%,
compared to an average interest rate of 14.4% for the nine months ended
September 30, 1995.
Net Gain (Loss) on Foreign Exchange. The Company recorded a net gain on
foreign exchange for the nine months ended September 30, 1996 of $1.2 million.
As a result of the devaluation of the Colombian peso and the Venezuelan bolivar,
the Company experienced a decrease in the indebtedness of IMPSAT Colombia
incurred in Colombian pesos and of IMPSAT Venezuela incurred in Venezuelan
bolivars by $0.15 million and $1.0 million, respectively, in U.S. dollar terms.
Benefit (Expense) for Foreign Income Taxes. The Company recorded an
expense for foreign income taxes for the nine months ended September 30, 1996 of
$2.5 million, a decrease of $2.6 million from the benefit for foreign income
taxes recorded for the nine months ended September 30, 1995. The expense for
foreign income taxes reflects the income taxes owed by the Company's operating
subsidiaries in their countries of operation. For the nine months ended August
31, 1996, IMPSAT Argentina recorded deferred income tax expense of $2.0 million,
and IMPSAT Colombia recorded deferred tax expense of $0.3 million for the nine
months ended September 30, 1996. IMPSAT Argentina currently has available
certain net loss carryforwards of $4.1 million which is expects to use to offset
its current income tax liability for 1996. See Note 8 to the Company's combined
financial statements and Note 8 to IMPSAT Argentina's consolidated financial
statements.
Net Loss. For the nine months ended September 30, 1996, the Company
incurred a net loss of $5.4 million, an increase of $0.5 million, or 10.2%,
compared to the Company's net loss of $4.9 million for the nine months ended
September 30, 1995. The Company's net loss as a percentage of total revenues for
the nine month period ended September 30, 1996 declined to 5.8% of total
revenues from a loss of 6.5% of total revenues for the nine month period ended
September 30, 1995. The Company's net loss for the nine months ended September
30, 1996 is primarily related to the costs of the Company's operations in
Venezuela (a net loss of $1.5 million after deduction for minority interests),
Ecuador (a net loss of $1.2 million), Mexico (a net loss of $1.3 million), as
well as management services provided, and overhead expenses incurred by IMPSAT
Corporation of $4.5 million Such losses were offset by IMPSAT Argentina's net
income for the nine month period ended August 31, 1996 of $3.0 million, of which
the Company's interest after deduction for minority interests totalled $1.5
million and IMPSAT Colombia's net income of $1.6 million for the nine month
period ended September 30, 1996, of which the Company's interest after deduction
for minority interests totalled $1.2 million. The increase in the Company's net
loss for the nine month period ended September 30, 1996 is primarily
attributable to increased interest expenses associated with the Company's higher
levels of indebtedness and to the deferred provision for $2.0 million in income
taxes at IMPSAT Argentina. The Company does not believe that the decrease in its
prices described above under "-- Overview" contributed in any significant
respect to the net loss recorded by the Company during the first nine months of
1996.
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1995 COMPARED TO 1994
Revenues. Revenues for 1995 totalled $105.6 million, an increase of $28.0
million, or 36.0%, from 1994. The increase in revenues reflected principally
growth in revenues of IMPSAT Argentina ($80.3 million, representing an increase
of $16.3 million, or 25.5%, from 1994) and of IMPSAT Colombia ($22.4 million,
representing an increase of $9.7 million, or 75.7%, from 1994), as the Company's
operations in Argentina and Colombia continued to expand during 1995.
The growth in the Company's revenues in 1995 reflected both growth in the
number of customers and growth in the amount of services provided to existing
customers. The number of customers grew from 445 at December 31, 1994, to 656 at
December 31, 1995. During 1995, IMPSAT Argentina's customer base expanded from
292 to 319 customers and IMPSAT Argentina installed 489 VSAT microstations and
119 Dataplus earth stations for existing and new customers. Revenue for IMPSAT
Argentina did not increase as much as the Company had anticipated, principally
because of the economic recession experienced in Argentina. IMPSAT Colombia
increased its customer base from 135 to 271 during 1995 and installed 371 VSAT
microstations and 36 Dataplus earth stations for existing and new customers in
1995. Substantially all of the customers of IMPSAT Argentina that completed the
term of their original contracts with IMPSAT Argentina during 1995 entered into
renewal contracts.
In addition to general service revenues, IMPSAT Argentina recorded revenues
of $2.2 million in 1995 as a result of the sale to YPF S.A. of VSAT
microstations and Dataplus earth stations in connection with the implementation
of YPF's contract with IMPSAT Argentina, of which $0.7 million was recorded as a
gain of the sale of such equipment. Unlike the Company's other customers, YPF
preferred to own the ground-based portions of the private telecommunications
network systems infrastructure utilized by IMPSAT to provide such services to
YPF. The Company does not anticipate that a substantial number of additional
customers will seek to own their customer-site located infrastructure.
Direct Cost of Services. The Company's direct cost of services for 1995
totalled $43.1 million, an increase of $10.1 million, or 30.5%, from the
Company's direct cost of services for 1994. Of the total direct cost of
services, $30.7 million related to the operations of IMPSAT Argentina and $6.9
million to IMPSAT Colombia. IMPSAT Argentina's direct cost of services of $30.7
million in 1995 represented an increase of $5.3 million, or 20.9%, from IMPSAT
Argentina's direct cost of services for 1994.
Of the Company's total direct cost of services in 1995, satellite lease
payments totalled $10.9 million, or 25.5% of total direct cost of services.
Personnel costs for engineering, design and maintenance of the Company's network
infrastructure totalled $6.7 million, or 15.5% of the Company's total direct
cost of services. Sales commissions paid to third party sales representatives in
1995 totalled $8.3 million in 1995, or 19.3% of the Company's total direct cost
of services in 1995. Finally, installation costs totalled $5.7 million in 1995,
or 13.3% of the Company's total direct cost of services.
Selling Expenses. The Company incurred selling expenses of $17.0 million
for 1995, an increase of $7.2 million, or 74.6%, from selling expenses incurred
by the Company in 1994. Selling expenses at IMPSAT Argentina in 1995 totalled
$11.0 million, an increase of $4.0 million, or 57.1%, from 1994. The increase in
selling expenses in 1995 related primarily to increased personnel levels
throughout the Company as the Company expanded its sales force in connection
with its anticipated growth in revenues and customer base which did not
materialize to the extent anticipated in 1995, principally because of the
recession in Argentina.
General and Administrative Expenses. The Company recorded general and
administrative expenses of $18.1 million for 1995, an increase of $7.6 million,
or 72.8%, from general and administrative expenses incurred by the Company in
1994. The increase in general and administrative expenses in 1995 reflected
principally increased personnel expense incurred in connection with the
establishment of a management infrastructure for IMPSAT Corporation and of the
operations of IMPSAT Ecuador and IMPSAT Mexico. In addition, the Company
recorded an expense of $1.5 million in 1995 for consultants' fees and related
charges in connection with the restructuring of personnel with respect to the
implementation of the Company's business unit concept. See "Business -- Sales,
Marketing and Customer Service." General and administrative expenses at IMPSAT
Argentina in 1995 totalled $8.2 million, an increase of $1.2 million, or 18.0%,
from general and administrative expenses incurred by IMPSAT Argentina in 1994.
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The rapid increase in both selling and general and administrative expenses
in 1995 resulted from the establishment of operations at the IMPSAT Corporation
level, as well as Resis, and from the creation of a personnel infrastructure to
support an expected growth in customers and revenues. Although the Company has
continued to experience significant customer and revenue growth in certain of
its markets, particularly Colombia and Ecuador, continued adverse economic
conditions in Argentina and Venezuela in 1995 and the first quarter of 1996
resulted in less than anticipated growth for the Company. See "Risk
Factors -- Risks Relating to Operations in Latin America -- Argentina," and
"-- Venezuela." The Company recently has taken steps to address the significant
increases in selling expenses and in general and administrative expenses
recorded in 1995. See "-- Six Months Ended June 30, 1996 Compared to Six Months
Ended June 30, 1995 -- General and Administrative Expenses."
The Company maintains a reserve for uncollectible receivables, which as of
December 31, 1995, related principally to IMPSAT Argentina and totalled $1.1
million, an increase of $0.4 million, or 58.7%, from the Company's reserve for
uncollectible receivables as of December 31, 1994. The increase is attributable
to the provisions for doubtful accounts of $0.8 million less write-offs of $0.4
million.
Depreciation and Amortization. The Company's depreciation and amortization
in 1995 totalled $20.7 million, an increase of $7.8 million, or 60.4%, compared
to depreciation and amortization in 1994. Depreciation and amortization for
IMPSAT Argentina in 1995 totalled $16.1 million, an increase of $5.3 million, or
49.9%, compared to 1994.
Interest Expense, Net. The Company's net interest expense for 1995
totalled $15.7 million, comprising interest expense of $16.5 million and
interest income of $0.8 million. Net interest expense increased $7.4 million, or
90.5%, compared to the Company's net interest expense for 1994. IMPSAT
Argentina's net interest expense totalled $10.4 million and increased $5.9
million, or 129.9%, compared to IMPSAT Argentina's net interest expense for
1994.
The increase in net interest expense reflects both increased outstanding
indebtedness of the Company, which increased from $107.5 million as of December
31, 1994 to $127.7 million as of December 31, 1995, an increase of 18.8%, and to
higher interest costs with respect to such indebtedness. The Company
substantially increased its level of indebtedness throughout the second half of
1994 and throughout 1995 in order to develop and commence the operations of its
private telecommunications network systems in Colombia and Venezuela and also
incurred significant indebtedness to expand its operations and customer base in
Argentina. Total outstanding indebtedness of the Company equalled $69.4 million
at June 30, 1994, and $81.7 million at September 30, 1994. Net interest expense
of IMPSAT Colombia for 1995 totalled $6.0 million, an increase of $3.0 million,
or 97.7%, compared to net interest expense for 1994. In addition, the adverse
economic effects in Argentina in the first half of 1995 as a result of the
Mexican peso crisis in December 1995 (see "Risk Factors -- Risks Relating to
Operations in Latin America -- Argentina"), resulted in the Company's having to
pay higher rates of interest on portions of its short-term debt. During the
first two quarters of 1995, IMPSAT Argentina was required to pay interest on its
short-term debt at rates as high as 30% on an annual basis. While the Argentine
banking sector stabilized during the second half of 1995 and interest rates
declined from the extraordinarily high rates experienced in the first half of
1995, interest rates for IMPSAT Argentina's short-term debt nonetheless remained
high. The average interest rate on the Company's indebtedness for 1995 was
14.1%, compared to an average interest rate of 11.0% for 1994.
Net Gain (Loss) on Foreign Exchange. The Company recorded a net gain on
foreign exchange in 1995 of $1.8 million, an increase of $0.5 million from the
net gain on foreign exchange recorded by the Company in 1994, as the devaluation
of the Colombian peso and the Venezuelan bolivar, resulted in a decrease in U.S.
dollar terms of the Company's net liabilities for indebtedness denominated in
such currencies.
Benefit (Expense) for Foreign Income Taxes. The Company recorded a benefit
for foreign income taxes in 1995 of $0.7 million, a decrease of $2.4 million,
from the benefit for foreign income taxes recorded in 1994. The benefit for
foreign income taxes reflects the difference in treatment for certain
preoperating costs and with respect to net operating loss carryforwards. See
Note 8 to the Company's combined financial statements.
Net Income (Loss). For 1995, the Company incurred a net loss of $7.4
million, compared to net income of $3.0 million for 1994. The principal reasons
for the Company's net loss for 1995 related to the costs of $5.4 million
associated with the establishment of operations at the IMPSAT Corporation level
and thereafter
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to the costs of management services provided, and overhead expenses incurred by
IMPSAT Corporation and to the organizational and start-up costs of the Company's
operations in Ecuador (a net loss of $1.3 million) and Mexico (a net loss of
$1.2 million). In addition, the Company's operations in Venezuela recorded a net
loss of $1.7 million for 1995, which after deduction for minority interests
resulted in a net loss of $1.3 million for the Company. For 1995, IMPSAT
Argentina recorded net income of $4.4 million, of which the Company's interest
therein after reduction for minority interests totalled $2.2 million. During the
same period, IMPSAT Columbia recorded a net loss of $0.2 million, which after
deduction for minority interests resulted in a loss of $0.1 million for the
Company. IMPSAT Argentina's net income decreased $8.0 million between 1995 and
1994, principally as a result of the recession in Argentina, increases in
selling expenses and interest expenses described above and an increase in
depreciation and amortization.
1994 COMPARED TO 1993
Revenues. Revenues for 1994 totalled $77.7 million, an increase of $40.0
million, or 106.1%, from the Company's combined revenues for 1993. The increase
in revenues reflected principally growth in revenues of IMPSAT Argentina ($64.0
million, representing an increase of $29.3 million, or 84.6%, from 1993) and of
IMPSAT Colombia ($12.8 million, representing an increase of $10 million, from
1993), as the Company's operations in Argentina and Colombia continued to
expand. During 1994, IMPSAT Argentina's customer base expanded from 200 to 292
customers and IMPSAT Argentina installed an additional 706 VSAT microstations
and 122 Dataplus earth stations for existing and new customers. IMPSAT Colombia
increased its customer base from 58 to 135 during 1994 and installed 266 VSAT
microstations and 16 Dataplus earth stations for customers in 1994.
Direct Cost of Services. The Company's direct cost of services for 1994
totalled $33.0 million, an increase of $10.7 million, or 48.3%, from 1993. Of
total direct cost of services, $25.4 million related to IMPSAT Argentina, with
the remainder relating to IMPSAT Colombia and IMPSAT Venezuela. Of total direct
cost of services of the Company in 1994, satellite lease payments in 1994
totalled $7.7 million, or 23.4% of the Company's total direct cost of services.
Personnel costs for the engineering, design and maintenance of the Company's
network infrastructure in 1994 totalled $5.3 million, or 16.1% of the Company
total direct cost of services in 1994. Sales commissions to third party sales
representatives in 1994 totalled $7.9 million, or 22.7% of the Company's total
direct cost of services in 1994, and installation costs totalled $4.3 million,
or 13.2% of the Company's total direct cost of services in 1994.
Selling Expenses. The Company recorded selling expenses of $9.7 million
for 1994, an increase of $6.4 million or 195.8%, from selling expenses incurred
by the Company in 1993. Selling expenses at IMPSAT Argentina in 1994 totalled
$7.0 million, an increase of $5.7 million, from 1993. The increase in selling
expenses in 1994 reflected principally increased personnel expense incurred in
connection with the growth of the Company's operations in Argentina.
General and Administrative Expenses. General and administrative expenses
for the Company for 1994 totalled $10.5 million, an increase of $7.0 million
from general and administrative expenses incurred by the Company in 1993.
General and administrative expenses for IMPSAT Argentina totalled $6.9 million,
an increase of $5.0 million from total general and administrative expenses at
IMPSAT Argentina in 1993. The increase in general and administrative expenses
during 1994 reflects the expansion of the Company's work force as a result of
the increased customer and revenue base of IMPSAT Argentina and, to a lesser
extent, in Colombia.
Depreciation and Amortization. The Company's depreciation and amortization
in 1994 totalled $12.9 million, an increase of $6.5 million, or 103.6%, compared
to depreciation and amortization in 1993. Depreciation and amortization at
IMPSAT Argentina totalled $10.7 million and increased $5.1 million, or 92.4%
from 1993. The increase in depreciation and amortization for IMPSAT Argentina is
related principally to the growth in IMPSAT Argentina's private
telecommunications network systems and the expansion of its facilities
throughout 1994.
Interest Expense, Net. The Company's net interest expense for 1994
totalled $8.2 million, comprising interest expense of $8.4 million and interest
income of $0.2 million. Net interest expense increased $2.0 million, or 32.3%,
compared to the Company's net interest expense for 1993. IMPSAT Argentina's net
interest expense totalled $4.6 million, an decrease of $0.9 million, or 16.4%,
compared to interest expense for
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1994. Interest expense for the Company increased in 1994 as a result of
increased borrowing in connection with the build-out and establishment of
operations of IMPSAT Colombia and IMPSAT Venezuela. Interest expense at IMPSAT
Argentina decreased during 1994 in part from the lower interest costs resulting
from IMPSAT Argentina's refinancing of expensive short-term debt with the
issuance of its $30 million 9.5% Negotiable Obligations due 1996 on November 29,
1993. The average interest rate on the Company's indebtedness for the year ended
December 31, 1994 was 11.0%, compared to an average interest rate of 19.3% for
the year ended December 31, 1993.
Net Gain (Loss) on Foreign Exchange. The Company recorded a net gain on
foreign exchange in 1994 of $1.4 million, a decrease of $0.2 million from net
gain on foreign exchange recorded by the Company in 1993. In 1994, the
devaluation of the Colombian peso and the Venezuelan bolivar, resulted in a
decrease in U.S. dollar terms of the Company's net liabilities for indebtedness
denominated in such currencies.
Benefit (Expense) for Foreign Income Taxes. The Company recorded a benefit
for foreign income taxes in 1994 of $3.2 million, an increase of $1.7 million,
or 120.9%, from the benefit for foreign income taxes recorded in 1993. Such
benefit related primarily to IMPSAT Argentina, which was able to utilize prior
years' net operating losses to offset income taxes on the net profit recorded in
1994 by IMPSAT Argentina.
Net Income (Loss). For 1994, the Company recorded net income of $3.0
million, compared to a net loss of $2.8 million for 1993. The principal reason
for the Company's net income for 1994 related to the increase in net income at
IMPSAT Argentina. For 1994, IMPSAT Argentina recorded net income of $12.5
million, of which the Company's interest therein after reduction for minority
interests totalled $6.4 million. IMPSAT Argentina's net income increased $5.7
million between 1994 and 1993, principally as a result of the increase in
revenues and decrease in net interest expenses described above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations have required significant capital expenditures for
the development and construction of its private telecommunications network
systems in each country in which it operates. See "Risk Factors -- Significant
Capital Requirements." The Company anticipates that it will continue to incur
significant capital expenditures in the next several years in connection with
the expected growth of its existing operations currently in the commercial
stages (Argentina, Colombia, Venezuela and Ecuador), with the planned
development of its operations now primarily in the build-out stage (principally
Mexico) and, potentially, with the establishment of operations in Brazil.
The ability of the Company to continue the expansion of its private
telecommunications network systems at their current rate of expansion and to
meet its debt service obligations will be dependent upon the future performance
of the Company, including the ability of the Company to obtain additional debt
financing and potential equity financing. While the Company anticipates that it
will generate sufficient cash flows from operations to be able to meet all of
its debt service requirements in the foreseeable future, the Company's ability
to maintain its planned program of capital expenditures will be dependent on its
ability to obtain additional sources of financing, including the refinancing of
certain short-term debt that remains outstanding after the completion of the
Offering. If the Company is unable to obtain such additional sources of
financing, it will not be able to maintain its historical levels of growth and
market position in each of the countries in which it operates, which could have
an adverse effect on the business and prospects of the Company.
As set forth in its combined statements of cash flow, the Company generated
$18.9 million in net cash flow from operating activities for 1995, compared to
$17.3 million for 1994. The increase in net cash flow for 1995 from operating
activities was primarily attributable to the continued growth of the Company's
private telecommunications network infrastructure ($20.7 million in 1995 versus
$12.9 million in 1994) and an increase in trade payables ($8.4 million in 1995
versus $3.3 million in 1994), net of a net loss of $7.4 million and an increase
in accounts receivable ($5.9 million in 1995 versus $1.2 million in 1994).
Financing activities provided $22.1 million in cash flow in 1995, which
represented a decrease of $73.3 million from 1994, principally as a result of a
$18.8 million decrease in net borrowings from short-term credit facilities, a
$19.7 million decrease in proceeds from long-term debt and a $32.4 million
decrease in capital contributions from shareholders and third parties. Financing
activities provided $95.4 million in 1994. During 1995, the Company used $66.9
million in net cash flow in investing activities, compared to $87.6 million for
1994. The decrease in net cash used in 1995 for investing activities resulted
principally from a decrease in purchases of property, plant and equipment ($66.8
million in 1995 versus $87.0 million in 1994).
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<PAGE> 49
At December 31, 1995, the Company had a cash balance of $6.2 million. At
that date, the Company's combined total debt was $127.7 million, approximately
$97.5 million of which was short-term debt (including the current portion of
long-term debt). As of December 31, 1995, approximately $8.4 million of the
Company's long-term debt was scheduled to mature in 1997, approximately $8.8
million in 1998, approximately $6.5 million in 1999 and approximately $6.5
million in the year 2000 and thereafter. The Company intends to repay
approximately $87.1 million of its indebtedness with the proceeds of this
Offering.
In the nine months ended September 30, 1996, the Company generated $2.6
million in net cash flow from operating activities, compared with $18.0 million
for the nine months ended September 30, 1995. Financing activities provided
$116.2 million cash flow for the nine months ended September 30, 1996, compared
with $14.6 million provided by financing activities for the nine months ended
September 30, 1995. Such increase is primarily attributable to the Offering. The
Company's net outstanding indebtedness increased by $120.9 million during the
nine months ended September 30, 1996. During such period, the Company used $31.1
million in net cash flow for investing activities, compared to $56.4 million for
the nine months ended September 30, 1995. Such decrease relates to a decrease in
purchases of property, plant and equipment as the Company's rate of installation
of private telecommunications network infrastructure declined in light of the
recession experienced in Argentina. The Company had a cash balance of $93.9
million as of September 30, 1996.
After giving effect to the Offering on an as adjusted basis as of September
30, 1996, the Company had approximately $21.8 million in outstanding short-term
debt, of which $20.0 million was owed by IMPSAT Argentina. As a result of the
refinancing of its short-term liabilities with the proceeds of the Offering, the
Company anticipates that its current assets should be sufficient to cover its
remaining current liabilities.
The Company intends to meet its future capital requirements from cash flow
from operations, from additional lines of credit and from future private or
public offerings of equity or debt securities of IMPSAT Corporation and/or any
of its subsidiaries. The Company anticipates that it will require approximately
$45 million of new capital during 1997, of which approximately $25 million would
contemplate refinancing of short-term indebtedness, including under IMPSAT
Argentina's Global Commercial Paper Program, and $20 million would be additional
indebtedness for the Company's subsidiaries outside of Argentina for capital
expenditures and working capital purposes. As of September 30, 1996 IMPSAT
Argentina had outstanding $20.0 million of commercial paper issued under its
$25.0 million Global Commercial Paper Program, with maturities of up to 360 days
and anticipates being able to access the Euro commercial paper market as its
outstanding commercial paper comes due. In the event that the Company were
unable to access such additional financing at commercially reasonable rates or
on commercially reasonable terms, it would be required to defer or cease
additional planned capital expenditures.
The Company anticipates accessing additional lines of credit from financial
institutions in the countries in which it operates. The Company also anticipates
requesting certain lines of credit from certain multilateral financial
institutions and bilateral export credit agencies including CAF, the
Inter-American Investment Corporation ("IIC"), The Export-Import Bank of the
United States and FMO for financing capital purchases. There can be no assurance
that any such financings will be consummated.
The Company's projected capital requirements and capital sources described
in the preceding paragraphs do not take into account the establishment of
operations and development of private telecommunications network systems in
Brazil. As described in "Business -- History," the Company currently is studying
the establishment of operations in Brazil, subject to satisfactory legal and
regulatory conditions. In the event that the Company were to establish
operations in Brazil, the Company's financial plans contemplate that the Company
would need to access additional sources of equity and debt financing for the
adequate build-out of a private telecommunications network system in Brazil. The
Company currently expects that the establishment of operations in Brazil would
be undertaken in connection with a partner or partners and that such partner
would provide a substantial portion of the funds necessary for the initial
establishment of such operations. There can be no assurance that the Company
will be able to access the additional financing required for any future
Brazilian operations or that the Company will reach agreement with any potential
minority partners on an investment in such operations. An affiliate of the
Company, controlled by the Pescarmona group, which is not a subsidiary of IMPSAT
Corporation, recently concluded a contract to provide six Dataplus earth
stations to Shell do Brasil S.A.
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<PAGE> 50
BUSINESS
OVERVIEW
The Company is a leading provider of private telecommunications network
services in Latin America. The Company provides private network integrated data
and voice telecommunications services for national and multinational companies,
financial institutions, governmental agencies and other business customers in
Latin America. The Company believes that it operates one of the largest shared
hub VSAT networks in Latin America. A substantial majority of the Company's
revenues currently are derived from Argentina and Colombia where it began
commercial operations in October 1990 and December 1992, respectively. The
Company is an established provider of such services in Venezuela and Ecuador,
where it began operations in January 1993 and January 1995, respectively, and
recently has commenced commercial operations in Mexico and the United States in
August 1995 and February 1996, respectively. Services are provided through the
Company's advanced telecommunications networks comprised of owned teleports,
earth stations, fiber optic and microwave links, and leased satellite and fiber
optic capacity.
The Company has grown rapidly since the commencement of its operations in
Argentina in 1990. Its customer base has expanded from 125 customers in two
countries as of December 31, 1992 to 656 customers in six countries as of
December 31, 1995. During the same period, total revenues on a combined basis
have grown from $20 million to $106 million, and EBITDA has grown from $7.9
million to $27.5 million. Contracts with customers are generally denominated in,
or tied to the value of, U.S. dollars, with initial terms that range from six
months to five years, but are generally for three years in duration. Contracts
generally may be terminated by customers without penalty.
The Company anticipates continued growth in the demand for private
telecommunications network services in Latin America. Continued deregulation of
the telecommunications market throughout the region should lead to growth in the
telecommunications sector, which is relatively limited as compared with more
developed countries. As the Latin American telecommunications sector matures,
the Company believes that the proportionate share accounted for by data
transmission services will also increase, as it has in more developed countries.
The Company also expects that continuing economic growth in Latin America will
bring greater opportunities for expansion and that economic integration of the
Latin American countries should add to the demand for private network services
in the region.
The Company believes it has significant advantages over its competitors as
a result of its: (i) operating experience as a pioneer in providing shared hub
VSAT services; (ii) ability to provide diverse cost-efficient networking
solutions; (iii) superior marketing skill, knowledge of the customer's needs and
responsiveness; and (iv) position as a market leader and its significant
existing network infrastructure in its markets.
As a result of its strong relationships with a broad base of customers, its
presence in numerous Latin American countries, its existing infrastructure and
experience and the experience and expertise of its principal shareholders, the
Company believes that it will be particularly well-positioned to consider other
opportunities that may arise in the Latin American telecommunications sector.
STRATEGY
The Company's goal is to become the leading provider of private
telecommunications network services in Latin America. The key elements of the
Company's strategy include the following:
Provide Tailor-Made Solutions. The Company distinguishes itself by
providing tailor-made solutions to meet the particular telecommunications needs
of each of its customers. The Company strives to design integrated packages of
data, voice and video transmission services using the various components of its
terrestrial and satellite networks to achieve the most technologically advanced,
efficient and cost-effective solution to each customer's needs. The particular
mix of services provided to each customer is determined by such factors as the
customer's locale, transmission volume and cost requirements.
Deliver Premium Services. The Company provides premium services using
state-of-the-art telecommunications technology that is continually updated and
improved, as well as round-the-clock customer support
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<PAGE> 51
and does not simply provide its customers with the equipment and infrastructure
for a private telecommunications network system. The Company views its
relationships with its customers as a long-term partnership in which customer
satisfaction is critical and believes that private companies, financial
institutions and governmental agencies will increasingly demand high levels of
customer service and responsiveness to satisfy their telecommunications needs
and that providers of private telecommunications networks will be better
situated to meet those needs than will operators of traditional public switched
telephony systems.
Expand Services Sold and Customer Base. The Company plans to increase its
business by taking advantage of demand for additional services from existing
customers, increasing its customer base in each of the countries in which it
operates, in particular to address a broader universe of smaller and
medium-sized business customers and expanding its business in Latin America.
The first prong of this strategy is to continue to sell additional services
to existing clients. The Company's customers often begin by purchasing limited
VSAT services from the Company and then expand the services purchased from the
Company by adding significant numbers of additional VSAT microstations and/or
adding additional services. For examples of such customer histories, see
"-- Customers."
The second prong of this strategy is to expand the number of customers in
each of the countries in which the Company operates, both by selling services to
new large national and multinational corporations, financial institutions and
governmental agencies, as well as by targeting smaller and medium-sized
businesses, as such businesses in Latin America increase their use of computers
and begin to require data transfer services. The Company's customer base has
grown from 125 customers in two countries as of December 31, 1992 to 850
customers in six countries as of September 30, 1996.
The third prong of this strategy is to expand the Company's presence in
Latin American countries in which it currently does not have operations. The
Company is actively considering establishing operations in Brazil. While the
Company currently has no plans to establish operating subsidiaries or extensive
telecommunications networks in countries other than Brazil in which it currently
does not have operations, the Company intends to explore opportunities -- for
example, through joint ventures or other cooperative efforts with local partners
in such countries -- to be able to provide its customers with private network
telecommunications services throughout Latin America.
Utilize a Mix of Technologies and Suppliers. The Company believes that one
of its key strengths is that it does not rely on any particular technology or
equipment supplier except that substantially all of its VSAT microstations and
related technology are supplied by Hughes. While satellite technology
constitutes the Company's principal technology, the Company utilizes a variety
of transmission media in its private telecommunications network services,
including terrestrial fiber optic networks, microwave radio links and undersea
cable capacity. The Company currently obtains its hardware and software from a
number of different suppliers. See "-- Infrastructure -- Equipment" for the
names of some of the Company's suppliers. The Company's lack of dependence on
any single technology, transmission medium or equipment supplier, provides the
Company the flexibility to react quickly and take full advantage of
technological developments and advancements as well as regulatory changes. The
Company believes that the technical sophistication of its equipment and the
reliability and efficiency of its services are critical to maintaining customer
satisfaction.
HISTORY
IMPSAT Corporation was organized in 1994 as a Delaware holding company to
combine the IMPSAT businesses in Argentina, Colombia and Venezuela. The
Company's operations commenced with the provision of VSAT services in Argentina
in 1990 under the name IMPSAT S.A. The Company began operations outside of
Argentina with the establishment of IMPSAT Colombia in 1991 and the
establishment of IMPSAT Venezuela in 1992. IMPSAT Argentina became a 51% owned
subsidiary of IMPSAT Corporation on July 5, 1996. New operating subsidiaries
were created in Ecuador in 1994 and Mexico and the United States in 1995. See
"Summary" for an organizational chart showing the Company's subsidiaries.
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<PAGE> 52
TECHNOLOGY
General. The Company utilizes satellite, fiber optic cable and microwave
links and employs state-of-the-art technology in its network systems. Satellite
communication links, which constitute the core of the Company's private network
service infrastructure, are complemented and supported by terrestrial microwave
radio and fiber optic cable systems.
The following diagram illustrates a typical network configuration:
CHART INSERTED
Satellites are well-suited for transmissions that must reach many locations
over vast distances simultaneously. Satellites can be accessed from virtually
anywhere within the geographic area they cover. Thus, satellite systems are
ideal for connecting locations that cannot be connected efficiently or
cost-effectively by terrestrial telecommunications networks. In addition, unlike
other transmission systems, the cost of satellite services does not increase
with distance. Satellite communications are therefore particularly appropriate
as a "last-mile" link for customers in Latin America, where access to the
existing public switched networks often is not readily available.
Fiber optic cable networks have significantly higher transmission capacity
and are less susceptible to electronic interference than copper wire networks,
which continue to be used to varying degrees in Latin American countries. The
higher capacity and lower maintenance characteristics of fiber optic cable are
well-suited for relaying the large amounts of digital information traffic found
in high density areas. Ground-based microwave systems disseminate signals in the
form of radio waves from an antenna on top of a building or a transmission tower
and are suitable for use in local transmission because the reach of the
transmission signal typically is limited to one discrete area.
Satellite Technology. The two primary satellite based private network
solutions offered by the Company are: (1) VSAT microstations utilizing Time
Division Multiple Access ("TDMA") technology; and (2) larger satellite antenna
earth stations utilizing SCPC technology.
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The VSAT service permits communications between and among remote locations
and a central location via satellite and a hub earth station known as a
Teleport. The Teleport has a relatively large antenna (typically ranging from
3.8 to 11 meters in diameter) as well as sophisticated radio frequency and
network management equipment. The remote VSAT location has a smaller antenna
(typically ranging from 1.2 to 2.4 meters in diameter) and is designed to
receive and transmit digital information via the satellite to the Teleport using
TDMA. TDMA enables multiple VSATs to share a single satellite channel thus
enhancing the use of satellite capacity. Upon receipt of a VSAT transmission,
the Teleport can amplify and retransmit the information via the satellite to the
rest of the VSAT network with each VSAT decoding only those messages addressed
to it. The Company's VSAT service is integrated into the customer's network
architecture, in part through protocol emulation technology which provides
support for various communications protocols including X.25 and Frame Relay.
Single Channel per Carrier ("SCPC") is an earlier and more established
technology than VSAT. SCPC provides the customer with a dedicated, permanent
channel, whereas communication channels are shared among customers using the
VSAT service. SCPC uses a multiplexer, a device that enables transmissions to be
made either through several channels bundled into one or through a single
channel that can be used by a number of different terminals (such as data,
facsimile or video).
Satellites transmissions utilize both C-band and Ku-band frequencies. The
Company's VSAT and SCPC services are able to take advantage of either C-band or
Ku-band satellite technology.
SERVICES
The Company provides a full range of private network services which are
tailored to meet the individual system requirements of its customers. The
Company's array of service offerings may be combined in different ways to create
a customized package that best suits each customer's private network system
needs. The particular mix of services purchased by each customer depends upon
such factors as the customer's locale, transmission volume and cost
requirements. The Company does not merely provide the equipment and hardware for
private telecommunications networks, but provides telecommunications solutions
which permit its customers to enjoy the advantages of a private network while
freeing the customers from the burdens of purchasing, operating and maintaining
the network. The principal services offered by the Company described below are
identified by their service marks:
- VSAT -- a digital information transmission service which permits
communications between and among many remote locations and a central
location via satellite and a central earth station, known as a
Teleport. Access to satellite channels is allocated among the remote
locations through several TDMA methods, depending on user traffic.
- Dataplus -- an SCPC digital information transmission service designed
for customers that require speedy transmission of large quantities of
information between relatively few fixed locations.
- Teledatos Networks -- microwave and fiber optic cable Metropolitan
Area Networks ("MANs"), which currently exist in twelve major cities
in Argentina, Colombia and Venezuela. Customers are able to transmit
information within the network and also be linked with any other place
in the Company's network by means of combining the Teledatos network
through a Teleport or a Regional Teleport with VSAT, Dataplus or other
services provided by the Company.
- Regional Teleports -- earth stations linking smaller MANs outside a
country's capital to the Teleport in that country via satellite, which
currently exist in ten cities in Argentina, Colombia and Ecuador.
- Difusat -- a unidirectional VSAT broadcast system whereby a signal
received by a Teleport through the Teledatos network is transmitted to
multiple locations.
- Interplus -- an SCPC transmission service which provides international
transmission of data, voice and video. The Company currently provides
Interplus links among eleven countries.
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- Global Fax -- a fax store and forward service which receives facsimile
transmissions from customers, temporarily stores the data and then
retransmits it to designated addressees.
The following table shows the Company's revenue breakdown by service for
the years ended December 31, 1993, 1994 and 1995 and for the nine months ended
September 30, 1996:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
------------------------------ SEPTEMBER 30,
SERVICE 1993 1994 1995 1996
-------------------------------- ------- ------- -------- -----------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
<CAPTION>
<S> <C> <C> <C> <C>
VSAT............................ $22,308 $44,092 $ 52,756 $40,263
Dataplus........................ 11,295 19,161 23,953 22,000
Other (1)....................... 4,092 14,426 28,932 31,130
------- ------- -------- -----------------
Total................. $37,695 $77,679 $105,641 $93,393
======= ======= ======== ==============
</TABLE>
- ---------------
(1) The figure for "Other" include revenues from the Company's Teledatos
network, Regional Teleport, Difusat, Interplus and Global Fax services.
VSAT. The Company's VSAT service permits communications between and among
many remote locations and a central location via satellite and a high-capacity
hub earth station known as a Teleport. Teleports are currently located in Buenos
Aires, Argentina; Bogota, Colombia; Caracas, Venezuela; and Quito, Ecuador. VSAT
was the first private network service provided by the Company and continues to
account for a significant portion of the Company's revenues. Although VSAT
technology is widespread in the United States for private network systems, the
Company is a pioneer in Latin America in the use of a shared hub whereby many
different customers share one central earth station operated by the Company. The
use of a shared hub earth station allows the Company to reduce the cost of
telecommunications services to its customers, which expands the Company's
addressable market, particularly to smaller and medium-sized businesses. The
Company believes that it currently operates one of the largest shared VSAT
network in Latin America measured by the number of microstations installed.
VSAT services are particularly well-suited to customers who need to
communicate bursts of information for relatively short periods of time and who
do not require a permanent, dedicated transmission channel. VSAT has proven to
be a cost-effective alternative to fixed-link data transmission in Latin America
for financial institutions, industrial companies and governmental agencies that
have geographically dispersed locations because the service is reliable and
customers pay a fixed monthly charge rather than a fee based on usage and
distance. A typical VSAT customer would have several VSAT microstations linked
to each other by the Teleport and then linked to terrestrially connected sites
in one or more local Teledatos networks.
VSAT generates the largest share of the Company's revenues from services,
accounting for approximately 49.9% of such revenues during 1995. The Company's
customers often begin by purchasing limited VSAT services from the Company and
then expand the services purchased from the Company by adding significant
numbers of additional VSAT microstations and/or adding additional services. For
examples of such customer histories, see "-- Customers." The Company believes
that its ability to customize its VSAT and/or other services to meet the
specific transmission volume and cost requirements of each of its customers will
permit it to expand its customer base, both by selling services to new large
national and multinational corporations, financial institutions and governmental
agencies, as well as by targeting smaller and medium-sized businesses.
VSAT customers are billed according to the number of VSAT microstations
installed, the number of ports on each VSAT and the rate of the satellite
transmission. As of September 30, 1996, the Company had 3,311 VSAT microstations
installed throughout Latin America.
Dataplus. Dataplus is the brand name for the Company's SCPC service, which
is designed for customers that require speedy point-to-point transmission of
large quantities of information. SCPC offers greater transmission capacity than
do VSATs because SCPC utilizes dedicated satellite links. In addition, a
Dataplus earth station (having a satellite dish larger and more powerful than
that of the VSAT) can communicate via satellite to another SCPC earth station or
to a Teleport where the transmission can be integrated with the Teledatos and
VSAT networks. The Dataplus service is therefore a particularly attractive
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<PAGE> 55
private network option for customers who tend to communicate relatively heavy
flows of information. Many of the Company's Dataplus customers began with the
less expensive VSAT service and then supplemented or replaced VSAT with Dataplus
at their higher volume locations.
Dataplus is the second most significant of the Company's private
telecommunications network service offerings in terms of revenue generation.
Dataplus accounted for approximately 22.7% of the Company's revenues from
services in 1995. The Company's customers typically begin by purchasing limited
VSAT services from the Company and, as their private network needs expand to
require the transmission of larger quantities of data at higher rates, they may
expand the services purchased from the Company by supplementing or replacing
VSAT with Dataplus. For examples of such customer histories, see "-- Customers."
The Company charges its customers for the use of each Dataplus earth
station, for the multiplexer which makes possible the multiple use of an SCPC
earth station, and according to the transmission rate of the SCPC earth station.
At September 30, 1996, the Company had a total of 609 Dataplus earth stations
installed.
Teledatos Networks. Teledatos is the brand name of the Company's MANs
comprised of microwave and fiber optic links among and between points in a
metropolitan area and a nearby Teleport or Regional Teleport. Customers are able
to transmit information within the network and also be linked with any other
place in the Company's network by means of combining the Teledatos network
through a Teleport or a Regional Teleport with VSAT, Dataplus or other services
provided by the Company. While the primary use of the Teledatos networks is for
interconnection with the Company's Teleports and Regional Teleports, the Company
has customers who only use the Teledatos service locally (for example, for air
reservation systems, and between a stock exchange and its members) and who are
not users of the satellite communication system.
The following diagram illustrates the configuration of a typical Teledatos
network:
CHART INSERTED HERE
The Company's first Teledatos network was established in Buenos Aires,
Argentina in 1990. Other Teledatos networks now exist in Cordoba, Mendoza,
Rosario, Mar del Plata, Tucuman and La Plata, Argentina; Bogota, Medellin, Cali
and Barranquilla, Colombia; and Caracas, Venezuela. Each Teledatos network is
composed of two elements: the "backbone," which consists primarily of fiber
optic cable, microwave radio, switching equipment and related infrastructure,
and the "last mile," which includes fiber
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<PAGE> 56
optic cable or microwave radio and equipment, such as modems and drivers that
connect the customer to the backbone. A Teledatos network may consist of leased
capacity on existing fiber optic networks owned and maintained by a local PTO
(as is the case in Bogota) or the Company may design, engineer, own and manage
the installation of its own fiber optic network (as is the case in Buenos
Aires).
Customers pay a monthly fee for each connection to the Teledatos network
and for the number of connections to the Teleport. At December 31, 1995, there
were 2,050 connections in service on the Teledatos networks.
Regional Teleports. Another component of the Company's customized private
network solutions is the Regional Teleport, which is the Company's brand name
for its earth stations which link smaller metropolitan area networks outside a
country's capital via satellite to the Teleport in that country. The Company
extends its networks to the interior of countries in which it operates through
its Regional Teleports. The first Regional Teleport was established in Mendoza,
Argentina in 1991, and the Company now has Regional Teleports in Cordoba,
Rosario, Tucuman, La Plata and Mar del Plata in Argentina; Medellin, Cali and
Barranquilla in Colombia; and Guayaquil in Ecuador. Each Regional Teleport has
an antenna ranging from 3.8 to 4.5 meters in diameter which provides SCPC links
through satellite to other Regional Teleports and to the Teleport in that
country. Customers are connected to a Regional Teleport through one of the
Company's Teledatos networks, or by microwave radio or satellite links.
The customer generally pays a fixed monthly fee for access to the Regional
Teleport. The monthly fee is based on the number of services and connections
provided and varies with the particular specifications of the private network
system designed and developed for the customer.
Difusat. Difusat is the brand name for the Company's unidirectional
Teleport-to-VSAT broadcast service whereby a signal received by a Teleport is
transmitted to multiple locations. A Difusat network typically consists of the
Teleport and numerous receive-only remote VSAT terminals. The source of the
information to be broadcast is generally connected to the Teleport through a
Teledatos network. The Teleport transmits the information to the VSAT receptors
via satellite. The largest Difusat customer is Telam, the Argentine news
service. Other customers include Reuters, Bloomberg L.P. and DHL International.
At December 31, 1995, the Company had installed 451 Difusat microstations.
The customer generally pays a fixed monthly fee for the Difusat service.
The monthly fee is based on the number of Difusat microstations installed, the
number of ports on each microstation and the rate of the satellite transmission.
Interplus. Interplus is the brand name for the Company's international
private line service which utilizes a combination of fiber optic, microwave or
SCPC satellite circuits to provide a dedicated telecommunications link between
customer locations in different countries. The Company currently provides
international integrated data, voice and video transmission services between and
among eleven countries -- Colombia, Venezuela, Bolivia, Peru, Ecuador, Curacao,
Mexico, Chile, Panama, the United States and Italy -- through Interplus. The
Company is prohibited by law from providing Interplus services to or from
Argentina during the term of a monopoly granted to Telintar with respect to
international telecommunications services to or from Argentina, unless the
Company obtains Telintar's consent or unless specifically authorized by the
Argentine Comision Nacional de Telecomunicaciones ("CNT"). Telintar's monopoly
is due to expire in 1997, with a possible extension through the year 2000. The
Company provides an Interplus link for one customer which, to date, has been the
Company's sole Interplus customer in Argentina.
International private line services such as Interplus are traditionally
provided by local carriers in each country acting as correspondents and
establishing dedicated telecommunications links between their facilities. Due to
its widespread operational presence in Latin America, the Company is often able
to offer its Interplus service using its own facilities and personnel at both
ends of the private line circuit. For example, utilizing the Teleport serving
the country from which a transmission originates, Interplus can provide the
customer with SCPC access via a dedicated satellite transponder to a Teleport in
another country. Information thus received by the destination Teleport can then
be transmitted over the "last mile" using VSAT, Dataplus or Teledatos networks.
This end-to-end control provides the Company with the ability to maintain
customer service and
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quality assurance at both ends of an Interplus link between the countries in
which it operates and allows the Company to realize better margins than when it
uses a correspondent carrier.
Where the regulatory environment in the destination country precludes
direct transmissions across its border, as is currently the case in Argentina,
or where the Company has no operational presence in the destination country, the
Interplus service will involve the Company's proprietary control of only part of
the transmission circuit. In such a case, a transmission between two customer
locations in different countries may be commenced using the Company's facilities
in the originating country and completed through a correspondent local carrier
in the destination country or vice-versa. To date, the Company has signed
Interplus correspondent agreements with carriers in Curacao, Nicaragua, Costa
Rica, Paraquay, Uruguay and Panama. In addition, the Company is currently
negotiating correspondent agreements with carriers in El Salvador, Honduras and
Guatemala, and expects such agreements to be signed in the near future. The
Company is in the early stages of negotiating correspondent agreements with
carriers in Brazil and Bolivia.
The Company charges customers a monthly fee for Interplus which is based on
the capacity of the circuit provided.
New Services. The Company works closely with its suppliers to keep abreast
of new technologies and evaluates its technology requirements to remain among
the most technologically advanced digital information transmission providers in
Latin America. While the Company relies on its suppliers for hardware and
software upgrades, it devotes significant attention to the identification and
commercialization of new services to meet the changing needs of its clients. The
Company currently has a core group of seven engineers dedicated to conducting
research with respect to available technologies and the development and
application of such technologies in the Company's new product developments
efforts. The Company's Frame Relay data transmission capability resulted from
such product development efforts.
In 1994, the Company created a new business unit called Global Fax, which
was charged with identifying and developing new value added products and
services. In March 1995, the Company initiated its fax store and forward service
under the brand name Global Fax in Argentina through its Buenos Aires Teleport,
and began offering the same service in Colombia in April 1996. The Company
receives a customer's facsimile transmission, temporarily stores the
transmission and then transmits it to addressees throughout the world, with
automatic retries in the event initial transmission attempts are not successful.
In Argentina, as of December 31, 1995, the Company had 146 customers for this
service and was handling approximately 70,000 pages per month and as of
September 30, 1996 had 243 customers and was handling approximately 135,000
pages per month. Global Fax customers are billed by the Company at a per minute
rate that varies with the destination of the transmission. The Company also
charges a one-time connection fee for each customer facsimile machine connected
to the Global Fax service, as well as an annual subscription fee of $100.
The Company is actively pursuing plans to become a regional Internet access
provider of dedicated and dial-up connections between Latin America and the
United States Internet backbone. To this end, the Company is pursuing several
avenues, including entering into marketing agreements with local retail service
providers, establishing relationships with Internet service providers in the
United States, and acquiring significant undersea fiber optic cable capacity.
See "-- Infrastructure -- Undersea Fiber Optic Cable Networks." The Company has
already entered into agreements with several retail entities which will market
the Company's Internet access service to their customers, including agreements
with VideoCable Comunicaciones S.A. (VCC), a leading Argentine cable company,
Banco Mayo, a commercial bank and Diario Uno, one of the principal newspapers in
Mendoza, Argentina. The Company intends to offer Internet access services to new
and existing customers, including universities, institutions, governmental
agencies and corporations. Services offered are expected to include access
software, electronic mail, network and worldwide web site implementation and
maintenance.
CUSTOMERS
The Company has grown rapidly since the commencement of its operations in
Argentina in 1990. Its customer base has grown from 125 customers in two
countries as of December 31, 1992 to 656 customers in
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six countries as of December 31, 1995. During the same period, total revenues
have grown from $20 million to $106 million, and EBITDA has grown from $7.9
million to $27.5 million.
Larger entities, which often have significant needs for reliable,
cost-effective data transmissions and other telecommunications services, were
the first to use the private telecommunications network services offered by the
Company. As a result, a significant proportion of the Company's revenues are
derived from the Company's largest customers. In addition, because of the
Company's relatively short operational history outside of Argentina, a
significant number of the Company's customers, including its largest customers,
are located in Argentina. See "Risk Factors -- Dependence on Certain Customers."
An important component of the Company's strategy is to continue to increase
both the depth and breadth of its customer base. In furtherance of the first
goal, the Company seeks to sell additional services to existing customers. In
furtherance of the second goal, the Company attempts to market its services to
an expanded number of potential customers, both additional large national and
multinational corporations, financial institutions and governmental agencies, as
well as medium-sized and smaller business customers, as such businesses in Latin
America increase their use of computers and begin to require data transfer
services.
The Company's largest customers consist of major governmental agencies,
financial institutions and leading national and multinational corporations and
private sector companies, including YPF S.A., Reuters, Banco de Galicia y Buenos
Aires S.A. and Occidental Petroleum. During 1995, the Company's ten largest
customers, each of which is headquartered in Argentina, accounted for
approximately 30% of the Company's revenues. The percentage of revenues
represented by the Company's ten largest customers during 1994 and 1993 was
37.2% and 41.8%, respectively.
The Company's ten largest customers as of December 31, 1995 were: Banco de
la Nacion Argentina (BNA), a state-owned bank and the largest bank in Argentina,
with 525 branches throughout Argentina; Administracion Nacional de la Seguridad
Social (ANSeS), the Argentine Social Security Administration; YPF S.A., which is
engaged in hydrocarbon exploitation and is the largest company in Argentina;
Gendarmeria Nacional Argentina (GNA), the Argentine governmental agency charged
with policing Argentina's borders; ENCOTESA, the Argentine national postal
service; Gobierno de la Provincia de Buenos Aires, an Argentine provincial
government; Direccion General Impositiva (DGI), the Argentine governmental
agency charged with the collection of taxes; Banco de Galicia y Buenos Aires
S.A., a private bank with 170 branches throughout Argentina; BANELCO S.A., a
private company engaged in electronic banking activities, with approximately 510
electronic banking posts in Argentina; and Banco del Sud, a private bank with
approximately 120 branches in Argentina. For a discussion of certain matters
relating to the Company's contracts with BNA and DGI, see "-- Legal Matters."
ENCOTESA, IMPSAT Argentina's fifth largest customer as of December 31,
1995, is experiencing financial and operating difficulties, and the Argentine
legislature is currently debating the means to address ENCOTESA's difficulties,
including the possible privatization of the agency. As of August 31, 1996,
ENCOTESA owed IMPSAT Argentina a total of $3.4 million in respect of accounts
receivable past due in excess of six months. In November 1996, IMPSAT Argentina
filed suit against ENCOTESA for amounts due and arising under IMPSAT Argentina's
contracts with ENCOTESA totalling $5.1 million, plus interest on such amounts.
IMPSAT Argentina is currently discussing with ENCOTESA modifications to the
amount of services being provided under ENCOTESA's contracts with IMPSAT
Argentina, which currently result in monthly invoices of $218,000. As of
September 30, 1996, the Company was providing ENCOTESA with 200 VSATs and 7
Dataplus earthstations, under contracts which are scheduled to expire in August
1997 and 1999, respectively.
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The following table sets forth the Company's customers by country as of the
dates indicated(1):
<TABLE>
<CAPTION>
NUMBER OF CUSTOMERS
AS OF DECEMBER 31,
-------------------- AS OF
COUNTRY 1993 1994 1995 SEPTEMBER 30, 1996
------------------------------------------- ---- ---- ---- ------------------
<S> <C> <C> <C> <C>
Argentina(2)............................... 200 292 319 363
Colombia................................... 58 135 271 373
Venezuela.................................. 4 18 39 71
Ecuador.................................... -- -- 25 33
Mexico..................................... -- -- 2 6
USA........................................ -- -- -- 4
---- ---- ---- ---
Total................................. 262 445 656 850
==== ==== ==== ==============
</TABLE>
- ---------------
(1) Totals presented do not include customers from the Company's new services
such as Internet and Global Fax. See "-- Services -- New Services."
(2) The number of customers for IMPSAT Argentina is presented as of November 30,
1993, 1994 and 1995 and August 31, 1996.
The Company's contracts with its customers are generally denominated in, or
tied to the value of, U.S. dollars and range from six months to five years and
average three years. Contracts generally may be terminated by the customer
without penalty. The customer generally pays a fixed monthly fee based on the
number of services and connections provided and varies with the particular
specifications of the private network system designed and developed for the
customer. See "-- Sales, Marketing and Customer Service." In addition, the
Company charges its customers a one-time fee that is intended to cover the
Company's costs of installing customer premises equipment.
Because of the relatively short period of the Company's operations, a
significant number of the Company's customers have not completed the term of
their initial contracts with the Company. Many of the Company's customers have,
however, expanded the amount and value of the services purchased from the
Company. The Company's customers typically begin by purchasing limited VSAT
services from the Company and then expand the services purchased from the
Company by adding significant numbers of additional VSAT microstations and/or
adding additional services such as Dataplus and Regional Teleport connections.
For example, Molinos Rio de la Plata S.A. ("Molinos"), a major Argentine company
in the food industry, began by purchasing five VSAT microstations for use by its
principal manufacturing plants in electronic mail transmission. Molinos then
expanded the services it purchases from the Company to include file transfer
capabilities for the majority of its facilities, and Dataplus and ancillary
voice transmission services for certain principal facilities. The Company is
currently in the process of implementing a comprehensive integrated private
network system for Molinos to serve its day-to-day commercial and administrative
data transmission needs. Similarly, Banco de Galicia y Buenos Aires S.A.
initially purchased services for 31 VSAT microstations, and currently purchases
services for over 160 VSAT microstations, 50 with voice channels, and eight
Regional Teleports.
By providing private network solutions and superior customer support
service to serve comprehensively the particular needs of each customer, the
Company has been able to maintain ongoing relationships with existing customers,
thus sustaining a base of continuing revenues. The stability of the Company's
revenues is also supported by the nature of the private network services offered
by the Company and the difficulty of obtaining alternate services on short
notice. The Company lost approximately 23 customers in 1995. The principal
reasons for such losses include mergers of existing customers, particularly
among financial institution customers in Argentina; customer bankruptcies or
closings; customer development or purchase of their own private networks; and no
more than three instances of customer dissatisfaction.
The Company's contracts generally provide for payment in U.S. dollars or
for payment in local currency linked to the exchange rate at the time of payment
between the local currency and the U.S. dollar. Notwithstanding such
arrangements, the revenues of the customers of the Company are generally denomi-
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nated in local currencies, and although the Company's customers include some of
the largest and most financially sound companies and financial institutions in
their markets, substantial or continued devaluation in such currencies relative
to the U.S. dollar could have a negative effect on the ability of the customers
to pay the Company for its services. Such currency devaluations could also
result in the Company's customers seeking to renegotiate their contracts with
the Company or, failing satisfactory renegotiation, defaulting on such
contracts. In addition, the imposition of exchange controls in the countries in
which the Company operates could affect the Company's access to, or the exchange
rate for, U.S. dollars. See "Risk Factors -- Currency Fluctuations, Devaluations
and Restrictions."
SALES, MARKETING AND CUSTOMER SERVICE
The Company views its relationship with its customers as a long-term
partnership in which customer satisfaction is of paramount importance. The
Company does not simply provide its customers with the equipment and
infrastructure for a private telecommunications network system, but draws on a
diverse range of technologies to provide customized telecommunications solutions
to each customer.
The Company applies an integrated approach to its sales, marketing and
customer service functions. In 1995 the Company reorganized its sales, marketing
and customer service functions into a total of 34 business units. Each business
unit typically comprises up to 12 persons and includes individuals with
backgrounds in and responsibilities for marketing, operations, engineering,
maintenance, customer service and administration. The business unit concept was
established with the view that each unit would be jointly responsible for all
aspects of a particular customer's or a group of customers' relationship with
the Company and that each customer would be able to call upon any of its
business unit representatives to respond to the customer's service requirements.
Each individual within each business unit is trained in a variety of skills so
that no business unit is dependent upon any one individual to address the
critical and time sensitive needs of its customers.
In the Company's larger operations, including in Argentina and Colombia,
the Company has established several business units, with business units focusing
on a particular type of client. For example, in Argentina, the Company has one
business unit devoted to industrial customers, one business unit devoted to
financial institutions, another devoted to governmental agencies, a business
unit that is devoted to companies with headquarters in the interior of the
country, and a special business unit that was established to service the
particular needs of key customers. Within each segment of the Company's market,
the respective business unit is responsible both for new sales to potential
customers within such segment as well as for the servicing and follow-up of
existing customers. In addition, each customer is assigned an account manager,
who has overall responsibility for relations with that customer. An important
function of the account manager is to identify new or enhanced services that can
be marketed to the existing customer.
As the first step in the Company's marketing process, after an initial
contact has been established between the Company and a potential customer, the
Company evaluates the customer's telecommunications needs. After the Company has
completed its study, the Company creates a plan for the customer which includes
a description of the Company's proposed tailor-made technological solution,
utilizing and combining those components of the Company's private network
services that best serve the customer's particular needs. With respect to the
provision of services to governmental agency customers, such proposals often are
delivered in response to public bid solicitations and related governmental
bidding procedures that govern the contracting of services by governmental
agencies.
Following execution of a contract with a new customer, the Company
commences the detailed technical engineering work required to implement the
private network system tailored to the customer's needs, including fine-tuning
the customer's software applications, and begins to purchase the microstations
and other equipment to construct the network and connect the customer to the
Company's existing facilities and infrastructure. Depending on the complexity of
the package of services and the network to be provided to the customer, the
period between the date a contract is signed and the customer's services are
operating and generating revenue is typically between 45 days and four months.
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Once a customer's system is in operation, the Company provides customer
service to address questions or problems on a 24-hour per day, 365-day per year
basis.
The employees of the Company engaged in the sales and marketing functions
receive a straight salary and do not receive any commissions. In addition to its
salaried business unit personnel, the Company often utilizes the services of
third party sales representatives to assist in generating sales and managing the
contract process between the Company and potential customers. Such third parties
typically receive a commission and royalties from the Company based on the value
of the contract signed. To date the practice of utilizing third party sales
representatives in connection with the generation and servicing of customer
contracts has been employed predominantly in the case of IMPSAT Argentina. With
respect to the other countries in which the Company currently operates,
including Colombia and Venezuela, the Company principally has utilized its own
sales force for the generation and servicing of customer contracts. The Company
anticipates that it will continue to rely on such third party sales
representatives in connection with its operations in Argentina and that it
primarily will use its own salesforce in other countries in which it does
business.
As of November 30, 1995, of IMPSAT Argentina's total customer base of 319,
IMPSAT Argentina had entered into contracts with third party sales
representatives for approximately 20% of its customer contracts, including a
number of its largest contracts. Pursuant to the terms of its contracts with
third party sales representatives, such representatives help to identify and
assist IMPSAT Argentina in negotiating contracts for telecommunications services
with identified customers. Third party sales representatives are generally
retained with respect to a specific customer or group of customers and receive a
fixed monthly fee that is based on the fee received by IMPSAT Argentina from the
customer or customers with respect to whom the consultant is engaged. In the
event that the customer fails to pay IMPSAT Argentina with respect to the
services provided or cancels its contract with IMPSAT Argentina, no further
payment is made to the third party sales representative. Although the financial
terms of IMPSAT Argentina's contracts with the third party sales representatives
vary based on the customers involved and the particular assistance provided by
the representatives, the commissions paid to third party sales representatives
equal approximately 9% of IMPSAT Argentina's total revenues for 1995.
COMPETITION
Although the Company is a leading provider of private telecommunications
network services in Latin America, the markets in which the Company offers its
services are highly competitive. In each country in which it operates or
anticipates operating, the Company has a number of competitors, many of whom
have greater financial resources than the Company. The Company's private
telecommunications services also could face future competition from entities
using or proposing to use new or emerging voice and data transmission services
or technologies which currently are not widely available in Latin America, such
as personal communications services (PCS), digital cellular radio. While the
Company does not foresee significant near-term competition in its existing
markets from such new technologies, there can be no assurance that such
competing technologies will not be successful and, as a result, provide
significant competition that could adversely affect the Company's results of
operations in the longer term. See "Risk Factors -- Technological
Considerations" and "-- Competition."
The Company's competitors fall into three broad categories. The first
category is comprised of the PTOs in each of the countries in which it operates.
The second category of competitors is comprised of other companies, engaged in
essentially the same business as the Company, that operate competing VSAT and
other satellite data transmission businesses, along with other terrestrial
telecommunications links. The third category is comprised of companies that do
not sell data transmission services, but only the equipment for privately owned
networks that are operated and maintained by the customer. In addition,
potential future competitors include certain of the large international long
distance carriers which will be able to enter the local Latin American
telecommunications markets in the coming years as the monopolies granted to the
PTOs expire.
Regarding the first group of competitors, the Company's further expansion
into the integrated private network systems market, along with continued
deregulation of the telecommunications industry in Latin
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America, will bring the Company into direct competition with the PTOs. The
Company believes that by establishing itself in the short-term as a reliable,
high-quality provider of private network systems it will be able to maintain its
current customers and successfully attract new customers. The Company will
consider strategic alliances and other cooperative ventures with the PTOs in the
area of private telecommunications network services to take advantage of each
partner's relative strengths.
With respect to the second category, i.e., current operators in the data
transmission sector of the telecommunications industry, the Company's
competitors, many of whom operate VSAT systems, include international satellite
providers such as COMSAT Corp. ("COMSAT") and local data transmission providers.
Regarding these competitors, the Company believes that it is able to compete
successfully in data transmission by virtue of having a broad array of services
and of providing high-quality, custom-designed services that are tailored to
meet the specific needs of each customer. For a description of the Company's
principal competitors in each of the countries in which the Company operates,
see "-- Description of Country Operations."
The third category of competitors are comprised of companies that do not
sell data transmission services, but merely supply the equipment necessary for a
customer to establish and maintain its own private network. The Company believes
that, with respect to this category of competitors, the Company possesses
significant competitive advantages by providing comprehensive telecommunications
services that offer the benefits of a private network while freeing the
customers from the burdens of operating and maintaining the network.
The principal barriers to entry for prospective providers of private
network services such as those offered by the Company are the development of the
requisite understanding of customer needs, and the technological and commercial
experience and know-how to provide quality services to meet those needs. The
Company believes that its operating experience as a pioneer in providing shared
hub VSAT services, its position as market leader and its significant existing
network infrastructure in its markets, and ability to offer a diversity of
cost-efficient networking solutions, create significant competitive advantages.
While the PTOs and international long distance carriers have in the past
focused on local and long distance telephony services, they may focus on the
private network telecommunications systems segment of the telecommunications
market in the future. Such entities have significantly greater financial and
other resources than the Company, including greater access to financing, and may
be able to subsidize their private network businesses with revenues from public
telephony until public telephony becomes fully competitive. In addition, there
can be no assurance that competing technologies will not become available that
will adversely affect the Company's position, although the Company believes that
it has the flexibility to act quickly to take advantage of any significant
technological development. In any event, the Company believes that increased
competition in the coming years will affect its ability to charge premium prices
as compared to its competitors. There can be no assurance that such greater
competition will not adversely affect the Company's financial condition or
results of operations. See "Risk Factors -- Competition".
REGULATION
The Company is subject to regulation by the national telecommunications
authorities of the countries in which it operates, and its operations require
the procurement of permits and licenses from such authorities. While the Company
believes it has received all authorizations from regulatory authorities that are
required for it to offer its services in the countries in which it currently
operates, the current conditions governing the Company's service offerings may
be altered by future legislation or regulation. Such future legislation or
regulation could favorably or unfavorably affect the Company's business and
operations. The regulatory regime in each of the countries in which the Company
has operations, and the licenses and permits obtained by the Company, are
separately described in the country-specific business descriptions under
"-- Description of Country Operations" below.
EMPLOYEES
As of December 31, 1995, the Company employed a total of 612 persons, of
whom 259 were employed by IMPSAT Argentina and 164 were employed by IMPSAT
Colombia. The number of employees of the
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Company has generally increased and is expected to continue to increase as a
result of the Company's expansion in the countries in which it operates and into
new countries. The Company does not have any long-term employment contracts with
any of its employees, including management, and none of its employees are
members of any union. The Company believes that its relations with its employees
are good.
INFRASTRUCTURE
Satellites. As of September 30, 1996, the Company had a total leased
capacity of 261.58 MHz on six satellites. The Company has satellite leases on
the Intelsat 603, 706 and 709 satellites for 1.28 MHz, 50 MHz and 124 MHz of
capacity, respectively, which are not scheduled to expire before April 1, 2000.
The Company also had leased 23 MHz of capacity on Paracomsat's Nahuel C1
satellite which expires on December 31, 1996. The Company has 62.4 MHz of leased
capacity on PanAmSat's PAS-1 satellite until the end of the useful life of the
satellite (estimated to be December 31, 2001). The Company currently has 0.9 MHz
of capacity (with an option to lease up to 9 MHz of capacity) on Mexico's
Solidaridad-II satellite which expires on February 28, 1998. The Company's total
lease payments for satellite capacity totaled $10.9 million in 1995, and are
expected to increase to approximately $14.2 million in 1996.
Certain amounts of the Company's satellite capacity is leased by ISCH, a
wholly-owned, non-operating Liechtenstein subsidiary of the Company. While each
of the Company's operating subsidiaries other than IMPSAT USA leases satellite
capacity directly, ISCH's principal function is to lease private satellite
capacity from satellite carriers and then sublease such capacity at market rates
to the Company's operating subsidiaries as required by those subsidiaries.
Approximately 17.7% of the Company's total leased satellite capacity at
September 30, 1996 was subleased at market rates to the Company's operating
subsidiaries through ISCH.
In April 1996, IMPSAT Argentina acquired a 0.06% interest in Intelsat for
$1.1 million. As a direct member of Intelsat, IMPSAT Argentina will be able to
lease 7 MHz of satellite capacity on Intelsat 705 directly from Intelsat without
being required to pay a 10% fee with respect to such capacity to the Argentine
Comision Nacional de Telecomunicaciones ("CNT"). Depending upon the availability
of financing, IMPSAT Argentina is considering possible additional investments in
Intelsat that would permit it to access directly up to 36 MHz of capacity on
Intelsat 705.
The Company currently has excess satellite capacity, especially with
respect to IMPSAT Argentina, and does not anticipate a need to increase such
capacity until at least 1998. The Company believes that it will be able to
access necessary satellite capacity at competitive prices, either directly
through agreements with the major satellite carriers or through subleases with
various entities, such as the local PTOs.
Equipment. Since its inception, the Company has placed significant
emphasis on employing technologically advanced equipment. After a period of
study, the Company selected Hughes as its primary supplier of VSAT technology,
including VSAT microstations and related software. The Company entered into a
non-exclusive agreement with Hughes in 1988, pursuant to which Hughes provides
equipment, related software licenses and technical assistance to the Company.
While the terms of the agreement with Hughes permit the Company to resell the
equipment, the software license is nontransferable. The agreement may be
terminated by either party upon 60 days notice. During the past three years, the
Company has purchased a total of $46.2 million in equipment and technical
assistance under this agreement.
With respect to SCPC technology, the Company's current major suppliers are
among the leading companies in the industry, and include EF Data Corporation,
Scientific-Atlanta Inc., SSE Technologies Inc. and Fairchild Data Corporation.
Other equipment suppliers to the Company include General DataComm, Inc. for time
division multiplexers; ACT Networks Inc. for frame relay multiplexers; Digital
Microwave Corporation and California Microwave Corporation for radiolink
systems; and Alcatel Data Networks for packet switches. The Company also employs
local companies in each location where it operates for installation and
groundwork services.
The Company analyzes and studies potential suppliers and equipment with the
goal of obtaining the most technologically advanced equipment on a cost
efficient basis. The Company believes that there are a number
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of potential providers of each of the significant items that are used in the
Company's operations and therefore that the Company is not dependent on any
single source of supply.
Teleports. The Company operates Teleports in Buenos Aires, Argentina;
Bogota, Colombia; Caracas, Venezuela; and Quito, Ecuador. The Company is
currently constructing a Teleport in Mexico City, Mexico, which is scheduled for
completion at the end of November 1996.
Each of the Company's Teleports serves as the command center for the
Company's VSAT networks in the host country. The Teleports also are linked to
the Company's SCPC installations and Teledatos networks. Each Teleport also
contains a radio microwave tower to transmit and receive transmissions to and
from nearby customer locations which are not connected to the Company's existing
Teledatos networks.
Regional Teleports. In addition to the Teleports described in the
preceding paragraphs, the Company has smaller SCPC-based earth stations called
Regional Teleports in other important cities in the countries in which it
operates. As of December 31, 1995, the Company was operating a total of ten
Regional Teleports in major cities in Argentina, Colombia and Ecuador. See
"-- Services -- Regional Teleports."
Teledatos Networks. The Company has fiber optic and microwave Metropolitan
Area Networks ("MANs") in eleven major cities in which it operates for
connection with the Teleport or Regional Teleport in such cities. Additionally,
the Company manages and operates a fiber optic network covering 186 route miles
in Bogota, Colombia, pursuant to a joint venture with Empresa de
Telecomunicaciones de Santafe de Bogota ("ETB"), the Colombian PTO that provides
local telephone service in the Bogota, Colombia region. The Teledatos networks,
which as of December 31, 1995 were operating in a total of twelve cities and
covered a total of 2,658 square miles, permit efficient connection to the
Company's Teleports and Regional Teleports.
In addition to utilizing the Company's Teledatos networks as conduits to
and from the Company's Teleports, the Company offers its customers the use of
its Teledatos networks for telecommunications transmission solely within the
Teledatos networks.
The Company also operates in Argentina a high capacity digital microwave
circuit that provides voice and data telecommunications links between user sites
in Buenos Aires and Mendoza.
Undersea Fiber Optic Cable Networks. The Company is a member of the
Americas-1 and Columbus-II undersea fiber optic cable consortia, and has
purchased an initial total of 2 Mbps capacity on both systems for use in its
Interplus service. If needed, more capacity may be purchased by the Company in
the future. Americas-1, which commenced commercial operation in December 1994,
is a 4,960 mile fiber optic cable system connecting Vero Beach, Florida in the
United States with the U.S. Virgin Islands, Trinidad, Brazil and Venezuela.
Americas-1 is owned by a consortium of 64 carriers from 42 countries and plans
to extend its links to Curacao and Argentina. Columbus-II, which commenced
service in mid-1994 and is owned by 56 telecommunications administrations in 40
countries, links Mexico, Florida, the U.S. Virgin Islands, Spain, Portugal and
Italy with about 7,440 miles of fiber optic cable.
The Company also expects to be a partner in the Pan American undersea cable
consortium, comprising AT&T and 13 PTOs from Latin America and Spain. The
Company expects to have capacity on the proposed Pan American Cable System
running from the U.S. Virgin Islands in the Caribbean through points in Panama,
Colombia, and the west coast of South America to Chile, which is currently
scheduled for completion in August 1998. The Company will decide the extent of
its participation in the Pan American Cable System after capital costs of the
project have been projected later this year.
LEGAL MATTERS
The Company is involved in or subject to various other litigation and legal
proceedings incidental to the normal conduct of the Company's business,
including with respect to regulatory matters.
According to Argentine press reports during February 1996, the General
Auditor of the Argentine Republic commenced an investigation into the manner in
which Banco de la Nacion Argentina ("BNA"), a state-owned commercial bank which
is IMPSAT Argentina's largest customer, awarded contracts to its service
providers, including IMPSAT Argentina. Such reports stated that the General
Auditor raised concerns
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regarding the failure by BNA to follow its public bidding procedures in
selecting IMPSAT Argentina to provide it with private telecommunications network
services. IMPSAT Argentina has not received any formal or informal notice from
the General Auditor, BNA or any other person concerning such matter and does not
believe that such matter will have an adverse effect on its financial condition
or results of operations. IMPSAT Argentina's current contracts with BNA expire
in the first quarter of 1997. IMPSAT Argentina believes that the award of its
contract by BNA and its dealings with BNA have been in full compliance with all
applicable legal norms.
In June 1996, as a result of certain controversies regarding a contract
between the Direccion General Impositiva ("DGI"), the Argentine governmental
agency charged with the collection of taxes, and another company, a member of
the Argentine legislature made public statements suggesting that certain other
contracts entered into by DGI, including DGI's contract with IMPSAT Argentina,
be reviewed. IMPSAT Argentina has not received any indication that any review is
being undertaken in respect of its contract with DGI, which is scheduled to
expire in the fourth quarter of 1996. IMPSAT Argentina and DGI have recently
entered into a one-year extension of IMPSAT Argentina's contract with DGI.
IMPSAT Argentina believes that its contract with DGI was awarded in compliance
with applicable law and does not believe that such matter will have an adverse
effect on its financial condition or results of operations.
DESCRIPTION OF COUNTRY OPERATIONS
The following are brief descriptions of certain specific matters relating
to the operations of the Company's subsidiaries in Argentina, Venezuela,
Colombia, Ecuador, Mexico and the United States.
IMPSAT ARGENTINA
BACKGROUND
IMPSAT Argentina, the first of the Company's subsidiaries, was established
in April 1988 and began commercial operations in October 1990. The Company holds
a 51% equity interest in IMPSAT Argentina. Other shareholders of IMPSAT
Argentina are Nevasa, which holds a 29.7% equity interest, STET International,
which holds an 11.5% equity interest, Credit Suisse, which holds a 4.8% equity
interest, and the Inter-American Investment Corporation, which holds a 3% equity
interest. The Inter-American Investment Corporation is an affiliate of the
Inter-American Development Bank. Nevasa and STET International have been having
discussions with third parties concerning the potential sale of their combined
41.2% interest in IMPSAT Argentina, which so far have been inconclusive. The
terms of the Notes would permit such a sale, subject to certain conditions.
IMPSAT Argentina is a leader in data transmission and VSAT services in
Argentina, and estimates that it had over 70% of the market share in VSAT
services and over 40% of the market share in data transmission services during
1995. Argentina has been the site of the initial introduction of each of the
services provided by the Company, except Interplus.
The Company's principal competitors in Argentina for the provision of
private telecommunications network services include Startel and Comsat
Investments Inc. ("Comsat Argentina"), a wholly-owned subsidiary of COMSAT,
which provides corporate data transmission services, primarily through VSAT and
SCPC technology.
IMPSAT Argentina had 363 customers at August 31, 1996. Financial
institution customers provided approximately 37% of IMPSAT Argentina's revenues
during 1995. The second largest sector of IMPSAT Argentina's customer base
consists of governmental agencies, which represented approximately 15% of its
revenues during 1995. IMPSAT Argentina's largest customers during 1995 included
Banco de la Nacion Argentina, a state-owned bank and the largest bank in
Argentina, with 525 branches throughout Argentina (9.1% of IMPSAT Argentina's
1995 revenues); the Argentine social security administration, which has 136
branch offices (5.7% of IMPSAT Argentina's 1995 revenues); the Argentine
national postal service, with over 5,500 branches, post offices and postal units
throughout the country (3.0% of IMPSAT Argentina's 1995 revenues); and YPF S.A.,
the largest company in Argentina, which is engaged in hydrocarbon exploitation
64
<PAGE> 66
(6.0% of IMPSAT Argentina's 1995 revenues). Revenues from IMPSAT Argentina's top
ten customers accounted for approximately 40% of IMPSAT Argentina's revenues
during 1995.
SELECTED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER NINE MONTHS ENDED
30, AUGUST 31,
----------------------------- ------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT FOR OPERATING AND OTHER DATA)
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Revenues from services......................... $34,672 $63,999 $80,346 $58,352 $62,939
Operating income............................... 12,726 13,886 14,327 11,384 13,611
Net income..................................... 6,805 12,464 4,472 3,722 3,031
EBITDA......................................... 18,296 24,605 30,394 23,083 27,505
Capital expenditures........................... 23,699 70,350 38,248 32,446 16,746
OPERATING DATA:
VSAT microstations installed................... 756 1,462 1,951 1,935 2,042
Dataplus earth stations installed.............. 114 236 355 347 394
Satellites linked.............................. 3 4 4 4 4
Leased satellite capacity (Mhz)................ 31.0 96.0 148.0 148.0 161.0
Teleports...................................... 1 1 1 1 1
Teleport antennas.............................. 8 11 12 12 12
Regional Teleports............................. 5 6 6 6 6
Teledatos Networks............................. 6 7 7 7 7
Customers...................................... 200 292 319 320 363
OTHER DATA:
Per capita GDP................................. $ 7,654 $ 8,239 $ 8,150
relative to U.S. ......................... 30.2% 31.0% 29.7%
Telephony revenue (U.S.$ millions)............. $ 4,147 $ 4,947 --
Per capita telephony revenues.................. 124 146 --
relative to U.S. ......................... 18.9% 21.4% --
Teledensity (lines in service/population x
100)......................................... 12.3 14.1 --
relative to U.S. ......................... 21.3% 23.7% --
Population (in millions)....................... 33.7 34.2 34.7
GDP growth rate (real)......................... 6.0% 7.4% (4.4)%
Inflation rate................................. 7.4% 3.9% 1.6%
</TABLE>
- ---------------
Sources: The WEFA Group -- Latin America Outlook. International
Telecommunication Union -- World Telecommunication Development
International Data and Statistics, 1996.
REGULATION
The supervision and control of the Argentine telecommunications sector is
under the jurisdiction of the CNT and the Secretary of Communications. Prior to
1989, telecommunication services in Argentina were provided by Empresa Nacional
de Telecomunicaciones ("ENTel"), the former state-owned national
telecommunications monopoly. In 1989, the Argentine government enacted a series
of laws to deregulate the telecommunications sector. Under the current regime,
"basic telephone services" are supplied domestically by Telefonica and Telecom
Argentina, pursuant to an exclusive license until 1997, with a possible
extension until 2000 at the option of such companies provided they meet certain
operating targets. International voice and transmission services are supplied by
Telintar, a joint venture between Telecom Argentina and Telefonica, which has an
exclusive license until at least 1997, with a possible extension until 2000 at
the option of Telintar, provided it meets certain requirements. Other services,
such as those rendered by IMPSAT Argentina, are provided on a non-exclusive
basis upon authorization by the CNT.
65
<PAGE> 67
IMPSAT Argentina obtained a permit in 1989 from the Executive Branch of the
Federal Government, which was converted into a license with no expiration date
in 1992, for the provision of data transmission services with ancillary voice
channels within Argentina. The license does not specify what is meant by
"ancillary" voice channels, and no official interpretation has been provided. In
the event that regulations or other administrative guidance defining "ancillary"
voice were to be issued in a manner that caused IMPSAT Argentina to restrict the
use of its networks, the Company could be adversely affected. IMPSAT Argentina's
license is subject to no material conditions and has no expiration date. Under
the terms of the license, IMPSAT Argentina may provide point-to-point voice
service in Argentina only if such voice transmission is accomplished without use
of the local public telephone networks and only in connection with providing a
service channel to its data transmission customers. IMPSAT Argentina is not
permitted under its license to provide data transmission services from Argentina
to points outside Argentina during the term of Telintar's statutory monopoly,
unless Telintar permits IMPSAT Argentina to provide such services.
IMPSAT Argentina provides value added services in the domestic and
international market pursuant to a license granted by the Secretary of
Communications in September 1995 to Teledatos, S.A., a wholly-owned subsidiary
of IMPSAT Argentina. Value added services include such services as electronic
data, voice and fax mail, fax store and forward and Internet access. Argentine
law requires that IMPSAT Argentina use international point-to-point trunk lines
leased from Telintar to provide value added services internationally.
IMPSAT Argentina has obtained licenses with no expiration date for the
provision of trunking and paging services within Argentina, although the Company
currently has no intention of entering into the business of providing trunking
and paging services. IMPSAT Argentina also has licenses with no expiration date
to provide videoconferencing services on a national and international level.
Although certain services are provided on a competitive basis, the CNT is
in charge of the authorization, supervision and control of the
telecommunications services. IMPSAT Argentina is required to pay the CNT a
monthly fee of 0.5% of its net revenues.
FACILITIES
The Company's private telecommunications network services are provided in
Argentina through the Company's fiber optic, microwave and satellite facilities.
The Company's principal transmission facilities in Argentina include the
Teleport in Buenos Aires, Regional Teleports located in Cordoba, Mendoza,
Rosario, Mar del Plata, Tucuman and La Plata, and Teledatos networks in Buenos
Aires, Cordoba, Mendoza, Rosario, Mar del Plata, Tucuman and La Plata, with an
aggregate of approximately 465 miles of fiber. In addition, IMPSAT Argentina
operates a digital microwave circuit that provides voice and data
telecommunications links between user sites in Buenos Aires and Mendoza. As of
August 31, 1996, the Company had installed approximately 2,042 VSAT
microstations and 394 Dataplus earth stations in Argentina. The Company operates
on both the C-band and Ku-band in Argentina with access to the Intelsat 706 and
709 satellites and the PAS-1 and Nahuel C1 satellites.
IMPSAT COLOMBIA
BACKGROUND
IMPSAT Colombia began operations in December 1992. The Company holds a
74.2% equity interest in IMPSAT Colombia, of which 8.9% is held directly and
65.3% held indirectly. Through Colinvertel S.A. ("Colinvertel"), a holding
company in which the Company holds a 71.7% equity interest, which holds a 91%
equity interest in IMPSAT Colombia. Other principal shareholders of Colinvertel
are Suramericana de Seguros and Suramericana de Capitalizacion, the insurance
and finance arms of the Sindicato Antioqueno (Suramericana de Seguros,
Suramericana de Capitalizacion and all other entities affiliated with the
Sindicato Antioqueno being referred to as the "Suramericana Group"), which
together hold a 27% equity interest in Colinvertel. Sindicato Antioqueno, which
was formed in Medellin, Colombia in the mid-1970s, is a group of over 100
financial services, food, textile and apparel, construction and real estate
companies related through cross-ownerships and interlocking directorates. Member
companies of the Sindicato Antioqueno include
66
<PAGE> 68
Banco Industrial Colombiano, one of the ten largest commercial banks in
Colombia; Cemento Argos, Colombia's largest cement manufacturer; and Nacional de
Chocolates, one of Colombia's largest food processing firms. Nevasa, Corporacion
IMPSA S.A. ("CORIM"), the holding company for the Pescarmona family, and Mr.
Alexander Rivelis, a director of IMPSAT Corporation, each hold less than a 1%
equity interest in IMPSAT Colombia.
IMPSAT Colombia has experienced significant growth since it began
operations. While the Company's original business plan for IMPSAT Colombia
contemplated the installation of approximately 1,000 VSAT microstations by 1998,
IMPSAT Colombia had approximately 1,015 VSAT microstations installed at
September 30, 1996. The Company estimates that it is the leader in terms of
market share in VSAT services and a leader in terms of the market share in data
transmission services at December 31, 1995.
The Company's principal competitors in Colombia are Telecom Colombia;
Colomsat, S.A., a privately owned provider of facsimile, data and voice
transmission services; Telegan, a provider of VSAT services; and Americatel
Colombia, a joint venture between ENTEL Chile and Grupo Santo Domingo,
Colombia's largest conglomerate, which provides voice, data and video services
primarily to Grupo Santo Domingo.
IMPSAT Colombia had 373 customers at September 30, 1996. Financial
institutions provided approximately 40% of IMPSAT Colombia's revenues for 1995.
The second largest sector of IMPSAT Colombia's customer base is comprised of
industrial companies (including oil companies) which provided approximately 25%
of IMPSAT Colombia's revenues for 1995. IMPSAT Colombia's largest customers
during 1995 included Banco de la Republica, Colombia's central bank; the
Colombian social security administration; Corporacion de Ahorro y Vivienda
(AHORRAMAS), a savings and loan institution; Banco Cafetero; and Banco de
Colombia. Revenues from IMPSAT Colombia's top ten customers accounted for
approximately 35% of IMPSAT Colombia's revenues for 1995.
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<PAGE> 69
SELECTED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------- ------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT FOR OPERATING AND OTHER DATA)
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Revenues from services......................... $ 2,777 $12,756 $22,417 $15,068 $25,021
Operating income (loss)........................ (2,794) 2,000 4,858 4,768 9,654
Net income (loss).............................. (970) (80) (135) (1,602) 1,587
EBITDA......................................... (2,038) 3,739 8,748 5,922 11,576
Capital expenditures........................... 6,746 14,220 19,684 17,205 8,990
OPERATING DATA:
VSAT microstations installed................... 175 441 812 723 1,064
Dataplus earth stations installed.............. 13 29 65 57 153
Satellites linked.............................. 1 1 2 2 3
Leased satellite capacity (Mhz)................ 16 23.9 34.4 34.4 55.98
Teleports...................................... 1 1 1 1 1
Teleport antennas.............................. 2 4 7 6 7
Regional Teleports............................. 1 3 3 3 3
Teledatos Networks............................. -- 4 4 4 4
Customers...................................... 58 135 271 188 373
OTHER DATA:
Per capita GDP................................. $ 1,590 $ 1,994 $ 2,257
relative to U.S. ......................... 6.3% 7.5% 8.2%
Telephony revenues (U.S. $ millions)........... -- 935 --
Per capita telephony revenues.................. -- $ 27 --
relative to U.S. ......................... -- 4.0% --
Teledensity (lines in service/population x
100)......................................... 8.2 11.0 --
relative to U.S. ......................... 14.2% 18.5% --
Population (in millions)....................... 34.0 34.5 35.1
GDP growth rate (real)......................... 5.4% 5.5% 5.2%
Inflation rate................................. 22.6% 22.6% 19.5%
</TABLE>
- ---------------
Sources: The WEFA Group -- Latin America Outlook. International
Telecommunication Union -- World Telecommunication Development
International Data and Statistics, 1996.
REGULATION
The telecommunications industry in Colombia is subject to regulation by the
Colombian Ministry of Communications. Since 1992, the Ministry of Communications
has pursued a policy of liberalization, and has encouraged joint ventures
between public and private telecommunications companies to provide new and
improved telecommunications services.
IMPSAT Colombia obtained a license in September 1991 which permits it to
operate national and international digital information transmission services for
twenty years. The license expires in 2011 and may be renewed at that time so
long as IMPSAT Colombia complies with the terms and conditions of the license
and any applicable laws and regulations. The license permits IMPSAT Colombia to
engage in digital voice, data and video transmission services, the provision of
value added services such as fax store and forward and electronic mail and
Internet access services, and authorizes the use by IMPSAT Colombia of radio
frequencies and satellite links in Colombia necessary to provide such services.
IMPSAT Colombia is prohibited by the terms of the license from connecting to the
Colombian public telecommunications network for purposes of reselling voice
communications.
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<PAGE> 70
IMPSAT Colombia is required to pay taxes equal to 5% of its net revenues to
the Ministry of Communications.
FACILITIES
The Company's private telecommunications network services are provided in
Colombia through fiber optic, microwave and satellite networks. The Company's
principal transmission facilities in Colombia include the Teleport and Teledatos
network in Bogota and Regional Teleports and Teledatos networks located in
Medellin, Cali and Barranquilla. The Company's Teledatos network in Bogota is
provided through a joint venture with the Empresa de Telecomunicaciones de
Santafe de Bogota ("ETB"), the Colombian PTO that provides local telephone
service in the Bogota region, under which ETB provides the fiber optic
infrastructure for the network while IMPSAT Colombia controls and monitors the
network, provides technical support and sells network services to customers. As
of September 30, 1996, IMPSAT Colombia had installed approximately 1,064 VSAT
microstations and 153 Dataplus earth stations in Colombia. IMPSAT Colombia
operates on the C-band with access to PAS-1 and the Intelsat 603 and 709
satellites.
IMPSAT VENEZUELA
BACKGROUND
IMPSAT Venezuela began operations in January 1993. The Company holds a 75%
equity interest in IMPSAT Venezuela. The remaining 25% equity interest in IMPSAT
Venezuela is held by Compania Suramericana de Construcciones, a construction
company within the Suramericana Group.
IMPSAT Venezuela had approximately 9% of the market share in VSAT services
and approximately 3.6% of the market share in data transmission services as of
December 31, 1995. The Company's principal competitors in Venezuela are Compania
Anonima Nacional de Telefonos de Venezuela ("CANTV"), the Venezuelan PTO, which
is operated by a consortium led by GTE Corporation; Infosat, C.A., a private
provider of data and video transmission services; MCI, which provides, data
transmission and value-added services in Venezuela; Telcel, one of Venezuela's
two cellular telephone providers and which also offers data transmission and
Internet services; and Bantel, which provides data and voice transmission
services.
IMPSAT Venezuela had 71 customers at September 30, 1996. IMPSAT Venezuela's
largest customers are generally large national and multinational corporations.
IMPSAT Venezuela's largest customers during 1995 included Corporacion Andina de
Fomento, a multilateral development bank; Reuters, an international news service
company; Banco Mercantil, Venezuela's second largest bank; Cigarrera Bigott,
Venezuela's largest cigarette manufacturer; and Compania Occidental de
Hidrocarburos, Inc., a subsidiary of Occidental Petroleum Corp. Revenues from
IMPSAT Venezuela's top ten customers accounted for approximately 79% of IMPSAT
Venezuela's revenues for 1995.
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<PAGE> 71
SELECTED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------- -------------------
1993 1994 1995 1995 1996
------- ------- ------- ------ ------
(IN THOUSANDS, EXCEPT FOR OPERATING AND OTHER DATA)
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Revenues from services........................ $ 246 $ 910 $ 2,204 $1,524 $3,105
Operating loss................................ (7,592) (2,790) (2,106) (615) (826)
Net loss...................................... (7,455) (2,582) (1,723) (1,717) (1,482)
EBITDA........................................ (7,592) (2,373) (1,675) (1,140) (822)
Capital expenditures.......................... 5,232 1,979 2,941 2,836 1,279
OPERATING DATA:
VSAT microstations installed.................. -- 22 38 34 146
Dataplus earth stations installed............. 2 6 20 20 53
Satellites linked............................. 1 1 2 3 3
Satellite capacity (Mhz)...................... 4.5 8.5 12.7 10.65 31.85
Teleports..................................... -- 1 1 1 1
Teleport antennas............................. -- 1 1 1 7
Teledatos Networks............................ -- 1 1 1 1
Customers..................................... 4 18 39 33 71
OTHER DATA:
Per capita GDP................................ $ 2,850 $ 2,688 $ 3,491
relative to U.S.......................... 11.2% 10.1% 12.7%
Telephony revenues (U.S. $ millions).......... $ 1,147 $ 1,040 --
Per capita telephony revenues................. 55 49 --
relative to U.S. ........................ 8.4% 7.2% --
Teledensity (lines in service/population x
100)........................................ 9.9 10.9 --
relative to U.S.......................... 17.1% 18.3% --
Population (in millions)...................... 20.7 21.2 21.7
GDP growth rate (real)........................ (0.3)% (2.8)% 2.0%
Inflation rate................................ 45.9% 70.8% 56.6%
</TABLE>
- ---------------
Sources: The WEFA Group -- Latin America Outlook. International
Telecommunication Union -- World Telecommunication Development
International Data and Statistics, 1996.
REGULATION
The Venezuelan telecommunications industry is regulated by the Comision
Nacional de Telecomunicaciones ("CONATEL"), which is under the jurisdiction of
the Ministry of Transport and Communications.
IMPSAT Venezuela obtained a license in December 1992, authorizing it to
build, maintain and operate a private telecommunications network for the
transmission of data, voice and video information. The license is valid for a
period of ten years, with an option to renew for an additional ten years. The
license prohibits IMPSAT Venezuela from providing its services through the
public switched telephone networks operated by CANTV and from switching and
sharing infrastructure with other operators of private telecommunications
networks.
A license was also issued to IMPSAT Venezuela in February 1996 for a period
of ten years, with an option to renew for an additional ten years, for the
provision of value added services such as fax store and forward, electronic mail
and Internet access. There are no prohibitions under this license with respect
to IMPSAT Venezuela's ability to switch with CANTV or other private networks in
connection with the provision of value added services.
IMPSAT Venezuela received a 10-year license which permits it to switch with
CANTV for the national and international transmission of data. The license would
not permit it to switch with CANTV in connection with the transmission of voice
until the year 2000. IMPSAT Venezuela is currently negotiating a concession
agreement with CONATEL pursuant to which IMPSAT Venezuela would be entitled to
exercise its rights under the license.
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<PAGE> 72
Under each of the licenses described above, IMPSAT Venezuela is or will be
required to pay taxes and fees equal to 5.5% of its gross revenues from the
services that are provided pursuant to such license.
FACILITIES
The Company's private telecommunications network services are provided in
Venezuela by fiber optic, microwave and satellite networks. The Company's
principal transmission facility in Venezuela is its Teleport in Caracas. The
Company also has a Teledatos network in Caracas. The Company had installed 146
VSAT microstations and 53 Dataplus earth stations in Venezuela as of September
30, 1996. The Company operates on the C-band in Venezuela utilizing the PAS-1
and the Intelsat 603 and 709 satellites.
IMPSAT Venezuela's plans for facilities-based expansion include the
installation of Regional Teleports to increase business in principal cities in
Venezuela, including Barquisimeto, Valencia, Maracaibo and Puerto Ordaz.
Additionally, IMPSAT Venezuela expects to install a second high-capacity antenna
at the Teleport in Caracas.
OPERATIONS IN OTHER COUNTRIES
IMPSAT ECUADOR
Background. The Company holds a 100% equity interest in IMPSAT Ecuador,
which began operations in January 1995. Its operating revenue for 1995 was $0.6
million. IMPSAT Ecuador's net losses for 1994 and 1995 were $0.5 million and
$1.3 million, respectively.
The data transmission market in Ecuador is currently dominated by Empresa
Estatal de Telecomunicaciones del Ecuador ("EMETEL"), the Ecuadoran state-owned
PTO. IMPSAT Ecuador is, however, the leading provider of private
telecommunications network services in Ecuador. The Company's other principal
competitors in Ecuador include Americatel del Ecuador S.A., which provides
national and international SCPC services as well as voice, paging and trunking;
Consorcio Ecuatoriano de Telecomunicaciones S.A., which provides national VSAT
services, national and international SCPC services, and cellular telephony; and
Ram Telecom Telecomunicaciones S.A., which provides international telephone
services and SCPC services between Quito and Guayaquil.
IMPSAT Ecuador had approximately 33 customers as of September 30, 1996.
Banks and financial institutions, provided approximately 56%, and industrial and
commercial companies provided approximately 44%, of IMPSAT Ecuador's revenues
for 1995.
IMPSAT Ecuador's largest customers at December 31, 1995 included Banco del
Pichincha, the third largest Ecuadoran bank; Aduanas, the Ecuadoran customs
agency; and Diners Club del Ecuador and Mastercard del Ecuador, two leading
credit card companies. Revenues from IMPSAT Ecuador's top ten customers
accounted for approximately 95% of its revenues for the fiscal year 1995. The
Company has recently entered into an agreement to provide international
communications services for the regional PTO located in the city of Cuenca.
Regulation. The telecommunications industry in Ecuador is regulated by the
Consejo Nacional de Telecomunicaciones, the Secretaria Nacional de
Telecomunicaciones and the Superintendencia de Telecomunicaciones. Ecuadoran law
provides for the privatization of the telecommunications industry in Ecuador
over a five year period ending in the year 2000.
IMPSAT Ecuador obtained a license in June 1994, which is effective for
fifteen years, to provide data, voice and video transmission services so long as
the provision of such services does not use the installed networks owned by
EMETEL or any other company granted a monopoly for the provision of fixed
telephony services. The license authorizes the installation, operation and
exploitation by IMPSAT Ecuador of a satellite system to offer national and
international information transmission services, including the construction of
two teleports (in Quito and Guayaquil), VSAT microstations and Dataplus earth
stations. IMPSAT Ecuador is required to pay an annual fee equal to 6% of its
revenues in connection with this license.
Facilities. The Company's private telecommunications network services are
provided in Ecuador through fiber optic, microwave and satellite links. The
Company operates on the C-band in Ecuador with
71
<PAGE> 73
access to PAS-1 satellite. A Teleport located in Quito, Ecuador was constructed
in September 1995. During the period in which the Quito Teleport was being
constructed, the Company's VSAT microstations in Ecuador utilized the Company's
Caracas, Venezuela Teleport for shared hub services. The Company also operates a
Regional Teleport in Guayaquil, Ecuador.
IMPSAT MEXICO
Background. IMPSAT Mexico began commercial operations in August 1995. The
Company's 99.9% equity interest in IMPSAT Mexico comprises all but one share of
IMPSAT Mexico's outstanding equity. IMPSAT Mexico's revenues for 1995 and for
the nine months ending September 30, 1996 were $12,500 and $137,000,
respectively. IMPSAT Mexico recorded a net loss of $1.2 million in 1995.
Because IMPSAT Mexico only began offering services in August 1995, its
current market share is insignificant. However, the Company believes that its
technical experience, know-how and commitment to customer service will enable it
to increase its revenues and market share.
The Company's principal competitors in Mexico include: Telecomunicaciones
de Mexico ("Telecom Mexico"), the PTO charged with the provision of national
satellite and telegraph services, including satellite transmission services;
Redes Via Satelites S.A. de C.V., which sells telecommunications equipment and
provides equipment maintenance services, and recently began providing
outsourcing services; SERSA/GeoComm, which provides teleport services; Vitacom
de Mexico S.A. de C.V., which sells and manufactures equipment, provides
maintenance and installation services, and recently began to offer teleport
services; Optel Telecommunications, S.A. de C.V., which offers data transmission
services and provides national and international telecommunications services;
and Satelitron, S.A. de C.V., which principally offers national and
international data transmission links.
As of December 31, 1995, IMPSAT Mexico had two customers: Wang de Mexico
S.A. de C.V. and Carvajal S.A. de C.V. Wang is a developer of computer equipment
software. Carvajal, headquartered in Colombia, publishes textbooks and books of
general interest and manufactures school products such as notebooks. Both
customers have entered into three year contracts.
Regulation. The telecommunications industry is regulated primarily by the
Secretaria de Comunicaciones y Transportes ("SCT"). An agency of the SCT,
Telecom Mexico, is charged with the regulation of national satellite and
telegraph services, including satellite transmission services. Telecom Mexico
supervises carriers and allocates electronic frequencies for satellite
communications.
IMPSAT Mexico obtained a permit from the SCT in May 1994, which authorizes
the installation, operation and exploitation by IMPSAT Mexico of a network of
earth stations to provide dedicated-link services, including VSAT services, for
the transmission of voice, data and videoconferencing signals. The permit
provides that such services must use Mexican satellites or those designated or
approved by the Mexican government. IMPSAT Mexico's permit imposes no
restrictions on IMPSAT Mexico's ability to carry voice or interconnect with the
public switched system. Interconnection of IMPSAT Mexico's network to networks
in other countries requires the approval of the SCT. IMPSAT Mexico plans to
initiate its network under the permit through a Teleport located in Mexico City
which will be equipped with two high-capacity antennas capable of both Ku-Band
and C-Band transmissions. The Teleport, which is scheduled for completion at the
end of November 1996, will provide dedicated-link and private network services
using satellites for the transmission of voice, data and video signals. While
IMPSAT Mexico's permit is valid for a period of fifteen years, its terms and
conditions may be revised for a nominal fee after the first five years if the
SCT believes such changes to be in the public interest. IMPSAT Mexico has the
right to renew the permit for an additional fifteen years if it has complied
with the provisions of the permit and agrees to accept any new conditions that
may be imposed by the SCT.
IMPSAT Mexico is required to pay 5% of its telecommunications income to the
Mexican government. In addition, IMPSAT Mexico is required to pay to the
government certain fees for having its signals transmitted and received by
satellite, and nominal fees for the installation of new earth stations.
72
<PAGE> 74
On June 7, 1995, the Mexican government promulgated a law which restricts
foreign investment in concession holders to no more than a 49% interest. The
Company has been advised by local Mexican counsel that this restriction does not
apply to IMPSAT Mexico because IMPSAT Mexico provides its services pursuant to a
permit, and does not hold a concession. In addition, the law does not apply to
concessions granted prior to its enactment.
Facilities. The Company operates on the C-band in Mexico with access to
PAS-1, which has been approved by the SCT, and to Solidaridad-II, a Mexican
satellite.
IMPSAT USA
Background. IMPSAT USA began offering Interplus services between Latin
America and North America in February 1996. The Company holds a 100% equity
interest in IMPSAT USA. IMPSAT USA had no operating revenue for 1995, and
operating expenses of $0.3 million. IMPSAT USA had revenues of $157,000 and
operating expenses of $855,000 during the first nine months of 1996.
IMPSAT USA expects intense competition in the market for international
private line network services between the United States and Latin America. Such
competition is expected to come primarily from the "Big Four" long-distance
carriers (AT&T, MCI, Sprint and Worldcom) in conjunction with Latin American
PTOs, as well as from alternative regional carriers. The Company believes that
IMPSAT USA is positioned to compete effectively by offering better end-to-end
customer service and quality assurance in Latin America through its regional
knowledge and in-country contacts using IMPSAT sister companies.
IMPSAT USA's target customer base can be divided into two distinct
segments: retail and wholesale. The retail segment consists of multinational
corporations with extensive voice and data communications needs, which are the
primary end-users in the United States/Latin American market for international
private-line services. IMPSAT USA's wholesale marketing campaign as presently
envisioned targets the Competitive Access Providers (CAPs) which have already
penetrated the corporate private line markets in major metropolitan areas
throughout the United States. Utilizing a teleport located in south Florida that
is leased from PanAmSat, IMPSAT USA currently provides Interplus service to four
customers. Intermedia Communications of Florida Inc., one of the largest CAPs in
the United States, has an Interplus link between Florida and its customer's
location in Medellin, Colombia. UBESA, the Ecuadoran subsidiary of Dole Fresh
Fruit International Ltd., and Business Technology Services, Inc., a call back
services provider based in Miami, Florida, each have Interplus links between
Florida and their locations in Ecuador. On June 2, 1996 IMPSAT USA signed a
five-year agreement to provide the U.S. multinational paper company,
Kimberly-Clark Corporation, with an Interplus link to Tocancipa, Colombia.
Regulation. The Federal Communications Commission ("FCC") exercises
exclusive U.S. jurisdiction over all facilities and services of communications
carriers to the extent that such facilities and services are used for interstate
or international communications. IMPSAT USA received an authorization from the
FCC in September 1995 to provide facilities-based telecommunications services,
including switched voice and data and private line services, between the United
States and various international points using certain international satellite
facilities. In connection with these services, IMPSAT USA also is authorized to
lease and operate any necessary U.S. connecting facilities. On July 1, 1996,
IMPSAT USA was granted a six-month Special Temporary Authorization to resell
telecommunications services of other international carriers between the United
States and various international points. IMPSAT USA and its customers may not,
however, connect private lines provided over its facilities to the public
switched network at either the United States or foreign end unless authorized to
do so by the FCC.
Facilities. IMPSAT USA has adopted an outsourcing strategy for its
Teleport facilities. IMPSAT USA intends to establish its point-of-presence in
leased facilities and intends to purchase switching hardware and software from
General Datacom and Cascade Communications Corporation.
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<PAGE> 75
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Certificates of Incorporation of IMPSAT Corporation and IMPSAT
Argentina, respectively, provide for an eight-member Board of Directors. The
directors of the Company and the Guarantor, respectively, will hold office until
the next annual meeting of their respective stockholders and until successors of
such directors have been elected and qualified, or until their earlier death,
resignation or removal.
The President of IMPSAT Corporation is elected at the annual meeting of
stockholders. The other officers are elected at the annual meetings of the Board
of Directors. All officers hold office until their successors are elected and
qualified, or until their earlier death, resignation or removal. The Chairman of
the Board of Directors of IMPSAT Argentina is elected at the regular annual
meeting of the Board of Directors. Officers of IMPSAT Argentina are appointed by
its Board of Directors.
Set forth below are the names, ages and positions of directors and
executive officers of the Company and the Guarantor as of September 30, 1996.
The officers designated as Vice Presidents of the Company are employees of
Resis, a wholly-owned subsidiary of the Company, which provides services to the
Company pursuant to a management services agreement with the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------- --- -------------------------------------------------
<S> <C> <C>
DIRECTORS
- ----------------------------------------
Enrique M. Pescarmona................... 54 Chairman of the Board; Director of IMPSAT
Argentina
</TABLE>
<TABLE>
<S> <C> <C>
Ricardo A. Verdaguer.................... 46 President and Chief Executive Officer;
Chairman of the Board of Directors of IMPSAT
Argentina
Roberto Vivo............................ 43 Director, Deputy Chief Executive Officer and Vice
President, Marketing; Director of IMPSAT
Argentina
Alexander Rivelis....................... 56 Director and Vice President, International
Development
Lucas Pescarmona........................ 26 Director
Sofia Pescarmona........................ 23 Director
Renato De Rimini........................ 45 Director
Girolamo Di Genova...................... 57 Director
EXECUTIVE OFFICERS
- ----------------------------------------
Hector Alonso........................... 39 Chief Operating Officer
Guillermo Jofre......................... 41 Vice President, Finance
Guillermo V. Pardo...................... 46 Vice President, Planning
Jose R. Torres.......................... 38 Vice President, Administration, Chief Accounting
Officer; Director of IMPSAT Argentina
Luca Minzolini.......................... 35 Vice President, Control Management
Norberto Daniel Musante................. 39 Vice President, Operations
Giulio Masserano........................ 43 Vice President, New Business
Alejandro Suarez del Cerro.............. 42 Vice President, Technology
Rafael Carchak Canes.................... 47 President and Director of IMPSAT Argentina
Claudio Albanese........................ 49 Director of IMPSAT Argentina
Archimede Del Vecchio................... 55 Director of IMPSAT Argentina
Pedro O. Mayol.......................... 57 Director of IMPSAT Argentina
Jorge Marine............................ 34 Manager, Administrator of IMPSAT Argentina
Maria Zavalski.......................... 31 Manager, Marketing of IMPSAT Argentina
Horacio Sajoux.......................... 44 President of IMPSAT Colombia
</TABLE>
74
<PAGE> 76
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------- --- -------------------------------------------------
<S> <C> <C>
Susana Gregori.......................... 39 Chairman of the Board of Directors and President
of IMPSAT Venezuela
Diego N. Rausei......................... 46 President of IMPSAT Mexico
Mariano Torre Gomez..................... 45 President of IMPSAT Ecuador
Richard Horner.......................... 45 President of IMPSAT USA
Federico Saurina........................ 45 President of Teledatos S.A., a wholly-owned
subsidiary of IMPSAT Argentina
</TABLE>
BIOGRAPHIES OF DIRECTORS AND EXECUTIVE OFFICERS
Information with respect to the business experience and the affiliations of
the directors and executive officers of the Company is set forth below.
Enrique M. Pescarmona has been Chairman of the Board of Directors of IMPSAT
Corporation since September 1994 and a member of the Board of Directors of
IMPSAT Argentina since March 1994. Mr. Pescarmona is also Chairman of CORIM and
Industrias Metalurgicas Pescarmona S.A.I.C. y F. ("IMPSA"). He is a director of
Lagarde, S.A. (a wine company), Ingenieria y Computacion S.A. ("ICSA") (a
manufacturer of electronic components), La Mercantil Andina S.A. (an insurance
company), Puerto Seco S.A. (a manufacturer of automobile parts), Buenos Aires al
Pacifico San Martin S.A. and Ferrocarriles Mesopotomico General Urquiza S.A.
(Argentine railway companies); and is Vice President of Henri Lagarde S.A. (an
agribusiness). Mr. Pescarmona is an electromechanical engineer with a master's
degree in economics and business administration from the University of Navarra
in Spain.
Ricardo A. Verdaguer has been President, Chief Executive Officer and a
member of the Board of Directors of IMPSAT Corporation since September 1994. Mr.
Verdaguer also has served as President of IMPSAT Argentina since April 1988
until February 1990 and has served as Chairman of the Board of Directors of
IMPSAT Argentina since 1990. Mr. Verdaguer served in a number of management
positions with IMPSA from 1976 to 1988, including as Manager of the Contracts
and Construction Department and Manager of the Commercial Department. Mr.
Verdaguer holds a degree in electromechanical engineering from Ingenieria de la
Universidad Juan Agustin Maza, Mendoza.
Roberto Vivo has been Deputy Chief Executive Officer, Vice President,
Marketing and a member of the Board of Directors of IMPSAT Corporation since
September 1994. Mr. Vivo has also served as Marketing Director of IMPSAT
Argentina from April 1988 to December 1994 and as a member of the Board of
Directors of IMPSAT Argentina since 1988 to the present. Mr. Vivo also serves as
Chairman of the Board of Directors of FAICSA, an Argentina company engaged in
public construction projects. Mr. Vivo holds a degree in business administration
from Universidad Argentina de la Empresa.
Alexander Rivelis has been Vice President of International Development and
a member of the Board of Directors of IMPSAT Corporation since December 1994.
Mr. Rivelis also serves as a member of the Board of Directors of IMPSAT USA. Mr.
Rivelis served as President of IMPSAT USA from 1995 to March 1996, President of
IMPSAT Colombia from 1991 to 1993, and has held a variety of managerial
positions with companies in the Pescarmona group from 1978 through 1990. Mr.
Rivelis holds a degree in electrical and mechanical engineering from the
University of Rosario, Argentina.
Lucas Enrique Pescarmona, the son of Enrique M. Pescarmona, has been a
member of the Board of Directors of IMPSAT Corporation since February 1996. From
1993 to 1995 he held positions in the Buenos Aires, Argentina office of Arthur
Andersen & Co. In 1995 he transferred to Tecnologica em Componentes Automotivas
Ltda., a Brazilian manufacturer of automotive parts that is part of the
Pescarmona group, as senior investment analyst in Brasil. Mr. Pescarmona is also
a member of the Board of Directors of Puerto Seco S.A., a company within the
Pescarmona group. Mr. Pescarmona holds degrees in Economics and Political
Science from the University of Pittsburgh and is currently completing a master
of business administration degree at SDA Bocconi in Milan.
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<PAGE> 77
Sofia Pescarmona, the daughter of Enrique M. Pescarmona, has been a member
of the Board of Directors of IMPSAT Corporation since February 1996. Ms.
Pescarmona has worked in the marketing area of IMPSAT Corporation since January
1995. Prior to this, since August 1994, Ms. Pescarmona worked as an accounts
assistant in the sales department of IMPSAT Argentina. Ms. Pescarmona holds a
degree in International Relations from Tufts University.
Renato De Rimini has been a member of the Board of Directors of IMPSAT
Corporation since December 1994. Mr. De Rimini previously held senior positions
with Telecom Italia with responsibility for the Latin America region and has
been in charge of business acquisition projects for STET International in Latin
America and in particular in Bolivia, Chile, Brazil and Argentina. Mr. De Rimini
currently holds the position of Director, Business Operations, with STET
International. Mr. De Rimini is a member of the Board of Directors of Entel
Bolivia, Intelcom San Marino and RTH Holland. Mr. De Rimini holds a degree in
telecommunications engineering.
Girolamo Di Genova has been a member of the Board of Directors of IMPSAT
Corporation since February 1996. Mr. Di Genova joined SIP, now Telecom Italia,
in 1967 and has since held several positions in the company, the latest of which
are: Regional Director in Venice (1986-89); Head of the Strategic Planning
(1989-91); Head of the Information Technologies (1991-92) and since January 1993
Head of the Business Division of Telecom Italia. He is a member of the boards of
various companies of the IRI-STET Group, and he was a member of the Technical
Superior Council of Parti e Telegrafi, an Italian PTO. Mr. Di Genova holds a
degree in electronic engineering and has completed postgraduate studies in
telecommunications at the Balileo Ferraris Institute, Turin, Italy.
Hector Alonso has been Chief Operating Officer of IMPSAT Corporation
beginning in September 1996 and was President of IMPSAT Colombia from September
1993 to August 1996. Prior to joining IMPSAT Colombia, Mr. Alonso had 14 years
of experience in a variety of senior management positions with companies in the
Pescarmona group. Mr. Alonso is a member of the Asociacion Nacional de Industria
of Colombia. Mr. Alonso holds a degree in industrial engineering from
Universidad Argentina de la Empresa.
Guillermo Jofre has been Vice President, Finance of IMPSAT Corporation
since May 1995. Prior to joining the Company, Mr. Jofre was Executive Vice
President of Banque Indosuez in Argentina from 1993 to 1995, and has had
approximately ten years of experience in management positions with companies in
Argentina, Germany and Switzerland. Presently, Mr. Jofre also serves as a member
of the Board of Directors of the investment fund Bemberg Inversiones S.A. Mr.
Jofre holds a degree in public accounting from University of Cordoba and an MBA
from Imede of Switzerland.
Guillermo V. Pardo has been Vice President, Planning of IMPSAT Corporation
since January 1995. Mr. Pardo was previously Managing Director of the Guido Di
Tella companies and has had over 20 years of experience in finance positions in
a number of companies in Argentina and Spain. Mr. Pardo is currently a member of
the Board of Directors of IMPSAT Argentina, FAICSA and the Fundacion Torcuato Di
Tella. Mr. Pardo holds a degree in business administration from Universidad de
Buenos Aires.
Jose R. Torres has been Vice President, Administration and Chief Accounting
Officer of IMPSAT Corporation since January 1995 and a Director of IMPSAT
Argentina since 1990. Mr. Torres served as external auditor of the Mendoza Stock
Exchange from 1982 to 1983. Mr. Torres previously worked as assistant finance
manager of IMPSA and as finance manager of IMPSAT Argentina until December 1994.
Mr. Torres holds a degree in public accounting from Universidad Nacional de
Cuyo.
Luca Minzolini has been Vice President, Control Management of IMPSAT
Corporation since December 1995. Prior to joining the Company, Mr. Minzolini had
10 years of experience in various management positions with the ENI Group,
including as Control Manager of Enichem Elastomers America Inc. from 1992 to
1995. Mr. Minzolini holds a degree in Business Administration from the
University of Rome, Italy and is a public accountant.
Norberto Musante has been Vice President, Operations of IMPSAT Corporation
since January 1995. Mr. Musante has held a number of management positions in the
Operations area of IMPSAT Argentina from 1990 to 1995. From 1980 to 1990, Mr.
Musante was Chief of the Logistic Department of Sisteval S.A., a
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<PAGE> 78
company engaged in the maintenance of radar systems and naval communications.
Mr. Musante holds a degree in electrical engineering from Universidad
Tecnologica Nacional.
Giulio Masserano has been Vice President, New Business of IMPSAT
Corporation since January 1995. Previously, Mr. Masserano has served as
Marketing Manager for IMPSAT Argentina from 1993 to 1994. Prior to joining the
Company, Mr. Masserano served in a number of management positions with STET and
its affiliates since 1985, including project leader for regulated and value
added services, and marketing expert for international projects related to
satellite activities. Mr. Masserano holds a degree in electronic engineering
from Universidad la Sapienza, Rome, Italy.
Alejandro Suarez del Cerro has been Vice President, Technology of IMPSAT
Corporation since January 1995. Previously, Mr. Suarez del Cerro has held a
number of management positions with IMPSAT Argentina, including the positions of
Technical Project Leader from 1988 to 1990, Technical Manager from 1990 to 1991
and Development Manager from 1991 to 1994. Mr. Suarez del Cerro holds a degree
in electronic engineering from Universidad de Buenos Aires.
Rafael Carchak Canes has been President and a Director of IMPSAT Argentina
since May 1995. Prior to joining the Company, Mr. Carchak served in a variety of
management positions with Eveready over a 15 year period, including Operations
Manager of Eveready Argentina from 1990 to 1992, and as President of Eveready
Argentina from 1992, in which position Mr. Carchak had responsibility for
Eveready's operations in Argentina, Paraguay and Chile. Mr. Carchak holds a
degree in engineering from Universidad Nacional de Buenos Aires.
Claudio Albanese has been a member of the Board of Directors of IMPSAT
Argentina since March 1996. Prior to joining IMPSAT Argentina, he held executive
positions with ITALCABLE-Servizi Cablegrafici Radiotelegrafici e Radioelettrici
S.p.A. ("ITALCABLE"), Telecom Italia S.p.A., Telemedia International, Inc.
(TMI), Ericsson Telecommunicazioni, Italy, Sirti S.p.A. and Mitel Corp. More
recently, he was appointed Managing Director of British Telecom, Italy and
Syncordia Italy. Mr. Albanese holds a degree in electronics.
Archimede Del Vecchio has been a member of the Board of Directors of IMPSAT
Argentina since March 1995. Mr. Del Vecchio, an engineer, previously held
executive positions with ITALCABLE and Telemedia International, Inc. (TMI). He
is presently International Manager with Telecom Italia S.p.A.
Pedro 0. Mayol has been a member of the Board of Directors of IMPSAT
Argentina since 1990. He also serves as a member of the Board of Directors of
several other Argentine corporations, including Lagarde S.A., ICSA, Puerto Seco
S.A., La Mercantil Andina S.A., CORIM and IMPSA. Mr. Mayol, who is a brother-in-
law of Enrique Pescarmona, is an architect.
Jorge Marine joined the Company as Manager, Administration in June 1995.
Previously, Mr. Marine was employed as a Manager, Administration and Finance by
BNL Inversiones, a company within the Banca Nazionale del Lavoro group. Mr.
Marine is a public accountant.
Maria Zavalski joined IMPSAT Argentina as Marketing Manager in April 1994.
Prior to joining IMPSAT Argentina she was employed by IBM Argentina as an
accounts executive in the marketing division. Ms. Zavalski holds a degree in
business administration.
Horacio Sajoux has been President of IMPSAT Colombia since September 1996.
Previously, Mr. Sajoux held several management positions with IMPSAT Colombia,
including General Director of Teledatos S.A., the joint venture entity formed by
IMPSAT Colombia and ETB; Vice President, Commercial and Technology; and
Commercial Manager and Director of Technology. Prior to joining IMPSAT Colombia
in 1992, Mr. Sajoux was employed in a number of management positions at IMPSAT
Argentina beginning in 1989. Mr. Sajoux received a degree in Electromechanical
Engineering from Universidad Nacional de Buenos Aires.
Susana Gregori has been President of IMPSAT Venezuela since September 1996
and before that from 1993 to November 1995. Ms. Gregori has also been Chairman
of the Board of Directors of IMPSAT
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<PAGE> 79
Venezuela since November 1995. Ms. Gregori holds a degree in industrial
engineering from Universidad Nacional de Cuyo.
Diego Nicasio Rausei has been President of IMPSAT Mexico since September
1994. Starting in 1980, Mr. Rausei has previously held various senior management
positions with companies of the Pescarmona group. Mr. Rausei holds a degree in
chemical engineering from Universidad del Litoral.
Mariano Torre Gomez has been President of IMPSAT Ecuador since June 1994.
Mr. Torre has served in a variety of positions involving engineering,
production, planning, business development and new markets for companies in the
Pescarmona group over a period of 17 years. Mr. Torre served four years at
IMPSAT Argentina in the Commercial and New Licenses Departments. Mr. Torre holds
a degree in engineering from Universidad Tecnologica Nacional.
Richard Horner has been President of IMPSAT USA since July 1995. Prior to
joining IMPSAT USA, Mr. Horner was South American Sales Manger for
Scientific-Atlanta Network Systems Group from 1991 to 1995, where he was
responsible for commercialization of satellite-based network products to both
PTOs and emerging private sector carriers. Mr. Horner holds a degree in
electrical engineering from University of Kansas and a degree in Latin American
studies from the University of Texas.
Federico Saurina has been President of Teledatos, S.A., a wholly-owned
subsidiary of IMPSAT Argentina responsible for the Global Fax business since
1994. Mr. Saurina served as Manager of Regional Teleports of IMPSAT Argentina
from 1991 to 1994, and as Purchasing Manager of Cielos del Sur-Austral Lineas
Aereas from 1989 to 1991. Mr. Saurina holds a degree in electromechanical
engineering from Universidad J.A. Maza, Mendoza.
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<PAGE> 80
EXECUTIVE COMPENSATION
The following tables set forth the compensation paid or accrued to the
chief executive officer and the four other most highly compensated executive
officers receiving over $100,000 per year for services rendered of each of the
Company and the Guarantor during fiscal year 1995. No bonuses were paid by the
Company or the Guarantor to such executive officers during fiscal year 1995. The
Company and the Guarantor do not maintain any long-term incentive plans and do
not grant stock appreciation rights, stock options or restricted stock awards.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- --------------------------------------------------------- ---- -------- ----- ------------
<S> <C> <C> <C> <C>
THE COMPANY
Ricardo A. Verdaguer..................................... 1995 $199,792 $-- $--
President and
Chief Executive Officer
Enrique M. Pescarmona.................................... 1995 $287,569 $-- $--
Chairman of the Board
Roberto Vivo............................................. 1995 $172,726 $-- $--
Director, Deputy Chief
Executive Officer and
Vice President, Marketing
Jose R. Torres........................................... 1995 $145,240 $-- $--
Vice President, Administration
Chief Accounting Officer
Alejandro Suarez del Cerro............................... 1995 $144,460 $-- $--
Vice President, Technology
THE GUARANTOR
Rafael Carchak Canes..................................... 1995 $128,700 $-- $--
President and
Chief Executive Officer
Daniel Horquescos(1)..................................... 1995 $123,077 $-- $--
</TABLE>
- ---------------
(1) In May 1995 Mr. Daniel Horquescos was replaced by Mr. Rafael Carchak Canes
as President and Chief Executive Officer of the Guarantor.
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<PAGE> 81
PRINCIPAL STOCKHOLDERS
The following table and the accompanying notes set forth certain
information concerning the beneficial ownership of IMPSAT Corporation's and
IMPSAT Argentina's common stock as of November 1, 1996 by (i) each person who
owned of record, or was known to own beneficially, more than five percent of
IMPSAT Corporation's Common Stock, (ii) each director, (iii) each executive
officer and (iv) all directors and executive officers as a group. Except as
otherwise indicated, each person listed in the table has informed the Company
that such person has (i) sole voting and investment power with respect to such
person's shares of Common Stock and (ii) record and beneficial ownership with
respect to such person's shares of Common Stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
-----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- --------------------------------------------------------------------- ---------- -------
<S> <C> <C>
IMPSAT Corporation
- ---------------------------------------------------------------------
Beneficial Owners of more than 5%
Nevasa Holdings Ltd.(1).............................................. 58,312,980 75.0%
17 Dame Street
Dublin 2, Ireland
STET International Netherlands NV(2)................................. 19,437,660 25.0%
6-8 Hoeckenrode
Amsterdam, The Netherlands
Directors and Executive Officers(1).................................. 0 0%
All Directors and Executive Officers as a Group (26 persons)(1)...... 0 0%
IMPSAT Argentina
- ---------------------------------------------------------------------
Beneficial Owners of more than 5%
Invertel S.A.(3)..................................................... 2,613 51.0%
Viamonte 1526
Buenos Aires, Argentina
Nevasa Holdings Ltd.(1).............................................. 1,519 29.7%
17 Dame Street
Dublin 2, Ireland
STET International Netherlands NV(2)................................. 590 11.5%
6-8 Hoeckenrode
Amsterdam, The Netherlands
Directors and Executive Officers(1).................................. 0 0%
All Directors and Executive Officers as a Group (10 persons)(1)...... 0 0%
</TABLE>
- ------------------
(1) Nevasa Holdings Ltd. ("Nevasa") is controlled by CORIM, Militello Ltd. and
Rotling International Corporation. CORIM, an Argentine corporation that
holds an 82.54% equity interest in Nevasa, is controlled by Mr. Enrique
Pescarmona, Chairman of the Board of Directors of IMPSAT Corporation, and
other members of the Pescarmona family and is a holding company for
businesses engaged in a variety of activities including property, casualty
and other insurance, heavy-steel capital goods, manufacturing auto parts,
cargo transportation and environmental services. Militello Ltd., a British
Virgin Islands corporation, holds an 11.62% equity interest in Nevasa and
is itself controlled by Mr. Roberto Vivo, Deputy Chief Executive Officer of
IMPSAT Corporation. Rotling International Corporation, a British Virgin
Islands corporation, holds a 5.84% equity interest in Nevasa and is itself
controlled by Mr. Ricardo Verdaguer, President and Chief Executive Officer
of IMPSAT Corporation.
(2) STET International Netherlands NV ("STET International") is a wholly-owned
subsidiary of STET International SpA. STET International SpA is in turn
held 51% by STET SpA ("STET"), 37% by
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<PAGE> 82
Telecom Italia and 12% by Telecom Italia Mobile, each of which are
controlled by IRI-Instituto per la Ricostruzione Industriale SpA.
(3) The Company holds a 99.9% equity interest in Invertel S.A.
The shareholders of IMPSAT Corporation and IMPSAT Argentina have entered
into shareholders agreements relating to the joint management of IMPSAT
Corporation and IMPSAT Argentina. The shareholders agreements provide STET with
veto rights with respect to certain significant corporate actions and provides
STET with the right of first refusal with respect to sales of IMPSAT Argentina's
capital stock.
STET RELATIONSHIP
In 1990 the STET group invested $10 million for 25% of IMPSAT Argentina;
and in 1994 STET International paid a total of $65.9 million for 25% of IMPSAT
Corporation (without IMPSAT Argentina). STET group employees are seconded to the
Company and its subsidiaries from time to time. The Company believes its
relationship with STET International provides it with additional expertise and
opportunities in the telecommunications business.
STET is the holding company for one of the world's largest
telecommunications operators, Telecom Italia, S.p.A. ("Telecom Italia"), through
which STET controls substantially all of the Italian telecommunications
industry. Telecom Italia was formed as part of a restructuring of Italy's
telecommunications industry into a single operator to compete more effectively
in the international marketplace. Telecom Italia was formed through the merger
in August 1994 of Italy's then-existing telecommunications companies, including
SIP-Societa Italiana per l'Esercizio delle Telecomunicazioni p.a. ("SIP"), the
carrier of national telecommunications services including data transmission,
cellular telephone and value added services, ITALCABLE-Servizi Cablegrafici
Radiotelegrafici e Radioelettrici S.p.A. ("ITALCABLE"), a company that managed
international telecommunications services, and TELESPAZIO Societa per Azioni per
le Comunicazioni Spaziali p.a., the satellite carrier for SIP, ITALCABLE and the
national broadcasting service. The shares of STET and Telecom Italia are
publicly traded in Italy. The Italian government recently announced plans to
privatize its controlling interest in STET in 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company in the normal course of its business provides private
telecommunications network services to companies in which CORIM, members of the
Pescarmona family and entities affiliated with the Suramericana Group have an
interest. Total telecommunications services provided to companies in which CORIM
or other members of the Pescarmona family have an interest during 1995 and for
the first nine months of 1996 totalled approximately $1.3 million. Total
telecommunications services provided to companies affiliated with the
Suramericana Group for the period from January 1, 1995 to September 30, 1996
totalled approximately $1.8 million. The following is a description of the most
significant of such transactions. Although the Company believes that
transactions with its affiliates are generally conducted on an arm's length
basis, conflicts of interest are inherent in such transactions.
IMPSAT Argentina telecommunications services to Industrias Metalurgicas
Pescarmona S.A.I.C. y F. ("IMPSA"), a company controlled by CORIM that produces
heavy steel capital goods, including hydromechanical equipment and cranes, and
through subsidiaries, engages in other businesses including cargo
transportation, auto parts manufacture and environmental services. Total
telecommunications services provided to IMPSA for the period from January 1,
1995 to August 31, 1996 equalled $533,000.
IMPSAT Argentina provides telecommunications services to Puerto Seco, S.A.
("Puerto Seco"), a company controlled by CORIM and IMPSA that produces wire
harnesses for automobile electrical systems and coil springs for automobile
suspension systems in Argentina and Brazil. Total telecommunications services
provided to Puerto Seco for the period from January 1, 1995 to August 31, 1996
equalled $141,000.
IMPSAT Argentina provides telecommunications services to Buenos Aires al
Pacifico San Martin S.A. ("BAPSA"), a company controlled by CORIM and IMPSA that
operates the San Martin Railway between
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<PAGE> 83
Buenos Aires and the Cuyo region in central-western Argentina and provides cargo
transportation services along the San Martin Railway. Total telecommunications
services provided to BAPSA for the period from January 1, 1995 to August 31,
1996 equalled $386,000.
IMPSAT Argentina provides telecommunications services to La Mercantil
Andina S.A., an insurance company owned by CORIM and members of the Pescarmona
family. Total telecommunications services provided to La Mercantil Andina S.A.
for the period from January 1, 1995 to August 31, 1996 equalled $210,000.
IMPSAT Argentina provides telecommunications services to Lagarde S.A., a
company owned by members of the Pescarmona family that owns and operates a
winery in the Mendoza area of Argentina. Total telecommunications services
provided to Lagarde S.A. for the period from January 1, 1995 to August 31, 1996
equalled $93,000.
IMPSAT Colombia provides telecommunications services to IMPSA Andina, S.A.
("IMPSA Andina"), a subsidiary of IMPSA that operates a production facility for
heavy steel capital goods near Bogota, Colombia. Total telecommunications
services provided to IMPSA Andina during 1995 and the first nine months of 1996
equalled $77,000. In addition, IMPSAT Colombia subleases office space at a
location in Bogota, Colombia from IMPSA Andina. Total lease payments from IMPSA
Andina to IMPSAT Colombia for the period from January 1, 1995 to September 30,
1996 totalled $73,000.
IMPSAT Colombia provides telecommunications services to several companies
within the Suramericana Group, including Suramericana de Seguros, an insurance
company, Corporacion Financiera Nacional y Suramericana S.A. ("Corfinsura"), a
financial institution, Susalud, a health services company, Proteccion S.A., a
pension fund, Suleasing, a finance company, and Sufinanciamento, a finance
company. For the period from January 1, 1995 to September 30, 1996, the total
amount of telecommunications services rendered to such companies equalled $1.0
million, $198,000, $253,000, $113,000, $103,000 and $235,000, respectively.
In addition, in the normal course of business the Company enters into
transactions with companies in which CORIM, members of the Pescarmona family or
the Suramericana Group had an interest. The following is a description of the
most significant of such transactions.
La Mercantil Andina acts from time to time as an insurance broker and an
insurer for IMPSAT Argentina. IMPSAT Argentina invoiced premiums to La Mercantil
Andina S.A. totalling $973,000 for the period from January 1, 1995 to August 31,
1996.
In connection with the purchase of telecommunications equipment from Hughes
Network Services pursuant to a financing from Citibank, N.A. that is guaranteed
by The Export-Import Bank of the United States, IMPSA International Inc., a
wholly-owned subsidiary of IMPSA located in Pittsburgh, Pennsylvania, acted as
supplier of such equipment to IMPSAT Argentina and received a commission of 3%
of the total value of the equipment subject to the Eximbank financing. The total
commissions paid by IMPSAT Argentina to IMPSA International Inc. in connection
with such transactions for the period from January 1, 1995 to August 31, 1996
equalled $165,000.
The Company receives technical assistance from Telecom Italia and
ITALCABLE, companies within the STET group and affiliates of STET International,
which assistance consists of the seconding of three employees from Telecom
Italia and ITALCABLE to the Company. Total payments to Telecom Italia and
ITALCABLE for such services for the period from January 1, 1995 to September 30,
1996 equalled $ .
IMPSAT Argentina received a loan of $5 million from IMPSA for a period of
30 days in March 1996 in connection with the refinancing of certain commercial
paper of IMPSAT Argentina. The loan, which bore interest at a rate of 15% per
annum, was repaid with the proceeds of the issuance of a subsequent series of
commercial paper of IMPSAT Argentina.
In December 1995, Mr. Vivo advanced IMPSAT Argentina $792,000. The loan,
which bore interest at a rate of 9.5% per annum, was repaid in May 1996.
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In December 1995, a company affiliated with Mr. Verdaguer advanced IMPSAT
Argentina $720,000. The loan, which bore interest at a rate of 13.8% per annum,
was repaid in May 1996. The interest rates on the loans to IMPSAT Argentina from
IMPSA, Mr. Vivo and Mr. Verdaguer were comparable to or less than prevailing
market rates. See "Management's Discussion and Analysis of Financial Condition
and Results of Operation -- Nine Months Ended September 30, 1996 Compared to
Nine Months Ended September 30, 1995 -- Interest Expense, Net."
Corfinsursa is a creditor of IMPSAT Colombia. As of September 30, 1996,
IMPSAT Colombia was indebted to Corfinsura for indebtedness in the amount of
$6.1 million. See "Description of Certain Indebtedness" for a summary of the
terms and conditions of such indebtedness.
Suramericana de Seguros acts from time to time as an insurance broker and
an insurer for IMPSAT Colombia. IMPSAT Colombia paid premiums to Suramerica de
Seguros totalling $1.0 million for the period from January 1, 1995 to September
30, 1996.
Susalud provides medical services on behalf of IMPSAT Colombia for its
employees. Total payments to Susalud for the period from January 1, 1995 to
September 30, 1996 totalled $244,000.
Certain other companies within the Suramericana group, including Suleasing
S.A. and Suleasing Panama, provide financial leasing services to IMPSAT
Colombia. The total payments by IMPSAT Colombia under leases from such companies
were $893,000 for the period from January 1, 1995 to September 30, 1996.
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following summary of the material provisions of certain agreements
governing certain long-term indebtedness of IMPSAT Argentina, IMPSAT Colombia
and IMPSAT Venezuela that will remain outstanding after the consummation of the
Offering. Such summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all of the provisions of such
agreements, including the definition of certain terms therein. Terms used and
not defined herein have the meanings given to them in the documents described
herein. Copies of such agreements are available upon request from the Company.
Itaco Agreements. In October 1993, Teledatos S.A., which became a
wholly-owned subsidiary of IMPSAT Argentina in 1994, through a series of
transactions, acquired Satelnet, S.A. ("Satelnet"), from Information,
Technology, Acquisition Corporation S.A. ("ITACO"). In connection with such
transaction, Teledatos S.A. entered into a stock purchase agreement with ITACO
for $3.0 million and assumed indebtedness of $7.0 million owed by Satelnet to
ITACO. Prior to such acquisition, Satelnet was a leading competitor of IMPSAT
Argentina. IMPSAT Argentina has since incorporated the private
telecommunications network systems of Satelnet into the operations of IMPSAT
Argentina. Pursuant to the agreements entered into with ITACO, Teledatos and
Satelnet agreed to pay the amounts owed to ITACO in eight equal semiannual
principal installments commencing in March 1995, with a final maturity on
September 30, 1998. The ITACO obligations, which had an outstanding balance of
$5.8 million as of August 31, 1996, bear interest at a rate per annum equal to
LIBOR plus 2.5% and are secured by a pledge of 99.9% of the capital stock of
Satelnet.
Credit Lyonnais Facility. IMPSAT Argentina is a party to a Loan and
Repayment Agreement with Credit Lyonnais dated April 9, 1996 (the "Credit
Lyonnais Facility") in the amount of $0.9 million as of August 31, 1996. IMPSAT
Argentina used the proceeds of the Credit Lyonnais Facility to acquire a 0.06%
interest in Intelsat. See "Business -- Infrastructure -- Satellites." The
principal amount of the Credit Lyonnais loan, which bears interest at a rate per
annum equal to LIBOR plus 1% payable quarterly, is payable in a single
installment on April 9, 2001.
The Credit Lyonnais Facility is secured by a first priority lien in IMPSAT
Argentina's interest in Intelsat, including all amounts payable by Intelsat to
IMPSAT Argentina in its capacity as a participant in Intelsat. The Credit
Lyonnais Facility contains certain covenants, including covenants limiting the
ability of IMPSAT Argentina to dispose of all or substantially all of its assets
and to effect mergers or consolidations into entities
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other than those that are controlled by IMPSAT Argentina. In addition, IMPSAT
Argentina has agreed to maintain its membership in Intelsat until the Credit
Lyonnais Facility is repaid in full.
Inter-American Investment Corporation Term Loan Agreement. IMPSAT Colombia
is party to a Term Loan Agreement dated as of March 2, 1994 (the "IIC Term Loan
Agreement") with the Inter-American Investment Corporation ("IIC'). Pursuant to
the IIC Term Loan Agreement, the IIC lent to IMPSAT Colombia a total of $12.0
million, of which $9.4 is outstanding as of September 30, 1996. The IIC Term
Loan is divided into two tranches, an A Loan and a B Loan. The outstanding
balance of the A Loan, which is currently $6.7 million, is repayable in ten
equal semiannual installments, with a final maturity on March 15, 2001, and
bears interest at a rate per annum equal to LIBOR plus 3.0%. The outstanding
balance of the B Loan, which is currently $2.9 million, is repayable in six
equal semiannual installments, with a final maturity on March 15, 1999, and
bears interest at a rate per annum equal to LIBOR plus 2.5%. The IIC Term Loan
Agreement is guaranteed by CORIM and by Colinvertel S.A., a subsidiary of IMPSAT
that holds a 90.9% interest in IMPSAT Colombia.
The IIC Term Loan Agreement contains certain covenants, including covenants
placing limitations on the ability of IMPSAT Colombia to create liens, incur
additional indebtedness, make capital expenditures and declare dividends in the
event of a default by IMPSAT Colombia under the IIC Term Loan Agreement. In
addition, IMPSAT Corporation and the Suramericana Group shareholders of IMPSAT
Colombia have agreed with IIC that they will maintain a majority interest in
Colinvertel during the term of the IIC Term Loan Agreement, and Colinvertel has
agreed to maintain a majority interest in IMPSAT Colombia during the term of the
IIC Term Loan Agreement.
The IIC notified IMPSAT Colombia in June 1996 of its position that IMPSAT
Colombia is not in compliance with applicable covenants relating to the maximum
permitted level of short-term debt and the maximum permitted debt to equity
ratio. IMPSAT Colombia's noncompliance with the maximum permitted level of
short-term debt was resolved by the refinancing of IMPSAT Colombia's short-term
debt with the proceeds of the Offering. Regarding compliance with IMPSAT
Colombia's debt to equity ratio, IMPSAT Colombia and IMPSAT Corporation have
reached an agreement in principle with IIC, pursuant to which agreement $7
million of the proceeds of the Offering being lent to IMPSAT Colombia will be
subordinated in the event of any payment default by IMPSAT Colombia under the
IIC Term Loan Agreement or in the event that EBITDA for IMPSAT Colombia for any
six-month period is less than $5 million. EBITDA for IMPSAT Colombia for the
six-month period ended June 30, 1996 was $7.5 million and EBITDA for the
nine-month period ended September 30, 1996 was $11.6 million. The Company
expects to execute definitive documentation with IIC regarding IIC's waiver and
amendments prior to the end of 1996.
IMPSAT Venezuela Credit Facility. IMPSAT Venezuela is a party to a Credit
Agreement dated September 30, 1995 (the "CAF Credit Facility") with the
Corporacion Andino de Fomento ("CAF"), a multilateral development agency
headquartered in Caracas, Venezuela. Pursuant to the CAF Credit Facility, CAF
extended to IMPSAT Venezuela a revolving line of credit of $1.0 million for
working capital purposes and a medium-term loan facility of $5.0 million for
capital expenditures. As of September 30, 1996, IMPSAT Venezuela had drawn down
the entire line of credit and loan facility and the outstanding balance of the
CAF Credit Facility as of such date was $5.9 million. The line of credit is
repayable in six equal semiannual installments commencing in October 1996, with
a current final maturity in April 1999 and bears interest at a rate per annum
equal to LIBOR plus 3.5%. The term loan is repayable in six equal semiannual
installments, commencing in March 1998 with a final maturity in March 2001 and
bears interest at a rate per annum equal to LIBOR plus 4.75%. The CAF Credit
Facility is guaranteed by IMPSAT Corporation and the Suramericana Group in
proportion to their shareholdings in IMPSAT Venezuela. The CAF Facility contains
certain covenants, including covenants placing limitations on IMPSAT Venezuela's
ability to enter into transactions out of the ordinary course of business or to
enter into profit-sharing arrangements with third parties.
IMPSAT Colombia Local Bank Facilities. IMPSAT Colombia is party to a
series of loan agreements with a group of local Colombian financial
institutions, including Corfinsura, a member of the Suramericana Group,
Corporacion Financiera del Valle S.A. ("Corfivalle"), Corporacion Financiera de
Caldas S.A. ("Corficaldas"), Corporacion Financiera Colombiana S.A.
("Corficolombiana") and Corporacion Financiera
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de Occidente S.A. ("Corfioccidente", and with Corfinsura, Corfivalle,
Corficaldas and Corficolombiana, the "Colombian Lenders").
Pursuant to a series of related agreements entered into between IMPSAT
Colombia and the Colombian Lenders between October 1993 and March 1995, IMPSAT
received loans, partially in U.S. dollars and partially in Colombian pesos, in
order to develop its private telecommunications network system infrastructure.
As of September 30, 1996, the total amount outstanding under such facilities
equalled the U.S. dollar equivalent of $12.8 million, of which approximately 19%
is denominated and payable in U.S. dollars and the remainder is denominated and
payable in Colombian pesos. Of such amount, approximately $6.1 million will be
payable to Corfinsura, $2.9 million will be payable to Corfivalle, $1.9 million
will be payable to Corficaldas, $941,000 will be payable to Corfioccidente and
$954,000 will be payable to Corficolombiana.
The terms of the outstanding obligations to the Colombian Lenders call for
such indebtedness to be repaid in equal semiannual installments with final
maturity dates in the fourth quarter of 2000. The majority of the obligations
have an initial principal repayment date falling in the second quarter of 1997,
although certain of the obligations to Corfinsura have initial principal payment
dates falling in the second quarter of 1996. The obligations bear interest,
payable semiannually, with interest rates on the U.S. dollar portions thereof
ranging from 8% per annum to 10% per annum and with interest rates on the
Colombian peso portions thereof ranging from 30% per annum to 41% per annum in
nominal terms in Colombian pesos.
IMPSAT Colombia's obligations to the Colombian Lenders are secured by
pledges of various items of telecommunications equipment comprising IMPSAT
Colombia's private telecommunications network infrastructure.
THE EXCHANGE OFFER
The Old Notes were sold by the Company on July 30, 1996 to a limited number
of institutional investors (the "Purchasers"). In connection with the sale of
the Old Notes, the Company and the Purchasers entered into a registration rights
agreement dated as of July 30, 1996 (the "Registration Rights Agreement"), which
requires the Company (i) to cause the Old Notes to be registered under the
Securities Act or (ii) to file with the Commission a registration statement
under the Securities Act with respect to the New Notes of the Company identical
in all material respects to the Old Notes, and to use its best efforts to cause
such registration statement to become effective under the Securities Act. The
Company is further obligated, upon the effectiveness of that registration
statement, to offer the holders of the Old Notes the opportunity to exchange
their Old Notes for a like principal amount of New Notes, which will be issued
without a restrictive legend and may be reoffered and resold by the holder
without restrictions or limitations under the Securities Act. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Exchange Offer is being made
pursuant to the Registration Rights Agreement to satisfy the Company's
obligations thereunder. The term "Holder" with respect to the Exchange Offer
means any person in whose name Old Notes are registered on the Company's books
or any other person who has obtained a properly completed assignment from the
registered holder.
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on , 1996; provided, however, that if the Company,
in its sole discretion, has extended the period of time during which the
Exchange Offer is open, the term "Expiration Date" means the latest time and
date to which the Exchange Offer is extended.
As of the date of this Prospectus, $125,000,000 aggregate principal amount
of the Old Notes is outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about , 1996, to all Holders
of Old Notes known to the Company. The Company's obligation to accept Old Notes
for exchange pursuant to the Exchange Offer is subject to certain customary
conditions as set forth under "-- Certain Conditions to the Exchange Offer"
below.
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The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving oral or
written notice of such extension to the Holders thereof as described below.
During any such extension, all Old Notes previously tendered will remain subject
to the Exchange Offer and may be accepted for exchange by the Company. Any Old
Notes not accepted for exchange for any reason will be returned without expense
to the tendering Holder thereof as promptly as practicable after the expiration
or termination of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 or any integral multiple thereof.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under "-- Certain Conditions to the Exchange Offer." The Company
will give oral or written notice of any extension, amendment, non-acceptance or
termination to the Holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued by means of a press release or
other public announcement no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
Only a registered holder of Old Notes may tender such Old Notes in the
Exchange Offer. The tender to the Company of Old Notes by a Holder thereof as
set forth below and the acceptance thereof by the Company will constitute a
binding agreement between the tendering Holder and the Company upon the terms
and subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal. Except as set forth below, a Holder who
wishes to tender Old Notes for exchange pursuant to the Exchange Offer must
transmit a properly completed and duly executed Letter of Transmittal, including
all other documents required by such Letter of Transmittal, to The Bank of New
York (the "Exchange Agent") at one of the address[es] set forth below under
"Exchange Agent" on or prior to the Expiration Date. In addition, either (i)
certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal, (ii) a timely confirmation of a book-entry
transfer ("a Book-Entry Confirmation") of such Old Notes, if such procedure is
available, into the Exchange Agent's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the Holder must comply with the guaranteed delivery
procedures described below. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF
TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's behalf, such owner must, prior
to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either make appropriate arrangements to register ownership of
the Old Notes in such beneficial owner's name or obtain a properly completed
bond power from the registered holder. The transfer of registered ownership may
take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "-- Withdrawal Rights"), as the case may be, must be guaranteed (see
"-- Guaranteed Delivery Procedures") unless the Old Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered Holder of the Old
Notes who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution (as defined below). In the event that
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signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, are required to be guaranteed, such guaranties must be by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Program or the Stock Exchanges
Medallion Program (collectively, "Eligible Institutions"). If Old Notes are
registered in the name of a person other than a signer of the Letter of
Transmittal, the Old Notes surrendered for exchange must be endorsed by or be
accompanied by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by the Company in its sole discretion, duly
executed by the registered holder exactly as the name or names of the registered
holder or holders appear on the Old Notes with the signature thereon guaranteed
by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or not to accept any
particular Old Note which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right to waive
any defects or irregularities or conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
right to waive the ineligibility of any Holder who seeks to tender Old Notes in
the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as the Company
shall determine. None of the Company, the Exchange Agent or any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing, and, unless waived by the
Company, proper evidence satisfactory to the Company of their authority to so
act must be submitted with the Letter of Transmittal.
By tendering, each Holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person receiving such New Notes,
whether or not such person is the Holder, and that neither the Holder nor such
other person has any arrangement or understanding with any person to participate
in the distribution of the New Notes. If any Holder or any such other person is
an "affiliate", as defined under Rule 405 of the Securities Act, of the Company
or is engaged in or intends to engage in, or has an arrangement or understanding
with any person to participate in, a distribution of such New Notes to be
acquired pursuant to the Exchange Offer, such Holder or any such other person
(i) may not rely on the applicable interpretation of the staff of the SEC and
(ii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes, where
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Notes. See "Plan of Distribution." The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See "-- Certain Conditions to the Exchange Offer" below. For purposes
of the Exchange Offer, the Company will be deemed to have accepted properly
tendered Old Notes for exchange when, as and if the Company has given oral or
written notice thereof to the Exchange Agent.
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For each Old Note accepted for exchange, the Holder of such Old Note will
receive as set forth below under "Description of the Notes -- Book-Entry,
Delivery and Form" a New Note having a principal amount equal to that of the
surrendered Old Note. Accordingly, registered holders of New Notes on the
relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid on the Old Notes or, if no interest
has been paid, from July 30, 1996. Old Notes accepted for exchange will cease to
accrue interest from and after the date of consummation of the Exchange Offer.
Holders whose Old Notes are accepted for exchange will not receive any payment
in respect of accrued interest on such Old Notes otherwise payable on any
interest payment date the record date for which occurs on or after consummation
of the Exchange Offer. If the Exchange Offer is not consummated and a Shelf
Registration Statement is not declared effective on or prior to January 30,
1997, the annual interest rate borne by the Notes will be increased by 0.5%. If
the Exchange Offer is not consummated and the Shelf Registration Statement is
not declared effective by July 30, 1997, the annual interest rate borne by the
Notes will be increased by an additional 0.5%. Upon consummation of the Exchange
Offer or the effectiveness of the Shelf Registration Statement, the interest
rate on the Notes will revert to the rate set forth on the cover page of this
Prospectus. See "Description of the Notes -- Registration Rights." Old Notes not
tendered or not accepted for exchange will continue to accrue interest from and
after the date of consummation of the Exchange Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
Holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering Holder thereof (or, in the case of Old
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry procedures described
below, such non-exchanged Old Notes will be credited to an account maintained
with such Book-Entry Transfer Facility) as promptly as practicable after the
expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or a facsimile thereof,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under "-- Exchange Agent" on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
Holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) on or prior to 5:00 P.M., New York City
time, on the Expiration Date, the Exchange Agent receives from such Eligible
Institution a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form
provided by the Company (by telegram, telex, facsimile transmission, mail or
hand delivery), setting forth the name and address of the Holder of Old Notes
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and the amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the Letter
of Transmittal will be deposited by the Eligible Institution within three NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 P.M., New
York City time, on the Expiration Date. For a withdrawal to be effective, a
written notice of withdrawal must be received by the Exchange Agent at one of
the addresses set forth below under "-- Exchange Agent." Any such notice of
withdrawal must specify the name of the person having tendered the Old Notes to
be withdrawn, identify the Old Notes to be withdrawn (including the principal
amount of such Old Notes), and (where certificates for Old Notes have been
transmitted) specify the name in which such Old Notes are registered, if
different from that of the withdrawing Holder. If certificates for Old Notes
have been delivered or otherwise identified to the Exchange Agent, then, prior
to the release of such certificates the withdrawing Holder must also submit the
serial numbers of the particular certificates to be withdrawn and a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution
unless such Holder is an Eligible Institution in which case such guarantee will
not be required. If Old Notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination will be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
Holder thereof without cost to such Holder (or, in the case of Old Notes
tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Old Notes will be credited to an account maintained with
such Book-Entry Transfer Facility for the Old Notes) as soon as practicable
after withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "-- Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, and subject to
its obligations pursuant to the Registration Rights Agreement, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such New Notes for exchange, any of the following
events shall occur:
(i) any injunction, order or decree shall have been issued by any
court or any governmental agency that would prohibit, prevent or otherwise
materially impair the ability of the Company to proceed with the Exchange
Offer; or
(ii) the Exchange Offer will violate any applicable law or any
applicable interpretation of the staff of the Commission.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company in whole or in part at any time and from time to time in
its sole discretion. The failure by the Company at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
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In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order is threatened by the SEC or in effect with respect
to the Registration Statement of which this Prospectus is a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended.
The Exchange Offer is not conditioned on any minimum principal amount of
Old Notes being tendered for exchange.
EXCHANGE AGENT
The Bank of New York has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at one of the addresses set forth below. Questions and requests
for assistance, requests for additional copies of this Prospectus or of the
Letter of Transmittal and requests or Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
The Bank of New York, Exchange Agent
By Mail:
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Operations, 7E
By Hand or Overnight Courier:
101 Barclay Street
New York, New York 10286
Attn: Securities Processing Window
Ground Level Reorganization, 7E
By Facsimile:
212-571-3080
Confirm by Telephone:
212-815-2742
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include registration fees, fees and
expenses of the Exchange Agent and Trustee, accounting and legal fees and
printing costs, among others.
TRANSFER TAXES
Holders who tender their Old Notes for exchanges will not be obligated to
pay any transfer taxes in connection therewith, except that Holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of the
applicable transfer tax thereon.
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CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act and applicable state
securities laws. The Company does not currently anticipate that it will register
Old Notes under the Securities Act. See "Description of the Notes -- Exchange
Offer; Registration Rights". Based on interpretations by the staff of the SEC,
as set forth in no-action letters issued to third parties, the Company believes
that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold or otherwise transferred by holders thereof
(other than any such holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course or such holders'
business and such holders, other than broker-dealers, have no arrangement or
understanding with any person to participate in the distribution of such New
Notes. However, the SEC has not considered the Exchange Offer in the context of
a no-action letter and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the Exchange Offer as in such other
circumstances. Each Holder, other than a broker-dealer, must acknowledge that it
is not engaged in, and does not intend to engage in, a distribution of such New
Notes and has no arrangement or understanding to participate in a distribution
of New Notes. If any Holder is an affiliate of the company or is engaged in or
intends to engage in or has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such Holder (i) may not rely on the applicable interpretations of the staff of
the SEC and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes pursuant to the Exchange Offer must acknowledge that such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities and that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution". In addition, to comply with the securities
laws of certain jurisdictions, if applicable, the New Notes may not be offered
or sold unless they have been registered or qualified for sale in such
jurisdictions or any exemption from registration or qualification is available
and is complied with. The Company has agreed, pursuant to the Registration
Rights Agreement, subject to certain limitations specified therein, to register
or qualify the New Notes for offer or sale under the securities laws of such
jurisdictions as any holder reasonably requests in writing. Unless a holder so
requests, the Company does not currently intend to register or qualify the sale
of the New Notes in any such jurisdictions.
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DESCRIPTION OF THE NOTES
The Old Notes were issued under an Indenture, dated as of July 30, 1996
(the "Indenture"), among the Company, as issuer, IMPSAT Argentina, as guarantor
(the "Guarantor"), and The Bank of New York, as Trustee (the "Trustee"). The New
Notes also will be issued under the Indenture. The Old Notes and the New Notes
will be treated as a single class of securities under the Indenture. The
following summary of certain provisions of the Indenture does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Indenture, including the definitions of certain terms
therein and those terms made a part thereof by the Trust Indenture Act of 1939,
as amended. A copy of the Indenture is available from the Company upon request.
Whenever defined terms of the Indenture not otherwise defined herein are
referred to, such defined terms are incorporated herein by reference. As used in
this "Description of the Notes," the term "Company" means IMPSAT Corporation, a
Delaware corporation, and excludes its Subsidiaries. The term "Notes" means the
New Notes and the Old Notes treated as a single class.
GENERAL
The Notes will be unsecured senior obligations of the Company, limited to
$125 million aggregate principal amount, and will mature on July 15, 2003. Each
Note will bear interest at the rate per annum shown on the front cover of this
Memorandum from the Closing Date, or from the most recent Interest Payment Date
to which interest has been paid or provided for, payable semiannually (to
Holders of record at the close of business on the July 1 or January 1
immediately preceding the Interest Payment Date) on July 15 and January 15 of
each year, commencing January 15, 1997.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, the City of New York (which initially will
be the corporate trust office of the Trustee at 101 Barclay Street, Floor 21
West, New York, New York 10286); provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of the Holders as
such address appears in the Security Register.
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 of principal amount and any integral multiple thereof.
No service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection
therewith.
For purposes of determining compliance with the Indenture, the U.S. dollar
equivalent of any amounts denominated in a foreign currency shall be calculated
using the noon dollar buying rate in New York City for wire transfers of such
currency as published by the Federal Reserve Bank of New York on the date such
foreign currency amount is received, incurred or paid. For other financial
reporting purposes, currency translations will be performed in accordance with
U.S. GAAP.
OPTIONAL REDEMPTION WITH PUBLIC OR PRIVATE EQUITY PROCEEDS
At any time on or prior to July 15, 1999, the Company may, at its option
from time to time, redeem Notes having an aggregate principal amount of up to
$25 million at a redemption price equal to 112.125% of the principal amount
thereof on the redemption date, together with accrued and unpaid interest
thereon, with the Net Cash Proceeds of one or more public or private issuances
and sales of Common Stock of the Company; provided that (i) Notes having an
aggregate principal amount of at least $100 million remain outstanding after
each such redemption and (ii) each such redemption occurs within 180 days after
consummation of any such issuance or sale.
In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not listed on a national securities exchange, on a
pro rata basis or by lot; provided that no Note of $1,000 in principal amount or
less shall be redeemed in part. If any Note is to be redeemed in part only, the
notice of redemption relating to such Note shall state the portion of the
principal amount thereof
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to be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note.
GUARANTEE
The Company's obligations under the Notes are fully and unconditionally
guaranteed on a senior basis by the Guarantor; provided that the Note Guarantee
shall not be enforceable against the Guarantor in an amount in excess of the net
worth of the Guarantor at the time that determination of such net worth is,
under applicable law, relevant to the enforceability of such Note Guarantee.
Such net worth shall include any claim of the Guarantor against the Company for
reimbursement and any claim against any grantor of a Subsidiary Guarantee for
contribution.
RANKING
The Indebtedness evidenced by the Notes and the Note Guarantee will rank
pari passu in right of payment with all existing and future unsubordinated
indebtedness of the Company or the Guarantor and senior in right of payment to
all existing and future subordinated indebtedness of the Company or the
Guarantor, respectively. At September 30, 1996, on an as adjusted basis after
giving effect to the Offering and the defeasance and repayment of $61.5 million
of other short-term debt to be repaid with the proceeds of the Notes, the
Company (on an unconsolidated basis) and the Guarantor (on a consolidated basis)
would have had approximately $4.5 million of indebtedness other than the Notes
(which represents a guarantee of indebtedness of IMPSAT Venezuela) and $31.1
million of indebtedness, respectively, all of which would have been senior
indebtedness. The Company is a holding company. As an equity holder of its
subsidiaries, the right of the Company to receive assets from a subsidiary upon
the bankruptcy, liquidation or reorganization of such subsidiary (and therefore
the right of the holders of the Notes to participate in those assets) will be
effectively subordinated to all existing and future liabilities (including trade
payables) of the Company's subsidiaries other than the Guarantor except to the
extent that the Company is recognized as a creditor of the subsidiary. Although
the proceeds of the Old Notes have been or will be distributed to the Company's
subsidiaries in the form of intercompany loans (thereby creating a
creditor-debtor relationship between the Company and its subsidiaries), there
are no restrictions upon the Company's ability to capitalize such amounts at a
later date. On such date on such as adjusted basis, the Company's Subsidiaries
(other than the Guarantor) would have had approximately $47.3 million of
liabilities (excluding inter-company payables to the Company or the Guarantor),
including approximately $32.4 million of indebtedness. At such date and on such
an as adjusted basis, the Company's operating subsidiaries (including the
Guarantor) had a total of approximately $22.3 million of secured indebtedness.
The Notes would also be subordinated to certain statutorily created preferences
in the countries in which the Company's subsidiaries operate with respect to
certain liabilities of the Company's subsidiaries, such as accrued tax
liabilities and accrued salary, severance, social security and pension
liabilities. See "Risk Factors -- Substantial Indebtedness" and "-- Holding
Company Structure: Effective Subordination of Notes to Obligations of
Subsidiaries."
REGISTRATION RIGHTS
The Company has agreed pursuant to the Registration Rights Agreement to use
its best efforts to cause to be filed a registration statement covering the
offering by the Company of the New Notes, to have the Exchange Offer consummated
not later than 60 days after the effective date of such registration statement
and to have such registration statement remain effective until the closing of
the Exchange Offer.
The Company and the Guarantor also agreed that in the event that the
Exchange Offer is not consummated by January 30, 1997, the Company will use its
best efforts (i) to cause to be filed as soon as possible, a shelf registration
statement (the "Shelf Registration Statement") providing for the sale by the
holders of all of the Old Notes; (ii) to have such Shelf Registration Statement
declared effective by the Commission; and (iii) to keep the Shelf Registration
continuously effective until July 30, 1999 or such shorter period that will
terminate when all of the Old Notes have been sold pursuant to the Shelf
Registration Statement. The Registration Rights Agreement provides that in the
event that the Exchange Offer is not consummated and a Shelf Registration
Statement is not declared effective on or prior to January 30, 1997, the
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annual interest rate borne by the Notes will be increased by 0.5%. If the
Exchange Offer is not consummated and the Shelf Registration Statement is not
declared effective by July 30, 1997, the annual interest rate borne by the Notes
will be increased by an additional 0.5%. Upon consummation of the Exchange Offer
or the effectiveness of the Shelf Registration Statement, the interest rate on
the Notes will revert to the rate set forth on the cover page of this
Prospectus.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. Reference is made to the
Indenture for the full definition of all terms as well as any other capitalized
term used herein for which no definition is provided.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Restricted Subsidiaries (or, for
purposes of determining whether the Guarantor may pay a dividend on or purchase
its Capital Stock under the "Limitation on Restricted Payments" covenant, of the
Guarantor and its Restricted Subsidiaries) for such period determined in
conformity with GAAP; provided that the following items shall be excluded in
computing Adjusted Consolidated Net Income (without duplication): (i) the net
income of any Person (other than net income attributable to a Restricted
Subsidiary) in which any Person (other than the Company or any of its Restricted
Subsidiaries) has a joint interest and the net income of any Unrestricted
Subsidiary, except to the extent of the amount of dividends or other
distributions actually paid to the Company or any of its Restricted Subsidiaries
by such other Person or such Unrestricted Subsidiary during such period; (ii)
solely for the purposes of calculating the amount of Restricted Payments that
may be made pursuant to clause (C) of the first paragraph of the "Limitation on
Restricted Payments" covenant described below (and in such case, except to the
extent includable pursuant to clause (i) above), the net income (or loss) of any
Person accrued prior to the date it becomes a Restricted Subsidiary or is merged
into or consolidated with the Company or any of its Restricted Subsidiaries or
all or substantially all of the property and assets of such Person are acquired
by the Company or any of its Restricted Subsidiaries; (iii) the net income of
any Restricted Subsidiary (other than the Guarantor) (A) to the extent that the
declaration or payment of dividends or similar distributions by such Restricted
Subsidiary of such net income is not at the time permitted by the operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Restricted
Subsidiary; provided that, in calculating the amount of EBITDA for the purpose
of determining whether a Restricted Subsidiary may Incur Indebtedness under
clause (i)(B) of the second paragraph of the "Limitation on Indebtedness"
covenant, such net income shall not be excluded as a result of provisions (for
the benefit of owners (other than the Company, the Guarantor or any of their
Subsidiaries) of a any Common Stock of such Restricted Subsidiary) that are
contained in a stockholders' agreement, joint venture agreement or similar
agreement among owners of such Common Stock; and (B) equal to the portion, if
any, thereof that would be required to be withheld for taxes with respect to the
payment of dividends or distributions on the Capital Stock of such Restricted
Subsidiary during the relevant period if such net income were to be declared and
distributed to the shareholders of such Restricted Subsidiary; (iv) any gains or
losses (on an after-tax basis) attributable to Asset Sales; (v) except for
purposes of calculating the amount of Restricted Payments that may be made
pursuant to clause (C) of the first paragraph of the "Limitation on Restricted
Payments" covenant described below, any amount paid or accrued as dividends on
Preferred Stock of the Company or any Restricted Subsidiary owned by Persons
other than the Company and any of its Restricted Subsidiaries; and (vi) all
extraordinary gains and extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" means the total amount of
assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company
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and its Restricted Subsidiaries (excluding intercompany items) and (ii) all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, all as set forth on the quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in conformity with GAAP and most recently sent to holders pursuant to
the "Commission Reports and Reports to Holders" covenant.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries; provided that such Person's
primary business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such investment or (ii)
an acquisition by the Company or any of its Restricted Subsidiaries of the
property and assets of any Person other than the Company or any of its
Restricted Subsidiaries that constitute substantially all of a division or line
of business of such Person; provided that the property and assets acquired are
related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such acquisition.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transactions) in one transaction
or a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property and assets of the Company or any of its Restricted
Subsidiaries outside the ordinary course of business of the Company or such
Restricted Subsidiary and, in each case, that is not governed by the provisions
of the Indenture applicable to mergers, consolidations and sales of assets of
the Company; provided that "Asset Sale" shall not include (A) sales or other
dispositions of equipment that has become obsolete or no longer useful in the
business of the Company or its Restricted Subsidiaries or inventory, receivables
and other current assets; (B) dispositions of assets (including Common Stock) of
the Company or any of its Restricted Subsidiaries, in substantially simultaneous
exchanges for consideration consisting of any combination of cash, Temporary
Cash Investments and assets (including Capital Stock of another Person) that are
used or useful in the telecommunications business of the Company or its
Restricted Subsidiaries, if such consideration has an aggregate fair market
value substantially equal to the fair market value of the assets so disposed of;
provided, however, that any cash or Temporary Cash Investments received by the
Company or any of its Restricted Subsidiaries pursuant to any transaction
described in clause (B) above shall be applied in accordance with clause (A) or
(B) of the first paragraph of the "Limitation on Asset Sales" covenant; and (C)
issuances and sales of Common Stock of Restricted Subsidiaries in accordance
with clause (v) of the second paragraph of the "Limitation on the Issuance of
and Sale of Capital Stock of Restricted Subsidiaries" covenant.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Buenos Aires Teledatos Entity" means any entity that (i) owns
substantially all of the assets that, as of the Closing Date, constitute (A) the
Guarantor's Teledatos fiber optic ring (and equipment primarily related to such
fiber optic ring, including, without limitation, microwave radios that
constitute a part of such ring) in Buenos Aires and (B) the microwave radio link
between such ring and Mendoza, Argentina, (ii) is designated as the Buenos Aires
Teledatos Entity in an Officers' Certificate delivered to the Trustee; (iii) is
not a Subsidiary of the Company or the Guarantor and (iv) as of the date that
such entity ceased to be a Subsidiary
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of the Company and the Guarantor, did not own any material assets other than
those referred to in (A) or (B) above that it received from the Company or any
other Restricted Subsidiary.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether now outstanding or
issued after the date of the Indenture, including, without limitation, all
Common Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person; and "Capitalized
Lease Obligations" means the discounted present value of the rental obligations
under such lease.
"Change of Control" means such time as (i) (a) prior to the occurrence of a
Public Market, a "person" or "group" (within the meaning of Section 13(d) or
14(d)(2) of the Exchange Act) becomes the ultimate "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act) of Voting Stock representing more
than the voting power of the Voting Stock of the Company than is held by the
Existing Stockholders and (b) after the occurrence of a Public Market, a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of Voting Stock representing more than 30% of the voting power of
the total Voting Stock of the Company on a fully diluted basis and such
ownership is greater than the voting power of the Voting Stock held by the
Existing Stockholders; (ii) individuals who on the Closing Date constitute the
Board of Directors (together with any new directors whose election by the Board
of Directors or whose nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the members of the Board of
Directors then in office who either were members of the Board of Directors on
the Closing Date or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the members of the
Board of Directors then in office; (iii) any Existing Stockholder other than
STET (A) transfers any of its ownership interest in Capital Stock of the
Guarantor to any Person that is not an Existing Stockholder or a Permitted
Investor and (B) fails, within 10 days of such transfer, to make a cash equity
investment in the Company in an amount equal to 90% of the fair market value of
the ownership interests so transferred by it, net of any taxes actually payable
by it or its affiliates as a result of such transfer; provided that any transfer
of any such ownership interest by any Existing Stockholder to STET shall be
deemed to be a "Change of Control" if (1) a principal purpose of such transfer
was to avoid the provisions of this clause (iii) and (2) STET (A) subsequently
transfers such ownership interest and (B) fails, within 10 days of such
transfer, to make the cash equity investment referred to in clause (iii) (B)
above; or (iv) the Company shall cease to beneficially own Voting Stock
representing a majority of the voting power of the Voting Stock of the
Guarantor.
"Closing Date" means the date on which the Notes are originally issued
under the Indenture.
"Consolidated EBITDA" means, for any period, the sum of the amounts for
such period of (i) Adjusted Consolidated Net Income, (ii) Consolidated Interest
Expense, to the extent such amount was deducted in computing Adjusted
Consolidated Net Income, (iii) income taxes, to the extent such amount was
deducted in calculating Adjusted Consolidated Net Income (other than income
taxes (either positive or negative) attributable to extraordinary and
non-recurring gains or losses or sales of assets), (iv) depreciation expense, to
the extent such amount was deducted in calculating Adjusted Consolidated Net
Income, (v) amortization expense, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income, and (vi) all other non-cash items
reducing Adjusted Consolidated Net Income (other than items that will require
cash payments and for which an accrual or reserve is, or is required by GAAP to
be, made), less all non-cash items increasing Adjusted Consolidated Net Income,
all as determined on a consolidated basis for the Company and its Restricted
Subsidiaries in conformity with GAAP; provided that, if any Restricted
Subsidiary (other than the Guarantor) is not a Wholly Owned Restricted
Subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise
reduced in accordance with GAAP) by an amount equal to (A) the amount of the
Adjusted Consolidated Net Income attributable to such Restricted Subsidiary
multiplied by (B) the quotient of (1) the number of shares of outstanding Common
Stock of such Restricted
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Subsidiary not owned on the last day of such period by the Company or any of its
Restricted Subsidiaries divided by (2) the total number of shares of outstanding
Common Stock of such Restricted Subsidiary on the last day of such period.
"Consolidated Interest Expense" means, for any period, the aggregate amount
of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and interest
paid or accrued (by any Person) on Indebtedness that is Guaranteed or secured by
the Company or any of its Restricted Subsidiaries) and all but the principal
component of rentals in respect of Capitalized Lease Obligations paid, accrued
or scheduled to be paid or to be accrued by the Company and its Restricted
Subsidiaries during such period; excluding, however, (i) any amount of such
interest of any Restricted Subsidiary if the net income of such Restricted
Subsidiary is excluded in the calculation of Adjusted Consolidated Net Income
pursuant to clause (iii) of the definition thereof (but only in the same
proportion as the net income of such Restricted Subsidiary is excluded from the
calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the
definition thereof) and (ii) any premiums, fees and expenses (and any
amortization thereof) payable in connection with the offering of the Notes, all
as determined on a consolidated basis (excluding Unrestricted Subsidiaries) in
conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination, stockholders'
equity as set forth on the quarterly or annual consolidated balance sheet of the
Company and its Restricted Subsidiaries most recently sent to holders pursuant
to the "Commission Reports and Reports to Holders" covenant, less the amount of
stockholders' equity attributable to Unrestricted Subsidiaries and any amounts
attributable to Disqualified Stock or any equity security convertible into or
exchangeable for Indebtedness, the cost of treasury stock and the principal
amount of any promissory notes receivable from the sale of the Capital Stock of
the Company or any of its Restricted Subsidiaries, each item to be determined in
conformity with GAAP (excluding the effects of foreign currency exchange
adjustments under Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 52).
"Customer Owned Transmission Facilities" means VSAT or other transmission
facilities transferred to customers of any Restricted Subsidiary in connection
with the provision of services by a Restricted Subsidiary to such customer.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions in favor of Holders that are contained in
"Limitation on Asset Sales" and "Repurchase of Notes Upon a Change of Control"
covenants, as the case may be, and such Capital Stock specifically provides that
such Person will not repurchase or redeem any such stock pursuant to such
provision prior to the Company's repurchase of such Notes as are required to be
repurchased pursuant to the "Limitation on Asset Sales" and "Repurchase of Notes
Upon a Change of Control" covenants.
"Existing Stockholders" means (i) Mr. Enrique Pescarmona, Mrs. Silvia
Monica Pescarmona de Baldini, Mrs. Liliana Pescarmona de Mayol, Mr. Roberto Vivo
and Mr. Ricardo Verdaguer, (ii) a parent, brother or sister of any of the
individuals named in clause (i), (iii) the spouse of any individual named in
clause (i) or (ii), (iv) the lineal descendants of any person named in clauses
(i) through (iii), (v) the estate
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or any guardian, custodian or other legal representative of any individual named
in clauses (i) through (iv), (vi) any trust established solely for the benefit
of any one or more of the individuals named in clauses (i) through (v), (vii)
any Person in which all of the equity interests are owned, directly or
indirectly, by any one or more of the Persons named in clauses (i) through (vi),
(viii) Nevasa Holdings Ltd., (ix) Invertel S.A., (x) Corporacion IMPSA, S.A. and
(xi) STET.
"fair market value" means the price that would be paid in an arms's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors (whose determination shall be conclusive)
and evidenced by a Board Resolution.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of determination, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained in the
Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of the Indenture shall be
made without giving effect to (i) the amortization of any expenses incurred in
connection with the offering of the Notes, (ii) except as otherwise provided,
the amortization of any amounts required or permitted by Accounting Principles
Board Opinion Nos. 16 and 17 and (iii) any non-recurring charges associated with
the adoption, after the Closing Date, of Financial Accounting Standard Nos. 106
and 109.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means IMPSAT, S.A., an Argentine corporation.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including, with respect to the Company and its Restricted Subsidiaries, an
"incurrence" of Indebtedness by reason of a Person becoming a Restricted
Subsidiary; provided that neither the accrual of interest nor the accretion of
original issue discount shall be considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables, (v) all obligations of such Person as
lessee under Capitalized Leases, (vi) all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of
other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person and (viii) to the extent not otherwise included in
this definition, obligations under Currency Agreements and Interest Rate
Agreements. The amount of
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Indebtedness of any Person at any date shall be (without duplication) the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation (unless the
underlying contingency has not occurred and the occurrence of the underlying
contingency is entirely within the control of the Company or its Restricted
Subsidiaries), provided (i) that the amount outstanding at any time of any
Indebtedness issued with original issue discount is the original issue price of
such Indebtedness and (ii) that Indebtedness shall not include any liability for
federal, state, local or other taxes.
"Indebtedness to EBITDA Ratio" means, as at any date of determination, the
ratio of (i) the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries on a consolidated basis as at the date of determination
(the "Transaction Date") to (ii) the Consolidated EBITDA of the Company for the
then most recent four full fiscal quarters for which reports have been filed
pursuant to the "Commission Reports and Reports to Holders" covenant described
below or, until four such reports have been filed, the then most recent four
fiscal quarters that concluded more than 40 days prior to the Transaction Date
(such four full fiscal quarter period being referred to herein as the "Four
Quarter Period"); provided that (x) pro forma effect shall be given to any
Indebtedness Incurred from the beginning of the Four Quarter Period through the
Transaction Date (including any Indebtedness Incurred on the Transaction Date),
to the extent outstanding on the Transaction Date, (y) if during the period
commencing on the first day of such Four Quarter Period through the Transaction
Date (the "Reference Period"), the Company or any of its Restricted Subsidiaries
shall have engaged in any Asset Sale, Consolidated EBITDA for such period shall
be reduced by an amount equal to the EBITDA (if positive), or increased by an
amount equal to the EBITDA (if negative), directly attributable to the assets
which are the subject of such Asset Sale as if such Asset Sale had occurred on
the first day of such Reference Period and (z) if during such Reference Period
the Company or any of the Restricted Subsidiaries shall have made any Asset
Acquisition, Consolidated EBITDA of the Company shall be calculated on a pro
forma basis as if such Asset Acquisition had taken place on the first day of
such Reference Period.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other similar instruments issued by, such Person and
shall include (i) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and (ii) the fair market value of the Capital Stock (or any other
Investment) held by the Company and its Restricted Subsidiaries of (or in) any
Person that has ceased to be a Restricted Subsidiary, including, without
limitation, by reason of any transaction permitted by clause (iii) of the
"Limitation on the Issuance of Capital Stock of Restricted Subsidiaries"
covenant. For purposes of the definition of "Unrestricted Subsidiary" and the
"Limitation on Restricted Payments" covenant described below, (i) "Investment"
shall include the fair market value of the assets (net of liabilities, other
than liabilities to the Company or any Subsidiary) of any Restricted Subsidiary
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary, (ii) the fair market value of the assets (net of liabilities, other
than liabilities to the Company or any Subsidiary) of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary shall be considered a reduction in outstanding
"Investments" and (iii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer. Notwithstanding the foregoing, the term "Investment" shall not include
advances to customers (other than Unrestricted Subsidiaries of the Company) and
accounts payable to suppliers in the ordinary course of business that are, in
conformity with GAAP, recorded as accounts receivable or accounts payable, as
the case may be, and Trade Payables.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof, any sale with recourse
against the seller or any Affiliate of the seller, or any agreement to give any
security interest), but excluding any right of first refusal.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash
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equivalents (except to the extent such obligations are financed or sold with
recourse to the Company or any Restricted Subsidiary) and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Subsidiary as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP and (b) with respect
to any issuance or sale of Capital Stock, the proceeds of such issuance or sale
in the form of cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the principal, but
not interest, component thereof) when received in the form of cash or cash
equivalents (except to the extent such obligations are financed or sold with
recourse to the Company or any Restricted Subsidiary) and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
"Note Guarantee" means the Guarantee by the Guarantor of the Company's
obligations under the Notes and the Indenture, pursuant to the Indenture.
"Offer to Purchase" means an offer to purchase Notes by the Company from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis; (ii)
the purchase price and the date of purchase, which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed
(the "Payment Date"); (iii) that any Note not tendered will continue to accrue
interest pursuant to its terms; (iv) that, unless the Company defaults in the
payment of the purchase price, any Note accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest on and after the Payment Date;
(v) that Holders electing to have a Note purchased pursuant to the Offer to
Purchase will be required to surrender the Note, together with the form entitled
"Option of the Holder to Elect Purchase" on the reverse side of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day immediately preceding the Payment
Date; (vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (vii) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered; provided
that each Note purchased and each new Note issued shall be in a principal amount
of $1,000 or integral multiples thereof. On the Payment Date, the Company shall
(i) accept for payment on a pro rata basis Notes or portions thereof tendered
pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee all Notes
or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date. The Trustee
shall act as the Paying Agent for an Offer to Purchase. The Company will comply
with Rule 14e-1 under the Exchange Act and any other securities laws
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and regulations thereunder to the extent such laws and regulations are
applicable, in the event that the Company is required to repurchase Notes
pursuant to an Offer to Purchase.
"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary or be merged or consolidated with or
into or transfer or convey all or substantially all its assets to, the Company
or a Restricted Subsidiary; provided that such Person's primary business is
related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such Investment; (ii) Temporary Cash
Investments; (iii) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP; (iv) loans or advances to employees made in the
ordinary course of business in accordance with past practice of the Company or
its Restricted Subsidiaries and that do not in the aggregate exceed $1 million
at any time outstanding; (v) stock, obligations or securities received in
satisfaction of judgments, work-outs or similar arrangements; (vi) Investments
in the Buenos Aires Teledatos Entity; provided that, if the Buenos Aires
Teledatos Entity is not a Restricted Subsidiary (A) such Investments are
reasonably related to the business of owning a fiber optic network in Buenos
Aires or a microwave radio link between Buenos Aires and Mendoza, Argentina and
(B) the Guarantor has the contractual right, upon an Event of Default with
respect to the Notes, to cause a Permitted Investor to purchase all of the
Company's and its Restricted Subsidiaries' Investments in the Buenos Aires
Teledatos Entity for cash, within 180 days after the giving of notice by the
Company, at a price at least equal to the lesser of (1) the fair market value
(as determined pursuant to such contract) of such Investments on any date within
the 90 days prior to making such cash payment and (2) the amount of such
Investments at the time they were made by the Company and its Restricted
Subsidiaries; (vii) Investments, in an aggregate amount at any one time
outstanding not to exceed $15 million during the first three years following the
Closing Date and $20 million thereafter in Common Stock of the International
Telecommunications Satellite Organization ("Intelsat"); provided that the
Company reasonably believes, at the time each such Investment is made, that the
benefits of such Investment will result in cash flow sufficient to pay the
interest and principal on such Investment; and (viii) participations in
Indebtedness of any Restricted Subsidiary permitted to be Incurred by clause
(ix) of the second paragraph of the "Limitation on Indebtedness" covenant.
"Permitted Investor" means (i) any entity that, (A) for its last four
consecutive fiscal quarters has generated revenues of at least $2 billion or
earnings before interest, income taxes, depreciation and amortization of at
least $300 million, or (B) on the date of determination has an equity market
capitalization of at least $3 billion, (ii) Teleport Communications Group Inc.,
MFS Communications Company, Inc., Nortel Inversora S.A. or Cointel S.A., or the
successor of any thereof, or (iii) any Subsidiary of any of the foregoing.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (ii) statutory and common law Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
similar Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security; (iv) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory or regulatory
obligations, bankers' acceptances, surety and appeal bonds, contracts (other
than for Indebtedness), performance and return-of-money bonds and other
obligations of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money) and any bank's
unexercised right of setoff with respect to deposits made in the ordinary course
of business of the Company or any Restricted Subsidiary; (v) easements,
rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company or any of its
Restricted Subsidiaries; (vi) Liens (including
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extensions and renewals thereof) upon real or personal property acquired after
the Closing Date; provided that (a) such Lien is created solely for the purpose
of securing Indebtedness Incurred, in accordance with the "Limitation on
Indebtedness" covenant, (1) to finance the cost (including the cost of design,
development, construction, improvement, installation or integration) of the item
of property or assets subject thereto and such Lien is created prior to, at the
time of or within six months after the later of the acquisition, the completion
of construction or the commencement of full operation of such property or (2) to
refinance any Indebtedness previously so secured, (b) the principal amount of
the Indebtedness secured by such Lien does not exceed 100% of such cost and (c)
any such Lien shall not extend to or cover any property or assets other than
such item of property or assets and any improvements on such item; (vii) leases
or subleases granted to others that do not materially interfere with the
ordinary course of business of the Company and its Restricted Subsidiaries,
taken as a whole; (viii) Liens encumbering property or assets under construction
arising from progress or partial payments by a customer of the Company or its
Restricted Subsidiaries relating to such property or assets; (ix) any interest
or title of a lessor in the property subject to any Capitalized Lease or
operating lease; (x) Liens arising from filing Uniform Commercial Code financing
statements regarding leases; (xi) Liens on property of, or on shares of stock or
Indebtedness of, any Person existing at the time such Person becomes, or becomes
a part of, any Restricted Subsidiary; provided that such Liens do not extend to
or cover any property or assets of the Company or any Restricted Subsidiary
other than the property or assets acquired; (xii) Liens in favor of the Company
or any Restricted Subsidiary; (xiii) Liens arising from the rendering of a final
judgment or order against the Company or any Restricted Subsidiary that does not
give rise to an Event of Default; (xiv) Liens securing reimbursement obligations
with respect to letters of credit that encumber documents and other property
relating to such letters of credit and the products and proceeds thereof; (xv)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods;
(xvi) Liens encumbering customary initial deposits and margin deposits, and
other Liens that are either within the general parameters customary in the
industry and incurred in the ordinary course of business, in each case, securing
Indebtedness under Interest Rate Agreements and Currency Agreements and forward
contracts, options, future contracts, futures options or similar agreements or
arrangements designed to protect the Company or any of its Restricted
Subsidiaries from fluctuations in the price of commodities; (xvii) Liens arising
out of conditional sale, title retention, consignment or similar arrangements
for the sale of goods entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business in accordance with the past
practices of the Company and its Restricted Subsidiaries prior to the Closing
Date; (xviii) Liens on or sales of existing or future receivables; and (xix) the
deposit of up to $32 million of assets to defease the 9.5% Negotiable
Obligations due 1996 of the Guarantor.
"Public Equity Offering" means an underwritten primary public offering of
Common Stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Restricted Subsidiary" means any Subsidiary of the Company or the
Guarantor other than an Unrestricted Subsidiary.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) accounted for
more than 10% of the consolidated revenues of the Company and its Restricted
Subsidiaries or (ii) was the owner of more than 10% of the consolidated assets
of the Company and its Restricted Subsidiaries, all as set forth on the
consolidated financial statements of the Company for the fiscal year most
recently filed pursuant to the "Commission Reports and Reports to Holders"
covenant.
"Stated Maturity" means, (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"STET" means STET SpA and any Subsidiary thereof.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which Voting Stock representing more
than 50% of the total voting power of the outstanding Voting Stock is owned,
directly or indirectly, by such Person and one or more other Subsidiaries of
such Person.
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"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
commercial paper, maturing not more than 90 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-1" (or higher)
according to Moody's Investors Service, Inc. or "A-1" (or higher) according to
Standard & Poor's Ratings Group, (v) securities with maturities of six months or
less from the date of acquisition issued or fully and unconditionally guaranteed
by any state, commonwealth or territory of the United States of America, or by
any political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Group or Moody's Investors Service, Inc. and (vi)
certificates of deposit maturing not more than 180 days after the acquisition
thereof by a Restricted Subsidiary and issued by any of the ten largest banks
(based on assets as of the last December 31) organized under the laws of the
country in which the Restricted Subsidiary that acquires such certificates of
deposit is organized, provided that such bank is not under intervention,
receivership or any similar arrangement at the time of the acquisition of such
certificates of deposit.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services and required to be paid within one year.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company or the
Guarantor that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Restricted Subsidiary (including any newly acquired or newly formed
Subsidiary of the Company or the Guarantor) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Company or any Restricted Subsidiary; provided that any
Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of the
Subsidiary being so designated shall be deemed an "Incurrence" of Indebtedness
by the Company or such Restricted Subsidiary (or both, if applicable) at the
time of such designation and either (A) the Subsidiary to be so designated has
total assets of $1,000 or less or (B) if such Subsidiary has assets greater than
$1,000, that such designation would be permitted under the "Limitation on
Restricted Payments" covenant described below and, if applicable, such deemed
Incurrence of Indebtedness would also be permitted under the Indenture. The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that immediately after giving effect to such designation
(x) the Company could Incur $1.00 of additional Indebtedness under the first
paragraph of the "Limitation on Indebtedness" covenant described below and (y)
no Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions. Notwithstanding anything herein
contained to the contrary, the Guarantor may not be designated as an
Unrestricted Subsidiary.
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"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, such
Subsidiary if all of the outstanding Capital Stock in such Subsidiary (other
than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) is owned by such Person or one or more Wholly Owned
Subsidiaries of such Person.
COVENANTS
Limitation on Indebtedness
(a) Under the terms of the Indenture, the Company will not, and will not
permit any of its Restricted Subsidiaries to, Incur any Indebtedness (other than
the Notes and Indebtedness existing on the Closing Date); provided that the
Company may Incur Indebtedness if, after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds therefrom, the
Indebtedness to EBITDA Ratio would be greater than zero and less than 4:1.
Notwithstanding the foregoing, the Company and any Restricted Subsidiary
(except as specified below) may Incur each and all of the following: (i)
Indebtedness in an aggregate principal amount not to exceed the greater of (A)
$100 million or (B) the Consolidated EBITDA for the four preceding quarters for
which financial statements have been filed pursuant to the "Commission Reports
and Reports to Holders" covenant, in each case less any amount of Indebtedness
permanently repaid as provided under the "Limitation on Asset Sales" covenant
described below (other than any Notes permanently repaid); provided that no more
than 25% of the Indebtedness Incurred under this clause (i) may be used for
purposes other than capital expenditures; (ii) Indebtedness (A) owed to the
Company evidenced by an unsubordinated promissory note or (B) owed to any of the
Restricted Subsidiaries; provided that any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such
Indebtedness not permitted by this clause (ii); (iii) Indebtedness issued in
exchange for, or the net proceeds of which are used to refinance or refund, then
outstanding Indebtedness, other than Indebtedness Incurred under clause (ii) or
(v) of this paragraph, and any refinancings thereof in an amount not to exceed
the amount so refinanced or refunded (plus premiums, accrued interest, fees and
expenses); provided that Indebtedness the proceeds of which are used to
refinance or refund the Notes, the Note Guarantee or Indebtedness that is pari
passu with, or subordinated in right of payment to, the Notes or the Note
Guarantee shall only be permitted under this clause (iii) if (A) in case the
Notes or the Note Guarantee are refinanced in part or the Indebtedness to be
refinanced is pari passu with the Notes or the Note Guarantee, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is expressly made pari
passu with, or subordinate in right of payment to, the remaining Notes or the
Note Guarantee, as the case may be, (B) in case the Indebtedness to be
refinanced is subordinated in right of payment to the Notes or the Note
Guarantee, such new Indebtedness, by its terms or by the terms of any agreement
or instrument pursuant to which such new Indebtedness is outstanding, is
expressly made subordinate in right of payment to the Notes or the Note
Guarantee at least to the extent that the Indebtedness to be refinanced is
subordinated to the Notes or the Note Guarantee, as the case may be, and (C)
such new Indebtedness, determined as of the date of Incurrence of such new
Indebtedness, does not mature prior to the Stated Maturity of the Indebtedness
to be refinanced or refunded, and the Average Life of such new Indebtedness is
at least equal to the remaining Average Life of the Indebtedness to be
refinanced or refunded; and provided further that in no event may Indebtedness
of the Company or the Guarantor be refinanced by means of any Indebtedness of
any Restricted Subsidiary other than the Guarantor pursuant to this clause
(iii); (iv) Indebtedness (A) in respect of performance, surety or appeal bonds
provided in the ordinary course of business, (B) under Currency Agreements and
Interest Rate Agreements; provided that such agreements do not increase the
Indebtedness of the obligor outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or interest rates or by reason
of fees, indemnities and compensation payable thereunder; and (C) arising from
agreements providing for indemnification, adjustment
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of purchase price or similar obligations, or from Guarantees or letters of
credit, surety bonds or performance bonds securing any obligations of the
Company or any of its Restricted Subsidiaries pursuant to such agreements, in
any case Incurred in connection with the disposition of any business, assets or
Restricted Subsidiary (other than Guarantees of Indebtedness Incurred by any
Person acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition), in a principal amount
not to exceed the gross proceeds actually received by the Company or any
Restricted Subsidiary in connection with such disposition; (v) Indebtedness of
the Company or the Guarantor not to exceed, at any one time outstanding, twice
the Net Cash Proceeds received by the Company or the Guarantor, as the case may
be, from the issuance and sale of its Common Stock after the Closing Date to a
Person that is not a Subsidiary of the Company or the Guarantor, less the amount
invested in the Company pursuant to clause (iii) of the definition of "Change of
Control"; (vi) Indebtedness Incurred to finance the cost (including the cost of
design, development, construction, improvement, installation or integration) of
property, plant or equipment acquired by the Company or any of its Restricted
Subsidiaries after the Closing Date and refinancings thereof; (vii) Indebtedness
of the Company, to the extent the proceeds thereof are promptly (A) deposited to
defease the Notes as described under "Defeasance" or (B) used to repurchase
Notes tendered in an Offer to Purchase made as a result of a Change of Control;
(viii) Guarantees of the Notes; (ix) Indebtedness of any Restricted Subsidiary,
to the extent that the Company or the Guarantor is the beneficial owner of such
Indebtedness and such Indebtedness is evidenced by an unsubordinated promissory
note or participation certificate issued to the Company or the Guarantor by the
record holder of such Indebtedness; and (x) Indebtedness of the Company or the
Guarantor, the proceeds of which are used to make an Investment in Intelsat, in
an amount at any one time outstanding not to exceed $15 million during the first
three years following the Closing Date and $20 million thereafter; provided that
the Company reasonably believes, at the time such Indebtedness is Incurred, that
the benefits of such Investment will result in cash flow sufficient to cover the
payment of interest and principal on such Indebtedness.
(b) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, (a) Guarantees, Liens or obligations
with respect to letters of credit supporting Indebtedness otherwise included in
the determination of such particular amount shall not be included, (b) the
maximum amount of Indebtedness that may be Incurred pursuant to this "Limitation
on Indebtedness" covenant shall be deemed not to be exceeded, with respect to
any outstanding Indebtedness, solely due to the result of fluctuations in the
exchange rates of currencies and (c) any Liens granted pursuant to the equal and
ratable provisions referred to in the "Limitation on Liens" covenant described
below shall not be treated as Indebtedness. For purposes of determining
compliance with this "Limitation on Indebtedness" covenant, in the event that an
item of Indebtedness meets the criteria of more than one of the types of
Indebtedness described in the above clauses, the Company, in its sole
discretion, shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of such clauses.
Limitation on Restricted Payments
Under the terms of the Indenture, the Company will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, (i) declare or pay any
dividend or make any distribution on or with respect to its Capital Stock held
by Persons other than the Company or any of its Restricted Subsidiaries (other
than dividends or distributions payable solely in shares of its or such
Restricted Subsidiary's Capital Stock (other than Disqualified Stock) or in
options, warrants or other rights to acquire shares of such Capital Stock and
other than pro rata dividends or distributions on Common Stock of Restricted
Subsidiaries other than the Guarantor), (ii) purchase, redeem, retire or
otherwise acquire for value any shares of Capital Stock of the Company or the
Guarantor (including options, warrants or other rights to acquire such shares of
Capital Stock) held by Persons other than the Company or any of its Wholly Owned
Restricted Subsidiaries, (iii) make any voluntary or optional principal payment,
or voluntary or optional redemption, repurchase, defeasance, or other
acquisition or retirement for value, of Indebtedness of the Company that is
subordinated in right of payment to the Notes or of the Guarantor that is
subordinated to the Note Guarantee or (iv) make any Investment, other than a
Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) being collectively "Restricted Payments")
if, at the time of, and after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and
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be continuing, (B) except with respect to Investments and dividends on the
Common Stock of the Guarantor, the Company could not Incur at least $1.00 of
Indebtedness under the first paragraph of the "Limitation on Indebtedness"
covenant or (C) the aggregate amount of all Restricted Payments after the
Closing Date shall exceed the sum of (1) 50% of the aggregate amount of the
Adjusted Consolidated Net Income (or, if the Adjusted Consolidated Net Income is
a loss, minus 100% of such amount) (determined by excluding income resulting
from transfers of assets by the Company or a Restricted Subsidiary to an
Unrestricted Subsidiary) accrued on a cumulative basis during the period (taken
as one accounting period) beginning on the first day of the fiscal quarter
immediately following the Closing Date and ending on the last day of the last
fiscal quarter preceding the Transaction Date for which reports have been filed
pursuant to the "Commission Reports and Reports to Holders" covenant plus (2)
the aggregate Net Cash Proceeds received by the Company or the Guarantor after
the Closing Date from the issuance and sale permitted by the Indenture of its
Capital Stock (other than Disqualified Stock) to a Person who is not a
Subsidiary of the Company or the Guarantor, or from the issuance to a Person who
is not a Subsidiary of the Company or the Guarantor of any options, warrants or
other rights to acquire Capital Stock of the Company (in each case, exclusive of
any convertible indebtedness, Disqualified Stock or any options, warrants or
other rights that are redeemable at the option of the holder, or are required to
be redeemed, prior to the Stated Maturity of the Notes), less the amount
invested in the Company pursuant to clause (iii) of the definition of "Change of
Control" plus (3) an amount equal to the net reduction in Investments (other
than Permitted Investments) made pursuant to this first paragraph of this
"Limitation on Restricted Payments" covenant in any Person resulting from
payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other transfers of assets, in each case to the Company or any
Restricted Subsidiary (except to the extent any such payment is included in the
calculation of Adjusted Consolidated Net Income), or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), not to exceed the amount of
Investments previously made by the Company and any Restricted Subsidiary in such
Person.
The foregoing provision shall not be violated by reason of: (i) the payment
of any dividend within 60 days after the date of declaration thereof if, at said
date of declaration, such payment would comply with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other acquisition or retirement
for value of Indebtedness that is subordinated in right of payment to the Notes
including premium, if any, and accrued and unpaid interest, with the proceeds
of, or in exchange for, Indebtedness Incurred under clause (iii) of the second
paragraph of the "Limitation on Indebtedness" covenant; (iii) the declaration or
payment of dividends on the Common Stock of the Company, following a Public
Equity Offering of such Common Stock, of up to 6% per annum of the Net Cash
Proceeds received by the Company in such Public Equity Offering; (iv) the
repurchase, redemption or other acquisition of Capital Stock of the Company (or
options, warrants or other rights to acquire such Capital Stock) in exchange
for, or out of the proceeds of a substantially concurrent offering of, shares of
Capital Stock (other than Disqualified Stock) of the Company (or options,
warrants or other rights to acquire such Capital Stock); (v) the making of any
principal payment or the repurchase, redemption, retirement, defeasance or other
acquisition for value of Indebtedness of the Company which is subordinated in
right of payment to the Notes in exchange for, or out of the proceeds of, a
substantially concurrent offering of, shares of the Capital Stock of the Company
(other than Disqualified Stock); (vi) payments or distributions, in the nature
of satisfaction of dissenters' rights, pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with the provisions of
the Indenture applicable to mergers, consolidations and transfers of all or
substantially all of the property and assets of the Company; (vii) Investments
in Unrestricted Subsidiaries not to exceed, at any one time outstanding, the
greater of (A) $5 million or (B) 10% of Consolidated EBITDA for the preceding
four quarters for which reports have been filed pursuant to the "Commission
Reports and Reports to Holders" covenant; and (viii) Investments in Unrestricted
Subsidiaries that, in Brazil, directly or indirectly, engage in a business
similar to the business of the Company and its Restricted Subsidiaries, in an
amount not to exceed $10 million at any one time outstanding; provided that,
except in the case of clauses (i) and (iv), no Default or Event of Default shall
have occurred and be continuing or occur as a consequence of the actions or
payments set forth therein. The value of any Restricted Payment made other than
in cash shall be the fair market value thereof. The amount of any Investment
"outstanding" at any time shall be deemed to be equal to the amount of such
Investment on
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the date made, less the return of capital to the Company and its Restricted
Subsidiaries with respect to such Investment (up to the amount of such
Investment).
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) thereof and an
exchange of Capital Stock or Indebtedness referred to in clause (iv) or (v)
thereof), and the Net Cash Proceeds from any issuance of Capital Stock referred
to in clause (iii), (iv) or (v), shall be included in calculating whether the
conditions of clause (C) of the first paragraph of this "Limitation on
Restricted Payments" covenant have been met with respect to any subsequent
Restricted Payments. In the event the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of the first paragraph
of this "Limitation on Restricted Payments" covenant only to the extent such
proceeds are not used for such redemption, repurchase or other acquisition of
Indebtedness. For purposes of determining compliance with this "Limitation on
Restricted Payments" covenant, in the event that a Restricted Payment meets the
criteria of more than one of the types of Restricted Payments described in
clauses (i) through (viii) of the preceding paragraph, the Company, in its sole
discretion, shall classify such Restricted Payment and only be required to
include the amount and type of such Restricted Payment in one of such clauses.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries
So long as any of the Notes are outstanding, the Company will not, and will
not permit any Restricted Subsidiary to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Restricted Subsidiary (other than the Guarantor) to (i)
pay dividends or make any other distributions permitted by applicable law on any
Capital Stock of such Restricted Subsidiary owned by the Company or any other
Restricted Subsidiary, (ii) pay any Indebtedness owed to the Company or any
other Restricted Subsidiary, (iii) make loans or advances to the Company or any
other Restricted Subsidiary or (iv) transfer any of its property or assets to
the Company or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Indenture or any other
agreements in effect on the Closing Date, and any extensions, refinancings,
renewals or replacements of such agreements; provided that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements are
no less favorable in any material respect to the Holders than those encumbrances
or restrictions that are then in effect and that are being extended, refinanced,
renewed or replaced; (ii) existing under or by reason of applicable law; (iii)
existing with respect to any Person or the property or assets of such Person
acquired by the Company or any Restricted Subsidiary, existing at the time of
such acquisition and not incurred in contemplation thereof, which encumbrances
or restrictions are not applicable to any Person or the property or assets of
any Person other than such Person or the property or assets of such Person so
acquired; (iv) in the case of clause (iv) of the first paragraph of this
"Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries" covenant, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (B) existing by virtue of
any transfer of, agreement to transfer, option or right with respect to, or Lien
on, any property or assets of the Company or any Restricted Subsidiary not
otherwise prohibited by the Indenture or (C) arising or agreed to in the
ordinary course of business, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from the value of property or assets
of the Company or any Restricted Subsidiary in any manner material to the
Company or any Restricted Subsidiary; (v) with respect to a Restricted
Subsidiary and imposed pursuant to an agreement that has been entered into for
the sale or disposition of any or all of the Capital Stock of, or property and
assets of, such Restricted Subsidiary during the period between the execution of
such agreement and the closing thereunder within three months of such execution;
(vi) with respect to Restricted Subsidiaries in which, on and subsequent to the
Closing Date, the Company and other Restricted Subsidiaries only make
Investments that are evidenced by unsubordinated promissory notes that bear a
reasonable rate of interest and are payable prior to the Stated Maturity of the
Notes; provided that such encumbrances and restrictions expressly allow the
payment of interest and principal on such promissory notes; or (vii)
encumbrances or
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restrictions solely of the type referred to in clause (iii) or (iv) of the
preceding paragraph that are contained in any stockholders' agreement, joint
venture agreement or similar agreement among owners of Common Stock of a
Restricted Subsidiary; provided that such restrictions consist solely of
requirements that transactions between such Restricted Subsidiaries and
affiliates thereof (including the Company and its Restricted Subsidiaries) be on
fair and reasonable terms no less favorable to such Restricted Subsidiary than
could be obtained in a comparable arm's-length transaction with a Person that is
not such an affiliate. Nothing contained in this "Limitation on Dividend and
Other Payment Restrictions Affecting Restricted Subsidiaries" covenant shall
prevent the Company or any Restricted Subsidiary from (1) creating, incurring,
assuming or suffering to exist any Liens otherwise permitted in the "Limitation
on Liens" covenant or (2) restricting the sale or other disposition of property
or assets of the Company or any of its Restricted Subsidiaries that secure
Indebtedness of the Company or any of its Restricted Subsidiaries.
Limitation on the Issuance and Sale of Capital Stock of Restricted
Subsidiaries
Under the terms of the Indenture, the Company will not sell, and will not
permit any Restricted Subsidiary (other than the Guarantor), directly or
indirectly, to issue or sell, any shares of Capital Stock of a Restricted
Subsidiary (including options, warrants or other rights to purchase shares of
such Capital Stock) except (i) to the Company or a Wholly Owned Restricted
Subsidiary, (ii) issuances or sales to foreign nationals of shares of Capital
Stock of foreign Restricted Subsidiaries, to the extent required by applicable
law, (iii) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any
Investment in such Person remaining after giving effect to such issuance or sale
would have been permitted to be made under the "Limitation on Restricted
Payments" covenant if made on the date of such issuance or sale, (iv) the sale
of Common Stock of Restricted Subsidiaries that is not Disqualified Stock, if
the proceeds of such issuance or sale are applied in accordance with clause (A)
or (B) of the first paragraph of the "Limitation on Asset Sales" covenant or (v)
the transfer of up to 3% of the Common Stock of each Restricted Subsidiary to
employees of such Restricted Subsidiary in connection with such employment.
Limitation on Issuances of Guarantees by Restricted Subsidiaries
Under the terms of the Indenture, the Company will not permit any
Restricted Subsidiary (other than the Guarantor), directly or indirectly, to
Guarantee any Indebtedness of the Company or the Guarantor ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to the Indenture providing for a Guarantee
(a "Subsidiary Guarantee") of payment of the Notes by such Restricted Subsidiary
and (ii) such Restricted Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against the Company or any other
Restricted Subsidiary as a result of any payment by such Restricted Subsidiary
under its Subsidiary Guarantee; provided that this paragraph shall not be
applicable to any Guarantee of any Restricted Subsidiary that (x) existed at the
time such Person became a Restricted Subsidiary and (y) was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the Notes or
the Note Guarantee, then the Guarantee of such Guaranteed Indebtedness shall be
pari passu with, or subordinated to, the Subsidiary Guarantee or (B)
subordinated to the Notes or the Note Guarantee, then the Guarantee of such
Guaranteed Indebtedness shall be subordinated to the Subsidiary Guarantee at
least to the extent that the Guaranteed Indebtedness is subordinated to the
Notes or the Note Guarantee, as the case may be.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of the Company, of all of the Company's and each
Restricted Subsidiary's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by the Indenture) or (ii) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
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Limitation on Transactions with Shareholders and Affiliates
Under the terms of the Indenture, the Company will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, enter into, renew or
extend any transaction (including, without limitation, the purchase, sale, lease
or exchange of property or assets, or the rendering of any service) with any
holder (or any Affiliate of such holder) of 5% or more of any class of Capital
Stock of the Company or with any Affiliate of the Company or any Restricted
Subsidiary, except upon fair and reasonable terms no less favorable to the
Company or such Restricted Subsidiary than could be obtained, at the time of
such transaction or at the time of the execution of the agreement providing
therefor, in a comparable arm's-length transaction with a Person that is not
such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized U.S.
investment banking firm stating that the transaction is fair to the Company or
such Restricted Subsidiary from a financial point of view; (ii) any transaction
solely between the Company and any of its Wholly Owned Restricted Subsidiaries
or solely between Wholly Owned Restricted Subsidiaries; (iii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company; (iv) any payments or other transactions pursuant to
any tax-sharing agreement between the Company and any other Person with which
the Company files a consolidated tax return or with which the Company is part of
a consolidated group for tax purposes; or (v) any Restricted Payments not
prohibited by the "Limitation on Restricted Payments" covenant (other than
pursuant to clause (iv) of the definition of "Permitted Investment").
Notwithstanding the foregoing, any transaction or series of transactions covered
by the first paragraph of this "Limitation on Transactions with Shareholders and
Affiliates" covenant and not covered by clauses (ii) through (iv) of this
paragraph, the aggregate amount of which exceeds $1 million in value, must be
approved or determined to be fair in the manner provided for in clause (i)(A) or
(B) above.
Limitation on Liens
Under the terms of the Indenture, the Company will not, and will not permit
any Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien
on any of its assets or properties of any character, or any shares of Capital
Stock or Indebtedness of any Restricted Subsidiary, without making effective
provision for all of the Notes and all other amounts due under the Indenture to
be directly secured equally and ratably with (or, if the obligation or liability
to be secured by such Lien is subordinated in right of payment to the Notes,
prior to) the obligation or liability secured by such Lien.
The foregoing limitation does not apply to (i) Liens existing on the
Closing Date; (ii) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of the
Holders; (iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or such other
Restricted Subsidiary; (iv) Liens securing Indebtedness which is Incurred to
refinance secured Indebtedness which is permitted to be Incurred under clause
(iii) of the second paragraph of the "Limitation on Indebtedness" covenant;
provided that such Liens do not extend to or cover any property or assets of the
Company or any Restricted Subsidiary other than the property or assets securing
the Indebtedness being refinanced; (v) Liens on assets having a fair market
value equal to no more than 10% of the fair market value of the Adjusted
Consolidated Net Tangible Assets that are not subject to Liens on the Closing
Date; or (vi) Permitted Liens.
Limitation on Sale-Leaseback Transactions
Under the terms of the Indenture, the Company will not, and will not permit
any Restricted Subsidiary to, enter into any sale-leaseback transaction
involving any of its assets or properties whether now owned or hereafter
acquired, whereby the Company or a Restricted Subsidiary sells or transfers such
assets or properties and then or thereafter leases such assets or properties or
any part thereof or any other assets or properties
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which the Company or such Restricted Subsidiary, as the case may be, intends to
use for substantially the same purpose or purposes as the assets or properties
sold or transferred.
The foregoing restriction does not apply to any sale-leaseback transaction
if (i) the lease is for a period, including renewal rights, of not in excess of
three years; (ii) the transaction is between the Company and any Wholly Owned
Restricted Subsidiary or between Wholly Owned Restricted Subsidiaries; or (iii)
the Company or such Restricted Subsidiary, within six months after the sale or
transfer of any assets or properties is completed, applies an amount not less
than the net proceeds received from such sale in accordance with clause (A) or
(B) of the first paragraph of the "Limitation on Asset Sales" covenant described
below.
Limitation on Asset Sales
Under the terms of the Indenture, the Company will not, and will not permit
any Restricted Subsidiary to, consummate any Asset Sale, unless (i) the
consideration received by the Company or such Restricted Subsidiary is at least
equal to the fair market value of the assets sold or disposed of and (ii),
except with respect to Customer Owned Transmission Facilities, at least 85% of
the consideration received consists of cash or Temporary Cash Investments. In
the event and to the extent that the Net Cash Proceeds received by the Company
or any of its Restricted Subsidiaries from one or more Asset Sales occurring on
or after the Closing Date in any period of 12 consecutive months exceed 10% of
Adjusted Consolidated Net Tangible Assets (determined as of the date closest to
the commencement of such 12-month period for which a consolidated balance sheet
of the Company and its Subsidiaries has been filed pursuant to the "Commission
Reports and Reports to Holders" covenant), then the Company shall or shall cause
the relevant Restricted Subsidiary to (i) within six months after the date Net
Cash Proceeds so received exceed 10% of Adjusted Consolidated Net Tangible
Assets (A) apply an amount equal to such excess Net Cash Proceeds to permanently
repay unsubordinated Indebtedness of the Company or any Restricted Subsidiary
providing a Subsidiary Guarantee pursuant to the "Limitation on Issuances of
Guarantees by Restricted Subsidiaries" covenant or Indebtedness of any other
Restricted Subsidiary, in each case owing to a Person other than the Company or
any of its Restricted Subsidiaries or (B) invest an equal amount, or the amount
not so applied pursuant to clause (A), (or enter into a definitive agreement
committing to so invest within six months after the date of such agreement), in
property or assets (other than current assets) of a nature or type or that are
used in a business (or in a company having property and assets of a nature or
type, or engaged in a business) similar or related to the nature or type of the
property and assets of, or the business of, the Company and its Restricted
Subsidiaries existing on the date of such investment (as determined in good
faith by the Board of Directors, whose determination shall be conclusive and
evidenced by a Board Resolution) and (ii) apply (no later than the end of the
six-month period referred to in clause (i)) such excess Net Cash Proceeds (to
the extent not applied pursuant to clause (i)) as provided in the following
paragraph of this "Limitation on Asset Sales" covenant. The amount of such
excess Net Cash Proceeds required to be applied (or to be committed to be
applied) during such six-month period as set forth in clause (i) of the
preceding sentence and not applied as so required by the end of such period
shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
"Limitation on Asset Sales" covenant totals at least $5 million, the Company
must commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders on a pro rata basis an
aggregate principal amount of Notes equal to the Excess Proceeds on such date,
at a purchase price equal to 101% of the principal amount of the Notes, plus, in
each case, accrued interest (if any) to the date of purchase.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
The Company must commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount thereof, plus accrued
interest (if any) to the date of purchase. Prior to the mailing of the notice to
Holders commencing such Offer to Purchase, but in any event within 30 days
following any Change of Control, the Company covenants to (i) repay in full all
indebtedness of the Company that would prohibit the repurchase of the Notes
pursuant to such Offer to Purchase or (ii) obtain any requisite consents under
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instruments governing any such indebtedness of the Company to permit the
repurchase of the Notes. The Company shall first comply with the covenant in the
preceding sentence before it shall be required to repurchase Notes pursuant to
this "Repurchase of Notes upon a Change of Control" covenant. The Company will
comply with any tender offer rules under the Exchange Act which may then be
applicable, including Rule 14e-1, in connection with an Offer to Purchase the
Notes as a result of a Change of Control.
If the Company is unable to repay all of its indebtedness that would
prohibit repurchase of the Notes or is unable to obtain the consents of the
holders of indebtedness, if any, of the Company outstanding at the time of a
Change of Control whose consent would be so required to permit the repurchase of
Notes, then the Company will have breached such covenant. This breach will
constitute an Event of Default under the Indenture if it continues for a period
of 30 consecutive days after written notice is given to the Company by the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes outstanding. In addition, the failure by the Company to repurchase Notes
at the conclusion of the Offer to Purchase will constitute an Event of Default
without any waiting period or notice requirements.
There can be no assurances that the Company will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the foregoing covenant (as well as
any covenant that may be contained in other securities of the Company which
might be outstanding at the time). The above covenant requiring the Company to
repurchase the Notes will, unless the consents referred to above are obtained,
require the Company to repay all indebtedness then outstanding which by its
terms would prohibit such Note repurchase, either prior to or concurrently with
such Note repurchase.
COMMISSION REPORTS AND REPORTS TO HOLDERS
Whether or not the Company is required to file reports with the Commission,
if any Notes are outstanding, the Company shall file with the Commission all
such reports and other information as it would be required to file with the
Commission by Sections 13(a) or 15(d) under the Securities Exchange Act of 1934,
as amended, if it were subject thereto, unless the Company shall be unable to
effect such filing or the Commission shall refuse to accept such filing. The
Company shall supply the Trustee and each Holder of Notes or shall supply to the
Trustee for forwarding to each such Holder, without cost to such Holder, copies
of such reports and other information, whether or not the Company shall be
unable to effect such filing or the Commission refuses to accept such filing.
EVENTS OF DEFAULT
The following events will be defined as "Events of Default" in the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period of 30
days; (c) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in the Indenture or under the Notes and
such default or breach continues for a period of 30 consecutive days after
written notice by the Trustee or the Holders of 25% or more in aggregate
principal amount of the Notes; (d) there occurs with respect to any issue or
issues of Indebtedness of the Company, the Guarantor or any Significant
Subsidiary having an outstanding principal amount of $5 million or more in the
aggregate for all such issues of all such Persons, whether such Indebtedness now
exists or shall hereafter be created, (I) an event of default that has caused
the holder thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not have
been made, waived or extended within 30 days of such payment default; (e) any
final judgment or order for the payment of money in excess of $5 million in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall
be rendered against the Company, the Guarantor or any Significant Subsidiary and
shall not be paid or discharged, and either (A) an enforcement proceeding shall
have commenced by any creditor upon such judgment or order or (B) there shall be
any
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period of 30 consecutive days following entry of the final judgment or order
that causes the aggregate amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to exceed $5
million during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; (f) a court
having jurisdiction in the premises enters a decree or order for (A) relief in
respect of the Company, the Guarantor or any Significant Subsidiary in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, (B) appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Company,
the Guarantor or any Significant Subsidiary or for all or substantially all of
the property and assets of the Company, the Guarantor or any Significant
Subsidiary or (C) the winding up or liquidation of the affairs of the Company,
the Guarantor or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 30 consecutive days;
(g) the Company, the Guarantor or any Significant Subsidiary (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consents to the entry of an order for relief in
an involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company, the Guarantor or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company, the Guarantor or any Significant Subsidiary or (C)
effects any general assignment for the benefit of creditors; or (h) the Note
Guarantee shall cease to be, or shall be asserted in writing by the Company or
the Guarantor not to be, in full force and effect or enforceable in accordance
with its terms.
If an Event of Default (other than an Event of Default specified in clause
(f) or (g) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes, then outstanding, by written notice to
the Company (and to the Trustee if such notice is given by the Holders), may,
and the Trustee at the request of such Holders shall, declare the principal of,
premium, if any, and accrued interest on the Notes to be immediately due and
payable. Upon a declaration of acceleration, such principal of, premium, if any,
and accrued interest shall be immediately due and payable. In the event of a
declaration of acceleration because an Event of Default set forth in clause (d)
above has occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (d) shall be remedied or cured by the
Company or the relevant Significant Subsidiary or waived by the holders of the
relevant Indebtedness within 60 days after the declaration of acceleration with
respect thereto, and no other Defaults under the Indenture have occurred and are
continuing after giving pro forma effect to such remedy, cure or waiver. If an
Event of Default specified in clause (f) or (g) above occurs with respect to the
Company, the principal of, premium, if any, and accrued interest on the Notes
then outstanding shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of at least a majority in principal amount of the outstanding Notes
by written notice to the Trustee, may waive all past defaults and rescind and
annul a declaration of acceleration and its consequences if (i) all existing
Events of Default, other than the nonpayment of the principal of, premium, if
any, and interest on the Notes that have become due solely by such declaration
of acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction. For
information as to the waiver of defaults, see "-- Modification and Waiver."
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee
in personal liability, or that the Trustee determines in good faith may be
unduly prejudicial to the rights of Holders of Notes not joining in the giving
of such direction and may take any other action it deems proper that is not
inconsistent with any such direction received from Holders of Notes. A Holder
may not pursue any remedy with respect to the Indenture or the Notes unless: (i)
the Holder gives the Trustee written notice of a continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of outstanding
Notes make a written request to the Trustee to pursue the remedy; (iii) such
Holder or Holders offer the Trustee indemnity satisfactory to the Trustee
against any costs, liability or expense; (iv) the Trustee does not comply with
the request within 60 days after receipt of the request and the offer of
indemnity; and (v) during such 60-day period, the Holders
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of a majority in aggregate principal amount of the outstanding Notes do not give
the Trustee a direction that is inconsistent with the request. However, such
limitations do not apply to the right of any Holder of a Note to receive payment
of the principal of, premium, if any, or interest on, such Note or to bring suit
for the enforcement of any such payment, on or after the due date expressed in
the Notes, which right shall not be impaired or affected without the consent of
the Holder.
The Indenture will require certain officers of the Company to certify, on
or before a date not more than 90 days after the end of each fiscal year, that a
review has been conducted of the activities of the Company and its Restricted
Subsidiaries and the Company's, and its Restricted Subsidiaries' performance
under the Indenture and that the Company has fulfilled all obligations
thereunder, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default and the nature and status thereof. The
Company will also be obligated to notify the Trustee of any default or defaults
in the performance of any covenants or agreements under the Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each of the Company and the Guarantor shall not consolidate with, merge
with or into, or sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets (as an entirety or substantially an
entirety in one transaction or a series of related transactions) to, any Person
(other than a consolidation or merger with or into a Wholly Owned Restricted
Subsidiary with a positive net worth; provided that, in connection with any such
merger or consolidation, no consideration (other than Common Stock in the
surviving Person, the Company or the Guarantor, as the case may be) shall be
issued or distributed to the stockholders of the Company or the Guarantor, as
the case may be) or permit any Person to merge with or into the Company or the
Guarantor unless: (i) the Company or the Guarantor, as the case may be, shall be
the continuing Person, or the Person (if other than the Company) formed by such
consolidation or into which the Company or the Guarantor, as the case may be, is
merged or that acquired or leased such property and assets of the Company or the
Guarantor, as the case may be, shall be a corporation organized and validly
existing under the laws of the United States of America or any jurisdiction
thereof (or, in the case of a consolidation, merger or sale, conveyance,
transfer, lease or other disposition of all or substantially all of the property
or assets of the Guarantor, the Republic of Argentina) and shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee, all
of the obligations of the Company or the Guarantor, as the case may be, with
respect to the Notes and under the Indenture; (ii) immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing; (iii) immediately after giving effect to such transaction on
a pro forma basis, the Company or the Guarantor, as the case may be, or any
Person becoming the successor obligor of the Notes shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company or the
Guarantor, as the case may be, immediately prior to such transaction; (iv)
immediately after giving effect to such transaction on a pro forma basis the
Company, or any Person becoming the successor obligor of the Notes, as the case
may be, could Incur at least $1.00 of Indebtedness under the first paragraph of
the "Limitation on Indebtedness" covenant; and (v) the Company or the Guarantor,
as the case may be, delivers to the Trustee an Officers' Certificate (attaching
the arithmetic computations to demonstrate compliance with clauses (iii) and
(iv)) and Opinion of Counsel, in each case stating that such consolidation,
merger or transfer and such supplemental indenture complies with this provision
and that all conditions precedent provided for herein relating to such
transaction have been complied with; provided, however, that clauses (iii) and
(iv) above do not apply if, in the good faith determination of the Board of
Directors of the Company, whose determination shall be evidenced by a Board
Resolution, the principal purpose of such transaction is to change the state of
incorporation of the Company; and provided further that any such transaction
shall not have as one of its purposes the evasion of the foregoing limitations.
DEFEASANCE
Defeasance and Discharge
The Indenture will provide that the Company will be deemed to have paid and
will be discharged from any and all obligations in respect of the Notes on the
123rd day after the deposit referred to below, and the
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provisions of the Indenture will no longer be in effect with respect to the
Notes (except for, among other matters, certain obligations to register the
transfer or exchange of the Notes, to replace stolen, lost or mutilated Notes,
to maintain paying agencies and to hold monies for payment in trust) if, among
other things, (A) the Company has deposited with the Trustee, in trust, money
and/or U.S. Government Obligations that through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of, premium, if any, and accrued
interest on the Notes on the Stated Maturity of such payments in accordance with
the terms of the Indenture and the Notes, (B) the Company has delivered to the
Trustee (i) either (x) an Opinion of Counsel to the effect that Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
the Company's exercise of its option under this "Defeasance" provision and will
be subject to federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit, defeasance and
discharge had not occurred, which Opinion of Counsel must be based upon (and
accompanied by a copy of) a ruling of the Internal Revenue Service to the same
effect unless there has been a change in applicable federal income tax law after
the Closing Date such that a ruling is no longer required or (y) a ruling
directed to the Trustee received from the Internal Revenue Service to the same
effect as the aforementioned Opinion of Counsel and (ii) an Opinion of Counsel
to the effect that the creation of the defeasance trust does not violate the
Investment Company Act of 1940 and after the passage of 123 days following the
deposit, the trust fund will not be subject to the effect of Section 547 of the
United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor
Law, (C) immediately after giving effect to such deposit on a pro forma basis,
no Event of Default, or event that after the giving of notice or lapse of time
or both would become an Event of Default, shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day after
the date of such deposit, and such deposit shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound, and (D) if at such time the Notes
are listed on a national securities exchange, the Company has delivered to the
Trustee an Opinion of Counsel to the effect that the Notes will not be delisted
as a result of such deposit, defeasance and discharge.
Defeasance of Certain Covenants and Certain Events of Default
The Indenture further will provide that the provisions of the Indenture
will no longer be in effect with respect to clauses (iii) and (iv) under
"Consolidation, Merger and Sale of Assets" and all the covenants described
herein under "Covenants," clause (c) under "Events of Default" with respect to
such covenants and clauses (iii) and (iv) under "Consolidation, Merger and Sale
of Assets," and clauses (d) and (e) under "Events of Default" shall be deemed
not to be Events of Default, upon, among other things, the deposit with the
Trustee, in trust, of money and/or U.S. Government Obligations that through the
payment of interest and principal in respect thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of,
premium, if any, and accrued interest on the Notes on the Stated Maturity of
such payments in accordance with the terms of the Indenture and the Notes, the
satisfaction of the provisions described in clauses (B)(ii), (C) and (D) of the
preceding paragraph and the delivery by the Company to the Trustee of an Opinion
of Counsel to the effect that, among other things, the Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and defeasance of certain covenants and Events of Default and will
be subject to federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred.
Defeasance and Certain Other Events of Default
In the event the Company exercises its option to omit compliance with
certain covenants and provisions of the Indenture with respect to the Notes as
described in the immediately preceding paragraph and the Notes are declared due
and payable because of the occurrence of an Event of Default that remains
applicable, the amount of money and/or U.S. Government Obligations on deposit
with the Trustee will be sufficient to pay amounts due on the Notes at the time
of their Stated Maturity but may not be sufficient to pay amounts due on the
Notes at the time of the acceleration resulting from such Event of Default.
However, the Company will remain liable for such payments.
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MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company,
the Guarantor and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding Notes; provided,
however, that no such modification or amendment may, without the consent of each
Holder affected thereby, (i) change the Stated Maturity of the principal of, or
any installment of interest on, any Note, (ii) reduce the principal amount of,
or premium, if any, or interest on, any Note, (iii) change the place or currency
of payment of principal of, or premium, if any, or interest on, any Note, (iv)
impair the right to institute suit for the enforcement of any payment on or
after the Stated Maturity (or, in the case of a redemption, on or after the
Redemption Date) of any Note, (v) reduce the above-stated percentage of
outstanding Notes the consent of whose Holders is necessary to modify or amend
the Indenture, (vi) waive a default in the payment of principal of, premium, if
any, or interest on the Notes, (vii) release the Guarantor from the Note
Guarantee or (viii) reduce the percentage or aggregate principal amount of
outstanding Notes the consent of whose Holders is necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults.
NO PERSONAL LIABILITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS, DIRECTORS, OR
EMPLOYEES
The Indenture provides that no recourse for the payment of the principal
of, premium, if any, or interest on any of the Notes or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in the Indenture, or in any of
the Notes or because of the creation of any Indebtedness represented thereby,
shall be had against any incorporator, shareholder, officer, director, employee
or controlling person of the Company or of any successor Person thereof. Each
Holder, by accepting the Notes, waives and releases all such liability.
CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of a Default,
the Trustee will not be liable, except for the performance of such duties as are
specifically set forth in such Indenture. If an Event of Default has occurred
and is continuing, the Trustee will use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Indenture and provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference therein contain limitations on the rights of
the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions; provided, however, that if it acquires any
conflicting interest, it must eliminate such conflict or resign.
GOVERNING LAW AND SUBMISSION TO JURISDICTION
The Notes, the Note Guarantee and the Indenture will be governed by the
laws of the State of New York. The Company and the Guarantor will submit to the
jurisdiction of the U.S. federal and New York state courts located in the City
of New York for purposes of all legal actions and proceedings instituted in
connection with the Notes, the Note Guarantee and the Indenture. The Company and
the Guarantor have appointed CT Corporation System, 1633 Broadway, New York, New
York 10019 as their authorized agent upon which process may be served in any
such action.
CURRENCY INDEMNITY
U.S. dollars are the sole currency of account and payment for all sums
payable by the Company or the Guarantor under or in connection with the Notes or
the Note Guarantee, including damages. Any amount received or recovered in a
currency other than dollars (whether as a result of, or of the enforcement of, a
judgment or order of a court of any jurisdiction, in the winding-up or
dissolution of the Company or the Guarantor or otherwise) by any Holder of a
Note in respect of any sum expressed to be due to it from the Company or the
Guarantor shall only constitute a discharge to the Company or the Guarantor to
the extent of the dollar amount which the recipient is able to purchase with the
amount so received or recovered in that
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other currency on the date of that receipt or recovery (or, if it is not
practicable to make that purchase on that date, on the first date on which it is
practicable to do so). If that dollar amount is less than the dollar amount
expressed to be due to the recipient under any Note or the Note Guarantee, the
Company and the Guarantor shall indemnify the recipient against any loss
sustained by it as a result. In any event, the Company and the Guarantor shall
indemnify the recipient against the cost of making any such purchase. For the
purposes of this paragraph, it will be sufficient for the Holder of a Note to
certify in a satisfactory manner (indicating the sources of information used)
that it would have suffered a loss had an actual purchase of dollars been made
with the amount so received in that other currency on the date of receipt or
recovery (or, if a purchase of dollars on such date had not been practicable, on
the first date on which it would have been practicable, it being required that
the need for a change of date be certified in the manner mentioned above). These
indemnities constitute a separate and independent obligation from the Company's
and the Guarantor's other obligations, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by any Holder of a Note and shall continue in full force and effect despite any
other judgment, order, claim or proof for a liquidated amount in respect of any
sum due under any Note.
ADDITIONAL AMOUNTS
Any payments made by the Guarantor under or with respect to the Notes
pursuant to the Note Guarantee will be made free and clear of and without
withholding or deduction for or on account of any present or future tax, duty,
levy, impost, assessment or other governmental charge (including penalties,
interest and other liabilities related thereto) imposed or levied by or on
behalf of the Government of the Republic of Argentina or of any subdivision,
province or territory thereof or by any authority or agency therein or thereof
having power to tax (hereinafter "Taxes"), unless the Guarantor is required to
withhold or deduct Taxes by law or by the interpretation or administration
thereof. If the Guarantor is required to withhold or deduct any amount for or on
account of Taxes from any payment made under or with respect to the Note
Guarantee, the Guarantor will pay such additional amounts ("Additional Amounts")
as may be necessary, so that the net amount received by each Holder of Notes
(including Additional Amounts) after such withholding or deduction will not be
less than the amount such Holder would have received if such Taxes had not been
withheld or deducted; provided, however, that no Additional Amounts will be
payable with respect to a payment made to a Holder (an "Excluded Holder") (i)
who is liable for taxes or duties in respect of such Note by reason of its
having some connection with Argentina other than the mere holding of such Note
or the receipt of principal or interest in respect thereof; (ii) in respect of
any estate, inheritance, gift, sales, transfer or personal property tax or any
similar tax, assessment or governmental charge; or (iii) in respect of any tax,
assessment or other governmental charge which would not have been imposed but
for any failure to comply with certification, information or other report
requirements concerning the nationality, residence or identity of the Holder or
beneficial owner of such Note, if such compliance is required by statute or by
regulation of Argentina or of any political subdivision or taxing authority
thereof or therein as a precondition to relief or exemption from such tax,
assessment or other governmental charge. The Guarantor will, upon written
request of any Holder (other than an Excluded Holder), reimburse such Holder for
the amount of (i) any Taxes so levied or imposed and paid by such Holder as a
result of payments made under or with respect to the Notes and (ii) any Taxes so
levied or imposed with respect to any reimbursement under the foregoing clause
(i), but excluding any such Taxes on such Holder's net income so that the net
amount received by such Holder after such reimbursement will not be less than
the net amount the Holder would have received if Taxes on such reimbursement had
not been imposed.
At least 30 days prior to each date on which any payment under or with
respect to the Notes is due and payable, if the Guarantor will be obligated to
pay Additional Amounts with respect to such payment, the Guarantor will deliver
to the relevant Trustee an Officers' Certificate stating the fact that such
Additional Amounts will be payable and the amounts so payable and will set forth
such other information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date. Whenever either in the Indenture or in
this Memorandum there is mentioned, in any context, the payment of principal (or
premium, if any), Redemption Price, interest or any other amount payable under
or with respect to any Note, such mention shall be deemed to include mention of
the payment of Additional Amounts to the extent that, in such context,
Additional Amounts are, were or would be payable in respect thereof.
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BOOK ENTRY; DELIVERY AND FORM
Except as set forth below, the New Notes to be issued upon the consummation
of the Exchange Offer will be issued in the form of a single global note (the
"Global Note"). The Global Note will be deposited with the Trustee as custodian
for, and registered in the name of, a nominee of DTC. Except as set forth below,
the Global Note may be transferred, in whole and not in part, only to the DTC or
another nominee of the DTC.
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in a Global
Note will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Note represented by such Global Note for all
purposes under such Note. No beneficial owner of an interest in a Global Note
will be able to transfer that interest except in accordance with DTC's
applicable procedures.
Payments made with respect to a Global Note will be made to DTC or its
nominee, as the case may be, as the registered owner thereof. Neither the
Company nor the Trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in a Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment
made with respect to a Global Note will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the Global Note as shown on the records of DTC or its nominee. The Company also
expects that payments by participants to owners of beneficial interests in such
Global Note held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same day funds.
The Company expects that DTC will take any action permitted to be taken by
a holder of Note (including the presentation of Note for exchange as described
below) only at the direction of one or more participants to whose account the
DTC interests in a Global Note is credited and only in respect of such portion
of the aggregate liquidation preference of the Note as to which such participant
or participants has or have given such direction.
The Company understands that DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of notes and
certain other organizations. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in a Global Note among participants of DTC, it
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trustee will have any responsibility for the performance by DTC or its
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
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CERTIFICATED NOTES
The New Notes represented by the Global Note are exchangeable for
certificated New Notes in definitive form of like tenor as such New Notes, in
denominations of $1,000 and integral multiples thereof if (i) DTC notifies the
Company that it is unwilling or unable to continue as a depositary for the
Global Notes and a successor depositary is not appointed by the Company within
90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a request to the foregoing effect from
DTC.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of the principal material United States federal
income tax consequences which may result to Holders from the purchase,
ownership, and disposition of the Notes is based on the advice of Arnold &
Porter, counsel to the Company. This discussion is based on existing provisions
of the U.S. Internal Revenue Code (the "Code"), applicable permanent, temporary
and proposed Treasury Regulations ("Treasury Regulations"), judicial authority,
and administrative rulings and pronouncements of the Internal Revenue Service
(the "Service") and is based on facts concerning the Company and its
subsidiaries as of the date hereof. There can be no assurance that the Service
will not take a contrary view, and no ruling from the Service has been or will
be sought, on the issues discussed herein. Legislative, judicial, or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conclusions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to Holders. This discussion applies only to a person who is (i) a
citizen or resident of the United States for U.S. federal income tax purposes,
(ii) a corporation, partnership or other entity created or organized under the
laws of the United States or any political subdivision thereof, or (iii) an
estate or trust the income of which is subject to U.S. federal income taxation
regardless of its source (a "U.S. Holder").
This summary does not purport to deal with all aspects of U.S. federal
income taxation that may be relevant to particular U.S. Holders of Notes in
light of their personal investment or tax circumstances, or to certain types of
investors (including insurance companies, certain financial institutions,
broker-dealers, tax-exempt organizations, foreign corporations and persons who
are not citizens or residents of the United States, and U.S. Holders who
directly or indirectly own 10% or more of the voting power of the Company) who
are subject to special treatment under the United States federal income tax
laws, or persons that hold Notes that are a hedge against, or that are hedged
against, currency risk or that are part of a straddle or conversion transaction,
or persons whose functional currency is not the U.S. dollar. Moreover, the
effect of any applicable state, local or foreign tax laws is not discussed.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCES TO THEM OF PURCHASING, HOLDING, AND DISPOSING OF THE NOTES,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR FOREIGN TAX LAWS.
Exchange of Old Notes for New Notes. An exchange of the Old Notes for the
New Notes pursuant to the Exchange Offer will not constitute a taxable event for
federal income tax purposes because the New Notes will not be considered to
differ materially in kind or extent from the Old Notes. Rather, the New Notes
received by U.S. Holders will be treated as a continuation of the Old Notes in
the hands of such holders. As a result, U.S. Holders who exchange their Old
Notes for New Notes should not recognize any income, gain or loss for federal
income tax purposes with respect to such exchange.
Interest and Additional Amounts. Interest on the Notes will be taxable to
a U.S. Holder as ordinary interest income at the time such amounts are accrued
or received, in accordance with the U.S. Holder's method of accounting for U.S.
federal income tax purposes. In addition, in the event that Additional Amounts
are paid under the Guarantee in respect of Argentine taxes imposed on payments
on the Notes (as described in "Description of the Notes -- Additional Amounts")
such Additional Amounts will be taxable to a U.S. Holder as ordinary interest
income at the time such amounts are accrued or received, in accordance with the
U.S. Holder's method of accounting for U.S. federal income tax purposes. The
amount of interest (including original issue discount) taxable to a U.S. Holder
will include all Argentine taxes withheld by the Guarantor in respect thereof.
Thus, a U.S. Holder will be required to report income in an amount greater than
the cash it receives in respect of payments on its Notes. However, a U.S. Holder
may, subject to certain limitations, be eligible to claim as a credit or
deduction for purposes of computing its U.S. federal income tax liability the
Argentine taxes withheld, notwithstanding that the payment of such taxes will be
made by the Guarantor. The rules relating to foreign tax credits are extremely
complex, and U.S. Holders should consult with their own tax advisors with regard
to the availability of a foreign tax credit and the application of the foreign
tax credit to their particular situations.
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Further, under U.S. federal income tax rules, interest payments on a debt
instrument generally are treated as derived from U.S. sources or foreign sources
based on the country of incorporation of the issuer of the debt instrument.
However, interest paid by a U.S. corporation that qualifies as an "80/20
company" for U.S. federal income tax purposes is treated as foreign source
interest income. A U.S. corporation will qualify as an 80/20 company if at least
80% of such corporation's gross income from all sources for a three-year testing
period ending with the close of the taxable year preceding payment is "active
foreign business income." The 80% active business requirement may be met by a
U.S. corporation alone or by a group including domestic and foreign subsidiaries
in which the U.S. corporation owns, directly or indirectly, at least 50% of both
the voting power and value of stock of the subsidiary corporation.
The Company expects to be an 80/20 company for U.S. federal income tax
purposes, although this determination will be made periodically based on the
Company's operations and source of income at the time of each determination. If
interest payments received by U.S. Holders are treated as foreign source income
for a taxable year, U.S. Holders who are otherwise claiming a foreign tax credit
should consult with their own tax advisors to determine the effect of including
such income in their foreign tax credit calculations.
Original Issue Discount. The Company intends to take the position that
stated interest on the Notes does not represent original issue discount. If the
Notes, however, were treated as having original issue discount, a U.S. Holder
(including a cash basis holder) generally would be required to include the
interest on the Notes in income for U.S. federal income tax purposes under the
accrual method on a constant yield basis (or perhaps at the beginning of each
interest period) resulting in the inclusion of interest in income somewhat in
advance of the receipt of cash attributable to that income.
In general, the amount of original issue discount, if any, on a debt
instrument is the excess of its "stated redemption price at maturity" over its
"issue price," subject to a statutorily defined de minimis exception. The "issue
price" of a debt instrument issued for cash is equal to the offering price to
the public (excluding sales to bond houses, brokers or similar persons or
organizations acting in the capacity of an underwriter, placement agent or
wholesaler) at which price a substantial amount of such debt instruments was
sold. According to the Treasury Regulations, the issue price of the Notes does
not change even if part of the issue is subsequently sold at a different price.
The "stated redemption price at maturity" of a debt instrument is the sum of its
principal amount plus all other payments required thereunder, other than
payments of "qualified stated interest" (defined generally as stated interest
that is unconditionally payable in cash or in property (other than the debt
instruments of the issuer), at least annually at a single fixed rate that
appropriately takes into account the length of intervals between payments).
In general, the amount of original issue discount that a holder of a debt
instrument with original issue discount must include in gross income for United
States federal income tax purposes will be the sum of the "daily portions" of
original issue discount with respect to such debt instrument for each day during
the taxable year or portion of a taxable year on which such holder holds the
debt instrument. The daily portion is determined under a constant yield method
by allocating to each day of an accrual period (generally, a six month period or
a shorter or longer period) a pro rata portion of an amount equal to the
"adjusted issue price" of the debt instrument at the beginning of the accrual
period multiplied by the yield to maturity of the debt instrument. The yield to
maturity of a debt instrument is the discount rate that, when applied to all
payments due under the debt instrument produces a present value equal to the
issue price of the debt instrument. The "adjusted issue price" is the issue
price of the debt instrument increased by the accrued original issue discount
for all prior accrual periods (and decreased by the amount of cash payments made
in all prior accrual periods, other than qualified stated interest payments).
As described under "Exchange Offer -- Acceptance of Old Notes for Exchange;
Delivery of New Notes," in the event that an exchange offer is not consummated
and a shelf registration is not declared effective prior to the date that is six
months after the Closing Date, then additional interest of 0.5% per annum
("Additional Interest") shall become payable with respect to the Notes. It is
not expected that such a failure by the Company would materially affect the U.S.
federal income tax consequences of the ownership of Notes by U.S. Holders,
except that U.S. Holders using the cash method of tax accounting may be required
to include such additional interest in gross income on an economic accrual
basis. Treasury Regulations provide that in
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the case of a debt instrument such as a Note that provides for an alternative
payment schedule applicable upon the occurrence of one or more contingencies,
the yield and maturity of such debt instrument for purposes of calculating the
amount of original issue discount, if any, are determined by assuming that the
payments will be made according to the stated payment schedule of the debt
instrument unless, based on all the facts and circumstances as of the closing
date, it is more likely than not that payments will not be made in accordance
with the stated payment schedule of the debt instrument. The Company has
determined that it is more likely than not that Additional Interest will not be
required to be paid. As a result, the Company will assume that no Additional
Interest will be paid. This determination by the Company is generally binding on
all Holders of Notes, unless a Holder explicitly discloses on a statement
attached to such Holder's timely filed United States federal income tax return
for the taxable year that includes the acquisition date of the Note that its
determination of yield and maturity is different from that of the Company. The
yield to maturity of the Notes is 12 1/8%, based on the issue price and computed
on the basis of semiannual compounding. The above yield does not take into
account any Additional Interest. There can be no assurance that forthcoming
Treasury regulations will not require that such amounts be included in computing
the yield to maturity. If Additional Interest does become payable, then solely
for purposes of the accrual of original issue discount, if any, the yield and
maturity of the Notes will be redetermined by treating the Notes as reissued on
the date the exchange offer requirement is not met for an amount equal to its
adjusted issue price on that date.
Tax Basis. A U.S. Holder's initial tax basis in a Note will be equal to
the purchase price paid by such U.S. Holder for such Note. The tax basis of the
Notes in the hands of each U.S. Holder will be increased by the amount of
original issue discount, if any, on such Note that is included in the U.S.
Holder's gross income and will be decreased by the amount of any cash payments
received with respect to the debt instrument, whether such payments are
denominated as principal or interest.
Election. A Holder of Notes, subject to certain limitations, may elect to
include all interest and discount on the Notes in gross income under the
constant yield method. For this purpose, interest includes stated and unstated
interest, acquisition discount, original issue discount, de minimis market
discount and market discount, as adjusted by any amortizable bond premium or
acquisition premium. Any such election, if made in respect of a market discount
bond, will constitute an election to include market discount in income currently
on all market discount bonds acquired by such Holder on or after the first day
of the first taxable year to which the election applies. See "Market Discount."
Acquisition Premium. If a U.S. Holder of a Note acquired such Note for an
amount in excess of its "adjusted issue price" but less than or equal to the sum
of all amounts payable on the Note after the date of such purchase, such Note
will have an acquisition premium to the extent of such excess. Notwithstanding
the original issue discount rules described in "Original Issue Discount" above,
the Holder of a Note with an acquisition premium would be entitled to reduce the
daily portion of original issue discount includible in income by a fraction, the
numerator of which is the excess of the adjusted tax basis of the Note
immediately after its acquisition over the adjusted issue price of the Note and
the denominator of which is the excess of the sum of all payments (other than
payments of qualified stated interest) after the purchase date over such Note's
adjusted issue price.
Market Discount. The Code generally requires holders of "market discount
bonds" to treat as ordinary income any gain realized on the disposition (or
gift) of such bonds to the extent of the accrued market discount during the
holder's period of ownership. A "market discount bond" is a debt obligation
purchased at a discount, subject to a statutory de minimis exception. For this
purpose, a purchase at a market discount includes (i) a purchase after the
original issue at a price below the stated redemption price at maturity, (ii) a
purchase at original issue at a price below its "issue price" and the stated
redemption price at maturity, or (iii) in the case of a debt instrument (such as
a Note) issued with original issue discount, a purchase at a price below (a) its
"issue price" plus (b) the amount of original issue discount includible in
income by all prior holders of the debt instrument, minus (c) all cash payments
(other than payments constituting qualified stated interest) received by such
prior holders. The accrued market discount generally equals a ratable portion of
the bond's market discount, based on the number of days the taxpayer has held
the bond at the time of such disposition, as a percentage of the number of days
from the date the taxpayer acquired the bond to its date of maturity.
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A holder of "market discount bonds" generally is not required to include
accrued market discount in income until (i) such holder receives a partial
principal payment; (ii) such holder sells or otherwise disposes of such market
discount bonds; or (iii) such market discount bonds are retired or redeemed by
the issuer. If a market discount bond is exchanged or otherwise disposed of in a
transaction which under the Code does not require the recognition of gain or
loss, the transferor of such debt instrument nevertheless will be required with
respect to certain nonrecognition transactions to recognize gain, if any, to the
extent of any accrued market discount.
Amortizable Bond Premium. Generally, if the tax basis of an obligation
held as a capital asset exceeds the amount payable at maturity of the
obligation, such excess will constitute amortizable bond premium that the holder
may elect to amortize under the constant yield method over the period from his
acquisition date to the obligation's maturity date. A holder who elects to
amortize bond premium must reduce his tax basis in the related obligation by the
amount of the aggregate amortization allowable for amortizable bond premium.
Amortizable bond premium will be treated under the Code as an offset to interest
income on the related debt instrument for federal income tax purposes, subject
to the promulgation of Treasury Regulations altering such treatment.
Disposition. Unless a nonrecognition provision applies, the sale,
exchange, redemption (including pursuant to an offer by the Company) or other
disposition of a Note, will be a taxable event for U.S. federal income tax
purposes. In such event, in general, a U.S. Holder of Notes will recognize gain
or loss equal to the difference between (i) the amount of cash plus the fair
market value of property received (except to the extent attributable to accrued
interest on the Notes) and (ii) the Holder's tax basis in the Notes (as
increased by any original issue discount and market discount previously included
in income by the U.S. Holder and decreased by any amortizable bond premium, if
any, deducted over the term of the Notes). Subject to the market discount rules
discussed above, any such gain or loss will generally be long-term capital gain
or loss, provided the Notes have been held for more than one year. The
deductibility of capital losses is subject to limitations. At the time of sale,
exchange, disposition, retirement or redemption, a U.S. Holder of the Notes must
also include in income any previously accrued but unrecognized original issue
discount.
Applicable High Yield Discount Obligations. Due to their maturity date,
yield to maturity, and de minimis amount of original issue discount, it is
anticipated that the Notes will not constitute high yield discount obligations
("AHYDOs").
Generally, under Section 163(e)(5) and 163(i) of the Code, a C corporation
that is an issuer of debt obligations subject to the AHYDO rules may not deduct
any portion of original issue discount on the obligations until such portion is
actually paid. A debt obligation is generally subject to the AHYDO rules if
original issue discount is not deductible until paid with respect to any debt
instrument issued by a corporation which (i) has a maturity date which is more
than five years from the date of issue, (ii) has a yield to maturity which
equals or exceeds five percentage points over the applicable federal rate for
the calendar month in which the obligation is issued and (iii) has "significant
original issue discount." Moreover, if the debt instrument's yield to maturity
exceeds the applicable federal rate plus six percentage points, a ratable
portion of the issuing corporation's deduction for original issue discount (the
"Disqualified OID") will be denied. For purposes of the dividends received
deduction under Section 243 of the Code, the Disqualified OID will be treated as
a dividend to the extent it would have been so treated if it had been
distributed by the issuing corporation with respect to its stock. Amounts
treated as dividends will be nondeductible by the issuer, and may qualify for
the dividend received deduction for corporate U.S. Holders, but will be treated
as original issue discount and not as dividends for withholding tax purposes.
U.S. INCOME TAX REPORTING
The Company will report to Holders of the Notes (other than Holders which
are corporations or are other entities included within exempt categories) and
the Service on a Form 1099, which will be furnished to the Holders and the
Service, the amount of any "reportable payments" (including any interest paid
and any original issue discount accrued on the Notes) and any amount withheld
with respect to the Notes during the calendar year.
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Backup Withholding. A Holder of Notes may be subject to backup withholding
at the rate of 31% with respect to interest paid on, original issue discount
accrued on, and gross proceeds from the sale of, the Notes unless (i) such
holder is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact or (ii) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. A holder of Notes who does not provide the Company or the
applicable reporting entity with his or her correct taxpayer identification
number may be subject to penalties under the Code. The backup withholding tax is
not an additional tax and may be credited against a holder's U.S. federal income
tax liability.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF UNITED STATES FEDERAL
INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR U.S. HOLDER OF NOTES IN
LIGHT OF HIS OR HER PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. HOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM
FROM THE PURCHASE, OWNERSHIP, AND DISPOSITION OF NOTES, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of New Notes received
in exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any commission
or concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
The Company has agreed, pursuant to the Registration Rights Agreement, to
pay all expenses incident to the Exchange Offer (including the expenses of one
counsel for all the holders of the Notes as a single class) other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the Notes (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon by Arnold
& Porter, Washington, D.C., U.S. counsel to the Company.
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EXPERTS
The combined financial statements of the Company as of December 31, 1994
and 1995, and for each of the three years ended December 31, 1995 included in
this Prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing herein, and have been so included
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The consolidated financial statements of IMPSAT Argentina as of November
30, 1994 and 1995, and for each of the three years ended November 30, 1995
included in this Prospectus have been audited by Deloitte & Touche, Argentina,
independent auditors, as stated in their report appearing herein, and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
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GLOSSARY
Analog: Describes a method of storing, processing and transmitting
information that employs variable and continuous (rather than pulsed or digital)
electrical signals that provide a "representation" or analog of the sound or
image to be transmitted.
Backbone: The core infrastructure of a network. A high-speed transmission
facility or arrangement of such facilities designed to interconnect one central
location to lower speed distribution channels or clusters of dispersed users or
devices.
Bandwidth: The range of frequencies that can be passed through a medium
without distortion. Bandwidth is expressed in hertz (Hz) by subtracting the
lowest frequency in the band from the highest frequency in the band. The greater
the bandwidth, the greater the information carrying capacity of the medium. This
would in turn allow, for example, greater and faster information transfer
between remote sites and the network's host computer.
Bit: A contraction for "binary digit." The smallest piece of data a
computer can process represented as a binary digit 0 or 1. Bits are generally
arranged in groups of eight or sixteen to form a single unit of information
("byte") such as a letter, number or other character.
Bps (Bits per second): A universal measurement of the signaling speed of a
data transmission equivalent to the maximum number of bits that are transmitted
per second.
CAP (Competitive Access Provider): A company that provides its customers
with an alternative to the local exchange carriers by using its own networks to
connect end users to long distance carriers or to interconnect long distance
carriers (special access services), and where authorized, to connect end users
to other end users using dedicated communications paths (private line services).
C-Band: That portion of the electromagnetic spectrum that is the frequency
band range 4-7 GHz and is used heavily for satellite and microwave
transmissions.
Channel: A single path for transmitting electric signals.
Digital: Describes a method of storing, processing and transmitting
information through the use of distinct electronic or optical pulses that
represent binary digits 0 and 1. Digital transmission technologies employ a
sequence of these pulses to represent information, as opposed to continuously
variable analog signals. The precise digital numbers virtually eliminate any
distortion (such as graininess or snow, in the case of video transmission, or
static or other background distortion, in the case of audio transmission).
Fiber Optics: Technology based on thin filaments of glass or other
transparent materials used as the medium for relaying coded light pulses that
represent data, image and sound at extremely transmission high speeds.
Frame Relay: A high-speed, packet-switching protocol for data
transmissions within digital networks at transmission speeds between 56Kbps and
1.544 Mbps. Frame Relay provides about a 300% increase in data throughout,
relative to packet-switched networks using the traditional and more commonly
used X.25 protocol.
Frequency: Usually expressed in hertz (Hz), represents the number of
oscillations per second made by an electronic signal travelling as a radio wave.
The distance between two consecutive oscillations is the wavelength and,
therefore, the shorter the wavelength of a radio signal the higher its
frequency.
GHz (Gigahertz): Approximately one billion hertz.
Hertz (Hz): A unit of measurement of frequency. One Hz is one cycle per
second.
Internet: A global interconnection of thousands of separate computer
networks through high-speed data lines and wireless systems. First established
and controlled by the U.S. Military in the early 1960s, computer access to the
Internet is now available to millions of academic, commercial and individual
users worldwide.
Kbps: Approximately one thousand bits per second.
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Ku Band: That portion of the electromagnetic spectrum that is the
frequency band range 10 to 18 GHz. It is being used increasingly for satellite
transmissions.
MAN (Metropolitan Area Network): A telecommunications network connecting
various user sites within a city.
Mbps: Approximately one million bits per second.
Microwave: A short electromagnetic wave used in the super-high frequency
radio spectrum with frequencies from about 2 to 20 GHz.
Multiplexer: A device that allows two or more users to share a common
physical transmission medium. A multiplexer is usually installed at both ends of
the communications medium, permitting multiplexing of the multiple user inputs
and demultiplexing into multiple output ports.
Packet-Switching: A transmission technique wherein digitized information
is segmented and routed in discrete "packets" each with its own protocol
controls for routing, sequencing and error checking.
Port: A point of access into a computer, a network or other electronic
device.
Private Line: A dedicated communications path directly between end-user
locations (excluding long distance carriers' points-of-presence).
Protocol: Standard rules that govern the format, timing, sequencing and
error control of batches of information exchanged between equipment within a
network.
Protocol Emulation: To be compatible, equipment within a network must
communicate using the same protocol. Protocol emulation technology acts as a
"translator" between equipment that would communicate using otherwise
incompatible protocols.
PTO (Public Telephony Operator): The monopoly providers of public
telephony services.
SCPC (Single Carrier Per Channel): The fixed assignment of transponder
capacity through dedication of overall frequency bandwidth to a single
transmitting earth station.
Transponder: That part of the satellite that accepts the incoming signal,
filters it, converts the incoming frequency to the outgoing frequency, amplifies
it, and relays the signal to the satellite antenna for transmission to the
intended destination.
VSAT (Very Small Aperture Terminal): A satellite ground antenna, typically
between 1 and 3 meters in size, that is typically used in large corporate
wide-area communications networks for point to multi-point or multi-point to
point satellite communications.
X.25: An established and widely used protocol for block transfer between a
host computer and a packet switching network. X.25 was invented for analog
lines, whereas newer, faster protocols such as Frame Relay were designed to run
on less error prone digital fiber connections. The higher error checking
features of X.25 accounts for its slower speed compared to Frame Relay.
126
<PAGE> 128
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
COMBINED FINANCIAL STATEMENTS OF IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
Independent Auditors' Report....................................................... F- 2
Combined Balance Sheets as of December 31, 1994 and 1995 and as of September 30,
1996............................................................................ F- 3
Combined Statements of Operations for the Years Ended December 31, 1993, 1994 and
1995 and the Nine Months Ended September 30, 1995 and 1996...................... F- 4
Combined Statements of Stockholders' Equity for the Years Ended December 31, 1993,
1994 and 1995 and the Nine Months Ended September 30, 1996...................... F- 5
Combined Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and
1995 and the Nine Months Ended September 30, 1995 and 1996...................... F- 6
Notes to Combined Financial Statements............................................. F- 7
CONSOLIDATED FINANCIAL STATEMENTS OF IMPSAT S.A. AND SUBSIDIARIES
Independent Auditors' Report....................................................... F-14
Consolidated Balance Sheets as of November 30, 1994 and 1995 and as of August 31,
1996............................................................................ F-15
Consolidated Statements of Income for the Years Ended November 30, 1993, 1994 and
1995 and the Nine Months Ended August 31, 1995 and 1996......................... F-16
Consolidated Statements of Stockholders' Equity for the Years Ended November 30,
1993, 1994 and 1995 and the Nine Months Ended August 31, 1996................... F-17
Consolidated Statements of Cash Flows for the Years Ended November 30, 1993, 1994
and 1995 and the Nine Months ended August 31, 1995 and 1996..................... F-18
Notes to Consolidated Financial Statements......................................... F-19
</TABLE>
F-1
<PAGE> 129
INDEPENDENT AUDITORS' REPORT
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES:
We have audited the accompanying combined balance sheets of IMPSAT
Corporation and its Combined Subsidiaries, all of which are under common
ownership and common management (collectively, the "Companies") as of December
31, 1994 and 1995, and the related combined statements of operations, changes in
stockholders' equity, and of cash flows for each of the three years ended
December 31, 1995. These combined financial statements are the responsibility of
the Companies' management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such combined financial statements present fairly, in all
material respects, the combined financial position of the Companies as of
December 31, 1994 and 1995, and the combined results of their operations and
their combined cash flows for each of the three years ended December 31, 1995,
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Miami, Florida
February 23, 1996
F-2
<PAGE> 130
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
COMBINED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 32,135 $ 6,216 $ 93,863
Trade accounts receivable, net......................... 15,647 21,587 25,070
Other receivables...................................... 5,991 6,441 9,186
Prepaid expenses....................................... 4,175 2,662 1,875
-------- -------- -------------
Total current assets.............................. 57,948 36,906 129,994
-------- -------- -------------
PROPERTY, PLANT AND EQUIPMENT, Net.......................... 152,909 199,701 218,094
-------- -------- -------------
NON-CURRENT ASSETS:
License and permit costs, net.......................... 3,056 2,785 2,524
Deferred income taxes.................................. 6,888 7,824 5,543
Other non-current assets............................... 1,883 1,879 6,980
-------- -------- -------------
Total non-current assets.......................... 11,827 12,488 15,047
-------- -------- -------------
TOTAL....................................................... $222,684 $249,095 $ 363,135
======== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -- trade.............................. $ 10,933 $ 19,641 $ 15,059
Short-term debt........................................ 44,802 60,335 52,001
Current portion of long-term debt...................... 3,245 37,175 37,410
Accrued liabilities.................................... 3,653 5,538 8,806
Other liabilities...................................... 6,351 6,124 6,386
-------- -------- -------------
Total current liabilities......................... 68,984 128,813 119,662
-------- -------- -------------
LONG-TERM DEBT, Net......................................... 59,437 30,200 159,240
-------- -------- -------------
OTHER LONG-TERM LIABILITIES................................. 6,590 6,243 4,263
-------- -------- -------------
COMMITMENTS AND CONTINGENCIES (Note 9)
MINORITY INTEREST........................................... 24,893 28,476 29,985
-------- -------- -------------
STOCKHOLDERS' EQUITY:
Common Stock (IMPSAT Corporation), $1 par value;
51,300,000 shares authorized, issued and outstanding
at December 31, 1994 and 1995 and 77,750,640 shares
authorized, issued and outstanding at September 30,
1996................................................. 51,300 51,300 77,750
Combined subsidiaries -- capitalization................ 13,360 13,360 --
Accumulated deficit.................................... (1,880) (9,297) (27,765)
-------- -------- -------------
Total stockholders' equity........................ 62,780 55,363 49,985
-------- -------- -------------
TOTAL....................................................... $222,684 $249,095 $ 363,135
======== ======== ==========
</TABLE>
See notes to combined financial statements.
F-3
<PAGE> 131
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------ ----------------------
1993 1994 1995 1995 1996
------- ------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES FROM SERVICES..................... $37,695 $77,679 $105,641 $ 75,324 $ 93,393
------- ------- -------- -------- --------
COST AND EXPENSES:
Direct cost of services............... 22,256 32,999 43,051 28,501 35,470
Selling expenses...................... 3,284 9,714 16,962 11,467 11,703
General and administrative expenses... 3,491 10,467 18,092 13,365 13,124
Reorganization costs -- severance..... 713
Depreciation and amortization......... 6,324 12,874 20,653 14,749 19,193
------- ------- -------- -------- --------
OPERATING INCOME........................... 2,340 11,625 6,883 7,242 13,190
INTEREST EXPENSE -- Net.................... (6,220) (8,231) (15,677) (10,725) (16,849)
NET GAIN (LOSS) ON FOREIGN EXCHANGE........ 1,518 1,352 1,838 (9) 1,166
OTHER INCOME (EXPENSES) -- Net............. (684) 599 511 (543) 1,119
------- ------- -------- -------- --------
INCOME (LOSS) BEFORE TAXES................. (3,046) 5,345 (6,445) (4,035) (1,374)
BENEFIT (EXPENSE) FOR INCOME
TAXES -- FOREIGN......................... 1,428 3,155 740 122 (2,495)
------- ------- -------- -------- --------
INCOME (LOSS) BEFORE MINORITY INTEREST..... (1,618) 8,500 (5,705) (3,913) (3,869)
MINORITY INTEREST.......................... (1,218) (5,464) (1,712) (976) (1,509)
------- ------- -------- -------- --------
NET INCOME (LOSS).......................... $(2,836) $ 3,036 $ (7,417) $ (4,889) $ (5,378)
======= ======= ======== ======== ========
</TABLE>
See notes to combined financial statements.
F-4
<PAGE> 132
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITALIZATION
-----------------------
COMBINED ACCUMULATED MINORITY
COMPANY SUBSIDIARIES DEFICIT TOTAL INTEREST
------- ------------ ----------- ------- --------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992............. $ 25,253 $ (3,672) $21,581 $ 15,697
Additional
capitalization -- Colombia........ 1,163 1,163 403
Initial
capitalization -- Venezuela....... 6,886 6,886 2,296
Net income (loss) for the year...... (2,836) (2,836) 1,218
------------ ----------- ------- --------
BALANCE AT DECEMBER 31, 1993............. 33,302 (6,508) 26,794 19,614
Dividends declared -- Argentina..... (765) (765) (735)
Additional
capitalization -- Venezuela....... 1,650 1,650 550
Net income (loss) for the year...... 3,036 3,036 5,464
Initial capitalization -- others.... 107 107
Initial capitalization -- corp.:
Colombia exchange.............. $12,070 (13,056) 986
Venezuela exchange............. 7,165 (8,536) 1,371
Other exchanges................ 107 (107)
Additional capital
contributions................ 31,958 31,958
------- ------------ ----------- ------- --------
BALANCE AT DECEMBER 31, 1994............. 51,300 13,360 (1,880)(*) 62,780 24,893
Additional
capitalization -- Venezuela....... 1,871
Net income (loss) for the year...... (7,417) (7,417) 1,712
------- ------------ ----------- ------- --------
BALANCE AT DECEMBER 31, 1995............. 51,300 13,360 (9,297)(*) 55,363 28,476
Stock issuance for IMPSAT Argentina
exchange.......................... 26,450 (13,360) (13,090)
------- ------------ -----------
Net income (loss) for the nine
months ended...................... (5,378) (5,378) 1,509
------- ------------ ----------- ------- --------
BALANCE AT SEPTEMBER 30, 1996
(Unaudited)............................ $77,750 $ -- $ (27,765)(*) $49,985 $ 29,985
======= ========= ========= ======= =======
</TABLE>
- ---------------
(*) Includes an appropriation of retained earnings, amounting to $150, $449 and
$1,254 in 1994, 1995, and 1996, respectively, to comply with legal reserve
requirements in Argentina.
See notes to combined financial statements.
F-5
<PAGE> 133
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................. $ (2,836) $ 3,036 $ (7,417) $ (4,889) $ (5,378)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Amortization and depreciation............. 6,324 12,874 20,653 14,749 19,193
Deferred income tax (benefit) expense..... (2,720) (3,483) (936) (364) 2,281
Minority interest......................... 1,218 5,464 1,712 976 1,509
Changes in assets and liabilities:
Increase in trade accounts receivable,
net................................. (11,371) (1,178) (5,940) (2,129) (3,483)
Decrease (increase) in prepaid
expenses............................ 549 (2,724) 1,513 1,707 787
Decrease (increase) in other
receivables and other non-current
assets.............................. 2,978 (4,317) (446) (1,041) (3,075)
Increase (decrease) in accounts
payable -- trade.................... 1,227 3,280 8,444 9,756 (10,821)
Increase (decrease) in accrued and
other liabilities................... 4,525 4,142 1,658 (1,206) 3,530
Increase (decrease) in other long-term
liabilities......................... 4,927 163 (347) 466 (1,980)
-------- -------- -------- -------- --------
Net cash provided by operating
activities..................... 4,821 17,257 18,894 18,025 2,563
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment..... (35,235) (87,023) (66,796) (56,443) (31,062)
License and permit costs....................... (26) (580) (114) -- (24)
-------- -------- -------- -------- --------
Net cash used by investing activities..... (35,261) (87,603) (66,910) (56,443) (31,086)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments of) borrowings from short-term
debt......................................... (8,342) 34,306 15,533 7,449 (8,334)
Proceeds from long-term debt................... 31,588 28,224 8,546 8,204 129,740
Repayments of long-term debt................... (1,444) (3,853) (1,811) (5,236)
Capital contributions.......................... 10,748 34,265 1,871 716 --
-------- -------- -------- -------- --------
Net cash provided by financing
activities.............................. 33,994 95,351 22,097 14,558 116,170
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS...................................... 3,554 25,005 (25,919) (23,860) 87,647
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD... 3,576 7,130 32,135 32,135 6,216
-------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......... $ 7,130 $ 32,135 $ 6,216 $ 8,275 $ 93,863
========= ========= ========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid.................................. $ 6,352 $ 7,358 $ 16,498 $ 12,374 $ 14,451
========= ========= ========= ========= =========
Foreign income taxes paid...................... $ 244 $ 193
========= =========
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND
FINANCING ACTIVITIES:
Dividends declared not yet paid................ $ 1,500
=========
Equipment in transit........................... $ 937 $ 518 $ 264 $ 632 $ 6,239
========= ========= ========= ========= =========
Deferred financing costs....................... $ 4,877
=========
</TABLE>
F-6
<PAGE> 134
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. BACKGROUND
IMPSAT Corporation, a Delaware holding company (the "Company"), is a
privately-held corporation which provides and operates private networks of
integrated data and voice telecommunications systems in a number of countries in
Latin America. The Company's principal line of business comprises the provision
of data transmission services for large national and multinational companies,
financial institutions, governmental agencies and other business customers in
Latin America. The Company provides its services through its owned advanced
telecommunications networks comprised of teleports, earth stations, fiber optic
and microwave links and leased satellite and fiber optic capacity.
The Company was formed in August 1994 for the purpose of combining
operating entities in Argentina, Colombia and Venezuela, which were previously
controlled by common ownership. The original operating entity was established in
Argentina in 1990 under the name of IMPSAT S.A. ("IMPSAT Argentina").
Thereafter, operating entities began operations in Colombia in 1992 ("IMPSAT
Colombia") and in Venezuela in 1993 ("IMPSAT Venezuela").
As part of the formation of the Company, a shareholder of the Company
contributed its ownership in the operating entities in Colombia and Venezuela in
exchange for common stock. At the same time, cash was contributed by four
shareholders in exchange for common stock. In July 1996, shareholders of IMPSAT
Argentina exchanged a 51% ownership interest in IMPSAT Argentina for common
stock of the Company. Since the establishment of the Company, new operating
subsidiaries have been created in Mexico, Ecuador, Peru and the United States.
Accordingly, the Company's operating subsidiaries at December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
OWNERSHIP
COUNTRY OPERATING SUBSIDIARIES PERCENTAGE TOTAL ASSETS REVENUES
- ---------- ----------------------------------------- ---------- ------------ --------
<S> <C> <C> <C> <C>
Argentina Impsat S.A. ............................. 51.0 $165,945 $ 80,346
Colombia Colinvertel S.A./Impsat S.A. ............ 74.2 59,929 22,417
Venezuela Telecomunicaciones Impsat S.A. .......... 75.0 11,192 2,204
Mexico Impsat S.A. de C.V. ..................... 99.9 4,357 12
Ecuador Impsatel del Ecuador S.A. ............... 100.0 4,383 588
Peru Impsat S.A. ............................. 99.6 3
USA Impsat USA, Inc. ........................ 100.0 150
------------ --------
Subtotal for operating subsidiaries...... 245,959 105,567
Parent company and others................ 3,136 74
------------ --------
Combined total $249,095 $105,641
========= ========
</TABLE>
In addition, the Company owns other subsidiaries which serve as
intermediaries or provide support functions to the Company and its operating
subsidiaries. They are Resis Ingenieria, S.A. (Argentina) and ISCH Ltd.
(Liechtenstein).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION -- The financial statements for the years ended
December 31, 1993, 1994 and 1995 and for the nine months ended September 30,
1995 are presented on a combined basis by virtue of common ownership, as
described in Note 1. The financial statements for the nine months ended
September 30, 1996 are presented on a consolidated basis as a result of the
exchange for 51% of IMPSAT Argentina described in Note 1. IMPSAT Argentina has
been combined on the basis of its fiscal year-end, November 30. All significant
intercompany transactions and balances have been eliminated.
F-7
<PAGE> 135
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
INTERIM FINANCIAL INFORMATION -- The unaudited combined financial
statements as of September 30, 1996 and for the nine months ended September 30,
1995 and 1996 have been prepared on the same basis as the audited combined
financial statements included herein. In the opinion of management, such
unaudited combined financial statements include all adjustments (consisting only
of normal recurring adjustments) necessary to present fairly the results for
such period. The operating results for the nine months ended September 30, 1995
and 1996 are not necessarily indicative of the operating results to be expected
for the full fiscal year or for any future period.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS -- Cash and cash equivalents are highly liquid
investments, including short-term investments and time deposits with maturities
of three months or less at the time of purchase. Cash equivalents and short-term
investments are stated at cost, which approximates market value. Included in
cash and cash equivalents at September 30, 1996 are approximately $30,000 in
funds which the Company placed during the third quarter of 1996 in a trust which
purchased U.S. Government securities. The funds in the trust will be used solely
to satisfy IMPSAT Argentina's 9.5% negotiable obligations due November 1996.
REVENUE RECOGNITION -- The Company provides services to its customers
pursuant to contracts which range from six months to five years but generally
are for three years. The customer generally pays an engineering fee, an
installation charge and a monthly fee based on the number of microsystems
installations. The fees stipulated in the contracts are denominated in U.S.
dollars equivalents. Services are billed on a monthly, predetermined basis,
which coincides with when the services are rendered. No single customer
accounted for greater than 10% of total revenue from services for each of the
three years ended December 31, 1995 and the nine months ended June 30, 1995 and
1996.
PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment are recorded
at cost and depreciated using the straight-line method over the following
estimated useful lives:
<TABLE>
<S> <C>
Buildings and improvements............................................. 20-25 years
Operating communications equipment..................................... 5-10 years
Furniture, fixtures and other equipment................................ 2-10 years
</TABLE>
LICENSE AND PERMIT COSTS -- License and permit costs, such as legal cost,
regulatory fees and application costs incurred to obtain and make functional the
operating licenses in each respective country were capitalized and are being
amortized on the straight-line basis over periods not to exceed ten years. The
Company reviews the carrying value of its license and permit costs on an ongoing
basis. If such review indicates that these values
F-8
<PAGE> 136
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
may not be recoverable, the Company's carrying value will be reduced to its
estimated fair value. The amounts capitalized, by operating subsidiary, are as
follows at:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- SEPTEMBER 30,
1994 1995 1996
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
IMPSAT Colombia......................................... $3,020 $3,020 $ 3,020
IMPSAT Ecuador.......................................... 287 287 287
IMPSAT Mexico........................................... 293 293 293
IMPSAT USA.............................................. 114 138
------ ------ -------------
Total costs capitalized............................ 3,600 3,714 3,738
Less: accumulated amortization.......................... (544) (929) (1,214)
------ ------ -------------
Unamortized balance..................................... $3,056 $2,785 $ 2,524
====== ====== ==========
</TABLE>
INCOME TAXES -- Deferred income taxes result from temporary differences in
the recognition of expenses for tax and financial reporting purposes and are
accounted for in accordance with Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 109, Accounting for
Income Taxes, which requires the liability method of computing deferred income
taxes. Under the liability method, deferred taxes are adjusted for tax rate
changes as they occur.
DEFERRED FINANCING COSTS -- Debt issuance costs and transaction fees, which
are associated with the issuance of the senior guaranteed notes (see note 7),
are being amortized (and charged to interest expense) over the term of the
related notes on a method which approximates the level yield method. The
unamortized balance of such costs totaled approximately $4,771 at September 30,
1996 and are included in other non-current assets in the accompanying combined
balance sheet. Amortization expense (charged to interest expense) for such costs
for the nine months ended September 30, 1996 was approximately $106.
FOREIGN CURRENCY TRANSLATION -- The Company's subsidiaries use the U.S.
dollar as the functional currency. Accordingly, the financial statements of the
subsidiaries were remeasured. The effects of foreign currency transactions and
of remeasuring the financial position and results of operations into the
functional currency are included as net gain on foreign exchange.
FAIR VALUE OF FINANCIAL INSTRUMENTS -- The Company's financial instruments
include receivables, payables, short and long-term debt. The fair value of such
financial instruments have been determined based on market interest rates as of
December 31, 1995. The fair values were not materially different than their
carrying (or contract) values.
NEW ACCOUNTING PRONOUNCEMENT -- In March 1995, the FASB issued SFAS No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, which establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles and goodwill
related to those assets to be held and used and for long-lived assets and
certain identifiable intangibles to be disposed of. Such long-lived assets
should be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. In
performing the review for recoverability, entities should estimate the future
cash flows expected to result from the use of the asset and its eventual
disposition. SFAS No. 121 is effective for financial statements for fiscal years
beginning after December 15, 1995. The adoption of SFAS No. 121 is not expected
to have a material impact on the Company's combined financial statements.
F-9
<PAGE> 137
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
3. TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable, by operating subsidiary, are summarized as
follows at:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ SEPTEMBER 30,
1994 1995 1996
------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C>
IMPSAT Argentina...................................... $13,944 $17,182 $20,373
IMPSAT Colombia....................................... 2,138 5,046 6,021
IMPSAT Venezuela...................................... 277 304 985
IMPSAT Ecuador........................................ 178 401
IMPSAT Mexico......................................... 7 38
IMPSAT USA............................................ 64
------- ------- -------------
Total............................................ 16,359 22,717 27,882
Less: allowance for doubtful accounts................. (712) (1,130) (2,812)
------- ------- -------------
Trade accounts receivable, net........................ $15,647 $21,587 $25,070
======= ======= ==========
</TABLE>
The Company's subsidiaries provide trade credit to their customers in the
normal course of business. The collection of a substantial portion of the trade
receivables are susceptible to changes in the Latin American economies and
political climates. Prior to extending credit, the customers' financial history
is analyzed.
The activity for the allowance for doubtful account is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------- SEPTEMBER 30,
1994 1995 1996
---- ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Beginning balance........................................ $296 $ 712 $ 1,130
Provision................................................ 416 418 1,713
Write-offs, net of recoveries............................ (31)
---- ------ -------------
Ending balance........................................... $712 $1,130 $ 2,812
==== ====== ==========
</TABLE>
4. OTHER RECEIVABLES
Other receivables consist primarily of refunds or credits pending from
local governments for taxes other than income and other miscellaneous amounts
due to the Company and its operating subsidiaries as follows at:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- SEPTEMBER 30,
1994 1995 1996
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
IMPSAT Argentina........................................ $4,012 $2,342 $ 2,969
IMPSAT Colombia......................................... 1,175 2,308 2,976
IMPSAT Venezuela........................................ 487 546 793
IMPSAT Ecuador.......................................... 345 539
Others.................................................. 317 900 1,909
------ ------ -------------
Total.............................................. $5,991 $6,441 $ 9,186
====== ====== ==========
</TABLE>
F-10
<PAGE> 138
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Land................................................ $ 228 $ 1,375 $ 1,375
Building and improvements........................... 14,893 20,501 21,853
Operating communications equipment.................. 152,583 209,317 234,912
Furniture, fixtures and other equipment............. 5,928 9,168 10,917
-------- -------- -------------
Total.......................................... 173,632 240,361 269,057
Less: accumulated depreciation...................... (27,188) (47,155) (65,837)
-------- -------- -------------
Total.......................................... 146,444 193,206 203,220
Deposit on purchase of equipment and in transit..... 6,465 6,495 14,874
-------- -------- -------------
Property, plant and equipment, net.................. $152,909 $199,701 $ 218,094
======== ======== ==========
</TABLE>
The recap of accumulated depreciation is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ SEPTEMBER 30,
1994 1995 1996
------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Beginning balance..................................... $12,381 $27,188 $47,155
Depreciation expense.................................. 12,602 20,268 18,908
Other addition........................................ 2,205
Disposals............................................. (301) (226)
------- ------- -------------
Ending balance........................................ $27,188 $47,155 $65,837
======= ======= ==========
</TABLE>
6. SHORT-TERM DEBT
The Company's short-term debt is detailed as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ SEPTEMBER 30,
1994 1995 1996
------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Commercial paper (12%)................................ $15,000 $ 5,000 $25,000
Short-term credit facilities, denominated in U.S.
dollars;
interest rates ranging from 8% to 18%:
IMPSAT Argentina................................. 19,030 31,808 3,620
IMPSAT Colombia.................................. 1,207 4,616 3,022
IMPSAT Venezuela................................. 3,964 256 597
IMPSAT Ecuador................................... 2,080
Short-term credit facilities, denominated in local
currencies;
local interest rates:
IMPSAT Colombia (23% to 34%)..................... 5,476 14,545 17,626
IMPSAT Venezuela (36% to 40%).................... 125 2,030 2,136
------- ------- -------------
Total short-term debt................................. $44,802 $60,335 $52,001
======= ======= ==========
</TABLE>
The Company has historically refinanced these short-term credit facilities
on an annual basis.
F-11
<PAGE> 139
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
7. LONG-TERM DEBT
The Company's long-term debt is detailed as follows at:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ SEPTEMBER 30,
1994 1995 1996
------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C>
12 1/8% Senior Guaranteed Notes due 2003.............. $ 125,000
Term notes payable:
IMPSAT Colombia; with maturities through 2001;
collateralized by equipment with carrying value
of
approximately $23,000; denominated in:
U.S. dollars (interest rates
8.94% -- 13.13%).......................... $18,942 $23,472 24,437
Local currency (interest rates
35% -- 38.7%)............................. 886 1,008
IMPSAT Argentina (8.4% -- 8.9%), maturing semi
annually through 1998, collateralized by stock
of a
subsidiary and other assets.................... 9,833 6,120 5,247
IMPSAT Venezuela (10.5%), maturing
during 2001.................................... 6,039
9.5% Negotiable Obligations, due 1996................. 30,000 30,000 30,000
Eximbank notes payable (7.125% -- 7.875%), maturing
semi
annually through 1999............................... 3,021 6,775 5,927
------- ------- -------------
Total long-term debt.................................. 62,682 67,375 196,650
Less: current portion................................. (3,245) (37,175) (37,410)
------- ------- -------------
Long-term debt, net................................... $59,437 $30,200 $ 159,240
======= ======= ==========
</TABLE>
The scheduled maturities of long-term debt at December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
DECEMBER
31,
FISCAL YEAR 1995
------------------------------------------------------------------------ -----------
<S> <C>
1996.................................................................... $37,175
1997.................................................................... 8,373
1998.................................................................... 8,821
1999.................................................................... 6,503
2000 and thereafter..................................................... 6,503
-----------
Total.............................................................. $67,375
=========
</TABLE>
Some of the term notes payable for IMPSAT Colombia and IMPSAT Venezuela
contain certain covenants requiring certain financial ratios, limiting the
incurrence of additional indebtedness and capital expenditures, and restricting
the ability to pay dividends. IMPSAT Argentina's 9.5% Negotiable Obligations,
due 1996 also contain similar covenants.
8. INCOME TAXES
For the years ended December 31, 1993, 1994 and 1995, and for the nine
months ended September 30, 1995 and 1996, the benefits (expense) for income
taxes, all of which are for foreign taxes, consist of a current provision of
$1,292, $328, $196, $242 and $214, respectively, and a deferred benefit of
$2,720, $3,483, $936, $364 and a deferred provision of $2,281, respectively. The
foreign statutory tax rates range from 30% to 35% depending on the particular
country. There is no provision or benefit for U.S. income taxes, as the Company
has net operating loss carryforwards. Deferred taxes result from temporary
differences in the capitalization
F-12
<PAGE> 140
IMPSAT CORPORATION AND COMBINED SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONCLUDED)
8. INCOME TAXES -- (CONTINUED)
policies of preoperating costs and net operating loss carryforwards. The
composition of net deferred tax assets is as follows at:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ SEPTEMBER 30,
1994 1995 1996
------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Preoperating costs:
IMPSAT Colombia.................................. $ 2,495 $ 2,188 $ 1,958
IMPSAT Venezuela................................. 1,926 1,731 1,561
IMPSAT Mexico.................................... (100) (85) (75)
IMPSAT Ecuador................................... 143 135
Net operating loss carryforwards:
IMPSAT Argentina................................. 3,220 3,220 1,235
IMPSAT Colombia.................................. 1,173 2,039 1,973
IMPSAT Venezuela................................. 1,193 1,946 2,391
IMPSAT Mexico.................................... 559 879 1,566
------- ------- -------------
Total deferred tax assets............................. 10,466 12,061 10,744
Less: valuation allowance............................. (3,578) (4,237) (5,201)
------- ------- -------------
Net deferred tax assets............................... $ 6,888 $ 7,824 $ 5,543
======= ======= ==========
</TABLE>
As there is no assurance that the Company will generate sufficient earnings
to utilize its available tax assets, a valuation allowance has been established
to offset deferred tax assets.
9. COMMITMENTS AND CONTINGENCIES
The Company leases satellite capacity with annual rental commitments of
approximately $14,200. In addition, the Company has commitments to purchase
communications equipment amounting to approximately $18,000 and was obligated
under letters of credit amounting to approximately $352 at December 31, 1995.
The Company is a third party guarantor of up to 75% of a $6,000 credit
facility provided to IMPSAT Venezuela by a regional development fund. At
September 30, 1996, the balance outstanding on the credit facility amounted to
approximately $6,000.
In the normal course of business, the Company faces challenges to its
various licenses and rights to operate on an exclusive basis. The Company
vigorously defends such challenges, however, there can be no assurance that
Company will ultimately prevail.
F-13
<PAGE> 141
INDEPENDENT AUDITORS' REPORT
To the Stockholders of IMPSAT S.A.:
We have audited the accompanying consolidated balance sheets of IMPSAT S.A.
and its subsidiaries ("IMPSAT Argentina") as of November 30, 1994 and 1995, and
the related consolidated statements of income, of stockholders' equity and of
cash flow for each of the three years ended November 30, 1995. These
consolidated financial statements are the responsibility of IMPSAT Argentina's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of IMPSAT Argentina at November
30, 1994 and 1995, and the results of its operations and its cash flows for each
of the three years ended November 30, 1995, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE
Buenos Aires, Argentina
February 23, 1996
F-14
<PAGE> 142
IMPSAT S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------- AUGUST 31,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................... $ 514 $ 1,160 $ 44,224
Trade accounts receivable, net.......................... 13,232 16,072 17,580
Receivable from affiliated companies.................... 801 1,286
Other receivables....................................... 4,012 2,342 2,969
Prepaid expenses........................................ 3,610 1,202 925
-------- -------- -----------
Total current assets............................... 22,169 20,776 66,984
-------- -------- -----------
PROPERTY, PLANT AND EQUIPMENT, NET........................... 118,024 140,205 143,057
-------- -------- -----------
NON-CURRENT ASSETS:
Deferred income taxes........................................ 3,220 3,220 1,236
Other non-current assets..................................... 1,091 1,744 1,758
-------- -------- -----------
Total non-current assets........................... 4,311 4,964 2,994
-------- -------- -----------
TOTAL........................................................ $144,504 $165,945 $ 213,035
======== ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -- trade............................... $ 9,721 $ 16,033 $ 9,661
Short-term debt......................................... 34,030 36,808 28,620
Advances from affiliated companies...................... 7,313 3,455
Current portion of long-term debt....................... 3,245 34,190 33,439
Accrued liabilities..................................... 2,426 4,372 3,467
Other liabilities....................................... 4,909 3,841 2,704
-------- -------- -----------
Total current liabilities.......................... 54,331 102,557 81,346
-------- -------- -----------
LONG-TERM DEBT, NET.......................................... 39,609 8,705 7,735
-------- -------- -----------
ADVANCE FROM PARENT COMPANY, LONG-TERM....................... 68,235
-------- -------- -----------
OTHER LONG-TERM LIABILITIES.................................. 6,591 6,244 4,263
-------- -------- -----------
COMMITMENTS AND CONTINGENCIES (Note 9)
MINORITY INTEREST............................................ 9 3 (11)
-------- -------- -----------
STOCKHOLDERS' EQUITY:
Common stock; 5,123 shares authorized, issued,
and outstanding....................................... 3 3 3
Paid-in capital......................................... 26,191 26,191 26,191
Retained earnings....................................... 17,770 22,242 25,273
-------- -------- -----------
Total stockholders' equity......................... 43,964 48,436 51,467
-------- -------- -----------
TOTAL........................................................ $144,504 $165,945 $ 213,035
======== ======== =========
</TABLE>
See notes to consolidated financial statements.
F-15
<PAGE> 143
IMPSAT S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED NOVEMBER 30, AUGUST 31,
----------------------------- --------------------------
1993 1994 1995 1995 1996
------- ------- ------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES FROM SERVICES..................... $34,672 $63,999 $80,346 $58,352 $62,939
------- ------- ------- ----------- -----------
COST AND EXPENSES:
Direct cost of services............... 13,186 25,420 30,721 20,473 22,878
Selling expenses...................... 1,279 7,027 11,036 8,621 6,845
General and administrative expenses... 1,911 6,947 8,195 6,175 4,998
Reorganization costs -- severance..... 713
Depreciation and amortization......... 5,570 10,719 16,067 11,699 13,894
------- ------- ------- ----------- -----------
OPERATING INCOME........................... 12,726 13,886 14,327 11,384 13,611
INTEREST EXPENSE -- Net.................... (5,453) (4,556) (10,384) (7,607) (9,173)
OTHER INCOME (EXPENSES) -- Net............. (468) (83) 523 (61) 563
------- ------- ------- ----------- -----------
INCOME BEFORE TAXES........................ 6,805 9,247 4,466 3,716 5,001
BENEFIT (EXPENSE) FOR INCOME TAXES......... 3,220 (1,984)
------- ------- ------- ----------- -----------
INCOME BEFORE MINORITY INTEREST............ 6,805 12,467 4,466 3,716 3,017
MINORITY INTEREST.......................... (3) 6 6 14
------- ------- ------- ----------- -----------
NET INCOME................................. $ 6,805 $12,464 $ 4,472 $ 3,722 $ 3,031
======= ======= ======= ========= =========
</TABLE>
See notes to consolidated financial statements.
F-16
<PAGE> 144
IMPSAT S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKHOLDERS'
-----------------------------
RETAINED
COMMON PAID-IN EARNINGS MINORITY
STOCK CAPITAL (DEFICIT) TOTAL INTEREST
------ ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
BALANCE AT NOVEMBER 30, 1992.................. $3 $26,191 $ 1 $26,195
Net income............................... 6,805 6,805
--
------- -------- -------
BALANCE AT NOVEMBER 30, 1993.................. 3 26,191 6,806 33,000
Dividends declared....................... (1,500) (1,500)
Capital contributions.................... $ 6
Net income............................... 12,464 12,464 3
--
------- -------- ------- --------
BALANCE AT NOVEMBER 30, 1994.................. 3 26,191 17,770(*) 43,964 9
Net income............................... 4,472 4,472 (6)
--
------- -------- ------- --------
BALANCE AT NOVEMBER 30, 1995.................. 3 26,191 22,242(*) 48,436 3
Net income for the nine months ended..... 3,031 3,031 (14)
--
------- -------- ------- --------
BALANCE AT AUGUST 31, 1996 (Unaudited)........ $3 $26,191 $ 25,273(*) $51,467 $(11)
====== ======= ======= ======= ======
</TABLE>
- ---------------
(*) includes an appropriation of retained earnings, amounting to $295, $881 and
$1,254 in 1994, 1995 and 1996, respectively, to comply with legal reserve
requirements in Argentina.
See notes to consolidated financial statements.
F-17
<PAGE> 145
IMPSAT S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED NOVEMBER 30, AUGUST 31,
------------------------------ ---------------------------
1993 1994 1995 1995 1996
-------- -------- -------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $ 6,805 $ 12,464 $ 4,472 $ 3,722 $ 3,031
Adjustment to reconcile net income to net cash
provided by operating activities:
Amortization and depreciation............ 5,570 10,719 16,067 11,699 13,894
Deferred income tax (benefit) expense.... (3,220) 1,984
Minority interest........................ 3 (6) 6 (14)
Changes in assets and liabilities:
(Increase) decrease in trade accounts
receivable, net...................... (10,635) 427 (2,840) (810) (1,508)
(Increase) decrease in prepaid
expenses............................. (733) (2,361) 2,408 3,610 277
Decrease (increase) in other receivable
assets and other non-current
assets............................... 3,392 (2,056) 1,017 (2,139) (641)
(Decrease) increase in accounts
payable -- trade..................... (1,501) 4,788 6,048 8,201 (6,635)
Increase (decrease) in accrued and
other liabilities.................... 4,710 1,372 878 (2,375) (2,042)
Increase (decrease) in other long-term
liabilities.......................... 617 162 (347) 466 (1,981)
-------- -------- -------- ------------ ------------
Net cash provided by operating
activities......................... 8,225 22,298 27,697 22,380 6,365
-------- -------- -------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment.... (22,762) (69,832) (37,984) (31,814) (16,483)
-------- -------- -------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments of) borrowings from short-term
debt........................................ (11,807) 30,913 2,778 8,990 (8,188)
(Decrease) increase in advances from/to
affiliates.................................. (553) (248) 8,114 801 (5,144)
Increase in advances from parent company...... 68,235
Repayments of long-term debt.................. (750) (750) (563) (2,602)
Proceeds from long-term debt.................. 32,224 11,378 791 593 881
Capital contributions......................... 6
-------- -------- -------- ------------ ------------
Net cash provided by financing activities..... 19,864 41,299 10,933 9,821 53,182
-------- -------- -------- ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................... 5,327 (6,235) 646 387 43,064
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD.......................................... 1,422 6,749 514 514 1,160
-------- -------- -------- ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........ $ 6,749 $ 514 $ 1,160 $ 901 $ 44,224
========= ========= ========= =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid................................. $ 5,374 $ 3,958 $ 9,208 $ 6,906 $ 7,951
========= ========= ========= =========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Dividends declared and not yet paid........... $ 1,500
=========
Equipment in transit.......................... $ 937 $ 518 $ 264 $ 632 $ 263
========= ========= ========= =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-18
<PAGE> 146
IMPSAT S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BACKGROUND
IMPSAT S.A. ("IMPSAT Argentina") provides and operates private networks of
integrated data and voice telecommunications systems in Argentina. IMPSAT
Argentina's principal line of business comprises the provision of data
transmission services for large national and multinational companies, financial
institutions, governmental agencies and other business customers in Argentina.
It provides its services through its owned advanced telecommunications networks
comprised of teleports, earth stations, fiber optic and microwave links and
leased satellite capacity. IMPSAT Argentina has two operating
subsidiaries -- Teledatos S.A. and Satelnet S.A. During July 1996, IMPSAT
Argentina became a 51% owned subsidiary of IMPSAT Corporation, a Delaware
holding company (the "Parent Company").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION -- The accompanying consolidated financial statements
include IMPSAT Argentina and its consolidated subsidiaries. All significant
intercompany accounts and transactions and balances have been eliminated.
INTERIM FINANCIAL INFORMATION -- The unaudited consolidated statements as
of August 31, 1996 and for the nine months ended August 31, 1995 and 1996 have
been prepared on the same basis as the audited consolidated financial statements
included herein. In the opinion of management, such unaudited financial
statements include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the results for such period. The
operating results for the nine months ended August 31, 1995 and 1996 are not
necessarily indicative of the operating results to be expected for the full
fiscal year or for any future period.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS -- Cash and cash equivalents are highly liquid
investments, including short-term investments and time deposits with maturities
of three months or less at the time of purchase. Cash equivalents and short-term
investments are stated at cost, which approximates market value. Included in
cash and cash equivalents at August 31, 1996 are approximately $30,000 in funds
which the Parent Company advanced to IMPSAT Argentina during the third quarter
of 1996 (see note 7) and were placed in a trust which purchased U.S. Government
securities. The funds in the trust will be used solely to satisfy IMPSAT
Argentina's 9.5% negotiable obligations due November 1996.
REVENUE RECOGNITION -- IMPSAT Argentina provides services to its customers
pursuant to contracts which range from six months to five years but generally
are for three years. The customer generally pays an engineering fee, an
installation charge and a monthly fee based on the number of microsystems
installations. The fees stipulated in the contracts are denominated in U.S.
dollars. Services are billed on a monthly, predetermined basis, which coincides
with when the services are rendered. No single customer accounted for greater
than 10% of total revenue from services for each of the three years ended
November 30, 1993, 1994 and 1995 and for the nine months August 31, 1995. For
the nine months ended August 31, 1996, IMPSAT Argentina had one customer that
represented approximately 10.6% of revenue from services.
F-19
<PAGE> 147
IMPSAT S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment are recorded
at cost and depreciated using the straight-line method over the following
estimated useful lives:
<TABLE>
<S> <C>
Building and improvement........................................ 20-25 years
Operating communications equipment.............................. 5-10 years
Furniture, fixtures and other equipment......................... 2-10 years
</TABLE>
INCOME TAXES -- Deferred income taxes result from temporary differences in
the recognition of expenses for tax and financial reporting purposes and are
accounted for in accordance with Financial Accounting Standards Board ("FASB")
Statements of Financial Accounting Standards ("SFAS") No. 109, Accounting for
Income Taxes, which required the liability method of computing deferred income
taxes. Under the liability method, deferred taxes are adjusted for tax rate
changes as they occur.
FOREIGN CURRENCIES TRANSLATION -- The translation of these consolidated
financial statements into U.S. dollars has been made following the guidelines of
SFAS No. 52, Foreign Currency Translation. Major operations of IMPSAT Argentina
and its subsidiaries are stated in U.S. dollars. Accordingly, the U.S. dollar
has been designated as the functional currency. Local currency denominated
transactions are remeasured into the functional currency. Accordingly, fixed
assets and stockholders account have been translated into U.S. dollars taking
into account the exchange rate prevailing at each transaction date. Monetary
assets and liabilities are translated using the year-end exchange. Profit and
loss accounts were translated using average exchange rates for the periods in
which they were accrued, except for the consumption of non-monetary assets for
which their respective dollar translated costs were considered.
FAIR VALUE OF FINANCIAL INSTRUMENTS -- IMPSAT Argentina's financial
instruments include receivables, payables, short and long-term debt. The fair
value of such financial instruments have been determined based on market
interest rates as of November 30, 1995. The fair values were not materially
different than their carrying (or contract) values.
NEW ACCOUNTING PRONOUNCEMENT -- In March 1995, the FASB issued SFAS No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, which establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles and goodwill
related to those assets to be held and used and for long-lived assets and
certain identifiable intangibles to be disposed of. Such long-lived assets
should be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. In
performing the review for recoverability, entities should estimate the future
cash flows expected to result from the use of the asset and its eventual
disposition. SFAS No. 121 is effective for financial statements for fiscal years
beginning after December 15, 1995. The adoption of SFAS No. 121 is not expected
to have a material impact on IMPSAT Argentina's consolidated financial
statements.
F-20
<PAGE> 148
IMPSAT S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable, by operating subsidiary, are summarized as
follows at:
<TABLE>
<CAPTION>
NOVEMBER 30,
------------------ AUGUST 31,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Impsat S.A............................................. $12,465 $15,755 $18,555
Satelnet S.A........................................... 1,462 1,172 1,079
Teledatos S.A.......................................... 17 255 739
------- ------- -----------
Total.................................................. 13,944 17,182 20,373
Less: allowance for doubtful accounts.................. (712) (1,110) (2,793)
------- ------- -----------
Trade accounts receivable, net......................... $13,232 $16,072 $17,580
======= ======= =========
</TABLE>
IMPSAT Argentina provides trade credit to its customers in the normal
course of business. Prior to extending credit, the customers' financial history
is analyzed.
The activity for the allowance for doubtful account is as follows:
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------- AUGUST 31,
1994 1995 1996
---- ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Beginning balance......................................... $296 $ 712 $ 1,110
Provision................................................. 416 398 1,713
Write-offs, net of recoveries............................. (30)
---- ------ -----------
Ending balance............................................ $712 $1,110 $ 2,793
==== ====== =========
</TABLE>
4. OTHER RECEIVABLES
Other receivables consist primarily of refunds or credits pending from
local government for taxes other than income and other miscellaneous amounts due
to IMPSAT Argentina and its operating subsidiaries as follows at:
<TABLE>
<CAPTION>
NOVEMBER 30,
---------------- AUGUST 31,
1994 1995 1996
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Impsat S.A............................................... $3,622 $1,929 $ 2,381
Teledatos S.A............................................ 251 424
Satelnet S.A............................................. 390 162 164
------ ------ -----------
$4,012 $2,342 $ 2,969
====== ====== =========
</TABLE>
F-21
<PAGE> 149
IMPSAT S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of:
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------- AUGUST 31,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Building installations and improvements.............. $ 11,425 $ 15,583 $ 15,995
Operating communications equipment................... 121,209 153,106 168,225
Furniture, fixtures and other equipment.............. 4,691 6,714 7,627
-------- -------- -----------
Total................................................ 137,325 175,403 191,847
Less: accumulated depreciation....................... (24,712) (40,477) (54,371)
-------- -------- -----------
112,613 134,926 137,476
Deposit on purchase of equipment and in transit...... 5,411 5,279 5,581
-------- -------- -----------
Property, plant and equipment, net................... $118,024 $140,205 $ 143,057
======== ======== =========
</TABLE>
The recap of accumulated depreciation is as follows at:
<TABLE>
<CAPTION>
NOVEMBER 30,
------------------ AUGUST 31,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Beginning balance...................................... $11,790 $24,712 $40,477
Depreciation expense................................... 10,719 16,067 13,894
Other addition......................................... 2,203
Disposals.............................................. (302)
------- ------- -----------
Ending balance......................................... $24,712 $40,477 $54,371
======= ======= =========
</TABLE>
6. SHORT-TERM DEBT
IMPSAT Argentina's short-term debt is detailed as follows at:
<TABLE>
<CAPTION>
NOVEMBER 30,
------------------ AUGUST 31,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Commercial paper (12%)................................. $15,000 $ 5,000 $25,000
Short-term credit facilities, denominated in U.S.
dollars, interest rates ranging from 8% to 15%....... 19,030 31,808 3,620
------- ------- -----------
Total short-term debt.................................. $34,030 $36,808 $28,620
======= ======= =========
</TABLE>
IMPSAT Argentina has historically refinanced its short-term credit
facilities on an annual basis.
F-22
<PAGE> 150
IMPSAT S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
7. LONG-TERM DEBT
IMPSAT Argentina's long-term debt is detailed as follows at:
<TABLE>
<CAPTION>
NOVEMBER 30,
------------------- AUGUST 31,
1994 1995 1996
------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Term notes payable (8.4%-8.9%) maturing semiannually
through 1998, collateralized by stock of a
subsidiary.......................................... $ 9,833 $ 6,120 $ 5,247
9.5% Negotiable Obligations, due 1996................. 30,000 30,000 30,000
Eximbank notes payable (7.125%-7.875%) maturing
semiannually through 1999........................... 3,021 6,775 5,927
------- -------- -----------
Total long-term debt.................................. 42,854 42,895 41,174
Less: current portion................................. (3,245) (34,190) (33,439)
------- -------- -----------
Long-term debt, net................................... $39,609 $ 8,705 $ 7,735
======= ======== =========
</TABLE>
During the third quarter of 1996, IMPSAT Argentina received advances
totalling approximately $68,000 from its Parent Company. These advances bear
interest at 12 1/8% and are due 2003.
The scheduled maturities of debt and credit facilities at November 30, 1995
are as follows at:
<TABLE>
<CAPTION>
NOVEMBER 30,
1995
------------
<S> <C>
Fiscal year:
1996............................................................ $ 34,190
1997............................................................ 3,572
1998............................................................ 3,439
1999............................................................ 1,694
------------
Total........................................................... $ 42,895
==========
</TABLE>
The 9.5% Negotiable Obligations, due 1996 contain certain covenants
requiring IMPSAT Argentina to maintain certain financial ratios and restrict its
ability to pay dividends.
8. INCOME TAXES
The benefit (expense) for income taxes in 1994 represents the carryforward
benefits for operating losses available to the subsidiaries of IMPSAT Argentina.
These benefits are expected to be realized during 1996 and through the nine
months ended August 31, 1996, IMPSAT Argentina has recognized a deferred expense
of $1,984. The statutory tax rate in Argentina is 30%. IMPSAT Argentina's
current provision for income taxes for years 1993, 1994 and 1995 amounted to
$2,041, $2,774 and $1,340, respectively. Such amounts are offset by deferred tax
benefits resulting from the realization of carryforward operating losses.
9. COMMITMENTS AND CONTINGENCIES
IMPSAT Argentina leases satellite capacity with annual rental commitments
of approximately $9,000 through the year 2000. In addition, IMPSAT Argentina has
commitments to purchase communications equipment amounting to approximately
$9,500 at November 30, 1995.
IMPSAT Argentina is guarantor on the $125,000,000, 12 1/8% Senior
Guaranteed Notes Due 2003 issued on July 30, 1996 by the Parent Company.
In the normal course of business, IMPSAT Argentina faces challenges to its
various licenses and rights to operate on an exclusive basis, which it
vigorously defends. There can be no assurance it will ultimately prevail on
these challenges.
F-23
<PAGE> 151
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information................. 4
Prospectus Summary.................... 6
Risk Factors.......................... 20
Capitalization........................ 32
Selected Financial and Other Data..... 33
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 38
Business.............................. 49
Management............................ 74
Principal Stockholders................ 80
Certain Relationships and Related
Transactions........................ 81
Description of Certain Indebtedness... 83
The Exchange Offer.................... 85
Description of the Notes.............. 92
Certain United States Federal Income
Tax Considerations.................. 119
Plan of Distribution.................. 123
Legal Matters......................... 123
Experts............................... 124
Glossary.............................. 125
Index to Financial Statements......... F-1
</TABLE>
---------------------
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS EXCHANGE
OFFER), ALL DEALERS OFFERING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT
PARTICIPATING IN THIS EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
$125,000,000
IMPSAT CORPORATION
12 1/8% SENIOR GUARANTEED
NOTES DUE 2003
PAYMENT OF PRINCIPAL AND INTEREST
GUARANTEED BY
IMPSAT S.A.
--------------------
PROSPECTUS
--------------------
, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 152
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify any persons, including directors and officers, who are
(or are threatened to be made) parties to any threatened, pending or completed
legal action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of their being directors or officers of the
corporation. The indemnity may include expenses, attorneys' fees, judgments,
fines and amounts paid in settlement, provided such sums were actually and
reasonably incurred in connection with such action, suit or proceeding and
provided the director or officer acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, in the case of criminal proceedings, provided he had no reasonable cause to
believe that his conduct was unlawful. The corporation may indemnify directors
and officers in a derivative action (in which suit is brought by a stockholder
on behalf of the corporation) under the same conditions, except that no
indemnification is permitted without judicial approval if the director or
officer is adjudged liable to the corporation. If the director or officer is
successful on the merits or otherwise in defense of any actions referred to
above, the corporation must indemnify him against the expenses and attorneys'
fees he actually and reasonably incurred.
Article III, section 10 of the Company's By-laws provides that the Company
shall indemnify its officers and directors to the fullest extent permitted by
Section 145.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
3.1. Restated Certificate of Incorporation of the Company.
3.2. Bylaws of the Company, as amended.
3.3. Estatutos of the Guarantor, as amended.
4.1. Indenture for the Notes, dated as of July 30, 1996, among the Company, the Guarantor,
and The Bank of New York, as Trustee (including form of Note).
4.2. Placement Agreement dated as of July 31, 1996 among the Company, the Guarantor and
the Initial Purchasers.
4.3. Registration Rights Agreement, dated July 31, 1996, among the Company, the Guarantor
and the Initial Purchasers.
4.4. Form of Note (included in Exhibit 4.1).
4.5. Form of Letter of Transmittal.
5. Form of Opinion of Arnold & Porter as to the legality of the securities being
registered (including consent).
9. Shareholders Agreement, dated December 16, 1994, among STET International Netherlands
N.V., NEVASA Holdings Ltd., LAIF -- Latin American Investment and Finance Trust reg.,
and JASDAN Ltd.
10.1. Form of Exchange Agent Agreement between the Company and The Bank of New York as
Exchange Agent.
10.2.+ Domestic Data Service Agreement, dated April 7, 1992, between Alpha Lyracom Space
Communications Inc. and Resis S.A., as amended by Agreement dated April 23, 1993; as
amended by Agreement dated October 28, 1993; as amended by Agreement dated April 28,
1994; as amended by Agreement dated November 1, 1994; as amended by Agreement dated
January 9, 1995; as amended by Agreement dated June 1, 1995; as amended by Agreement
dated August 1, 1995; as amended by Agreement dated September 26, 1995.
10.3.+ Domestic Data Service Agreement, dated May 30, 1991, between Alpha Lyracom Space
Communications, Inc. and IMPSAT, S.A.; as amended by Agreement dated April 7, 1992.
</TABLE>
II-1
<PAGE> 153
<TABLE>
<C> <S>
10.4. Agreement for Lease of Satellite Capacity, dated November 5, 1993, among Aerospatiale
S.N.1., Alcatel Espace S.A., Alenia Spazio S.P.A., Deutsche Aerospace AG, Empresa
Brasileira de Telecomunicacoes S.A. -- Union Transitoria de Empresas and IMPSAT S.A.;
as amended by Agreement dated February 8, 1994; as amended by Agreement dated April
1, 1994; as amended by Agreement dated April 7, 1994; as amended by Agreement dated
July 14, 1994; as amended by Agreement dated September 30, 1994; as amended by
Agreement dated December 12, 1994; as amended by Agreement dated January 24, 1995.
10.5. Agreement for Lease of Satellite Capacity, dated March 27, 1995, between la Comision
Nacional de Telecomunicaciones and IMPSAT S.A.; as amended by Agreement dated May 3,
1993; as amended by Agreement dated May 23, 1994; as amended by Agreement dated May
8, 1995.
10.6. Agreement for Lease of Satellite Capacity, dated May 8, 1995, between Organizacion
Internacional de Telecomunicaciones por Satelite and IMPSAT S.A.
10.7. Agreement for Lease of Satellite Capacity, dated December 26, 1995, between Empresa
Nacional de Telecomunicaciones and IMPSAT Colombia.
10.8. Agreement for Lease of Satellite Capacity, dated August 11, 1994, between
Organizacion Internacional de Telecomunicaciones por Satelite (INTELSAT) and
Telecomunicaciones IMPSAT, S.A.; as amended.
10.9. Agreement dated December 6, 1994, between IMPSAT, S.A. and Hughes Network Systems,
Inc.
12. Computation of ratio of earnings to fixed charges.
21. List of subsidiaries of the Company (incorporated by reference to the "Summary"
section of the Prospectus hereto).
23.1. Consent of Deloitte & Touche LLP, Miami, Florida.
23.2. Consent of Deloitte & Touche, Buenos Aires, Argentina.
23.3. Consent of Arnold & Porter (contained in its opinion to be filed as Exhibit 5
hereto).
23.4. Consent of Nicholson & Cano.
24. Power of Attorney (included on the signature page hereto).
25. Statement of eligibility under the Trust Indenture Act of 1939, as amended, on Form
T-1 of The Bank of New York, as Trustee under the Indenture.
</TABLE>
- ---------------
+ Confidential treatment requested as to certain portions, which portions were
omitted and filed separately with the Commission.
(b) Financial Statement Schedules
Schedule II -- All schedules for which provision is made in the applicable
accounting regulations of the Commission are omitted because they are not
applicable, or the information is included in the financial statements included
herein.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
II-2
<PAGE> 154
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1993;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE> 155
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
AND THE GUARANTOR AS CO-REGISTRANT HAVE DULY CAUSED THIS AMENDMENT TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF BUENOS AIRES IN THE REPUBLIC OF ARGENTINA,
NOVEMBER 20, 1996.
IMPSAT CORPORATION
By: /s/ RICARDO A. VERDAGUER
------------------------------------
RICARDO A. VERDAGUER
PRESIDENT AND CHIEF EXECUTIVE
OFFICER OF
IMPSAT CORPORATION
Date: November 20, 1996
IMPSAT S.A.
By: /s/ RAFAEL CARCHAK CANES*
------------------------------------
RAFAEL CARCHAK CANES
PRESIDENT
Date: November 20, 1996
*By: /s/ GUILLERMO JOFRE
-----------------------------------
GUILLERMO JOFRE
ATTORNEY-IN-FACT
Date: November 20, 1996
II-4
<PAGE> 156
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below (each, a "Signatory") constitutes and appoints Guillermo Jofre and
Jose R. Torres (each, an "Agent," and collectively, "Agents") or either of them,
his true and lawful attorney-in-fact and agent for and in his name, place and
stead, in any and all capacities, to sign this Registration Statement and any
and all amendments (including post-effective amendments) thereto and to file the
same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission. Each Signatory further
grants to the Agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary, in the judgment of
such Agent, to be done in connection with any such signing and filing, as full
to all intents and purposes as he might or could do in person, and hereby
ratifies and confirms all that said Agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ----------------------------- ------------------
<S> <C> <C>
/s/ ENRIQUE M. PESCARMONA* Chairman of the Board of November 20, 1996
- ---------------------------------------- Directors of IMPSAT
ENRIQUE M. PESCARMONA Corporation
/s/ RICARDO A. VERDAGUER President, Chief Executive November 20, 1996
- ---------------------------------------- Officer and Director of
RICARDO A. VERDAGUER IMPSAT Corporation
/s/ GUILLERMO JOFRE Vice President, Finance of November 20, 1996
- ---------------------------------------- IMPSAT Corporation
GUILLERMO JOFRE
/s/ JOSE R. TORRES* Vice President, November 20, 1996
- ---------------------------------------- Administration and Chief
JOSE R. TORRES Accounting Officer of
IMPSAT Corporation
/s/ ROBERTO VIVO* Director, Deputy Chief November 20, 1996
- ---------------------------------------- Executive Officer and Vice
ROBERTO VIVO President, Marketing of
IMPSAT Corporation
/s/ ALEXANDER RIVELIS* Director and Vice President, November 20, 1996
- ---------------------------------------- International Development of
ALEXANDER RIVELIS IMPSAT Corporation
/s/ LUCAS PESCARMONA* Director of IMPSAT November 20, 1996
- ---------------------------------------- Corporation
LUCAS PESCARMONA
/s/ SOFIA PESCARMONA* Director of IMPSAT November 20, 1996
- ---------------------------------------- Corporation
SOFIA PESCARMONA
/s/ RENATO DE RIMINI* Director of IMPSAT November 20, 1996
- ---------------------------------------- Corporation
RENATO DE RIMINI
/s/ GIROLAMO DI GENOVA* Director of IMPSAT November 20, 1996
- ---------------------------------------- Corporation
GIROLAMO DI GENOVA
*By: /s/ GUILLERMO JOFRE Attorney-in-Fact November 20, 1996
- ----------------------------------------
GUILLERMO JOFRE
</TABLE>
II-5
<PAGE> 157
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below (each, a "Signatory") constitutes and appoints Guillermo Jofre,
Jose R. Torres and Richard Horner (each, an "Agent," and collectively, "Agents")
and each or any of them, his true and lawful attorney-in-fact and agent for and
in his name, place and stead, in any and all capacities, to sign this
Registration Statement and any and all amendments (including post-effective
amendments) thereto and to file the same, with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission. Each Signatory further grants to the Agents, and each of them, full
power and authority to do and perform each and every act and thing requisite and
necessary, in the judgment of such Agent, to be done in connection with any such
signing and filing, as full to all intents and purposes as he might or could do
in person, and hereby ratifies and confirms all that said Agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ----------------------------- ------------------
<S> <C> <C>
/s/ RICARDO A. VERDAGUER Chairman of the Board of November 20, 1996
- ---------------------------------------- Directors of IMPSAT
RICARDO A. VERDAGUER Argentina
/s/ ENRIQUE M. PESCARMONA* Director of IMPSAT Argentina November 20, 1996
- ----------------------------------------
ENRIQUE M. PESCARMONA
/s/ ROBERTO VIVO* Director of IMPSAT Argentina November 20, 1996
- ----------------------------------------
ROBERTO VIVO
/s/ PEDRO O. MAYOL* Director of IMPSAT Argentina November 20, 1996
- ----------------------------------------
PEDRO O. MAYOL
/s/ RAFAEL CARCHAK CANES* Director of IMPSAT Argentina November 20, 1996
- ----------------------------------------
RAFAEL CARCHAK CANES
/s/ JOSE R. TORRES* Director of IMPSAT Argentina November 20, 1996
- ---------------------------------------- (principal financial officer)
JOSE R. TORRES
/s/ ARCHIMEDE DEL VECCHIO* Director of IMPSAT Argentina November 20, 1996
- ----------------------------------------
ARCHIMEDE DEL VECCHIO
/s/ CLAUDIO ALBANESE* Director of IMPSAT Argentina November 20, 1996
- ----------------------------------------
CLAUDIO ALBANESE*
/s/ JORGE I. MARINE* Manager, Administration of November 20, 1996
- ---------------------------------------- IMPSAT Argentina
JORGE I. MARINE (principal accounting
officer)
/s/ RICHARD HORNER* Attorney-in-Fact November 20, 1996
- ----------------------------------------
RICHARD HORNER
*By: /s/ GUILLERMO JOFRE Attorney-in-Fact November 20, 1996
- ----------------------------------------
GUILLERMO JOFRE
</TABLE>
II-6
<PAGE> 158
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- -------------------------------------------------------------------------- --------
<C> <S> <C>
3.1. Restated Certificate of Incorporation of the Company......................
3.2. Bylaws of the Company, as amended.........................................
3.3. Estatutos of the Guarantor, as amended....................................
4.1. Indenture for the Notes, dated as of July 31, 1996, among the Company, the
Guarantor and The Bank of New York as Trustee (including form of Note)....
4.2. Placement Agreement dated as of July 31, 1996 among the Company, the
Guarantor and the Initial Purchasers......................................
4.3. Registration Rights Agreement, dated July 31, 1996, among the Company, the
Guarantor and the Initial Purchasers......................................
4.5. Form of Note (included in Exhibit 4.1)....................................
4.6. Form of Letter of Transmittal.............................................
5. Form of Opinion of Arnold & Porter as to the legality of the securities
being registered (including consent)......................................
9. Shareholders Agreement, dated December 16, 1994, among STET International
Netherlands N.V., NEVASA Holdings Ltd., LAIF -- Latin American Investment
and Finance Trust reg., and JASDAN Ltd. ..................................
10.1. Form of Exchange Agent Agreement between the Company and The Bank of New
York as Exchange Agent....................................................
10.2.+ Domestic Data Service Agreement, dated April 7, 1992, between Alpha
Lyracom Space Communications Inc. and Resis S.A., as amended by Agreement
dated April 23, 1993; as amended by Agreement dated October 28, 1993; as
amended by Agreement dated April 28, 1994; as amended by Agreement dated
November 1, 1994; as amended by Agreement dated January 9, 1995; as
amended by Agreement dated June 1, 1995; as amended by Agreement dated
August 1, 1995; as amended by Agreement dated September 26, 1995..........
10.3.+ Domestic Data Service Agreement, dated May 30, 1991, between Alpha Lyracom
Space Communications, Inc. and IMPSAT, S.A.; as amended by Agreement dated
April 7, 1992.............................................................
10.4. Agreement for Lease of Satellite Capacity, dated November 5, 1993, among
Aerospatiale S.N.1., Alcatel Espace S.A., Alenia Spazio S.P.A., Deutsche
Aerospace AG, Empresa Brasileira de Telecomunicacoes S.A. -- Union
Transitoria de Empresas and IMPSAT S.A.; as amended by Agreement dated
February 8, 1994; as amended by Agreement dated April 1, 1994; as amended
by Agreement dated April 7, 1994; as amended by Agreement dated July 14,
1994; as amended by Agreement dated September 30, 1994; as amended by
Agreement dated December 12, 1994; as amended by Agreement dated January
24, 1995..................................................................
10.5. Agreement for Lease of Satellite Capacity, dated March 27, 1995, between
la Comision Nacional de Telecomunicaciones and IMPSAT S.A.; as amended by
Agreement dated May 3, 1993; as amended by Agreement dated May 23, 1994;
as amended by Agreement dated May 8, 1995.................................
10.6. Agreement for Lease of Satellite Capacity, dated May 8, 1995, between
Organizacion Internacional de Telecomunicaciones por Satelite and IMPSAT
S.A. .....................................................................
10.7. Agreement for Lease of Satellite Capacity, dated December 26, 1995,
between Empresa Nacional de Telecomunicaciones and IMPSAT Colombia. ......
10.8. Agreement for Lease of Satellite Capacity, dated August 11, 1994, between
Organizacion Internacional de Telecomunicaciones por Satelite (INTELSAT)
and Telecomunicaciones IMPSAT, S.A.; as amended...........................
10.9. Agreement dated December 6, 1994, between IMPSAT, S.A. and Hughes Network
Systems, Inc..............................................................
</TABLE>
<PAGE> 159
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- -------------------------------------------------------------------------- --------
<C> <S> <C>
12. Computation of ratio of earnings to fixed charges.........................
21. List of subsidiaries of the registrants (incorporated by reference to the
"Summary" section of the Prospectus hereto)...............................
23.1. Consent of Deloitte & Touche LLP, Miami, Florida..........................
23.2. Consent of Deloitte & Touche, Buenos Aires, Argentina.....................
23.3. Consent of Arnold & Porter (contained in its opinion to be filed as
Exhibit 5 hereto).........................................................
23.4. Consent of Nicholson & Cano...............................................
24. Power of Attorney (included on the signature page hereto).................
25. Statement of eligibility under the Trust Indenture Act of 1939, as
amended, on Form T-1 of The Bank of New York, as Trustee under the
Indenture.................................................................
</TABLE>
- ---------------
+ Confidential treatment requested as to certain portions, which portions were
omitted and filed separately with the Commission.
<PAGE> 1
EXHIBIT 3.1
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
IMPSAT CORPORATION
--------------------------
FIRST: The name of the corporation is "IMPSAT
Corporation".
SECOND: The address of the corporation's
registered office in the State of Delaware is Corporation Trust Center, 1209
Orange Street in the City of Wilmington, County of New Castle. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
FOURTH: The corporation shall have the authority
to issue One Hundred Thousand (100,000) shares of Class A common stock with a
par value of $1.00 per share and each such share shall have five votes per
share.
FIFTH: The name and mailing address of the
incorporator are as follows:
NAME MAILING ADDRESS
Dennis J. Burnett 1300 I Street, N.W.
Washington, D.C. 20005
SIXTH: The corporation is to have perpetual
existence.
SEVENTH: In furtherance of (and not in limitation
of) the powers conferred by statute, the stockholders of the corporation are
expressly authorized to make, alter or repeal the by-laws of the corporation.
<PAGE> 3
CERTIFICATE OF INCORPORATION -2- IMPSAT CORPORATION
EIGHTH: Meetings of the stockholders of the
corporation may be held within or without the State of Delaware, as the by-laws
may provide. The books of the corporation may be kept outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation, except as and to the
extent provided by applicable law. Elections of directors need not be by
written ballot unless the by-laws of the corporation shall so provide.
NINTH: The corporation may amend this
certificate of incorporation from time to time in any and as many respects as
may be desired so long as this certificate of incorporation, as amended,
contains only such provisions as it would be lawful and proper to insert in an
original certificate of incorporation filed at the time of the filing of the
amendment, and, if a change in stock or the rights of stockholders, or an
exchange, reclassification of cancellation of stock or rights of stockholders,
is to be made, such provisions as may be necessary to effect such change,
exchange, reclassification or cancellation.
TENTH: No director of the corporation shall be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this Article TENTH
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under section 174 of the General Corporation
Law of Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
IN WITNESS WHEREOF, I have signed this certificate of
incorporation on August 30, 1994.
/s/ DENNIS J. BURNETT
-----------------------------------------
Dennis J. Burnett
<PAGE> 4
RESTATED CERTIFICATE OF INCORPORATION
OF
IMPSAT CORPORATION
(ORIGINAL CERTIFICATE FILED ON 31 AUGUST 1994)
FIRST: The name of the corporation is "IMPSAT
Corporation"
SECOND: The address of the corporation's
registered office in the State of Delaware is Corporation Trust Center, 1209
Orange Street, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation law of Delaware.
FOURTH: The corporation shall have the authority
to issue fifty one million, three hundred thousand (51,300,000) shares of Class
A common stock with a par value of $1.00 per share and each such share shall
have five votes per share.
FIFTH: The name and mailing address of the
incorporator are as follows:
NAME: MAILING ADDRESS
----------------- -------------------------
Dennis J. Burnett 1300 I Street, N.W.
Washington, D.C. 20005
SIXTH: The corporation is to have perpetual
existence.
SEVENTH: In furtherance of (and not in limitation
of) the powers conferred by statute, the stockholders of the corporation are
expressly authorized to make, alter or repeal the by-laws of the corporation.
EIGHTH: Meetings of the stockholders of the
corporation may be held within or without the State of Delaware, as the by-laws
may provide. The books of the corporation may be kept outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation, except as and to the
extent provided by applicable law. Elections of directors need not be by
written ballot unless the by-laws of the corporation shall so provide.
NINTH: The corporation may amend this
certificate of incorporation from time to time in any and as many respects as
may be desired so long as this certificate of incorporation, as amended,
contains only such provisions as it would be lawful and proper to insert in an
original certificate of incorporation filed at
<PAGE> 5
CERTIFICATE OF INCORPORATION -2- IMPSAT CORPORATION
the time of the filing of the amendment, and, if a change in stock or the
rights of stockholders, or an exchange, reclassification or cancellation of
stock or rights of stockholders, is to be made, such provisions as may be
necessary to effect such change, exchange, reclassification or cancellation.
TENTH: No director of the corporation shall be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this article TENTH
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under section 174 of the General Corporation
Law of Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
IN WITNESS WHEREOF, I have signed this Restated
Certificate of Incorporation was adopted by the Board of Directors prior to the
receipt of payment of stock of the Corporation pursuant to sections 241 and 245
of the Delaware Corporation Law.
SIGNED: /s/ RICARDO ANIBAL VERDAGUER
-------------------------------------
Ricardo Anibal Verdaguer
President
ATTESTED: /s/ DENNIS J. BURNETT
---------------------------------
Dennis J. Burnett
Secretary
<PAGE> 6
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
IMPSAT CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called
the "corporation") is IMPSAT CORPORATION
2. The Certificate of Incorporation of the
corporation is hereby amended by striking out Article Fourth thereof and by
substituting in lieu of said Article the following new Article:
"FOURTH: The corporation shall have the
authority to issue seventy seven million seven hundred fifty thousand six
hundred and forty (77,750,640) shares of Class A common stock with a par value
of $1.00 per share and each such share shall have five votes per share."
3. The amendment of the certificate of incorporation
herein certified has been duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
Signed on July 5, 1996.
/s/ BRIAN BELT
---------------------------------
BRIAN BELT, SECRETARY
<PAGE> 7
IMPSAT CORPORATION
UNANIMOUS WRITTEN CONSENT OF DIRECTORS
The undersigned, being all the members of the Board of Directors
of IMPSAT Corporation, a Delaware corporation (the "Corporation"), hereby
consent, pursuant to Section 141(f) of the Delaware General Corporation Law and
in lieu of a meeting of the Board of Directors, to the adoption of the
following resolutions:
WHEREAS, the Board of Directors have been elected and have been
qualified;
WHEREAS, the Board of Directors are empowered by Section 241(b)
of the Delaware Corporation Law to amend the certificate of incorporation by a
majority vote of the Board of Directors in the case the Corporation has not yet
received any payment for any of its stock and prior to the receipt of such
payment;
WHEREAS, the Board of Directors are empowered by Section 109 of
the Delaware Corporation Law to amend the by-laws of the Corporation by a
majority vote of the Board of Directors prior to the receipt of payment for
stock of the Corporation;
NOW THEREFORE, it is:
RESOLVED, that the Articles of Incorporation shall be amended and
restated as set forth in Attachment One:
RESOLVED, FURTHER, that the appropriate officers of the
corporation be and they hereby are authorized and empowered to execute in the
name of the Corporation, under its corporate seal, a certificate setting forth
the amended and restated Articles of Incorporation, certifying that the
Corporation has not received any payment for any of its stock, and that the
amendment and restatement of the Articles of Incorporation have been duly
adopted in accordance with the provisions of section 241 of the Delaware
Corporation Law, and are hereby authorized and empowered to have such
certificate executed, acknowledged, filed and recorded in accordance with the
section 103 of the Delaware Corporation Law.
RESOLVED, FURTHER, that Article III, Section 1(a) of the By-Laws
of the Corporation shall be amended to read as follows:
a) The business and the property of the Corporation shall be
managed and controlled by the Board of Directors, which
shall consist of eight (8) directors of whom one shall be
Chairman and all of whom shall be subject to change from
time to time by amendment of these By-Laws.
<PAGE> 8
UNANIMOUS WRITTEN CONSENT OF DIRECTORS 14 NOVEMBER 1994
RESOLVED, FURTHER, that this Consent may be signed in one or more
counterparts, and each director may sign a separate counterpart, but all such
counterparts together shall be one and the same Consent; and
RESOLVED, FURTHER, that the Secretary of the Corporation be, and
hereby is, directed to file this Consent; when signed by all the directors of
the Corporation, with the minutes of proceedings of the Board of Directors of
the Corporation.
IN WITNESS WHEREOF, each of the undersigned directors has duly
signed this Consent as of 14 November 1994.
/s/ ENRIQUE M. PESCARMONA
----------------------------------
Enrique M. Pescarmona
/s/ RICARDO ANIBAL VERDAGUER
-----------------------------------
Ricardo Anibal Verdaguer
/s/ ROBERTO A. VIVO CHANETON
-----------------------------------
Roberto A. Vivo Chaneton
/s/ NESTOR A. GONZALEZ
-----------------------------------
Nestor A. Gonzalez
/s/ GERALD KATZ
-----------------------------------
Gerald Katz
2
<PAGE> 1
EXHIBIT 3.2
<PAGE> 2
CERTIFICATION
I, Dennis James Burnett, Secretary of IMPSAT Corporation, on this 1st
day of December 1994, do hereby certify that to the best of my knowledge, the
attached is a true and correct copy of the BY-LAWS of IMPSAT CORPORATION as
adopted by the Statement of Sole Incorporator, dated 31 August 1994, and as
amended by the Board of Directors by Unanimous Written Consent, dated 14
November 1994.
/s/ DENNIS JAMES BURNETT
----------------------------
Dennis James Burnett
Secretary
IMPSAT Corporation
ACKNOWLEDGEMENT
District of )
) ss:
Columbia )
I, Diana K. Page, a Notary Public in and for said District do hereby
certify that Dennis James Burnett, who is known to me, personally appeared
before me in said District and executed the above certification and acknowledged
the same to be his act and deed in his duly-authorized capacity as Secretary of
IMPSAT Corporation.
Given under my hand and seal, this 1st day of December, 1994.
/s/ DIANE K. PAGE
----------------------------
Notary Public
(Seal)
My Commission Expires: MY COMMISSION EXPIRES APRIL 14, 1995
--------------------------------
<PAGE> 3
BY-LAWS
OF
IMPSAT CORPORATION
<PAGE> 4
IMPSAT Corporation BY-LAWS
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 11 - MEETINGS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1 - Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2 - Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3 - Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4 - Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5 - Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6 - Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III - BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1 - Number, Election and Term of Office . . . . . . . . . . . . . . . . . . 4
Section 2 - Duties and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3 - Annual and Regular Meetings; Notice . . . . . . . . . . . . . . . . . . 4
Section 4 - Special Meetings; Notice . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5 - Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
-i-
<PAGE> 5
IMPSAT Corporation BY-LAWS
<TABLE>
<S> <C>
Section 6 - Quorum and Adjournments . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7 - Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 8 - Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 9 - Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 10 - Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 11 - Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 12 - Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 13 - Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 14 - Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1 - Number, Qualifications, Election and Term of Office . . . . . . . . . . 9
Section 2 - Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3 - Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4 - Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5 - Duties of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6 - Sureties and Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7 - Shares of Other Corporations . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
-ii-
<PAGE> 6
IMPSAT Corporation BY-LAWS
<TABLE>
<S> <C>
ARTICLE V - SHARES OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1 - Certificates of Stock . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2 - Lost or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . 11
Section 3 - Transfers of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4 - Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI - DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII - FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VIII - CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IX - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1 - By Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
-iii-
<PAGE> 7
BY-LAWS
OF
IMPSAT CORPORATION
-------------------------------------
ARTICLE I - OFFICES
The registered office of the Corporation shall be located in the City,
County and State designated in the Certificate of Incorporation of the
Corporation (such Certificate and any amendments thereof being hereinafter
collectively referred to as the"Certificate of Incorporation"). The
Corporation may also maintain offices at such other places within or without
the State of Delaware as the Board of Directors may, from time to time,
determine.
ARTICLE II - MEETINGS OF SHAREHOLDERS
Section 1 - Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held
within five months after the close of the fiscal year of the Corporation for
the purpose of electing directors and transacting such other business as may
properly come before the meeting.
Section 2 - Special Meetings:
Special meetings of the shareholders may be called at any time by the
Board of Directors or by the President, and shall be called by the President or
the Secretary at the written request of the holders of fifty per cent (50%) of
the shares then
-1-
<PAGE> 8
IMPSAT Corporation BY-LAWS
outstanding and entitled to vote thereat, or as otherwise required under the
provisions of the General Corporation Law of the State of Delaware.
Section 3 - Place of Meetings:
All meetings of shareholders shall be held at the principal office of
the Corporation, or at such other places within or without the State of
Delaware as shall be designated in the notices or waivers of notice of such
meetings.
Section 4 - Notice of Meetings:
(a) Written notice of each meeting of shareholders, whether annual or
special, stating the time when and place where it is to be held, shall be
served either personally or by mail, not less than ten or more than fifty days
before the meeting, upon each shareholder of record entitled to vote at such
meeting, and to any other shareholder to whom the giving of notice may be
required by law. Notice of a special meeting shall also state the purpose or
purposes for which the meeting is called and shall indicate that it is being
issued by, or at the direction of, the person or persons calling the meeting.
If, at any meeting, action is proposed to be taken that would, if taken, entitle
shareholders to receive payment for their shares pursuant to the General
Corporation Law of the State of Delaware, the notice of such meeting shall
include a statement of that purpose and to that effect. If mailed, such notice
shall be directed to each such shareholder at his address, as it appears on the
records of the shareholders of the Corporation, unless such shareholder shall
have previously filed with the Secretary of the Corporation a written request
that notices intended for such shareholder be mailed to some other address, in
which case, it shall be mailed to the address designated in such request.
(b) Notice of any meeting need not be given to any person who may
become a shareholder of record after the mailing of such notice and prior to
the meeting, or to any shareholder who attends such meeting, in person or by
proxy, or to any shareholder who, in person or by proxy, submits a signed
waiver of notice either before or after such meeting. Notice of any adjourned
meeting of shareholders need not be given, unless otherwise required by
statute.
Section 5 - Quorum:
(a) Except as otherwise provided herein or by statute or in the
Certificate
-2-
<PAGE> 9
IMPSAT Corporation BY-LAWS
of Incorporation, at each meeting of the shareholders of the Corporation, the
presence at the commencement of such meeting, in person or by proxy, of
shareholders holding of record a majority of the total number of shares of the
Corporation then issued and outstanding and entitled to vote shall be necessary
and sufficient to constitute a quorum for the transaction of any business. The
withdrawal of any shareholder after the commencement of a meeting shall have no
effect on the existence of a quorum after a quorum has been established at such
meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called if a
quorum had been present.
Section 6 - Voting:
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action to be taken by vote of the shareholders
shall be authorized by a majority of votes cast at a meeting of shareholders by
the holders of shares entitled to vote thereon.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of Class
A shares of stock of the Corporation entitled to vote thereat shall be entitled
to five votes for each share of Class A stock registered in his name on the
books of the Corporation.
(c) Each shareholder entitled to vote, or to express consent or dissent
without a meeting, may do so by proxy; provided, however, that the instrument
authorizing such proxy to act shall have been executed in writing by the
shareholder, or by the shareholder's attorney-in-fact thereunto duly authorized
in writing. No proxy shall be valid after the expiration of eleven months from
the date of its execution, unless the person or persons executing it shall have
specified therein the length of time it is to continue in force. Such
instrument shall be exhibited to the Secretary at the meeting and shall be
filed with the records of the Corporation.
(d) Any resolution in writing, signed by all of the shareholders
entitled to vote thereon, shall be and constitute action by such shareholders
to the effect therein expressed, with the same force and effect as if the same
had been duly passed by unanimous vote at a duly called meeting of shareholders
and such resolution so signed
-3-
<PAGE> 10
IMPSAT Corporation BY-LAWS
shall be inserted in the Minute Book of the Corporation under its proper date.
ARTICLE III - BOARD OF DIRECTORS
Section I - Number, Election and Term of Office:
(a) The business and the property of the Corporation shall be managed
and controlled by the Board of Directors, which shall consist of five (5)
directors of whom one shall be Chairman and all of whom shall be subject to
change from time to time by amendment of these By-Laws.
(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the Chairman and the other members of the Board of Directors of
the Corporation, who need not be shareholders, shall be elected by a majority
of the votes cast at a meeting of shareholders, by the holders of shares
entitled to vote in the election.
(c) Each director shall hold office until the annual meeting of the
shareholders next succeeding his election, and until his successor is elected
and qualified, or until his earlier death, resignation or removal.
Section 2 - Duties and Powers:
The Board of Directors shall be responsible for the control and
management of the affairs, property and interests of the Corporation, and may
exercise all powers of the Corporation, except such powers as are in the
Certificate of Incorporation or by statute expressly conferred upon or reserved
to the shareholders.
Section 3 - Annual and Regular Meetings; Notice:
(a) A regular annual meeting of the Board of Directors shall be held
immediately following the annual meeting of the shareholders, at the place of
such annual meeting of shareholders.
(b) The Board of Directors, from time to time, may provide by
resolution for the holding of other regular meetings of the Board of Directors,
and may fix the time and place thereof.
-4-
<PAGE> 11
lMPSAT Corporation BY-LAWS
(c) Notice of any regular meeting of the Board of Directors shall not
be required to be given and, if given, need not specify the purpose of the
meeting; provided, however, that in case the Board of Directors shall fix or
change the time or place of any regular meeting, notice of such action shall be
given to each director who shall not have been present at the meeting at which
such action was taken within the time specified, and in the manner set forth,
in paragraph (b) of Section 4 of this Article III, with respect to special
meetings, unless such notice shall be waived in the manner set forth in
paragraph (c) of such Section 4.
Section 4 - Special Meetings; Notice:
(a) Special meetings of the Board of Directors shall be held whenever
called by the President or by one of the directors, at such time and place as
may be specified in the respective notices or waivers of notice thereof.
(b) Notice of special meetings shall be mailed directly to each
director, addressed to him at his residence or usual place of business, at
least two (2) days before the day on which the meeting is to be held, or shall
be sent to him at such place by telegram, telex or fax, or shall be delivered
to him personally or given to him orally, not later than the day before the day
on which the meeting is to be held. A notice, or waiver of notice, except as
required by Section 8 of this Article III need not specify the purpose of the
meeting.
(c) Notice of any special meetings shall not be required to be given to
any director who shall attend such meeting without protesting, prior thereto or
at its commencement, the lack of notice to him, or who submits a signed waiver
of notice, whether before or after the meeting. Notice of any adjourned
meeting shall not be required to be given.
Section 5 - Chairman:
At all meetings of the Board of Directors, the Chairman of the Board, if
present, shall preside. If there shall be no Chairman, or he shall be absent,
then the President shall preside, and in his absence, a Chairman chosen by the
directors shall preside.
-5-
<PAGE> 12
IMPSAT Corporation BY-LAWS
Section 6 - Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of a
majority of the entire Board shall be necessary and sufficient to constitute a
quorum for the transaction of business, except as otherwise provided by law, by
the Certificate of Incorporation, or by these By-Laws. Participation of any
one or more members of the Board by means of a conference telephone or similar
communications equipment, allowing all persons participating in the meeting to
hear each other at the same time, shall constitute presence in person at any
such meeting.
(b) A majority of the directors present at the time and place of any
regular or special meeting, although less than a quorum, may adjourn the same
from time to time without notice, until a quorum shall be present.
Section 7 - Manner of Acting:
(a) At all meetings of the Board of Directors, each director present
shall have one vote, irrespective of the number of shares of stock, if any,
which he may hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. In the case of a tie vote of the directors present, the
Chairman shall cast the deciding vote. Any action authorized, in writing, by
all of the directors entitled to vote thereon and filed with the minutes of the
Corporation shall be the act of the Board of Directors with the same force and
effect as if the same had been passed by unanimous vote at a duly called
meeting of the Board.
Section 8 - Vacancies:
Any vacancy in the Board of Directors occurring by reason of an increase
in the number of directors, or by reason of the death, resignation,
disqualification, removal (unless a vacancy created by the removal of a
director by the shareholders shall be filled by the shareholders at the meeting
at which the removal was effected) or inability to act of any director, or
otherwise, shall be filled for the unexpired portion of the term by a majority
vote of the shareholders, at any regular meeting or at any special meeting of
the shareholders called for that purpose.
-6-
<PAGE> 13
IMPSAT Corporation BY-LAWS
Section 9 - Resignation:
Any director may resign at any time by giving written notice to the
Board of Directors, the President or the Secretary of the Corporation. Unless
otherwise specified in such written notice, such resignation shall take effect
upon receipt thereof by the Board of Directors or such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 10 - Indemnification:
The Corporation shall indemnify to the full extent authorized or
permitted by the General Corporation Law of the State of Delaware, or the
indemnification provision of any successor statute, every person (and the
heirs, executors and administrators of such person) made, or threatened to be
made, a party to an action by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture or other enterprise, against the expenses, including attorneys' fees,
actually and necessarily incurred by him in connection with the defense or
settlement of such action, or in connection with any appeal therein, except in
relation to matters as to which such director is adjudged to have breached his
duty to the Corporation.
The Corporation shall also indemnify to the full extent authorized or
permitted by the General Corporation Law of the State of Delaware, or the
indemnification provisions of any successor statute, every person (and the
heirs, executors and administrators of such person) made, or threatened to be
made, a party to an action, suit, or proceeding other than one by or in the
right of the Corporation to procure a judgment in its favor, whether civil,
criminal investigative or administrative, including an action by or in the
right of any other corporation of any type or kind, domestic or foreign, which
he served in any capacity at the request of the Corporation by reason of the
fact that he was a director of the Corporation or served such other corporation
in any capacity, against judgments, fines, amounts, paid in settlement, and
reasonable expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal therein. The
foregoing right of indemnification shall not be exclusive of other rights to
which any such person may be entitled under any agreement, vote of shareholders
or otherwise.
-7-
<PAGE> 14
IMPSAT Corporation BY-LAWS
Section 11 - Removal:
Any director may be removed with or without cause at any time by the
shareholders, at a special meeting of the shareholders called for that purpose,
and may be removed for cause by action of the Board.
Section 12 - Salary:
No stated salary shall be paid to directors, as such, for their
services, but by resolution of the Board of Directors a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided, however, that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 13 - Contracts:
(a) No contract or other transaction between this Corporation and any
other corporation shall be impaired, affected or invalidated, nor shall any
director be liable in any way by reason of the fact that any one or more of the
directors of this Corporation is or are interested in, or is a director or
officer, or are directors or officers of such other corporation, provided that
such facts are disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be a party to or may
be interested in any contract or transaction of this Corporation, and no
director shall be liable in any way by reason of such interest, provided that
the fact of such interest be disclosed or made known to the Board of Directors,
and provided that the Board of Directors shall authorize, approve or ratify
such contract or transaction by the vote (not counting the vote of any such
director) of a majority of a quorum, notwithstanding the presence of any such
director at the meeting at which such action is taken. Such director or
directors may be counted in determining the presence of a quorum at such
meeting. This Section shall not be construed to impair or invalidate or in any
way affect any contract or other transaction which would otherwise be valid
under the law (common, statutory or otherwise) applicable thereto.
-8-
<PAGE> 15
IMPSAT CORPORATION BY-LAWS
Section 14 - Committees:
The Board of Directors, by resolution adopted by a majority of the
entire Board, may from time to time designate from among its members an
executive committee and such other committees, and alternate members thereof,
as they deem desirable, each consisting of three or more members, with such
powers and authority (to the extent permitted by law) as may be provided in
such resolution. Each such committee shall serve at the pleasure of the Board.
At all meetings of a committee, the presence of all members of the committee
shall be necessary to constitute a quorum for the transaction of business,
except as otherwise provided by said resolution or by these By-Laws.
Participation of any one or more members of the committee by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time, shall
constitute presence in person at any such meeting. Any action authorized in
writing by all of the members of a committee entitled to vote thereon and filed
with the minutes of the committee shall be the act of the committee with the
same force and effect as if the same had been passed by unanimous vote at a
duly called meeting of the committee.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a President, a
Secretary and such other officers as the Board of Directors may from time to
time deem advisable. Any officer may be, but is not required to be, a director
of the Corporation. Any two or more offices may be held by the same person.
(b) The President of the Corporation shall be elected by the
shareholders at the annual meeting of the shareholders. The officers of the
Corporation other than the President shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until his successor shall have been
elected and qualified, or until his earlier death, resignation or removal.
-9-
<PAGE> 16
IMPSAT Corporation BY-LAWS
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such
resignation to the Board of Directors, or to the President or the Secretary of
the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors
or by such officer, and the acceptance of such resignation shall not be
necessary to make it effective.
Section 3 - Removal:
The President may be removed, either with or without cause, and a
successor elected by the shareholders at any time. Any officer other than the
President may be removed, either with or without cause, and a successor elected
by the Board of Directors at any time.
Section 4 - Vacancies:
A vacancy in the office of the President by reason of death,
resignation, inability to act, disqualification, or any other cause, may at any
time be filled for the unexpired portion of the term by the shareholders. A
vacancy in any office other than the President by reason of death, resignation,
inability to act, disqualification, or any other cause, may at any time be
filled for the unexpired portion of the term by the Board of Directors.
Section 5 - Duties of Officers:
Officers of the Corporation shall, unless otherwise provided by the
Board of Directors, each have such powers and duties as generally pertain to
their respective offices as well as such powers and duties as may be set forth
in these By-Laws, or may from time to time be specifically conferred or imposed
by the Board of Directors. The President shall be the chief executive officer
of the Corporation.
Section 6 - Sureties and Bonds:
In case the Board of Directors shall so require, any officer, employee
or agent of the Corporation shall execute to the Corporation a bond in such
sum, and with
-10-
<PAGE> 17
IMPSAT Corporation BY-LAWS
such surety or sureties, as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
Section 7 - Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other
corporation, any right or power of the Corporation as such shareholder
(including the attendance, acting and voting at shareholders' meetings and
execution of waivers, consents, proxies or other instruments) may be exercised
on behalf of the Corporation by the President, or such other person as the
Board of Directors may authorize.
ARTICLE V - SHARES OF STOCK
Section 1 - Certificates of Stock:
(a) The certificates representing shares of the Corporation shall be in
such form as shall be adopted by the Board of Directors, and shall be numbered
and registered in the order issued. They shall bear the holder's name and the
number of shares, and shall be signed by (i) the Chairman of the Board or the
President or a Vice President, and (ii) the Secretary or Treasurer, or any
Assistant Secretary or Assistant Treasurer, and may bear the corporate seal.
(b) No certificate representing shares shall be issued until the full
amount of consideration therefor has been paid, except as otherwise permitted
by law.
(c) The Board of Directors may authorize the issuance of certificates
for fractions of a share which shall entitle the holder to exercise voting
rights, receive dividends and participate in liquidating distributions, in
proportion to the fractional holdings; or it may authorize the payment in cash
of the fair value of fractions of a share as of the time when those entitled to
receive such fractions are determined; or it may authorize the issuance,
subject to such conditions as may be permitted by law, of scrip in registered
or bearer form over the signature of an officer or agent of the Corporation,
exchangeable as therein provided for full shares, but such scrip shall not
entitle the holder to any rights of a shareholder, except as therein provided.
-11-
<PAGE> 18
IMPSAT Corporation BY-LAWS
Section 2 - Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation
shall immediately notify the Corporation of any loss or destruction of the
certificate representing the same. The Corporation may issue a new certificate
in the place of any certificate theretofore issued by it, alleged to have been
lost or destroyed. On production of such evidence of loss or destruction as
the Board of Directors in its discretion may require, the Board of Directors
may, in its discretion, require the owner of the lost or destroyed certificate,
or his legal representatives, to give the Corporation a bond in such sum as the
Board may direct, and with such surety or sureties as may be satisfactory to
the Board, to indemnify the Corporation against any claims, loss, liability or
damage it may suffer on account of the issuance of the new certificate. A new
certificate may be issued without requiring any such evidence or bond when, in
the judgment of the Board of Directors, it is proper so to do.
Section 3 - Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the share
records of the Corporation only by the holder of record thereof, in person or
by his duly authorized attorney, upon surrender for cancellation of the
certificate or certificates representing such shares, with an assignment or
power of transfer endorsed thereon or delivered therewith, duly executed, with
such proof of the authenticity of the signature and of authority to transfer
and of payment of transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of
any share or shares as the absolute owner thereof for all purposes and,
accordingly, shall not be bound to recognize any legal equitable or other claim
to, or interest in, such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
Section 4 - Record Date:
In lieu of closing the share records of the Corporation, the Board of
Directors may fix, in advance, a date not exceeding fifty (50) days, nor less
than ten (10) days, as the record date for the determination of shareholders
entitled to receive notice of, or to vote at, any meeting of shareholders, or
to consent to any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of
-12-
<PAGE> 19
IMPSAT Corporation BY-LAWS
any dividends, or allotment of any rights, or for the purpose of any other
action. If no record date is fixed, the record date for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders
shall be at the close of business on the day next preceding the day on which
notice is given, or, if no notice is given, the day on which the meeting is
held; the record date for determining shareholders for any other purpose shall
be at the close of business on the day on which the resolution of the directors
relating thereto is adopted. When a determination of shareholders of record
entitled to notice of or to vote at any meeting of shareholders has been made
as provided for herein, such determination shall apply to any adjournment
thereof, unless the directors fix a new record date for the adjourned meeting.
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any
funds available therefor as often, in such amounts, and at such time or times
as the Board of Directors may determine.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors from time to time, subject to applicable law.
ARTICLE VIII - CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved
from time to time by the Board of Directors.
-13-
<PAGE> 20
IMPSAT Corporation BY-LAWS
ARTICLE IX - AMENDMENTS
Section 1 - By Shareholders:
All By-Laws of the Corporation shall be subject to alteration or repeal,
and new By-Laws may be made, by a majority vote of the shareholders at the time
entitled to vote in the election of directors.
-14-
<PAGE> 1
EXHIBIT 3.3
<PAGE> 2
------------TRANSLATION--------------
All pages bear the following seals:-------------------------------------------
NOTARIES ASSOCIATION - PROVINCE OF BUENOS AIRES.------------------------------
AMANCIO A.C. del CAMPO BENEGAS - NOTARY. Followed by an illegible
signature.--------------------------------------------------------------------
The pages are numbered Notarial Proceeding AFC1896607 through AFC
1896620.----------------------------------------------------------------------
On the left margin there appears a seal reading: NOTARIES' ASSOCIATION-PROVINCE
OF BUENOS AIRES - San Isidro Delegation - Legalizations.------------
COMPILATION OF CORPORATE BY-LAWS: IMPSAT SOCIEDAD ANONIMA - DEED NUMBER TWO
HUNDRED AND NINETY.- In the City and District of San Isidro. Jurisdiction of
the Province of Buenos Aires, this seventeenth day of november of the year one
thousand nine hundred and ninety three, there appears before me Mr. Ricardo
Anibal VERDAGUER Argentine, married, with Identity Document No. 8,456,135,
residing at the Federal Capital, who appears in the name and on behalf of and
in his capacity as Chairman of IMPSAT SOCIEDAD ANONIMA, which capacity is
evidenced by him with: 1) Constitution of the Corporate By-Laws delivered
through deed dated April 7, 1988, executed before the Notary of the Federal
Capital J. Marcelo Ferrari, on folio 53, of Record number 181 at his charge,
the certified copy of which deed was registered with the National Inspection of
Corporations on June 7, 1988, under number 3555 of Book 105, Volume A of
Corporations. 2) With the deed of Amendment to the Corporate By-Laws dated June
12, 1990, executed before the Notary of the Federal Capital, Mr. Carlos A.
Arzeno, on folio 498 of Record number 413 at his charge, the certified copy of
which deed was registered with the General Inspection of Corporations on July
12, 1990, under number 4526 of Book 108, Volume A of Corporations. 3) With the
deed of Amendment to the Corporate By-Laws dated May, 3, 1991, executed before
the Notary of the Vicente Lopez District, Ms. Susana Marcela Stamuccio de
Herrera on folio 379 of Record number 95 of her temporary assignment, the
certified copy of which deed was registered with the General Inspection of
Corporations on October 10, 1991, under number 8315 of Book 110, Volume A of
Corporations. 3) With the Minutes of the Meeting number ten dated May 4, 1993,
appearing on folio 38 of the Meetings Book number One, Signed and sealed on
August lst, 1988, under number A18581, where the Board of Directors is
appointed. 4) With the Minutes of the Board of Directors' Meeting number 48
dated May 4, 1993, appearing on folio 78 of the Meetings Book number One,
signed and sealed
<PAGE> 3
on August lst, 1988, under number A18580, where positions are assigned. I have
before me the related documentation and I herein attach certified copy thereof,
I attest. The person appearing is capable, of age, and to me known which I
attest and he says: That through Minutes of Unanimous Special Shareholders'
Meeting number Six dated April 25, 1991, appearing on folio 26 of Minutes of
Meetings Book number one, it was unanimously resolved to compile the Corporate
By-Laws, which meeting copied in its relevant part says: "Minutes of Meeting
number 6.- In the City of Buenos Aires, this 25th day of April, 1991, at 5
p.m., the shareholders appearing on Folio 6 of the Attendance to Meetings
Record gather at the premises of IMPSAT S.A., under the Chairmanship of Ing.
Ricardo A. Verdaguer, the members of the Supervisory Committee and the
Directors signing at the botton of these Minutes also attending the meeting.
The Chairman starts speaking and certifies that all the shareholders are
present through the intermediary of their proxies, with a total of 100% of the
capital stock with voting right and stating that the Meeting is carried out
pursuant to the terms of Section 237 of the Companies Law. He also adds that
since the General Inspection of Corporations has been previously informed of
the call to this Meeting, the Meeting is held without the attendance of the
relevant Inspector. Thereafter, the Chairman declares the Meeting open... Mr.
Joss R. Torres starts speaking and he states that it is advisable to compile
the Corporate By-Laws, taking into account the amendments they have suffered.
This motion is unanimously approved by the shareholders... It is unanimously
resolved that all the parties attending the Meeting shall sign these Minutes.
Since there are no more business to deal with the meeting is adjourned at 7
p.m. prior reading and ratification of these Minutes. There appear ten
signatures: Ricardo Verdaguer; Roberto A. Vivo Chaneton; Jose Torres; Guillermo
Pardo; Mauricio Engelbert; Francesco Armato; Christian Gall; Adolfo Vaeza
Baque; Reto Tognola; Carlos Maurente." I have before me the Minutes
transcribed, a certified copy of which I attach hereto, I attest. The person
appearing requests me to transcribe the Compiled By-Laws of IMPSAT Sociedad
Anonima: COMPILED BY-LAWS OF IMPSAT SOCIEDAD ANONIMA.--------------------------
SECTION ONE: NAME: A corporation (Sociedad Anonima) is hereby constituted under
the name of IMPSAT SOCIEDAD ANONIMA which shall be governed by these By-Laws
and other legal provisions and regulations that may apply.---------------------
<PAGE> 4
SECTION TWO: LIFE: The Company shall last ninety nine years computed from the
date of its recording with the Commercial Court of Record. This term may be
extended.-------------------
SECTION THREE: DOMICILE: The Company establishes its registered office in the
jurisdiction of the City of Buenos Aires and by decision of the Board of
Directors may establish branches, agencies, representative offices and any
other kind of commercial, administrative or operating office, in any other
place of Argentina or abroad.--------------------------------
SECTION FOUR: PURPOSE: The corporate purpose of the Company shall be the
research, development, manufacture, supply, installation, operation,
maintenance, repair, improvement, acquisition and leasing of telecommunication
equipment, systems, proceedings or instruments, as well as the management,
promotion, exploitation and rendering of telecommunication services for data,
voice and video transmission in all its aspects and possibilities, including
the transmission, emission or reception of signs, signals, texts, images,
sounds or information of any kind and generally the rendering of any other
service, media or activity supplementary, subsidiary or ancillary to such
telecommunications; all that within the framework of the laws and regulations
governing telecommunications. In order to attain its corporate purpose, the
Company may carry out all acts and activities directly or indirectly connected
thereto, on its own account or on the account of third parties, by itself or
through representatives, agents, correspondents, licencees and third parties in
general. To such an end, without limitation and without restricting any of the
powers necessary for the fulfilment of its corporate purpose, the Company may:
a) Execute any kind of agreement, contract or juridical act with or before
official agencies, bodies, whether centralized or decentralized,
self-administered entities, state owned companies or enterprises, whether
national, provincial, municipal, from the country, binational or foreign;
arrange and accept before governmental powers, concessions, permits,
authorizations, licences, privileges, exemptions and as many facilities may
assist either directly or indirectly to the best attainment of its corporate
purpose.- b) Carry out all acts of purchase and sale; barter; assignment of
credits, rights and debts; leases of services, works and things, deposits of
all kind of goods; loans for consumption with any kind of guarantees and in any
currency; correspondent, agency, representation, licence, transfer of
technology and mandate agreements; employment, management and advisory
agreements; donations and any other act directly or indirectly
<PAGE> 5
necessary for the better attainment of its corporate pupose. c) Open current
accounts, make any class and kind of bank or credit transactions, with or
without guarantees, in the country or abroad, with any kind of financing
institution, official banks, state owned companies, private or mixed companies,
whether domestic or foreign, in any currency; issue in the country or abroad
bonds, bills of exchange, promissory notes, checks, acknowledged invoices and
any kind of obligation or evidence of indebtedness or credit instrument with or
without guarantee or special repayment system and guarantee or give bond for
such obligations. d) Associate under any manner with individuals or
corporations either from the country or from abroad, for the development of
activities directly or indirectly connected with its corporate purpose, and
generally, participate in the capital of any stock corporation in the country,
or company incorporated abroad, by any means, as well as participate in
entrepreneurial chambers or associations of any kind, whether private, mixed,
state-owned, domestic, foreign, international or intergovernmental. e)
Establish or agree the rates of the services rendered by the Company, in
accordance with the laws and regulations in force; grant exemptions and
reductions of such rates and fix the amounts, supplements and surcharges
relative to the rendering of additional, special or supplementary services that
due to their characteristics meet the particular interest of the customer.- f)
Acquire, dispose of, agree the exploitation, register patents and/or
trademarks, industrial models or designs, licences and assistance agreements
and/or technical assistance agreements, in the country or abroad. g) Import or
export goods or services directly or indirectly referred to the corporate
purpose; take part in judicial and administrative proceedings in all the
manners authorized by law it being empowered to carry out in such respect all
acts connected with legal proceedings that may be necessary. h) Constitute any
class of in rem rights, grant and receive representations, mandates,
correspondent offices and in general incurr in any kind and class of
obligations, with or without personal guarantee or security, dispose of and
mortgage or pledge personal property, cattle and real property and all kind of
rights, titles, shares and securities, as well as execute agreements, acts,
legal transactions, industrial transactions, commercial transactions and any
other that pursuant to the laws and regulations in force may be necessary for
the fulfilment of the corporate purpose.----------------------------
SECTION FIVE: CAPITAL STOCK: the Capital Stock is fixed in the amount of
Australes Four Hundred and twelve thousand three hundred (A=412,300)
<PAGE> 6
represented by three thousand and ninety two (3092) Class A common shares and
one thousand and thirty one (1031) Class B common shares, all of Australes one
hundred (A=100) par value each and with five (5) votes per
share.------------------------
SECTION SIX: CAPITAL INCREASE: The capital stock may be increased by resolution
of the Regular Shareholders' Meeting up to five times its amount, and for so
doing the majorities established in section twenty one of these By-Laws shall
be required. The issue of new series of shares may be done at the time, in the
manner and under the payment conditions determined by the Board of Directors.
Capital increases may be made through one of the five manners stated below or
combining any of them: a) For the suscription of any of the classes of shares
specified in Section SEVEN at the times, in the manner and with the
characteristics determined by the Shareholders' Meeting, without prejudice to
the fact that the Board of Directors shall establish the time for the issues
and the manner and payment conditions of the subscription; b) Through the
delivery in payment for dividends from any year of par value, A and B shares
and/or preferred shares; c) Through capitalization of profits and reserves
excluding legal reserves, resulting from balance sheets approved by Regular
Shareholders' Meetings; d) Through the capitalization of the excess or the
highest value that the properties of the Company may acquire, over the
estimated price of the last inventory or balance sheet approved by the Regular
Shareholders' Meeting and in accordance with the legal rules in force, all of
this without prejudice to the capitalizations that may apply under accounting
revaluations stipulated or authorized by special or general laws; e) Through
the conversion into shares of debentures under the terms of section 334 of Law
No. 19,550.-------------------
SECTION SEVEN: SHARES: Each of the shares shall have a par value of ONE HUNDRED
AUSTRALES, shall be registered, non endorsable and may be common or preferred.
Common shares may give right to from one to five votes per share and shall be
divided into the following classes: a) Class A common shares, with right to the
election of seventy five per cent of the vacancies at the Board of Directors,
two alternate directors and two regular syndics of the Supervisory Committee
and their respective alternate members; b) Class B common shares, with right to
the election of twenty five per cent of the vacancies at the Board of
Directors, one Alternate Director and one Regular Syndic of the Supervisory
Committee and their respective alternate member.- Preferred shares that may be
created by the Shareholders' Meeting, shall have the following
<PAGE> 7
characteristics: a) They may have right to a fixed or variable dividend, with
or without additional participation and either cumulative or non cumulative,
during one or more years, and a minimum and maximum dividend may be
established; b) The dividends may have payment priority to those of the common
shares; c) Preferences may be acknowledged in the return of the amount paid in
the event of the Company's winding up; d) They shall not have voting right,
except in the events of Sections 217, first paragraph and 244, fourth paragraph
of Law No. 19,550, when they shall have one vote per share.- The holders of
preferred shares shall have the right to speak in all the Shareholders' Meeting
of the Company.- The shares and the interim certificates to be issued shall
have the references to Section 211 of Law No. 19,550 and the provisions of
Section 1 of Decree 83/88 regulating Law No. 23,299.- Stock certificates
representing more than one share may be issued. The Shareholders' Meeting may
establish that all the shares or any of its classes, are not represented as
stock certificates, in this instance they shall be recorded in individualized
accounts with the name of their holders in a Book-Entry Shares Record which
shall be kept by the Company and/or commercial banks and/or investment banks
and/or authorized safe-deposit boxes, pursuant to the provisions of the Board
of Directors. In no case registered, non endorsable shares may be exchanged by
bearer shares.-------------------------
SECTION EIGHT: SUSCRIPTION OF NEW SHARES: The subscribers of common shares
shall have the pre-emptive right to subscribe common shares to be issued of
their respective classes in proportion to the ones they already have.
Suscribers of common and preferred shares shall have the pre-emptive right to
subscribe preferred shares to be issued in proportion to the shares each of
them has. The subscription of new shares shall be informed to the shareholders
through notices that during three days shall be published in the Official
Gazette and in one of the newspapers of widest circulation of the country. In
all cases those interested may only make use of their right within the term of
thirty business days after the day following the last publication where the
suscription is offered. Without prejudice to the pre-emptive subscription
right, the shareholders shall have the right to accrual under the terms and
conditions established by Section 194 of Law No. 19,550. When common shares
are issued the proportion between A and B shares should always be kept, which
proportion results from the subscription of the shares stated in Section FIVE
and only with the approval of the different classes of shares stated in the
manner established in Section
<PAGE> 8
250 of Law No. 19,550, may the proportion among them be
altered.------------------------
SECTION NINE: DEFAULTING SUBSCRIBER: Default in the payment of subscriptions
occurs by the mere expiry of the term, the right inherent to the shares in
default being automatically suspended. The Board of Directors shall summon the
defaulting shareholders to pay the amounts unpaid plus interest for late
payment calculated at the maximum rate charged by Banco de la Nacion Argentina
for current account overdraft transactions for 30 day periods in more than 50%
(FIFTY PER CENT) within a term of thirty days. After the expiry of this term,
the Board of Directors may opt for a) the sale of shares in public auction with
the expenses of the auction and the interest for late payment being borne by
the defaulting subscriber without prejudice to the responsibility for damages
or b) declared the rights of the subscriber no longer valid with loss of the
amounts already paid. Without prejudice to the foregoing the Board of
Directors may opt for legally requiring the fulfilment of the subscription
agreement.-----------------------------------
SECTION TEN: INDIVISIBILITY. KNOWLEDGE OF THE BY-LAWS: The shares are
indivisible and the Company shall not recognize more than one owner per
share. The recording as shareholder of the Company implies the knowledge and
acceptance of these By-Laws, without admitting proof to the
contrary.-------------------------
SECTION ELEVEN: LOANS: Through a decision of the Special Shareholders' Meeting
adopted with the special majority established in Section TWENTY TWO of these
By-Laws, the Company may take loans either public or private, in domestic or
foreign currency, through the issue of debentures or negotiable obligations.
Debentures may have floating guarantee, ordinary guarantee or special guarantee
and may be convertible into shares pursuant to the issue
schedule.------------------------------
SECTION TWELVE: BOARD OF DIRECTORS: The Company shall be conducted and managed
by a Board of Directors who shall have the powers and authorities established
in Section 255 and similar of Law No.
19,550.----------------------------------------------------------
SECTION THIRTEEN: COMPOSITION OF THE BOARD OF DIRECTORS: The Board of Directors
shall be composed of eight regular members and three alternate directors. The
directors shall last ONE year in their duties and may be re-elected
indefinitely, and they shall remain in their positions until their replacement.
As guarantee for their position each director shall
<PAGE> 9
deposit in the corporate safe deposit box the amount of EIGHTY THOUSAND
AUSTRALES in cash or their equivalent in government securities. In the event
of resignation, death, disqualification or absence of the regular directors,
the respective position shall be covered by the alternate director appointed by
the Shareholders' Meeting of the class corresponding to such regular director
according to the provisions of section FOURTEEN. Should it be impossible to
fill the vacancy produced in each class, it shall be covered by the director(s)
appointed by the other directors of the class where the vacancy occurred, this
with the consent of the syndic(s) appointed by the shareholders of the class
corresponding to the vacant position. The Board of Directors shall immediately
call for the shareholders' meeting of that class to fill the aforementioned
vacancy and its respective alternate.-------------------------------
SECTION FOURTEEN: ELECTION PER CLASSES: Class A shares shall appoint seventy
five per cent of the vacancies to be filled by the Board of Directors and two
alternate directors, therefore, they shall be entitled to SIX regular
positions. Class B shares shall appoint twenty five per cent of the vacancies
to be filled by the Board of Directors and of one alternate director,
consequently they are entitled to TWO regular positions. The extraordinary
Shareholders' Meetings of each class for the election of directors shall be
governed by the same rules applying to the operation of the Regular
Shareholders' Meetings, and the provisions regarding quorum and the majorities
established in Section 243 of Law No. 19,550 shall apply. If after fulfilling
the provisions of these By-Laws and of Law No. 19,550, the class shareholders'
meetings fail to appoint all of the directors their are entitled to, the
vacancies shall be covered by the Regular Shareholders' Meeting. In the event
the preferred shares shall acquire a voting right in the cases specified in the
first paragraph of Section 217 of Law 19,550, the number of directors shall
increase by one, in order that the holders of such shares may appoint such
director. This director shall last one year in his position if the causes
giving rise to the acquisition of the voting right by the preferred shares
shall survive. If during his term of office such causes shall cease, the
mandate of the directors elected by the shareholders of preferred shares shall
expire. When the Board of Directors is composed of Directors elected by the
shareholders of preferred shares, the decisions shall have the affirmative vote
of at least one of the directors chosen by the holders of Class A shares and
one of the directors chosen by Class B shares.---------------------------------
<PAGE> 10
SECTION FIFTEEN. BOARD OF DIRECTORS COMPOSITION, QUORUM AND VOTING: The
chairman of the Board of Directors shall be appointed by the Regular Meeting
among those who were elected directors. The individual chosen must have
necessarily had at least the favourable vote of the majority of class A stock.
In case of resignation, disqualification or absence, chairmanship shall be
exercised by the Director appointed for such a purpose by the Board of
Directors. The former shall exercise that position until completion of the
term of office for which he had been elected, or until he assumes his duties
again or the impediment disappears. The chairman shall perform his duties
during the period for which he was appointed director. Board of Directors'
meetings shall be called at least twelve days in advance, attaching the agenda
thereto. The Board of Directors shall validly meet with the attendance of the
absolute majority of its members and shall adopt its resolutions by vote
majority of the directors present, save the exceptions listed below, for which
it shall also be necessary to have at least the vote of one of the directors
appointed by class B stockholders, whenever present at the said meeting.
These decisions shall include: a) Proposals to amend corporate purpose; b)
Proposals to liquidate the Company or submit it to other special proceedings;
c) Approval of the granting of powers-of-attorney or general administration
and disposal powers and d) Approval of the purchase of stock or the
participation of other companies. In case of draw, the Chairman shall have
the casting vote. The position of director is personal and cannot be
delegated. Directors shall not be entitled to vote by mail, but in case of
absence, they may authorize another director in writing to do so on his behalf
provided that there is quorum. His responsibility shall be that of the
directors present. The Board of Directors shall meet upon the Chairman or
officer replacing him call or at the request of any director. In this last
case, the call shall be made by the chairman to hold a meeting within the fifth
day as from receipt of the request. Otherwise, it may be called by any of the
directors. The call shall always state the issues to be dealt with.-----------
SECTION SIXTEEN. LEGAL REPRESENTATION: The legal representation of the Company
corresponds to the chairman of the Board of Directors. The legal
representation ruled hereunder shall be carried out without prejudice to the
general or special powers-of-attorney expressly granted by the Board of
Directors and pursuant to which the representation arising from the said
powers-of-attorney may be exercised by one or several members of the Board of
Directors either jointly or indistinctly or by individuals who do not form
<PAGE> 11
part of it, if the Board of Directors so determines. It is also stated that
the legal representation before the Courts belonging to the Legal
System of any forum or jurisdiction may be exercised with equal powers as those
corresponding to the Chairman, either individually or indistinctly by any one
member of the Board of Directors, managers or attorneys-in fact of the Company,
which shall be empowered to answer interrogatories connected with legal
proceedings on behalf thereof, without any other requirement except for the
filing of the relevant power-of-attorney and of a certificate issued by the
Board of Directors evidencing that capacity. This right shall be included in
the powers-of-attorney granted to managers or attorneys-in-fact. The Board of
Directors' members may answer interrogatories without need of the granting of a
power-of-attorney.-------------------------------------------------------------
SECTION SEVENTEEN. BOARD OF DIRECTORS'S POWERS: Within the legal and
regulatory framework in effect for corporations, the Board of Directors has all
the management and disposal powers related to corporate assets, necessary for
compliance with the corporate purpose. It may therefore carry
out all kinds of legal actions on behalf of the Company, including all those
for which the law requires special powers-of-attorney pursuant to section 1881
of the Civil Code and section 9 of Decree law 5965/63. The Board of Directors
shall be particularly in charge of: a) calling Regular and Special
Shareholders' Meetings; b) drafting and submitting the Annual Report and
Financial Statements in accordance with the legal and regulatory provisions
applicable thereto; c) proposing to the Regular Shareholders' Meeting profit
distribution and the use thereof as well as mandatory or legal revaluation
reserves; d) proposing to the Shareholders' Meeting capital increase and
amendment of by-laws; b) resolving the establishment of branches, agencies,
representative offices or correspondent headquarters, fixing a certain capital
therefor, as the case may be; f) appointing managers and assistant managers,
delegating to them executive management duties and the powers necessary for
such a purpose; g) granting general or special powers-of-attorney, h) issuing
internal regulations and rules connected with operating structure; i)
administering the services rendered by the Company to third parties, regardless
of compliance with the laws and regulations governing telecommunications; j)
carrying out all actions provided for under section FOUR of these By-Laws not
specifically and expressly corresponding to Regular and Special Shareholders'
Meetings; k) controlling the duly execution of the decisions taken at
shareholders' meetings and of their own
<PAGE> 12
resolutions, complying with the laws and other rules in effect and particularly
fulfilling those connected with telecommunications; 1) carrying out all the
actions mentioned under section FIFTEEN hereof. ---SECTION EIGHTEEN.
SUPERVISORY COMMITTEE: The supervision of the Company shall be in charge of a
supervisory committee composed of three Regular Syndics lasting one year
in their position. Notwithstanding the foregoing, the said syndics shall
remain in their position until their replacement. Class A stock shall be
entitled to the election of two regular syndics and two alternate syndics.
Class B stock shall be entitled to the election of one regular syndic and one
alternate syndic, at special shareholders' meetings by stock class governed by
the rules for Regular Shareholders' Meetings established by Law 19,550. In
case of resignation, death, disqualification or licence exceeding two months,
each alternate syndic shall replace the relevant regular syndic, fulfilling the
period for which the latter had been appointed. If upon fulfilment of the
procedures set forth herein and under Law 19,550, special shareholders'
meetings by stock class do not make the relevant appointments, vacancies shall
be filled by the Regular Shareholders' Meeting. -----------------------
SECTION NINETEEN. SUPERVISORY COMMITTEE OPERATION: The supervisory committee
shall meet as many times as necessary for the correct fulfilment of its duties
and may be called upon by any of the Syndics at least three days in advance.
It shall validly meet with the necessary attendance of its three members. Its
decisions shall be taken pursuant to the favourable vote of at least two
Syndics, without prejudice to the rights which may individually correspond to
every Syndic pursuant to law and in accordance with the provisions of the last
part of section 290 of Law 19,550. The supervisory committee shall choose
among its members a chairman who shall preside the meetings of the body and
shall be in charge of the execution of the actions and resolutions taken by the
former. The chairman of the Supervisory Committee shall be appointed
alternatively, always for a one year's term. For the first fiscal year, the
Chairman shall be elected between the Syndics chosen by Class A Shareholders.
For the second fiscal year, the Syndic appointed by Class B shareholders shall
be chosen and so on. Their compensation shall be fixed by the Regular
Shareholders' Meeting pursuant to the provisions of the legislation in
effect.-----------------------------------------------
SECTION TWENTY. SHAREHOLDERS' MEETING. Regular and Special shareholders'
meetings shall be called by the Board of Directors or the
<PAGE> 13
supervisory committee to deal with the subjects contemplated under sections
234 and 235 of Law 19,550 respectively, during FIVE days' publication at least
TEN and not more than THIRTY days in advance in the official Gazette
and in one of the general leading newspapers of the Republic of Argentina.
Shareholders shall be also given written notice in connection therewith when
they were domiciled or had established domicile in the Republic of Argentina,
being the same registered on corporate records. Notices related to Regular or
Special Shareholders' Meetings shall comply with the requirements porvided for
under section 237 of Law 19,550.------------------------------------------
SECTION TWENTY-ONE. REGULAR SHAREHOLDERS' MEETING: Regular Shareholders'
Meetings shall be deemed constituted on first call with the attendance of
shareholders representing the majority of shareholders entitled to voting. If
such quorum is not reached, they shall be called for the second time within the
thirty following days. There shall be notices published at least three and no
more than eight days in advance to the date of the meeting. The Regular
shareholders' meeting shall be deemed constituted on second call whatever the
number of stock present. Notwithstanding the foregoing, Regular Shareholders'
Meetings may be simultaneously called on first and second call, fulfilling the
provisions of section 237 of Law 19,550. The resolutions taken by the Regular
Shareholders' Meeting whether on first or second call shall be taken by the
absolute majority of the votes present which may be cast in connection with the
relevant decision to be taken, except for the resolutions deciding an increase
of capital stock up to fivefold its amount and establish profit distribution.
The latter resolutions shall require more than eighty percent of the votes
present.------------------------------------------------------- SECTION
TWENTY-TWO. SPECIAL SHAREHOLDERS' MEETING: Special Shareholders' Meetings
shall be deemed constituted on first call with the attendance of shareholders
representing EIGHTY PERCENT of voting stock. If such quorum is not reached,
they shall be called for the second time within the THIRTY following days.
There shall be notices published at least THREE and no more than EIGHT days in
advance to the date of the meeting. The Special Shareholders' Meeting shall be
deemed constituted on second call with the attendance of the shareholders
entitled to voting. The resolutions taken by the Special Shareholders' Meeting
whether on first or second call shall be taken by the absolute majority of the
votes present which may be cast in connection with the relevant decision to be
taken, with
<PAGE> 14
the only exceptions listed below. The favourable vote of more than eighty
percent of the votes present shall be required to totally or partially
amend corporate by-laws, approve increases of capital stock exceeding fivefold
its amount, resolve the prosecution of an arrangement with creditors or
bankruptcy proceedings and approve loans. In order to adopt resolutions in
connection with the special cases ruled by section 244 of Law 19,550, the
favourable vote of more than eighty percent of the voting stock shall be
required.---------------------------- SECTION TWENTY-THREE. ATTENDANCE TO
SHAREHOLDERS' MEETINGS: Up to three business days before meetings take place,
shareholders shall inform the Company about their attendance, for their filing
in the attendance record. Shareholders may be represented by proxy at the
meetings with the restrictions contemplated under section 239 of Law 19,550.
In the last case, the granting of a power-of-attorney in a private deed shall
be enough, with signature certified by a court, notary public or bank. SECTION
TWENTY-FOUR. SHAREHOLDERS' MEETINGS BY STOCK CLASS: The Special meetings of
Class A and B stock shall be governed by the provisions established under Law
19,550 for Regular Shareholders' Meetings as regards calling and operation
thereof and may be called to take place on the same dates provided for the
latter. They shall meet jointly with the relevant Regular Shareholders'
Meeting to decide upon the election of the Board of Directors and the
Supervisory Committee.------------------------------------------ SECTION
TWENTY-FIVE. CHAIRMANSHIP OF SHAREHOLDERS' MEETINGS: Shareholders' Meetings
shall be presided over by the Chairman of the Board of Directors, by the
director replacing him in case of absence and by the Director or Shareholder
appointed, in case of absence of both of them, for such a purpose by the
majority of votes of Shareholders entitled thereto. The resolutions taken
shall be registered on a special minutes book signed by the Chairman, one
Director and two Shareholders appointed for such a purpose by the Meeting.
- --------------------------------SECTION TWENTY-SIX. COPORATE FISCAL YEAR: The
corporate fiscal year shall close on November 30 of every year. The Inventory,
General Balance Sheet, Income Statement and Annual Report shall be prepared
upon closure of every fiscal year pursuant to legal and regulatory rules, which
together with the Supervisory Committee report, shall be submitted to the
Regular Shareholders' Meeting consideration. ---------SECTION TWENTY-SEVEN.
PROFIT DISTRIBUTION: Upon payment of the fees established by
<PAGE> 15
the Shareholders' Meeting as compensation for the Board of Directors and
members of the Supervisory Committee within legal restrictions, the liquid
and realized profits arising from balance sheets shall be distributed as
follows: a) The percentage set forth by every Shareholders' Meeting for the
legal reserve fund pursuant to the legal rules applicable thereto; b) The
relevant amount to comply with, as the case may be, the cumulative dividend in
arreas of preferred stock, if any; c) the amount necessary to pay, as the case
may be, the fixed dividend of preferred stock; d) The balance, once optional
reserves have been made, if the Shareholders' Meeting decides to carry them
out, shall be distributed on a pro rata basis among Class A and B stock,
without prejudice to the additional dividend which may correspond to preferred
stock on account of issue conditions and provided that the Shareholders'
Meeting does not decide to totally or partially transfer the said balance to
the next fiscal year. All non-collected dividends shall prescribe in favour of
the Company upon expiry of a three years' term computed as from their
availability to shareholders. SECTION TWENTY-EIGHT. DISSOLUTION AND
WINDING-UP: In case of dissolution of the Company on any grounds, the same
shall be liquidated. The said winding-up shall be the carried out by the Board
of Directors or the individuals appointed by Special Shareholders' Meeting for
such a purpose, under the control of the Supervisory Committee. Upon
realization of assets and payment of liabilities, the remaining amount shall be
distributed as follows: a) The paidup capital of preferred stock shall be
repaid, as the case maybe, pursuant to the preferences granted in the relevant
issues. b) The cumulative dividends in arrears on preferred stock shall be
paid, if any. c) The paid-up capital of common stock shall be paid without
distinction of classes. d) The remaning amount shall be distributed among
shareholders with the preferences arising from the conditions of issue and from
these By-Laws.-----------------------------------------There appears below the
Book of Attendance to the Special Shareholders' Meeting dated April 25, 1991,
appearing on folio 6 of the Book of Deposit of Shares and Attendance to
Meetings Record number 1, signed and sealed on August lst, 1988, under number
A18583: "General Special Shareholders' Meeting dated April 25, 1991 Order
Number Date year 1991 day month shareholder complete name and last name
identity document domicile proxy complete name and last name identity document
domicile amount of shares or certificates A B number of securities shares or
certificates iterim certificate No. Capital A amount of votes signatures 1 22 4
Invertel S.A. Viamonte 1526 9th floor Federal Capital, Christian C.M. Gall
D.N.I. 11478403,
<PAGE> 16
2800 from 0201 through 3000 280,000 14,000 there is a signature 2 22 4
Italcable S.p.A. San Martin 320 2nd floor Federal Capital Francesco Armato
Passport 539604 Italy 1000 from 3001 through 4000 100,000 5000 there is a
signature 3 22 4 Credit Suisse Bartolome Mitre 559 5th floor Federal Capital
Reto Tognola D.N.I. 92849767 200 from 0001 through 0200 20000 1000 there is a
signature 3000 1000 400,000 20,000. In Buenos Aires this 22nd day of April,
1991, this book is closed with the contribution of 4000 shares representing
100% of the Capital Stock with right to 20,000 votes there are three
signatures. In Buenos Aires this 25th day of April, 1991, the Special
Shareholders' Meeting of IMPSAT S.A. is held with the attendance of three
shareholders. There are three signatures. It is a true copy, I attest. Under
these conditions, Mr. Verdaguer grants Special Power of Attorney in favour of
Doctor Alberto E. Zavalia Lagos, for him to appear, arrange and deal with the
General Inspection of Corporations the registration of this Compilation of
Corporate By-Laws, with powers to accept the amendments required by such
Inspection, whichever they may be, and he will be empowered to deliver and sign
deeds of amendment or addenda and finally to do all acts or arrangements that
may be necessary for the better fulfilment of this power of attorney. And the
person appearing requests that a certified copy hereof be delivered for its
registration with the Commercial Court of Record. This was READ, ratified and
signed before me, I attest. Ricardo Verdaguer. There is a seal. Before me:
A. del Campo Benegas. IT AGREES with its original which was executed before me
on folio 705, of Record number Fifteen at my charge, I attest. This FIRST
CERTIFIED COPY is issued for the Company in fourteen folios of Notarial
Proceeding numbers AFC1896607 through AFC1896620, which I seal and sign in the
place of its delivery, this eighteenth day of November, one thousand nine
hundred and ninety three.------------------------------------------------------
There is another seal reading: NOTARIES' ASSOCIATION - PROVINCE OF BUENOS AIRES
- - San Isidro Delegation - Legalization.----------------------------------------
There follows an illegible text. There is a seal reading: NOTARIES' ASSOCIATION
- - PROVINCE OF BUENOS AIRES.----------------------------------------------------
LEGALIZATIONS. Decree-Law 9020 (Sections 117,118).----------------------------
AFL1211673.--------------------------------------------------------------------
THE NOTARIES' ASSOCIATION OF THE PROVINCE OF BUENOS AIRES, Republic of
Argentina, under the powers conferred upon it by the Institutional Law of the
Notaries' Association, legalizes the signature and
<PAGE> 17
seal of Notary AMANCIO A.C. del CAMPO BENEGAS appearing on Document No.
AFC1896620.------------------------------------------------------------------
This legalization does not issue any opinion on the form and substance of the
document.----------------------------------------------------------------------
San Isidro, November 18,1993.--------------------------------------------------
There follow a signature and a seal reading: ALBERTO MADERO, Notary,
San Isidro Delegation.---------------------------------------------------------
There appears another seal reading: NOTARIES' ASSOCIATION PROVINCE OF BUENOS
AIRES - San Isidro Delegation - Legalization.----------------------------------
On the reverse of this document there are two seals reading: AMANCIO A. C.
del CAMPO BENEGAS - NOTARY.----------------------------------------------------
CERTIFICATION in NOTARIAL PROCEEDING ACD1772510, San Isidro, November 19,
1993. There is an illegible signature.----------------------------------------
There is a seal reading: NOTARIES' ASSOCIATION - PROVINCE OF BUENOS
AIRES.-------------------------------------------------------------------------
ACD1772510.--------------------------------------------------------------------
I DO HEREBY CERTIFY that the document attached hereto is composed of 15
(fifteen) pages that bear my seal and signature, is a true copy of its
original, which I have before me I attest. Record number 15 of the San Isidro
District.----------------------------------------------------------------------
Place and date: San Isidro, November 19,1993.----------------------------------
There follow a signature and a seal: AMANCIO A. C. del CAMPO BENEGAS -
NOTARY.------------------------------------------------------------------------
There is another seal: NOTARIES' ASSOCIATION - PROVINCE OF BUENOS AIRES - San
Isidro Delegation - Legalization.----------------------------------------------
The seal and signature appearing above are legalized in the Legalization paper
No. Afl 1211815 attached hereto. San Isidro, November, 19, 1993.
There follows an illegible signature.------------------------------------------
There is a seal reading: NOTARIES' ASSOCIATION - PROVINCE OF BUENOS
AIRES.-------------------------------------------------------------------------
LEGALIZATIONS. Decree-Law 9020 (Sections 117,118).----------------------------
AFL1211815.--------------------------------------------------------------------
THE NOTARIES ASSOCIATION OF THE PROVINCE OF BUENOS AIRES, Republic of
Argentina, under the powers conferred upon it by the Institutional Law of the
Notaries' Association, legalizes the signature and seal of Notary AMANCIO A.C.
del CAMPO BENEGAS appearing on Document No. ACD1772510.------------------------
<PAGE> 18
This legalization does not issue any opinion on the form and substance of the
document.------------------------------------------- San Isidro, November
19,1993.--------------------------------------- There follow a signature and a
seal reading: MIRTA AYARZA, Notary, San Isidro Delegation.---------------------
There two identical seals reading: NOTARIES' ASSOCIATION - PROVINCE OF BUENOS
AIRES - San Isidro Delegation -Legalization.-----------------------------------
I CERTIFY THIS TO BE A TRUE AND ACCURATE TRANSLATION INTO ENGLISH OF THE
ORIGINAL DOCUMENT WRITTEN IN SPANISH WHICH I HAVE HAD BEFORE ME IN BUENOS
AIRES, THIS 23RD DAY OF NOVEMBER, 1993.----------------------------------------
ES TRADUCCION FIEL AL INGLES DEL DOCUMENTO REDACTADO EN IDIOMA CASTELLANO QUE
HE TENIDO A LA VISTA Y AL QUE ME REMITO EN BUENOS AIRES, A LOS 23 DIAS DEL
MES DE NOVIEMBRE DE 1993.------------------------------------------------------
<PAGE> 1
EXHIBIT 4.1
<PAGE> 2
================================================================================
IMPSAT CORPORATION,
as Issuer
IMPSAT S.A.
as Guarantor
and
THE BANK OF NEW YORK,
as Trustee
---------------------------
Senior Guaranteed Notes Indenture
Dated as of July 30, 1996
---------------------------
12 1/8% Senior Guaranteed Notes due 2003
================================================================================
<PAGE> 3
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Sections Indenture Sections
------------ ------------------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . 7.08
Section 313(c) . . . . . . . . . . . . . . . . . . . . 7.06; 11.02
Section 314(a) . . . . . . . . . . . . . . . . . . . . 4.19; 11.02
(a)(4) . . . . . . . . . . . . . . . . . . 4.18; 11.02
(c)(1) . . . . . . . . . . . . . . . . . . 11.03
(c)(2) . . . . . . . . . . . . . . . . . . 11.03
(e) . . . . . . . . . . . . . . . . . . . . 11.04
Section 315(b) . . . . . . . . . . . . . . . . . . . . 7.05; 11.02
Section 316(a)(1)(A) . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . 6.04
(b) . . . . . . . . . . . . . . . . . . . . 6.07
Section 317(a)(1) . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . 6.09
Section 318(a) . . . . . . . . . . . . . . . . . . . . 11.01
(c) . . . . . . . . . . . . . . . . . . . . 11.01
</TABLE>
- ---------------
Note: The Cross-Reference Table shall not for any purpose be deemed to be a
part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.03. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.02. Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.03. Execution, Authentication and Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.04. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.05. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.07. Book-Entry Provisions for Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.08. Special Transfer Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.09. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.10. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.11. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.12. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.13. CUSIP, CINS and ISIN Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.14. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.02. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.03. Selection of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.04. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.05. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.06. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.07. Payment of Securities Called for Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.08. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
- ----------------
Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
<PAGE> 5
ii
<TABLE>
<S> <C>
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.03. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.04. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries . . . . 44
SECTION 4.06. Limitation on the Issuance of Capital Stock of Restricted Subsidiaries . . . . . . . . . . . . 45
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted Subsidiaries . . . . . . . . . . . . . . . 45
SECTION 4.08. Limitation on Transactions with Shareholders and Affiliates . . . . . . . . . . . . . . . . . . 46
SECTION 4.09. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.10. Limitation on Sale-Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.11. [Reserved.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.12. Limitation on Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.13. Repurchase of Securities upon a Change of Control . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.14. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.15. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.16. Maintenance of Properties and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.17. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.18. Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.19. Commission Reports and Reports to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.20. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.21. Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Consolidation, Merger and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 5.02. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.07. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
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<TABLE>
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SECTION 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.12. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.13. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.14. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.02. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.05. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.09. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.10. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.11. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.12. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.02. Defeasance and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 8.03. Defeasance of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.04. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 8.05. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 8.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 8.07. Insiders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 9.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 9.03. Revocation and Effect of Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 9.04. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.05. Trustee to Sign Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.06. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
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<TABLE>
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ARTICLE TEN
GUARANTEE OF SECURITIES
SECTION 10.01. Security Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.02. Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.03. Payment by Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 10.04. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 10.05. This Article Not to Prevent Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 10.06. Net Worth Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 10.07. Representation and Warranty of the Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 10.08. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 10.09. Special Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.03. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11.04. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11.05. Rules by Trustee, Paying Agent or Registrar . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.06. Payment Date Other Than a Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.07. Governing Law; Consent to Jurisdiction and Service . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.08. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.09. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.10. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.11. Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.12. Currency Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.13. Table of Contents, Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
EXHIBIT A Form of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S . . . . . C-1
EXHIBIT D Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited Investors . D-1
</TABLE>
<PAGE> 8
INDENTURE, dated as of July 30, 1996, among IMPSAT
CORPORATION, a Delaware corporation, as issuer (the "Company"), IMPSAT S.A., an
Argentine corporation, as guarantor (the "Guarantor"), and THE BANK OF NEW
YORK, as trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance of up to $125,000,000 aggregate
principal amount of the Company's 12 1/8% Senior Guaranteed Notes due 2003 (the
"Securities") issuable as provided in this Indenture. Pursuant to the terms of
the Placement Agreement dated as of July 25, 1996 (the "Placement Agreement")
among the Company, the Guarantor, and Morgan Stanley & Co. Incorporated and
Bear Stearns & Co. Inc., as the placement agents, the Company has agreed to
issue and sell, and the Placement Agents have agreed to purchase, the
Securities. All things necessary to make this Indenture a valid agreement of
the Company and the Guarantor, in accordance with its terms, have been done,
and the Company and the Guarantor have done all things necessary to make the
Securities, when executed by the Company and authenticated and delivered by the
Trustee hereunder and duly issued by the Company, the valid obligations of the
Company as hereinafter provided.
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act of 1939, as amended, that are required to
be a part of and to govern indentures qualified under the Trust Indenture Act
of 1939, as amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Additional Amounts" has the meaning provided in Section 4.21.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
or, for purposes of determining whether the Guarantor may pay a dividend on or
purchase its Capital Stock under Section 4.04, of the Guarantor and its
Restricted Subsidiaries, for such period determined in conformity with GAAP;
provided that the following items shall be excluded in computing Adjusted
Consolidated Net Income (without duplication): (i) the net income of any Person
(other than net income attributable to a Restricted Subsidiary) in which any
Person (other than the Company or any of
<PAGE> 9
2
its Restricted Subsidiaries) has a joint interest and the net income of any
Unrestricted Subsidiary, except to the extent of the amount of dividends or
other distributions actually paid to the Company or any of its Restricted
Subsidiaries by such other Person or such Unrestricted Subsidiary during such
period; (ii) solely for the purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
Section 4.04 (and in such case, except to the extent includable pursuant to
clause (i) above), the net income (or loss) of any Person accrued prior to the
date it becomes a Restricted Subsidiary or is merged into or consolidated with
the Company or any of its Restricted Subsidiaries or all or substantially all
of the property and assets of such Person are acquired by the Company or any of
its Restricted Subsidiaries; (iii) the net income of any Restricted Subsidiary
(other than the Guarantor):(A) to the extent that the declaration or payment of
dividends or similar distributions by such Restricted Subsidiary of such net
income is not at the time permitted by the operation of the terms of its charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary; provided
that, in calculating the amount of EBITDA for the purpose of determining
whether a Restricted Subsidiary may Incur Indebtedness under clause (i)(B) of
the second paragraph of Section 4.03 such net Income shall not be excluded as a
result of provisions (for the benefit of owners (other than the Company, the
Guarantor or any of their Subsidiaries) of any Common Stock of such Restricted
Subsidiary) that are contained in a stockholders' agreement, joint venture
agreement or similar agreement among owners of such Common Stock; and (B) equal
to the portion, if any, thereof that would be required to be withheld for taxes
with respect to the payment of dividends or distributions on the Capital Stock
of such Restricted Subsidiary during the relevant period if such net income
were to be declared and distributed to the shareholders of such Restricted
Subsidiary; (iv) any gains or losses (on an after-tax basis) attributable to
Asset Sales; (v) except for purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
Section 4.04, any amount paid or accrued as dividends on Preferred Stock of the
Company or any Restricted Subsidiary owned by Persons other than the Company
and any of its Restricted Subsidiaries; and (vi) all extraordinary gains and
extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" means the total
amount of assets of the Company and its Restricted Subsidiaries (less
applicable depreciation, amortization and other valuation reserves), except to
the extent resulting from write-ups of capital assets (excluding write-ups in
connection with accounting for acquisitions in conformity with GAAP), after
deducting therefrom (i) all current liabilities of the Company and its
Restricted Subsidiaries (excluding intercompany items) and (ii) all goodwill,
trade names, trademarks, patents, unamortized debt discount and expense and
other like intangibles, all as set forth on the quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in conformity with GAAP and most recently sent to holders pursuant to
Section 4.19.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the
<PAGE> 10
3
terms "controlling," "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means any Registrar, Paying Agent, authenticating
agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.07(a).
"Asset Acquisition" means (i) an investment by the Company or
any of its Restricted Subsidiaries in any other Person pursuant to which such
Person shall become a Restricted Subsidiary or shall be merged into or
consolidated with the Company or any of its Restricted Subsidiaries; provided
that such Person's primary business is related, ancillary or complementary to
the businesses of the Company and its Restricted Subsidiaries on the date of
such investment or (ii) an acquisition by the Company or any of its Restricted
Subsidiaries of the property and assets of any Person other than the Company or
any of its Restricted Subsidiaries that constitute substantially all of a
division or line of business of such Person; provided that the property and
assets acquired are related, ancillary or complementary to the businesses of
the Company and its Restricted Subsidiaries on the date of such acquisition.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by the Company or any of
its Restricted Subsidiaries to any Person other than the Company or any of its
Restricted Subsidiaries of (i) all or any of the Capital Stock of any
Restricted Subsidiary, (ii) all or substantially all of the property and assets
of an operating unit or business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets of the Company or any of
its Restricted Subsidiaries outside the ordinary course of business of the
Company or such Restricted Subsidiary and, in each case, that is not governed
by the provisions of Article Five; provided that "Asset Sale" shall not include
(A) sales or other dispositions of equipment that has become obsolete or no
longer useful in the business of the Company or its Restricted Subsidiaries or
inventory, receivables and other current assets; (B) dispositions of assets
(including Common Stock) of the Company or any of its Restricted Subsidiaries,
in substantially simultaneous exchanges for consideration consisting of any
combination of cash, Temporary Cash Investments and assets (including Capital
Stock of another Person) that are used or useful in the telecommunications
business of the Company or its Restricted Subsidiaries, if such consideration
has an aggregate fair market value substantially equal to the fair market value
of the assets so disposed of; provided, however, that any cash or Temporary
Cash Investments received by the Company or any of its Restricted Subsidiaries
pursuant to any transaction described in clause (B) above shall be applied in
accordance with clause (A) or (B) of the first paragraph of Section 4.12; and
(C) issuances and sales of Common Stock of Restricted Subsidiaries in
accordance with clause (v) of the second paragraph of Section 4.06.
<PAGE> 11
4
"Average Life" means, at any date of determination with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the products of (a) the number of years from such date of determination to the
dates of each successive scheduled principal payment of such debt security and
(b) the amount of such principal payment by (ii) the sum of all such principal
payments.
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any committee of such Board of Directors
duly authorized to act with respect to this Indenture.
"Board Resolution" means, with respect to any Person, a copy
of a resolution, certified by the Secretary or Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Buenos Aires Teledatos Entity" means any entity that (i) owns
substantially all of the assets that, as of the Closing Date, constitute (A)
the Guarantor's Teledatos fiber optic ring (and equipment primarily related to
such fiber optic ring, including, without limitation, microwave radios that
constitute a part of such ring) in Buenos Aires and (B) the microwave radio
link between such ring and Mendoza, Argentina, (ii) is designated as the Buenos
Aires Teledatos Entity in an Officers' Certificate delivered to the Trustee;
(iii) is not a Subsidiary of the Company or the Guarantor and (iv) as of the
date that such entity ceased to be a Subsidiary of the Company and the
Guarantor, did not own any material assets other than those referred to in
clause (A) or (B) above that it received from the Company or any other
Restricted Subsidiary.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in The City of New York, or in the city of
the Corporate Trust Office of the Trustee, are authorized by law to close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, whether now outstanding
or issued after the date of this Indenture, including, without limitation, all
Common Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such Person;
and "Capitalized Lease Obligations" means the discounted present value of the
rental obligations under such lease.
"Change of Control" means such time as (i) (a) prior to the
occurrence of a Public Market, a "person" or "group" (within the meaning of
Section 13(d) or 14(d)(2) of the Exchange
<PAGE> 12
5
Act) becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act) of Voting Stock representing more than the voting power of the
Voting Stock of the Company than is held by the Existing Stockholders and (b)
after the occurrence of a Public Market, a "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of Voting
Stock representing more than 30% of the voting power of the total Voting Stock
of the Company on a fully diluted basis and such ownership is greater than the
voting power of the Voting Stock of the Company held by the Existing
Stockholders; (ii) individuals who on the Closing Date constitute the Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the members of the Board of
Directors then in office who either were members of the Board of Directors on
the Closing Date or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the members of the
Board of Directors then in office; (iii) any Existing Stockholder other than
STET (A) transfers any of its ownership interest in Capital Stock of the
Guarantor to any Person that is not an Existing Stockholder or a Permitted
Investor and (B) fails, within 10 days of such transfer, to make a cash equity
investment in the Company in an amount equal to 90% of the fair market value of
the ownership interests so transferred by it, net of any taxes actually payable
by it or its affiliates as a result of such transfer; provided that any
transfer of any such ownership interest by any Existing Stockholder to STET
shall be deemed to be a "Change of Control" if (1) a principal purpose of such
transfer was to avoid the provisions of this clause (iii) and (2) STET (A)
subsequently transfers such ownership interest and (B) fails, within 10 days of
such transfer, to make the cash equity investment referred to in clause (iii)
(B) above; or (iv) the Company shall cease to beneficially own Voting Stock
representing a majority of the voting power of the Voting Stock of the
Guarantor.
"Closing Date" means the date on which the Securities are
originally issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted. created under the Exchange Act or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body
performing such duties at such time.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
"Company" means the party named as such in the first paragraph
of this Indenture until a successor replaces it pursuant to Article Five of
this Indenture and thereafter means the successor.
<PAGE> 13
6
"Company Order" means a written request or order signed in the
name of the Company (i) by its Chairman, a Vice Chairman, its President or a
Vice President and (ii) by its Chief Financial Officer, Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary and delivered to
the Trustee, provided, however, that such written request or order may be
signed by any two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed in such clause
(i) and one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, the sum of the
amounts for such period of (i) Adjusted Consolidated Net Income, (ii)
Consolidated Interest Expense, to the extent such amount was deducted in
computing Adjusted Consolidated Net Income, (iii) income taxes, to the extent
such amount was deducted in calculating Adjusted Consolidated Net Income (other
than income taxes (either positive or negative) attributable to extraordinary
and non-recurring gains or losses or sales of assets), (iv) depreciation
expense, to the extent such amount was deducted in calculating Adjusted
Consolidated Net Income, (v) amortization expense, to the extent such amount
was deducted in calculating Adjusted Consolidated Net Income, and (vi) all
other non-cash items reducing Adjusted Consolidated Net Income (other than
items that will require cash payments and for which an accrual or reserve is,
or is required by GAAP to be, made), less all non-cash items increasing
Adjusted Consolidated Net Income, all as determined on a consolidated basis for
the Company and its Restricted Subsidiaries in conformity with GAAP; provided
that, if any Restricted Subsidiary (other than the Guarantor) is not a Wholly
Owned Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the
extent not otherwise reduced in accordance with GAAP) by an amount equal to (A)
the amount of the Adjusted Consolidated Net Income attributable to such
Restricted Subsidiary multiplied by (B) the quotient of (1) the number of
shares of outstanding Common Stock of such Restricted Subsidiary not owned on
the last day of such period by the Company or any of its Restricted
Subsidiaries divided by (2) the total number of shares of outstanding Common
Stock of such Restricted Subsidiary on the last day of such period.
"Consolidated Interest Expense" means, for any period, the
aggregate amount of interest in respect of Indebtedness (including, without
limitation, amortization of original issue discount on any Indebtedness and the
interest portion of any deferred payment obligation, calculated in accordance
with the effective interest method of accounting; all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing; the net costs associated with Interest Rate Agreements;
and interest paid or accrued (by any Person) on Indebtedness that is Guaranteed
or secured by the Company or any of its Restricted Subsidiaries) and all but
the principal component of rentals in respect of Capitalized Lease Obligations
paid, accrued or scheduled to be paid or to be accrued by the Company and its
Restricted Subsidiaries during such period; excluding, however, (i) any amount
of such interest of any Restricted Subsidiary if the net income of such
Restricted Subsidiary is excluded in the calculation of Adjusted Consolidated
Net Income pursuant to clause (iii) of the definition thereof (but only in the
same proportion as the net income of such Restricted Subsidiary is excluded
from the calculation of Adjusted Consolidated Net Income pursuant to
<PAGE> 14
7
clause (iii) of the definition thereof) and (ii) any premiums, fees and
expenses (and any amortization thereof) payable in connection with the offering
of the Securities, all as determined on a consolidated basis (excluding
Unrestricted Subsidiaries) in conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the quarterly or annual consolidated
balance sheet of the Company and its Restricted Subsidiaries most recently sent
to Holders pursuant to Section 4.19, less the amount of stockholders' equity
attributable to Unrestricted Subsidiaries and any amounts attributable to
Disqualified Stock or any equity security convertible into or exchangeable for
Indebtedness, the cost of treasury stock and the principal amount of any
promissory notes receivable from the sale of the Capital Stock of the Company
or any of its Restricted Subsidiaries, each item to be determined in conformity
with GAAP (excluding the effects of foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 52).
"Corporate Trust Office" means the office of the Trustee at
which the corporate trust business of the Trustee shall, at any particular
time, be principally administered, which office is, at the date of this
Indenture, located at 101 Barclay Street, Floor 21 West, New York, New York
10286.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Guarantor or any of its Restricted Subsidiaries against
fluctuations in currency values to or under which the Guarantor or any of its
Restricted Subsidiaries is a party or a beneficiary on the date of this
Indenture or becomes a party or a beneficiary thereafter.
"Customer Owned Transmission Facilities" means VSAT or other
transmission facilities transferred to customers of any Restricted Subsidiary
in connection with the provision of services by a Restricted Subsidiary to such
customer.
"Default" means any event that is, or after notice or passage
of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees,
and their respective successors.
"Disqualified Stock" means any class or series of Capital
Stock of any Person that by its terms or otherwise is (i) required to be
redeemed prior to the Stated Maturity of the Securities, (ii) redeemable at the
option of the holder of such class or series of Capital Stock at any time prior
to the Stated Maturity of the Securities or (iii) convertible into or
exchangeable for Capital Stock referred to in clause (i) or (ii) above or
Indebtedness having a scheduled maturity prior to the Stated Maturity of the
Securities; provided that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
<PAGE> 15
8
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
Stated Maturity of the Securities shall not constitute Disqualified Stock if
the "asset sale" or "change of control" provisions applicable to such Capital
Stock are no more favorable to the holders of such Capital Stock than the
provisions in favor of Holders that are contained in Sections 4.12 and 4.13, as
the case may be, and such Capital Stock specifically provides that such Person
will not repurchase or redeem any such stock pursuant to such provision prior
to the Company's repurchase of such Securities as are required to be
repurchased pursuant to Sections 4.12 and 4.13.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.12.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Securities" means any securities of the Company
containing terms identical to the Securities (except that such Exchange
Securities (i) shall be registered under the Securities Act, (ii) will not
provide for an increase in the rate of interest (other than with respect to
overdue amounts) and (iii) will not contain terms with respect to transfer
restrictions) that are issued and exchanged for the Securities pursuant to the
Registration Rights Agreement and this Indenture.
"Existing Stockholders" means (i) Mr. Enrique Pescarmona, Mrs.
Silvia Monica Pescarmona de Baldini, Mrs. Liliana Pescarmona de Mayol, Mr.
Roberto Vivo and Mr. Ricardo Verdaguer, (ii) a parent, brother or sister of any
of the individuals named in clause (i), (iii) the spouse of any individual
named in clause (i) or (ii), (iv) the lineal descendants of any person named in
clauses (i) through (iii), (v) the estate or any guardian, custodian or other
legal representative of any individual named in clauses (i) through (iv), (vi)
any trust established solely for the benefit of any one or more of the
individuals named in clauses (i) through (v), (vii) any Person in which all of
the equity interests are owned, directly or indirectly, by any one or more of
the Persons named in clauses (i) through (vi), (viii) Nevasa Holdings Ltd.,
(ix) Invertel S.A., (x) Corporacion IMPSA, S.A. and (xi) STET.
"fair market value" means the price that would be paid in an
arms's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to
buy, as determined in good faith by the Board of Directors (whose determination
shall be conclusive) and evidenced by a Board Resolution.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date of determination,
including, without limitation, those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant
<PAGE> 16
9
segment of the accounting profession. All ratios and computations contained in
this Indenture shall be computed in conformity with GAAP applied on a
consistent basis, except that calculations made for purposes of determining
compliance with the terms of the covenants and with other provisions of this
Indenture shall be made without giving effect to (i) the amortization of any
expenses incurred in connection with the offering of the Securities, (ii)
except as otherwise provided, the amortization of any amounts required or
permitted by Accounting Principles Board Opinion Nos. 16 and 17 and (iii) any
non-recurring charges associated with the adoption, after the Closing Date, of
Financial Accounting Standard Nos. 106 and 109.
"Global Securities" has the meaning provided in Section 2.01.
"Guaranteed Indebtedness" has the meaning provided in Section
4.07.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well,
to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii) entered into for
purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means the party named as such in the first
paragraph of this Indenture until a successor replaces it pursuant to Article
Five of this Indenture and thereafter means the successor.
"Holder" or "Securityholder" means the then registered holder
of any Security.
"Incur" means, with respect to any Indebtedness, to incur,
create, issue, assume, Guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including, with respect to the Company and its Restricted
Subsidiaries, an "incurrence" of Indebtedness by reason of a Person becoming a
Restricted Subsidiary; provided that neither the accrual of interest nor the
accretion of original issue discount shall be considered an Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person at any date
of determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
<PAGE> 17
10
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables, (v) all obligations of such Person as
lessee under Capitalized Leases, (vi) all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness
of other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person and (viii) to the extent not otherwise included in
this definition, obligations under Currency Agreements and Interest Rate
Agreements. The amount of Indebtedness of any Person at any date shall be
(without duplication) the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent obligations, the
maximum liability upon the occurrence of the contingency giving rise to the
obligation (unless the underlying contingency has not occurred and the
occurrence of the underlying contingency is entirely within the control of the
Company or its Restricted Subsidiaries), provided (i) that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the original issue price of such Indebtedness and (ii) that Indebtedness
shall not include any liability for federal, state, local or other taxes.
"Indebtedness to EBITDA Ratio" means, as at any date of
determination, the ratio of (i) the aggregate amount of Indebtedness of the
Company and its Restricted Subsidiaries on a consolidated basis as at the date
of determination (the "Transaction Date") to (ii) the Consolidated EBITDA of
the Company for the then most recent four full fiscal quarters for which
reports have been sent to Holders pursuant to Section 4.19 or, until four such
reports have been sent, the then most recent four fiscal quarters that
concluded more than 40 days prior to the Transaction Date (such four full
fiscal quarter period being referred to herein as the "Four Quarter Period");
provided that (x) pro forma effect shall be given to any Indebtedness Incurred
from the beginning of the Four Quarter Period through the Transaction Date
(including any Indebtedness Incurred on the Transaction Date), to the extent
outstanding on the Transaction Date, (y) if during the period commencing on the
first day of such Four Quarter Period through the Transaction Date (the
"Reference Period"), the Company or any of its Restricted Subsidiaries shall
have engaged in any Asset Sale, Consolidated EBITDA for such period shall be
reduced by an amount equal to the EBITDA (if positive), or increased by an
amount equal to the EBITDA (if negative), directly attributable to the assets
which are the subject of such Asset Sale as if such Asset Sale had occurred on
the first day of such Reference Period and (z) if during such Reference Period
the Company or any of the Restricted Subsidiaries shall have made any Asset
Acquisition, Consolidated EBITDA of the Company shall be calculated on a pro
forma basis as if such Asset Acquisition had taken place on the first day of
such Reference Period.
"Indenture" means this Indenture as originally executed or as
it may be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
<PAGE> 18
11
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) of Regulation D under the Securities Act.
"Interest Payment Date" means each semiannual interest payment
date on January 15 and July 15 of each year, commencing January 15, 1997.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement or other similar agreement or
arrangement designed to protect the Guarantor or any of its Restricted
Subsidiaries against fluctuations in interest rates in respect of Indebtedness
to or under which the Guarantor or any of its Restricted Subsidiaries is a
party or a beneficiary on the date of this Indenture or becomes a party or a
beneficiary hereafter; provided that the notional principal amount thereof does
not exceed the principal amount of the Indebtedness of the Guarantor and its
Restricted Subsidiaries that bears interest at floating rates.
"Investment" in any Person means any direct or indirect
advance, loan or other extension of credit (including, without limitation, by
way of Guarantee or similar arrangement) or capital contribution to (by means
of any transfer of cash or other property to others or any payment for property
or services for the account or use of others), or any purchase or acquisition
of Capital Stock, bonds, notes, debentures or other similar instruments issued
by, such Person and shall include (i) the designation of a Restricted
Subsidiary as an Unrestricted Subsidiary and (ii) the fair market value of the
Capital Stock (or any other Investment) held by the Company and its Restricted
Subsidiaries of (or in) any Person that has ceased to be a Restricted
Subsidiary, including, without limitation, by reason of any transaction
permitted by clause (iii) of Section 4.06. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.04, (i) "Investment" shall include the
fair market value of the assets (net of liabilities, other than liabilities to
the Company or any Subsidiary) of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary, (ii) the
fair market value of the assets (net of liabilities, other than liabilities to
the Company or any Subsidiary) of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding "Investments" and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer. Notwithstanding the foregoing, the
term "Investment" shall not include advances to customers (other than
Unrestricted Subsidiaries of the Company) and accounts payable to suppliers in
the ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable or accounts payable, as the case may be, and Trade
Payables.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale with recourse against the seller or any Affiliate
<PAGE> 19
12
of the seller, or any agreement to give any security interest), but excluding
any right of first refusal.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale,
the proceeds of such Asset Sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to the Company or any Restricted
Subsidiary) and proceeds from the conversion of other property received when
converted to cash or cash equivalents, net of (i) brokerage commissions and
other fees and expenses (including fees and expenses of counsel and investment
bankers) related to such Asset Sale, (ii) provisions for all taxes (whether or
not such taxes will actually be paid or are payable) as a result of such Asset
Sale without regard to the consolidated results of operations of the Company
and its Restricted Subsidiaries, taken as a whole, (iii) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (A) is secured by a Lien on the property or assets sold or (B) is
required to be paid as a result of such sale and (iv) appropriate amounts to be
provided by the Company or any Restricted Subsidiary as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as determined in conformity with GAAP and
(b) with respect to any issuance or sale of Capital Stock, the proceeds of such
issuance or sale in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Offer to Purchase" means an offer to purchase Securities by
the Company from the Holders commenced by mailing a notice to the Trustee and
each Holder stating: (i) the covenant pursuant to which the offer is being made
and that all Securities validly tendered will be accepted for payment on a pro
rata basis; (ii) the purchase price and the date of purchase, which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed (the "Payment Date"); (iii) that any Security not tendered
will continue to accrue interest pursuant to its terms; (iv) that, unless the
Company defaults in the payment of the purchase price, any Security accepted
for payment pursuant to the Offer to Purchase shall cease to accrue interest on
and after the Payment Date; (v) that Holders electing to have a Security
purchased pursuant to the Offer to Purchase will be required to surrender the
Security, together
<PAGE> 20
13
with the form entitled "Option of the Holder to Elect Purchase" on the reverse
side of the Security completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business Day immediately
preceding the Payment Date; (vi) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the close of
business on the third Business Day immediately preceding the Payment Date, a
telegram, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Securities delivered for purchase and a
statement that such Holder is withdrawing his election to have such Securities
purchased; and (vii) that Holders whose Securities are being purchased only in
part will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered; provided that each Security purchased
and each new Security issued shall be in a principal amount of $1,000 or
integral multiples thereof. On the Payment Date, the Company shall (i) accept
for payment on a pro rata basis Securities or portions thereof tendered
pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Securities or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee all
Securities or portions thereof so accepted together with an Officers'
Certificate specifying the Securities or portions thereof accepted for payment
by the Company. The Paying Agent shall promptly mail to the Holders of
Securities so accepted payment in an amount equal to the purchase price, and
the Trustee shall promptly authenticate and mail to such Holders a new Security
equal in principal amount to any unpurchased portion of the Security
surrendered; provided that each Security purchased and each new Security issued
shall be in a principal amount of $1,000 or integral multiples thereof. The
Company will publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the Paying Agent
for an Offer to Purchase. The Company will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that the Company
is required to repurchase Securities pursuant to an Offer to Purchase.
"Officer" means, (A) with respect to any Person, (i) the
Chairman of the Board, the Vice Chairman of the Board, the President, any Vice
President, the Chief Financial Officer, and (ii) the Treasurer or any Assistant
Treasurer, or the Secretary or any Assistant Secretary, in each case of such
Person and (B) with respect to the Company, in addition to the foregoing, Mr.
Alberto Milvio, as attorney-in-fact.
"Officers' Certificate" means a certificate signed by one
Officer listed in clause (i) of the definition thereof and one Officer listed
in clause (ii) of the definition thereof; provided, however, that any such
certificate may be signed by any two of the Officers listed in clause (i) of
the definition thereof in lieu of being signed by one Officer listed in clause
(i) of the definition thereof and one Officer listed in clause (ii) of the
definition thereof. Each Officers' Certificate (other than certificates
provided pursuant to TIA Section 314(a)(4)) shall include the statements
provided for in TIA Section 314(e).
"Offshore Global Security" has the meaning provided in Section
2.01.
<PAGE> 21
14
"Offshore Physical Securities" has the meaning provided in
Section 2.01.
"Opinion of Counsel" means a written opinion signed by legal
counsel who may be an employee of or counsel to the Company or the Guarantor.
Each such Opinion of Counsel shall include the statements provided for in TIA
Section 314(e).
"Paying Agent" has the meaning provided in Section 2.04,
except that, for the purposes of Article Eight, the Paying Agent shall not be
the Company or a Subsidiary of the Company or an Affiliate of any of them.
The term "Paying Agent" includes any additional Paying Agent.
"Payment Date" has the meaning provided in the definition of
"Offer to Purchase".
"Permanent Offshore Global Security" has the meaning provided
in Section 2.01.
"Permitted Investment" means (i) an Investment in the Company
or a Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary or be merged or consolidated with or
into or transfer or convey all or substantially all its assets to, the Company
or a Restricted Subsidiary; provided that such Person's primary business is
related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such Investment; (ii) Temporary Cash
Investments; (iii) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP; (iv) loans or advances to employees made in the
ordinary course of business in accordance with past practice of the Company or
its Restricted Subsidiaries and that do not in the aggregate exceed $1 million
at any time outstanding; (v) stock, obligations or securities received in
satisfaction of judgments, workouts or similar arrangements; (vi) Investments
in the Buenos Aires Teledatos Entity; provided that, if the Buenos Aires
Teledatos Entity is not a Restricted Subsidiary (A) such Investments are
reasonably related to the business of owning a fiber optic network in Buenos
Aires or a microwave radio link between Buenos Aires and Mendoza, Argentina and
(B) the Guarantor has the contractual right, upon an Event of Default with
respect to the Securities, to cause a Permitted Investor to purchase all of the
Company's and its Restricted Subsidiaries' Investments in the Buenos Aires
Teledatos Entity for cash, within 180 days after the giving of notice by the
Company, at a price at least equal to the lesser of (1) the fair market value
(as determined pursuant to such contract) of such Investments on any date
within the 90 days prior to making such cash payment and (2) the amount of such
Investments at the time they were made by the Company and its Restricted
Subsidiaries; (vii) Investments, in an aggregate amount at any one time
outstanding not to exceed $15 million during the first three years following
the Closing Date and $20 million thereafter in Common Stock of the
International Telecommunications Satellite Organization ("Intelsat"), provided
that the Company reasonably believes, at the time each such Investment is made,
that the benefits of such Investment will result in cash flow sufficient to pay
the interest and principal on such investment; and (viii) participations in
<PAGE> 22
15
Indebtedness of any Restricted Subsidiary permitted to be Incurred by clause
(ix) of the second paragraph of Section 4.03.
"Permitted Investor" means (i) any entity that, (A) for its
last four consecutive fiscal quarters has generated revenues of at least $2
billion or earnings before interest, income taxes, depreciation and
amortization of at least $300 million, or (B) on the date of determination has
an equity market capitalization of at least $3 billion, (ii) Teleport
Communications Group Inc., MFS Communications Company, Inc., Nortel Inversora
S.A. or Cointel S.A., or the successor of any thereof, or (iii) any Subsidiary
of any of the foregoing.
"Permitted Liens" means (i) Liens for taxes, assessments,
governmental charges or claims that are being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made; (ii) statutory and
common law Liens of landlords and carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen or other similar Liens arising in the ordinary course of
business and with respect to amounts not yet delinquent or being contested in
good faith by appropriate legal proceedings promptly instituted and diligently
conducted and for which a reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made; (iii) Liens
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; (iv) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory or regulatory obligations, bankers'
acceptances, surety and appeal bonds, contracts (other than for Indebtedness),
performance and return-of-money bonds and other obligations of a similar nature
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed money) and any bank's unexercised right of setoff with
respect to deposits made in the ordinary course of business of the Company or
any Restricted Subsidiary; (v) easements, rights-of-way, municipal and zoning
ordinances and similar charges, encumbrances, title defects or other
irregularities that do not materially interfere with the ordinary course of
business of the Company or any of its Restricted Subsidiaries; (vi) Liens
(including extensions and renewals thereof) upon real or personal property
acquired after the Closing Date; provided that (a) such Lien is created solely
for the purpose of securing Indebtedness Incurred, in accordance with Section
4.03, (1) to finance the cost (including the cost of design, development,
construction, improvement, installation or integration) of the item of property
or assets subject thereto and such Lien is created prior to, at the time of or
within six months after the later of the acquisition, the completion of
construction or the commencement of full operation of such property or (2) to
refinance any Indebtedness previously so secured, (b) the principal amount of
the Indebtedness secured by such Lien does not exceed 100% of such cost and (c)
any such Lien shall not extend to or cover any property or assets other than
such item of property or assets and any improvements on such item; (vii) leases
or subleases granted to others that do not materially interfere with the
ordinary course of business of the Company and its Restricted Subsidiaries,
taken as a whole; (viii) Liens encumbering property or assets under
construction arising from progress or partial payments by a customer of the
Company or its Restricted Subsidiaries
<PAGE> 23
16
relating to such property or assets; (ix) any interest or title of a lessor in
the property subject to any Capitalized Lease or operating lease; (x) Liens
arising from filing Uniform Commercial Code financing statements regarding
leases; (xi) Liens on property of, or on shares of stock or Indebtedness of,
any Person existing at the time such Person becomes, or becomes a part of, any
Restricted Subsidiary; provided that such Liens do not extend to or cover any
property or assets of the Company or any Restricted Subsidiary other than the
property or assets acquired; (xii) Liens in favor of the Company or any
Restricted Subsidiary; (xiii) Liens arising from the rendering of a final
judgment or order against the Company or any Restricted Subsidiary that does
not give rise to an Event of Default; (xiv) Liens securing reimbursement
obligations with respect to letters of credit that encumber documents and other
property relating to such letters of credit and the products and proceeds
thereof; (xv) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; (xvi) Liens encumbering customary initial deposits and
margin deposits, and other Liens that are either within the general parameters
customary in the industry and incurred in the ordinary course of business, in
each case, securing Indebtedness under Interest Rate Agreements and Currency
Agreements and forward contracts, options, future contracts, futures options or
similar agreements or arrangements designed to protect the Company or any of
its Restricted Subsidiaries from fluctuations in the price of commodities;
(xvii) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by the Company or any
of its Restricted Subsidiaries in the ordinary course of business in accordance
with the past practices of the Company and its Restricted Subsidiaries prior to
the Closing Date; (xviii) Liens on or sales of existing or future receivables;
and (xix) the deposit of up to $32 million of assets to defease the 9.5%
Negotiable Obligations due 1996 of the Guarantor.
"Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Physical Securities" has the meaning provided in Section
2.01.
"Preferred Stock" means, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the date of this Indenture, including,
without limitation, all series and classes of such preferred or preference
stock.
"Principal" of a debt security, including the Securities,
means the principal amount due on the Stated Maturity as shown on such debt
security.
"Private Placement Legend" means the legend initially set
forth on the Securities in the form set forth in Section 2.02(a).
<PAGE> 24
17
"Public Equity Offering" means an underwritten primary public
offering of Common Stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Public Market" means, and shall be deemed to exist, if (i) a
Public Equity Offering has been consummated and (ii) at least 15% of the total
issued and outstanding Common Stock of the Company has been distributed by
means of an effective registration statement under the Securities Act or sales
pursuant to Rule 144 under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Redemption Date" means, when used with respect to any
Security to be redeemed, the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price" means, when used with respect to any
Security to be redeemed, the price at which such Security is to be redeemed
pursuant to this Indenture.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated July 30, 1996, among the Company, the Guarantor, Morgan
Stanley & Co. Incorporated and Bear, Stearns & Co. Inc.
"Registration Statement" means the Registration Statement as
defined and described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the July 1 or January 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer", when used with respect to the Trustee,
means any vice president, any assistant vice president, any assistant
secretary, any assistant treasurer, and any trust officer or assistant trust
officer employed in the conduct of the Trustee's corporate trust business, or
any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his or her knowledge of and familiarity with the
particular subject.
"Restricted Payments" has the meaning provided in Section
4.04.
<PAGE> 25
18
"Restricted Subsidiary" means any Subsidiary of the Company or
the Guarantor other than an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities" means any of the securities, as defined in the
first paragraph of the recitals hereof, that are authenticated and delivered
under this Indenture. For all purposes of this Indenture, the term
"Securities" shall include any Exchange Securities to be issued and exchanged
for any Securities pursuant to the Registration Rights Agreement and this
Indenture and, for purposes of this Indenture, all Securities and Exchange
Securities shall vote together as one series of Securities under this
Indenture.
"Securities Act" means the Securities Act of 1933.
"Security Guarantee" means the full and unconditional
Guarantee of the Securities by the Guarantor, as set forth in Article Ten.
"Security Register" has the meaning provided in Section 2.04.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined and described in the Registration Rights Agreement.
"Significant Subsidiary" means, at any date of determination,
any Restricted Subsidiary that, together with its Subsidiaries, (i) accounted
for more than 10% of the consolidated revenues of the Company and its
Restricted Subsidiaries or (ii) was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the consolidated financial statements of the Company for the fiscal
year most recently sent to Holders pursuant to Section 4.19.
"Stated Maturity" means, (i) with respect to any debt
security, the date specified in such debt security as the fixed date on which
the final installment of principal of such debt security is due and payable and
(ii) with respect to any scheduled installment of principal of or interest on
any debt security, the date specified in such debt security as the fixed date
on which such installment is due and payable.
"STET" means STET SpA and any Subsidiary thereof.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which Voting Stock
representing more than 50% of the total voting power of the outstanding Voting
Stock is owned, directly or indirectly, by such Person and one or more other
Subsidiaries of such Person.
<PAGE> 26
19
"Subsidiary Guarantee" has the meaning provided in Section
4.07.
"Subsidiary Guarantor" means a Restricted Subsidiary that
executes and delivers a Subsidiary Guarantee.
"Temporary Cash Investment" means any of the following: (i)
direct obligations of the United States of America or any agency thereof or
obligations fully and unconditionally guaranteed by the United States of
America or any agency thereof, (ii) time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $50 million (or
the foreign currency equivalent thereof) and has outstanding debt which is
rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act) or any money-market fund sponsored by a registered
broker dealer or mutual fund distributor, (iii) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clause (i) above entered into with a bank meeting the qualifications
described in clause (ii) above, (iv) commercial paper, maturing not more than
90 days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America, any state thereof or any foreign country recognized
by the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's Investors
Service, Inc. or "A-1" (or higher) according to Standard & Poor's Ratings
Group, (v) securities with maturities of six months or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by Standard &
Poor's Ratings Group or Moody's Investors Service, Inc. and (vi) certificates
of deposit maturing not more than 180 days after the acquisition thereof by a
Restricted Subsidiary and issued by any of the ten largest banks (based on
assets as of the last December 31) organized under the laws of the country in
which the Restricted Subsidiary that acquires such certificates of deposit is
organized, provided that such bank is not under intervention, receivership or
any similar arrangement at the time of the acquisition of such certificates of
deposit.
"Temporary Offshore Global Security" has the meaning provided
in Section 2.01.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act
of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb), as in effect on the
date this Indenture was executed, except as provided in Section 9.06.
"Trade Payables" means, with respect to any Person, any
accounts payable or any other indebtedness or monetary obligation to trade
creditors created, assumed or Guaranteed by
<PAGE> 27
20
such Person or any of its Subsidiaries arising in the ordinary course of
business in connection with the acquisition of goods or services and required
to be paid within one year.
"Transaction Date" means, with respect to the Incurrence of
any Indebtedness by the Company or any of its Restricted Subsidiaries, the date
such Indebtedness is to be Incurred and, with respect to any Restricted
Payment, the date such Restricted Payment is to be made.
"Trustee" means the party named as such in the first paragraph
of this Indenture until a successor replaces it in accordance with the
provisions of Article Seven of this Indenture and thereafter means such
successor.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company or the Guarantor that at the time of determination shall be designated
an Unrestricted Subsidiary by the Board of Directors in the manner provided
below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Restricted Subsidiary (including any newly acquired
or newly formed Subsidiary of the Company or the Guarantor) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Company or any Restricted
Subsidiary; provided that any Guarantee by the Company or any Restricted
Subsidiary of any Indebtedness of the Subsidiary being so designated shall be
deemed an "Incurrence" of Indebtedness by the Company or such Restricted
Subsidiary (or both, if applicable) at the time of such designation and either
(A) the Subsidiary to be so designated has total assets of $1,000 or less or
(B) if such Subsidiary has assets greater than $1,000, that such designation
would be permitted under Section 4.04 and, if applicable, such deemed
Incurrence of Indebtedness would also be permitted under this Indenture. The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that immediately after giving effect to such designation
(x) the Company could Incur $ 1.00 of additional Indebtedness under the first
paragraph of Section 4.03 and (y) no Default or Event of Default shall have
occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions. Notwithstanding anything herein contained to the contrary, the
Guarantor may not be designated as an Unrestricted Subsidiary.
"United States Bankruptcy Code" means the Bankruptcy Reform
Act of 1978, as amended and as codified in Title 11 of the United States Code,
as amended from time to time hereafter, or any successor federal bankruptcy
law.
"U.S. Global Security" has the meaning provided in Section
2.01.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America the payment of which is unconditionally
<PAGE> 28
21
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof at any time prior to the Stated Maturity of the Securities,
and shall also include a depository receipt issued by a bank or trust company
as custodian with respect to any such U.S. Government Obligation or a specific
payment of interest on or principal of any such U.S. Government Obligation held
by such custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of interest on or principal of
the U.S. Government Obligation evidenced by such depository receipt.
"U.S. Person" has the meaning ascribed thereto in Rule 902
under the Securities Act.
"U.S. Physical Securities" has the meaning provided in Section
2.01.
"Voting Stock" means with respect to any Person, Capital Stock
of any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"Wholly Owned" means, with respect to any Subsidiary of any
Person, such Subsidiary if all of the outstanding Capital Stock in such
Subsidiary (other than any director's qualifying shares or Investments by
foreign nationals mandated by applicable law) is owned by such Person or one or
more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder or a
Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company, the
Guarantor or any other obligor on the Securities.
<PAGE> 29
22
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by a rule of
the Commission and not otherwise defined herein have the meanings assigned to
them therein.
SECTION 1.03. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words
in the plural include the singular;
(v) provisions apply to successive events and
transactions;
(vi) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
(vii) all references to Sections or Articles refer to
Sections or Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating. The Securities and the
Trustee's certificate of authentication shall be substantially in the form
annexed hereto as Exhibit A. The Securities may have notations, legends or
endorsements required by law, stock exchange agreements to which the Company is
subject or usage. The Company shall approve the form of the Securities and any
notation, legend or endorsement on the Securities. Each Security shall be
dated the date of its authentication.
The terms and provisions contained in the form of the
Securities annexed hereto as Exhibit A shall constitute, and are hereby
expressly made, a part of this Indenture. Each of the Company, the Guarantor
and the Trustee, by its execution and delivery of this Indenture, expressly
agrees to the terms and provisions of the Securities applicable to it and to be
bound thereby.
Securities offered and sold in reliance on Rule 144A shall be
issued in the form of permanent global Securities in registered form,
substantially in the form set forth in Exhibit A
<PAGE> 30
23
(the "U.S. Global Security"), deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the U.S. Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
Securities offered and sold in offshore transactions in
reliance on Regulation S shall be issued in the form of a single temporary
global Security in registered form substantially in the form set forth in
Exhibit A (the "Temporary Offshore Global Security") deposited with the
Trustee, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. At any time following
September 9, 1996 (the "Offshore Securities Exchange Date"), upon receipt by
the Trustee and the Company of a certificate substantially in the form of
Exhibit B hereto, a single permanent global Security in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore
Global Security"; and together with the Temporary Offshore Global Security, the
"Offshore Global Securities") duly executed by the Company and authenticated by
the Trustee as hereinafter provided shall be deposited with the Trustee, as
custodian for the Depositary, and the registrar shall reflect on its books and
records the date and a decrease in the principal amount of the Temporary
Offshore Global Security transferred.
Securities which are offered and sold to Institutional
Accredited Investors which are not QIBs (excluding Non-U.S. Persons) shall be
issued in the form of permanent certificated Securities in registered form in
substantially the form set forth in Exhibit A (the "U.S. Physical
Securities"). Securities issued pursuant to Section 2.07 in exchange for
interests in the Offshore Global Securities shall be in the form of permanent
certificated Securities in registered form substantially in the form set
forth in Exhibit A (the "Offshore Physical Securities").
The Offshore Physical Securities and U.S. Physical Securities
are sometimes collectively herein referred to as the "Physical Securities".
The U.S. Global Security and the Offshore Global Securities are sometimes
referred to as the "Global Securities".
The definitive Securities shall be typed, printed,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as determined by the
Officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 2.02. Restrictive Legends. (a) Unless and until a
Security is exchanged for an Exchange Security in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, (i) the
U.S. Global Security and each U.S. Physical Security shall bear the legend set
forth below on the face thereof and (ii) the Offshore Physical Securities and
the Offshore Global Security shall bear the legend set forth below on the
<PAGE> 31
24
face thereof until at least 41 days after the Closing Date and receipt by the
Company and the Trustee of a certificate substantially in the form of Exhibit B
hereto:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT
WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k)
UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE
TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER
IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES AT THE
TIME OF TRANSFER OF LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME
PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE
<PAGE> 32
25
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE
COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
(b) Each Global Security, whether or not an Exchange
Security, shall also bear the following legend on the face thereof:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO THE DEPOSITORY TRUST
COMPANY OR NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION
2.08 OF THE INDENTURE.
<PAGE> 33
26
SECTION 2.03. Execution, Authentication and Denominations.
Two Officers shall execute the Securities for the Company by facsimile or
manual signature in the name and on behalf of the Company.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee or authenticating agent authenticates the
Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee or authenticating agent manually signs the certificate of
authentication on the Security. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture.
The Trustee or an authenticating agent shall upon receipt of a
Company Order authenticate for original issue Securities in the aggregate
principal amount of up to $125,000,000 plus any Exchange Securities that may be
issued pursuant to the Registration Rights Agreement; provided that the Trustee
shall receive an Officers' Certificate and an Opinion of Counsel of the Company
in connection with such authentication of Securities. The Opinion of Counsel
shall be to the effect that:
(a) the form and terms of such Securities have been
established by or pursuant to a Board Resolution or, if applicable, an
indenture supplemental hereto in conformity with the provisions of
this Indenture;
(b) such supplemental indenture, if any, when executed
and delivered by the Company, the Guarantor and the Trustee, will
constitute a valid and binding obligation of the Company and the
Guarantor;
(c) such Securities, when authenticated and delivered by
the Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and binding obligations of the Company in accordance with their terms
and will be entitled to the benefits of this Indenture, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equitable principles; and
(d) that the Company has been duly incorporated in, and
is a validly existing corporation in good standing under the laws of,
the State of Delaware.
Such Company Order shall specify the amount of Securities to be authenticated
and the date on which the original issue of Securities is to be authenticated.
The aggregate principal amount of Securities outstanding at any time may not
exceed the amount set forth above except for
<PAGE> 34
27
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities pursuant to Section 2.06, 2.09 or
2.11.
The Trustee may appoint an authenticating agent to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such authenticating
agent. An authenticating agent has the same rights as an Agent to deal with
the Company or an Affiliate of the Company.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 in principal amount and any
integral multiple of $1,000 in excess thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar"), an office or agency where
Securities may be presented for payment (the "Paying Agent") and an office or
agency where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served, which shall be in the Borough of
Manhattan, The City of New York. The Company shall cause the Registrar to keep
a register of the Securities and of their transfer and exchange (the "Security
Register"). The Company may have one or more co-Registrars and one or more
additional Paying Agents.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. The agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
give prompt written notice to the Trustee of the name and address of any such
Agent and any change in the address of such Agent. If the Company fails to
maintain a Registrar, Paying Agent and/or agent for service of notices and
demands, the Trustee shall act as such Registrar, Paying Agent and/or agent for
service of notices and demands for so long as such failure shall continue and
shall be entitled to compensation therefor pursuant to Section 7.07. The
Company may remove any Agent upon written notice to such Agent and the Trustee;
provided that no such removal shall become effective until (i) the acceptance
of an appointment by a successor Agent to such Agent as evidenced by an
appropriate agency agreement entered into by the Company and such successor
Agent and delivered to the Trustee or (ii) notification to the Trustee that the
Trustee shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Company, any Subsidiary of the
Company, or any Affiliate of any of them may act as Paying Agent, Registrar or
co-Registrar, and/or agent for service of notice and demands; provided,
however, that neither the Company, a Subsidiary of the Company nor an Affiliate
of any of them shall act as Paying Agent in connection with the defeasance of
the Securities or the discharge of this Indenture under Article Eight.
The Company initially appoints the Trustee as Registrar,
Paying Agent, authenticating agent and agent for service of notice and demands.
If, at any time, the Trustee
<PAGE> 35
28
is not the Registrar, the Registrar shall make available to the Trustee before
each Interest Payment Date and at such other times as the Trustee may
reasonably request, the names and addresses of the Holders as they appear in
the Security Register.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later
than 11:00 a.m. New York City time on each due date of the principal, premium,
if any, and interest on any Securities, the Company shall deposit with the
Paying Agent money in immediately available funds sufficient to pay such
principal, premium, if any, and interest so becoming due. The Company shall
require each Paying Agent, if any, other than the Trustee to agree in writing
that such Paying Agent shall hold in trust for the benefit of the Holders or
the Trustee all money held by the Paying Agent for the payment of principal of,
premium, if any, and interest on the Securities (whether such money has been
paid to it by the Company or any other obligor on the Securities), and that
such Paying Agent shall promptly notify the Trustee in writing of any default
by the Company (or any other obligor on the Securities) in making any such
payment. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and account for any funds disbursed, and the Trustee
may at any time during the continuance of any payment default, upon written
request to a Paying Agent, require such Paying Agent to pay all money held by
it to the Trustee and to account for any funds disbursed. Upon doing so, the
Paying Agent shall have no further liability for the money so paid over to the
Trustee. If the Company or any Subsidiary of the Company or any Affiliate of
any of them acts as Paying Agent, it will, on or before each due date of any
principal of, premium, if any, or interest on the Securities, segregate and
hold in a separate trust fund for the benefit of the Holders a sum of money
sufficient to pay such principal, premium, if any, or interest so becoming due
until such sum of money shall be paid to such Holders or otherwise disposed of
as provided in this Indenture, and will promptly notify the Trustee in writing
of its action or failure to act as required by this Section 2.05.
SECTION 2.06. Transfer and Exchange. The Securities are
issuable only in registered form. A Holder may transfer a Security by written
application to the Registrar stating the name of the proposed transferee and
otherwise complying with the terms of this Indenture. No such transfer shall
be effected until, and such transferee shall succeed to the rights of a Holder
only upon, registration of the transfer by the Registrar in the Security
Register. Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Guarantor, the Trustee, and any agent of the Company,
the Guarantor or the Trustee shall treat the person in whose name the Security
is registered as the owner thereof for all purposes whether or not the Security
shall be overdue, and neither the Company, the Guarantor, the Trustee, nor any
such agent shall be affected by notice to the contrary. Furthermore, any
Holder of or beneficial owner of an interest in a Global Security shall, by
acceptance of such Global Security, be deemed to have agreed that transfers of
beneficial interests in such Global Security may be effected only through a
book-entry system maintained by the Depositary (or its agent), and that
ownership of a beneficial interest in the Security shall be required to be
reflected in a book entry. When Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Securities of other authorized
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denominations (including on exchange of Securities for Exchange Securities),
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met: provided that no exchanges of
Securities for Exchange Securities shall occur until a Registration Statement
shall have been declared effective by the Commission and that any Securities
that are exchanged for Exchange Securities shall be cancelled by the Trustee.
To permit registrations of transfers and exchanges in accordance with the
terms, conditions and restrictions hereof, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request. No service
charge shall be made to any Holder for any registration of transfer or exchange
or redemption of the Securities, but the Company may require payment by the
Holder of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes or
other similar governmental charge payable upon transfers, exchanges or
redemptions pursuant to Section 2.11, 3.08, 4.12, 4.13 or 9.04).
The Registrar shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 3.03 or Section 3.08 and
ending at the close of business on the day of such mailing, or (ii) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Securities. (a)
The U.S. Global Security and Offshore Global Security initially shall (i) be
registered in the name of the Depositary for such Global Securities or the
nominee of such Depositary, (ii) be delivered to the Trustee as custodian for
such Depositary and (iii) bear legends as set forth in Section 2.02.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under any Global Security, and the Depositary may be treated by
the Company, the Guarantor, the Trustee and any agent of the Company, the
Guarantor or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Guarantor, the Trustee or any agent of the Company,
the Guarantor or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Agent Members, the operation of customary practices
governing the exercise of the rights of a beneficial owner of any Security.
(b) Transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in
a Global Security may be transferred in accordance with the applicable rules
and procedures of the Depositary and the provisions of Section 2.08. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in the U.S. Global Security or the
Offshore Global Security, respectively,
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if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depository for the U.S. Global Security or the Offshore Global
Security, as the case may be, and a successor depositary is not appointed by
the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request to the
foregoing effect from the Depository.
(c) Any beneficial interest in one of the Global
Securities that is transferred to a person who takes delivery in the form of an
interest in the other Global Security will, upon transfer, cease to be an
interest in such Global Security and become an interest in the other Global
Security and, accordingly, will thereafter be subject to all transfer
restrictions, if any, and other procedures applicable to beneficial interests
in such other Global Security for as long as it remains such an interest.
(d) In connection with any transfer pursuant to paragraph
(b) of this Section 2.07 of a portion of the beneficial interests in a Global
Security to beneficial owners who are required to hold Physical Securities. the
Registrar shall reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more Physical Securities of like tenor and amount.
(e) In connection with the transfer of an entire Global
Security to beneficial owners pursuant to paragraph (b) of this Section 2.07,
the Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in the Global Security an equal aggregate principal
amount of Physical Securities of authorized denominations.
(f) Any Physical Security delivered in exchange for an
interest in the U.S. Global Security pursuant to paragraph (b) or (d) of this
Section 2.07 shall, except as otherwise provided by paragraph (f)(i)(A) or
paragraph (d) of Section 2.08, bear the legend regarding transfer restrictions
applicable to the U.S. Physical Security set forth in Section 2.02.
(g) The registered holder of a Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a
Holder is entitled to take under this Indenture or the Securities.
(h) QIBs that are beneficial owners of interests in a
Global Security may receive Physical Securities (which shall bear the Private
Placement Legend if required by Section 2.02)in accordance with the procedures
of the Depositary. In connection with the execution, authentication and
delivery of such Physical Securities, the Registrar shall reflect on its books
and records a decrease in the principal amount of the relevant Global Security
equal to the
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principal amount of such Physical Securities and the Company shall execute and
the Trustee shall authenticate and deliver one or more Physical Securities
having an equal aggregate principal amount.
SECTION 2.08. Special Transfer Provisions. Unless and until a
Security is exchanged for an Exchange Security in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, transfers
of a Security or of Securities shall only be permitted as specified below:
(a) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of a U.S.
Physical Security or an interest in the U.S. Global Security to a QIB (excluding
Non-U.S. Persons):
(i) If the Security to be transferred consists of (A)
U.S. Physical Securities, the Registrar shall register the transfer if
such transfer is being made by a proposed transferor who has checked
the box provided for on the form of Security stating, or has otherwise
advised the Company and the Registrar in writing, that the sale has
been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form
of Security stating, or has otherwise advised the Company and the
Registrar in writing, that it is purchasing the Security for its own
account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within
the meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested pursuant to
Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A or (B) an interest in the U.S. Global Security,
the transfer of such interest may be effected only through the book
entry system maintained by the Depositary.
(ii) If the proposed transferee is an Agent Member, and
the Security to be transferred consists of U.S. Physical Securities,
upon receipt by the Registrar of the documents referred to in clause
(i) and instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the U.S.
Global Security in an amount equal to the principal amount of the U.S.
Physical Securities to be transferred, and the Trustee shall cancel
the U.S. Physical Securities so transferred.
(b) Transfers of Interests in the Offshore Global
Security or Offshore Physical Securities to U.S. Persons. The following
provisions shall apply with respect to any transfer of interests in the
Offshore Global Security or Offshore Physical Securities to U.S. Persons:
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(i) prior to the removal of the Private Placement Legend
from the Offshore Global Security or Offshore Physical Securities
pursuant to Section 2.02, the Registrar shall refuse to register such
transfer; and
(ii) after such removal, the Registrar shall register the
transfer of any such Security without requiring any additional
certification.
(c) Transfers to Non-U.S. Persons at Any Time. The
following provisions shall apply with respect to any transfer of a Security to
a Non-U.S. Person:
(i) The Registrar shall register any proposed transfer to
any Non-U.S. Person if the Security to be transferred is a U.S.
Physical Security or an interest in the U.S. Global Security only upon
receipt of a certificate substantially in the form of Exhibit C from
the proposed transferor.
(ii) (A) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global Security, upon receipt
by the Registrar of (1) the documents required by paragraph (i) and (2)
instructions in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount of the U.S. Global
Security in an amount equal to the principal amount of the beneficial
interest in the U.S. Global Security to be transferred, and (B) if the
proposed transferee is an Agent Member, upon receipt by the Registrar
of instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the
Offshore Global Security in an amount equal to the principal amount of
the U.S. Physical Securities or the U.S. Global Security, as the case
may be, to be transferred, and the Trustee shall cancel the Physical
Security, if any, so transferred or decrease the amount of the U.S.
Global Security.
(d) Private Placement Legend. Upon the transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless either (i) the Private Placement Legend is
no longer required by Section 2.02 or (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Company to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act.
(e) General. By its acceptance of any Security bearing
the Private Placement Legend, each Holder of, or beneficial owner of an
interest in, such Security acknowledges the restrictions on transfer of such
Security set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Security only as provided in this Indenture.
The
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Registrar shall not register a transfer of any Security unless such transfer
complies with the restrictions on transfer of such Security set forth in this
Indenture. In connection with any transfer of Securities to an Institutional
Accredited Investor, each such Holder or beneficial owner agrees by its
acceptance of Securities to furnish to the Registrar and the Company such
certifications, legal opinions or other information as the Company may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other
information.
(f) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to the
registration of any proposed transfer of a Security to any Institutional
Accredited Investor which is not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any
Security, whether or not such Security bears the Private Placement
Legend, if (A) the requested transfer is after three years after the
date hereof or such other time that the Commission determines to apply
pursuant to Rule 144(k) under the Securities Act or any successor
provision at the time of such transfer or (B) the proposed transferee
has delivered to the Registrar (1) a certificate substantially in the
form of Exhibit D hereto and (2) if such transfer is in respect of an
aggregate principal amount of Securities at the time of transfer of
less than $250,000, an Opinion of Counsel acceptable to the Company
that such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding
a beneficial interest in the U.S. Global Security, upon receipt by the
Registrar of (A) the documents, if any, required by paragraph (i) and
(B) instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S.
Global Security in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Security to be transferred, and
the Company shall execute, and the Trustee shall authenticate and
deliver, one or more U.S. Physical Securities of like tenor and
amount.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.07 or this Section
2.08. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
SECTION 2.09. Replacement Securities. If a mutilated Security
is surrendered to the Trustee or if the Holder claims that the Security has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding; provided
<PAGE> 41
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that the requirements of the second paragraph of Section 2.10 are met. If
required by the Trustee or the Company, an indemnity bond must be furnished
that is sufficient in the judgment of both the Trustee and the Company to
protect the Company, the Trustee or any Agent from any loss that any of them
may suffer if a Security is replaced. The Company may charge such Holder for its
expenses and the expenses of the Trustee in replacing a Security. In case any
such mutilated, lost, destroyed or wrongfully taken Security has become or is
about to become due and payable, the Company in its discretion may pay the
principal of, premium. if any, and interest accrued on such Security instead of
issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the
Company and shall be entitled to the benefits of this Indenture.
SECTION 2.10. Outstanding Securities. Securities
outstanding at any time are all Securities that have been authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section 2.10 as not outstanding.
If a Security is replaced pursuant to Section 2.09, it ceases
to be outstanding unless and until the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a bona fide
purchaser.
If the Paying Agent (other than the Company or an Affiliate of
the Company) holds on the maturity date money sufficient to pay the principal
of, premium, if any, and interest accrued on Securities payable on that date,
then on and after that date such Securities cease to be outstanding and
interest on them shall cease to accrue.
A Security does not cease to be outstanding because the
Company or one of its Affiliates holds such Security, provided, however, that,
in determining whether the Holders of the requisite principal amount of the
outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
SECTION 2.11. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have insertions,
substitutions, omissions and other variations determined to be appropriate by
the Officers executing the temporary Securities, as evidenced by their
execution of such temporary
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Securities. If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until
so exchanged, the temporary Securities shall be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 2.12. Cancellation. The Company at any time may
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold.
The Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for transfer, exchange or payment. The Trustee shall
cancel all Securities surrendered for transfer, exchange, payment or
cancellation and shall dispose of them in accordance with its normal procedure.
The Company shall not issue new Securities to replace Securities it has paid in
full or delivered to the Trustee for cancellation.
SECTION 2.13. CUSIP, CINS and ISIN Numbers. The Company in
issuing the Securities may use "CUSIP", "CINS", "ISIN" or other identification
numbers (if then generally in use), and, if so, the Trustee shall use CUSIP
numbers, CINS numbers, ISIN numbers or other identification numbers, as the
case may be, in notices of redemption or exchange as a convenience to Holders;
provided that any such notice shall state that no representation is made as to
the correctness of such numbers either as printed on the Securities or as
contained in any notice of redemption or exchange and that reliance may be
placed only on the other identification numbers printed on the Securities;
provided further, that failure to use "CUSIP", "CINS", "ISIN" or other
identification numbers in any notice of redemption or exchange shall not effect
the validity or sufficiency of such notice.
SECTION 2.14. Defaulted Interest. If the Company defaults in
a payment of interest on the Securities, it shall pay, or shall deposit with
the Paying Agent money in immediately available funds sufficient to pay the
defaulted interest, plus (to the extent lawful) any interest payable on the
defaulted interest, to the Persons who are Holders on a subsequent special
record date. A special record date, as used in this Section 2.14 with respect
to the payment of any defaulted interest, shall mean the 15th day next
preceding the date fixed by the Company for the payment of defaulted interest,
whether or not such day is a Business Day. At least 15 days before the
subsequent special record date, the Company shall mail to each Holder and to
the Trustee a notice that states the subsequent special record date, the
payment date and the amount of defaulted interest to be paid.
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ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. At any time on or prior to
July 15, 1999, the Company may, at ITS option from time to time, redeem
Securities having an aggregate principal amount of up to $25 million at a
redemption price equal to 112.125% of the principal amount thereof on the
Redemption Date, together with accrued and unpaid interest thereon, with the
Net Cash Proceeds of one or more public or private issuances and sales of
Common Stock of the Company; provided that (i) Securities having an aggregate
principal amount of at least $100 million remain outstanding after each such
redemption and (ii) each such redemption occurs within 180 days after
consummation of any such issuance and sale.
SECTION 3.02. Notices to Trustee. If the Company elects to
redeem Securities pursuant to Section 3.01, it shall notify the Trustee in
writing of the Redemption Date and the principal amount of Securities to be
redeemed.
The Company shall give each notice provided for in this
Section 3.02 in an Officers' Certificate at least ten days before mailing the
notice to Holders required pursuant to Section 3.04 (unless a shorter period
shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Securities to Be Redeemed. In the
case of any partial redemption, selection of the Securities for redemption will
be made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Securities are listed or, if
the Securities are not listed on a national securities exchange, on a pro rata
basis or by lot; provided that no Security of $1,000 in principal amount or
less shall be redeemed in part.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption. Securities in
denominations of $1,000 in principal amount may only be redeemed in whole. The
Trustee may select for redemption portions (equal to $1,000 in principal amount
or any integral multiple thereof) of Securities that have denominations larger
than $1,000 in principal amount . Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption. The Trustee shall notify the Company and the Registrar
promptly in writing of the Securities or portions of Securities to be called
for redemption.
SECTION 3.04. Notice of Redemption. With respect to any
redemption of Securities pursuant to Section 3.01, at least 30 days but not
more than 60 days before a Redemption Date, the Company shall mail a notice of
redemption by first class mail to each Holder whose Securities are to be
redeemed.
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The notice shall identify the Securities to be redeemed and
shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be
surrendered to the Paying Agent in order to collect the Redemption
Price;
(e) that, unless the Company defaults in making the
redemption payment, interest on Securities called for redemption
ceases to accrue on and after the Redemption Date and the only
remaining right of the Holders is to receive payment of the Redemption
Price plus accrued interest to the Redemption Date upon surrender of
the Securities to the Paying Agent;
(f) that, if any Security is being redeemed in part, the
portion of the principal amount (equal to $1,000 in principal amount
or any integral multiple thereof) of such Security to be redeemed and
that, on and after the Redemption Date, upon surrender of such
Security, a new Security or Securities in principal amount equal to
the unredeemed portion thereof will be reissued; and
(g) that, if any Security contains a CUSIP, CINS, ISIN or
other identification number as provided in Section 2.13, no
representation is being made as to the correctness of the CUSIP, CINS,
ISIN or other identification number either as printed on the
Securities or as contained in the notice of redemption and that
reliance may be placed only on the other identification numbers
printed on the Securities.
At the Company's request (which request may be revoked by the
Company at any time prior to the time at which the Trustee shall have given
such notice to the Holders), made in writing to the Trustee at least ten days
before it is required to mail the notice to Holders required by this Section
3.04, the Trustee shall give such notice of redemption in the name and at the
expense of the Company. If, however, the Company gives such notice to the
Holders, the Company shall concurrently deliver to the Trustee an Officers'
Certificate stating that such notice has been given.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the Redemption Date and at the Redemption Price. Upon surrender of any
Securities to the Paying Agent, such Securities shall be paid at the
Redemption Price, plus accrued interest, if any, to the Redemption Date.
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Notice of redemption shall be deemed to be given when mailed,
whether or not the Holder receives the notice. In any event, failure to give
such notice, or any defect therein, shall not affect the validity of the
proceedings for the redemption of Securities held by Holders to whom such
notice was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior to
10:00 A.M. on any Redemption Date, the Company shall deposit with the Paying
Agent (or, if the Company is acting as its own Paying Agent, shall segregate
and hold in trust as provided in Section 2.05) money sufficient to pay the
Redemption Price of and accrued interest on all Securities to be redeemed on
that date other than Securities or portions thereof called for redemption on
that date that have been delivered by the Company to the Trustee for
cancellation.
SECTION 3.07. Payment of Securities Called for Redemption. If
notice of redemption has been given in the manner provided above, the
Securities or portion of Securities specified in such notice to be redeemed
shall become due and payable on the Redemption Date at the Redemption Price
stated therein, together with accrued interest to such Redemption Date, and on
and after such date (unless the Company shall default in the payment of such
Securities at the Redemption Price and accrued interest to the Redemption Date,
in which case the principal, until paid, shall bear interest from the
Redemption Date at the rate prescribed in the Securities), such Securities
shall cease to accrue interest. Upon surrender of any Security for redemption
in accordance with a notice of redemption, such Security shall be paid and
redeemed by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided that installments of
interest shall be payable to the Holders registered as such at the close of
business on the relevant Regular Record Date that is on or prior to the
Redemption Date.
SECTION 3.08. Securities Redeemed in Part. Upon surrender of
any Security that is redeemed in part, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder a new Security equal in
principal amount to the unredeemed portion of such surrendered Security.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities. The Company shall pay
the principal of, premium, if any, and interest on the Securities on the dates
and in the manner provided in the Securities and this Indenture. An
installment of principal, premium, if any, or interest shall be considered paid
on the date due if the Trustee or Paying Agent (other than the Company, a
Subsidiary of the Company, or any Affiliate of any of them) holds on that date
money designated for and sufficient to pay the installment. If the Company or
any Subsidiary of the Company or any Affiliate of any of them, acts as Paying
Agent, an installment of principal, premium, if any, or interest shall be
considered paid on the due date if the entity acting as Paying Agent complies
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with the last sentence of Section 2.05. As provided in Section 6.09, upon any
bankruptcy or reorganization procedure relative to the Company, the Trustee
shall serve as the Paying Agent for the Securities.
The Company shall pay interest on overdue principal, premium,
if any, and interest on overdue installments of interest, to the extent lawful,
at the rate per annum specified in the Securities.
SECTION 4.02. Maintenance of Office or Agency. The Company
will maintain in the Borough of Manhattan. The City of New York, an office or
agency (which may be an office of the Trustee, Registrar or co-Registrar or any
Affiliate of any of them) where Securities may be surrendered for registration
of transfer or exchange or for presentation for payment and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 11.02.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations. The Company will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any
such other office or agency.
The Company hereby initially designates the Corporate Trust
Office of the Trustee, located in the Borough of Manhattan, The City of New
York, as such office of the Company in accordance with Section 2.04.
SECTION 4.03. Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, Incur any Indebtedness (other than the
Securities and Indebtedness existing on the Closing Date); provided that the
Company may Incur Indebtedness if, after giving effect to the Incurrence of
such Indebtedness and the receipt and application of the proceeds therefrom,
the Indebtedness to EBITDA Ratio would be greater than zero and less than 4:1.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness in an aggregate principal amount not to exceed the greater of
(A) $100 million or (B) the Consolidated EBITDA for the four preceding quarters
for which financial statements have been sent to Holders pursuant to Section
4.19, in each case less any amount of Indebtedness permanently repaid as
provided under Section 4.12 (other than any Securities permanently repaid);
provided
<PAGE> 47
40
that no more than 25% of the Indebtedness Incurred under this clause (i) may
be used for purposes other than capital expenditures; (ii) Indebtedness (A)
owed to the Company evidenced by an unsubordinated promissory note or (B) owed
to any of the Restricted Subsidiaries; provided that any event which results in
any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or another
Restricted Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness not permitted by this clause (ii); (iii)
Indebtedness issued in exchange for, or the net proceeds of which are used to
refinance or refund, then outstanding Indebtedness, other than Indebtedness
Incurred under clause (ii) or (v) of this paragraph, and any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded (plus
premiums, accrued interest, fees and expenses); provided that Indebtedness the
proceeds of which are used to refinance or refund the Securities, the Security
Guarantee or Indebtedness that is pari passu with, or subordinated in right of
payment to, the Securities or the Security Guarantee shall only be permitted
under this clause (iii) if (A) in case the Securities or the Security Guarantee
are refinanced in part or the Indebtedness to be refinanced is pari passu with
the Securities or the Security Guarantee, such new Indebtedness, by its terms
or by the terms of any agreement or instrument pursuant to which such new
Indebtedness is outstanding, is expressly made pari passu with, or subordinate
in right of payment to, the remaining Securities or the Security Guarantee, as
the case may be, (B) in case the Indebtedness to be refinanced is subordinated
in right of payment to the Securities or the Security Guarantee, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is expressly made
subordinate in right of payment to the Securities or the Security Guarantee at
least to the extent that the Indebtedness to be refinanced is subordinated to
the Securities or the Security Guarantee, as the case may be, and (C) such new
Indebtedness, determined as of the date of Incurrence of such new Indebtedness,
does not mature prior to the Stated Maturity of the Indebtedness to be
refinanced or refunded, and the Average Life of such new Indebtedness is at
least equal to the remaining Average Life of the Indebtedness to be refinanced
or refunded; and provided further that in no event may Indebtedness of the
Company or the Guarantor be refinanced by means of any Indebtedness of any
Restricted Subsidiary other than the Guarantor pursuant to this clause (iii);
(iv) Indebtedness: (A) in respect of performance, surety or appeal bonds
provided in the ordinary course of business; (B) under Currency Agreements and
Interest Rate Agreements; provided that such agreements do not increase the
Indebtedness of the obligor outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or interest rates or by reason
of fees, indemnities and compensation payable thereunder; and (C) arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Restricted Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted
Subsidiary (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted Subsidiary
for the purpose of financing such acquisition), in a principal amount not to
exceed the gross proceeds actually received by the Company or any Restricted
Subsidiary in connection with such disposition; (v) Indebtedness of the Company
or
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41
the Guarantor not to exceed, at any one time outstanding, twice the Net Cash
Proceeds received by the Company or the Guarantor, as the case may be, from the
issuance and sale of its Common Stock after the Closing Date to a Person that
is not a Subsidiary of the Company or the Guarantor, less the amount invested
in the Company pursuant to clause (iii) of the definition of "Change of
Control"; (vi) Indebtedness Incurred to finance the cost (including the cost of
design, development, construction, improvement, installation or integration) of
property, plant or equipment acquired by the Company or any of its Restricted
Subsidiaries after the Closing Date and refinancings thereof; (vii)
Indebtedness of the Company, to the extent the proceeds thereof are promptly
(A) deposited to defease the Securities as described under "Defeasance" or (B)
used to repurchase Securities tendered in an Offer to Purchase made as a result
of a Change of Control; (viii) Guarantees of the Securities; (ix) Indebtedness
of any Restricted Subsidiary, to the extent that the Company or the Guarantor
is the beneficial owner of such Indebtedness and such Indebtedness is evidenced
by an unsubordinated promissory note or participation certificate issued to the
Company or the Guarantor by the record holder of such Indebtedness; and (x)
Indebtedness of the Company or the Guarantor, the proceeds of which are used to
make an Investment in Intelsat, in an amount at any one time outstanding not to
exceed $15 million during the first three years following the Closing Date and
$20 million thereafter; provided that the Company reasonably believes, at the
time such Indebtedness is Incurred, that the benefits of such Investment will
result in cash flow sufficient to cover the payment of interest and principal
on such Indebtedness.
(b) For purposes of determining any particular amount of
Indebtedness under this Section 4.03,(a) Guarantees, Liens or obligations with
respect to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included, (b) the maximum
amount of Indebtedness that may be Incurred pursuant to this Section 4.03 shall
be deemed not to be exceeded, with respect to any outstanding Indebtedness,
solely due to the result of fluctuations in the exchange rates of currencies
and (c) any Liens granted pursuant to the equal and ratable provisions referred
to in Section 4.09 described below shall not be treated as Indebtedness. For
purposes of determining compliance with this Section 4.03, in the event that an
item of Indebtedness meets the criteria of more than one of the types of
Indebtedness described in the above clauses, the Company, in its sole
discretion, shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of such clauses.
SECTION 4.04. Limitation on Restricted Payments. The Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, (i) declare or pay any dividend or make any distribution on or with
respect to its Capital Stock held by Persons other than the Company or any of
its Restricted Subsidiaries (other than dividends or distributions payable
solely in shares of its or such Restricted Subsidiary's Capital Stock (other
than Disqualified Stock) or in options, warrants or other rights to acquire
shares of such Capital Stock and other than pro rata dividends or distributions
on Common Stock of Restricted Subsidiaries other than the Guarantor), (ii)
purchase, redeem, retire or otherwise acquire for value any shares of Capital
Stock of the Company or the Guarantor (including options, warrants or other
rights
<PAGE> 49
42
to acquire such shares of Capital Stock) held by Persons other than the Company
or any of its Wholly Owned Restricted Subsidiaries, (iii) make any voluntary or
optional principal payment, or voluntary or optional redemption, repurchase,
defeasance, or other acquisition or retirement for value, of Indebtedness of
the Company that is subordinated in right of payment to the Securities or of
the Guarantor that is subordinated to the Security Guarantee or (iv) make any
Investment, other than a Permitted Investment, in any Person (such payments or
any other actions described in clauses (i) through (iv) being collectively
"Restricted Payments") if, at the time of, and after giving effect to, the
proposed Restricted Payment: (A) a Default or Event of Default shall have
occurred and be continuing; (B) except with respect to Investments and
dividends on the Common Stock of the Guarantor, the Company could not Incur at
least $1.00 of Indebtedness under the first paragraph of Section 4.03; or (C)
the aggregate amount of all Restricted Payments after the Closing Date shall
exceed the sum of (1) 50% of the aggregate amount of the Adjusted Consolidated
Net Income (or, if the Adjusted Consolidated Net Income is a loss, minus 100%
of such amount) (determined by excluding income resulting from transfers of
assets by the Company or a Restricted Subsidiary to an Unrestricted Subsidiary)
accrued on a cumulative basis during the period (taken as one accounting
period) beginning on the first day of the fiscal quarter immediately following
the Closing Date and ending on the last day of the last fiscal quarter
preceding the Transaction Date for which reports have been sent to Holders
pursuant to Section 4.19 plus (2) the aggregate Net Cash Proceeds received by
the Company or the Guarantor after the Closing Date from the issuance and sale
permitted by this Indenture of its Capital Stock (other than Disqualified
Stock) to a Person who is not a Subsidiary of the Company or the Guarantor, or
from the issuance to a Person who is not a Subsidiary of the Company or the
Guarantor of any options, warrants or other rights to acquire Capital Stock of
the Company (in each case, exclusive of any convertible Indebtedness,
Disqualified Stock or any options, warrants or other rights that are redeemable
at the option of the holder, or are required to be redeemed, prior to the
Stated Maturity of the Securities), less the amount invested in the Company
pursuant to clause (iii) of the definition of "Change of Control" plus (3) an
amount equal to the net reduction in Investments (other than Permitted
Investments) made pursuant to this first paragraph of Section 4.04 in any
Person resulting from payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other transfers of assets, in each case to
the Company or any Restricted Subsidiary (except to the extent any such payment
is included in the calculation of Adjusted Consolidated Net Income), or from
redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries (valued
in each case as provided in the definition of "Investments"), not to exceed the
amount of Investments previously made by the Company and any Restricted
Subsidiary in such Person.
The foregoing provision shall not be violated by reason of:
(i) the payment of any dividend within 60 days after the date of declaration
thereof if, at said date of declaration, such payment would comply with the
foregoing paragraph; (ii) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is subordinated in
right of payment to the Securities including premium, if any, and accrued and
unpaid interest, with the proceeds of, or in exchange for, Indebtedness
Incurred under clause (iii) of the second paragraph of Section 4.03; (iii) the
declaration or payment of dividends on the Common Stock of the
<PAGE> 50
43
Company, following a Public Equity Offering of such Common Stock, of up to 6%
per annum of the Net Cash Proceeds received by the Company in such Public
Equity Offering; (iv) the repurchase, redemption or other acquisition of
Capital Stock of the Company (or options, warrants or other rights to acquire
such Capital Stock) in exchange for, or out of the proceeds of a substantially
concurrent offering of, shares of Capital Stock (other than Disqualified Stock)
of the Company (or options, warrants or other rights to acquire such Capital
Stock); (v) the making of any principal payment or the repurchase, redemption,
retirement, defeasance or other acquisition for value of Indebtedness of the
Company which is subordinated in right of payment to the Securities in exchange
for, or out of the proceeds of, a substantially concurrent offering of, shares
of the Capital Stock of the Company (other than Disqualified Stock); (vi)
payments or distributions, in the nature of satisfaction of dissenters' rights,
pursuant to or in connection with a consolidation, merger or transfer of assets
that complies with the provisions of the Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the property and
assets of the Company; (vii) Investments in Unrestricted Subsidiaries not to
exceed, at any one time outstanding, the greater of (A) $5 million or (B) 10%
of Consolidated EBITDA for the preceding four quarters for which reports have
been sent to Holders pursuant to Section 4.19; and (viii) Investments in
Unrestricted Subsidiaries that, in Brazil, directly or indirectly, engage in a
business similar to the business of the Company and its Restricted
Subsidiaries, in an amount not to exceed $10 million at any one time
outstanding; provided that, except in the case of clauses (i) and (iv), no
Default or Event of Default shall have occurred and be continuing or occur as a
consequence of the actions or payments set forth therein. The value of any
Restricted Payment made other than in cash shall be the fair market value
thereof. The amount of any Investment "outstanding" at any time shall be
deemed to be equal to the amount of such Investment on the date made, less the
return of capital to the Company and its Restricted Subsidiaries with respect
to such Investment (up to the amount of such Investment).
Each Restricted Payment permitted pursuant to the preceding
paragraph (other than the Restricted Payment referred to in clause (ii) thereof
and an exchange of Capital Stock or Indebtedness referred to in clause (iv) or
(v) thereof), and the Net Cash Proceeds from any issuance of Capital Stock
referred to in clause (iii), (iv) or (v), shall be included in calculating
whether the conditions of clause (C) of the first paragraph of this Section
4.04 have been met with respect to any subsequent Restricted Payments. In the
event the proceeds of an issuance of Capital Stock of the Company are used for
the redemption, repurchase or other acquisition of the Securities, or
Indebtedness that is pari passu with the Securities, then the Net Cash Proceeds
of such issuance shall be included in clause (C) of the first paragraph of this
Section 4.04 only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of Indebtedness. For purposes of determining
compliance with this Section 4.04, in the event that a Restricted Payment meets
the criteria of more than one of the types of Restricted Payments described in
clauses (i) through (viii) of the preceding paragraph, the Company, in its sole
discretion, shall classify such Restricted Payment and only be required to
include the amount and type of such Restricted Payment in one of such clauses.
<PAGE> 51
44
SECTION 4.05. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. So long as any of the
Securities are outstanding, the Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary (other than the Guarantor) to (i) pay
dividends or make any other distributions permitted by applicable law on any
Capital Stock of such Restricted Subsidiary owned by the Company or any other
Restricted Subsidiary, (ii) pay any Indebtedness owed to the Company or any
other Restricted Subsidiary, (iii) make loans or advances to the Company or any
other Restricted Subsidiary or (iv) transfer any of its property or assets to
the Company or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances
or restrictions: (i) existing on the Closing Date herein or any other
agreements in effect on the Closing Date, and any extensions, refinancings,
renewals or replacements of such agreements; provided that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements
are no less favorable in any material respect to the Holders than those
encumbrances or restrictions that are then in effect and that are being
extended, refinanced, renewed or replaced; (ii) existing under or by reason of
applicable law; (iii) existing with respect to any Person or the property or
assets of such Person acquired by the Company or any Restricted Subsidiary,
existing at the time of such acquisition and not incurred in contemplation
thereof, which encumbrances or restrictions are not applicable to any Person or
the property or assets of any Person other than such Person or the property or
assets of such Person so acquired; (iv) in the case of clause (iv) of the first
paragraph of this Section 4.05, (A) that restrict in a customary manner the
subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) existing by
virtue of any transfer of, agreement to transfer, option or right with respect
to, or Lien on, any property or assets of the Company or any Restricted
Subsidiary not otherwise prohibited by the Indenture or (C) arising or agreed
to in the ordinary course of business, not relating to any Indebtedness, and
that do not, individually or in the aggregate, detract from the value of
property or assets of the Company or any Restricted Subsidiary in any manner
material to the Company or any Restricted Subsidiary; (v) with respect to a
Restricted Subsidiary and imposed pursuant to an agreement that has been
entered into for the sale or disposition of any or all of the Capital Stock of,
or property and assets of, such Restricted Subsidiary during the period between
the execution of such agreement and the closing thereunder within three months
of such execution; (vi) with respect to Restricted Subsidiaries in which, on
and subsequent to the Closing Date, the Company and other Restricted
Subsidiaries only make Investments that are evidenced by unsubordinated
promissory notes that bear a reasonable rate of interest and are payable prior
to the Stated Maturity of the Securities; provided that such encumbrances and
restrictions expressly allow the payment of interest and principal on such
promissory notes; or (vii) encumbrances or restrictions solely of the type
referred to in clause (iii) or (iv) of the preceding paragraph that are
contained in any stockholders' agreement, joint venture agreement or similar
agreement among owners of Common Stock of a Restricted Subsidiary; provided
that such restrictions consist solely of requirements that transactions between
such Restricted Subsidiaries and affiliates thereof
<PAGE> 52
45
(including the Company and its Restricted Subsidiaries) be on fair and
reasonable terms no less favorable to such Restricted Subsidiary than could be
obtained in a comparable arm's-length transaction with a Person that is not
such an affiliate. Nothing contained in this Section 4.05 shall prevent the
Company or any Restricted Subsidiary from (1) creating, incurring, assuming or
suffering to exist any Liens otherwise permitted in Section 4.09 or (2)
restricting the sale or other disposition of property or assets of the Company
or any of its Restricted Subsidiaries that secure Indebtedness of the Company
or any of its Restricted Subsidiaries.
SECTION 4.06. Limitation on the Issuance and Sale of Capital
Stock of Restricted Subsidiaries. The Company shall not sell, and shall not
permit any Restricted Subsidiary (other than the Guarantor), directly or
indirectly, to issue or sell, any shares of Capital Stock of a Restricted
Subsidiary (including options, warrants or other rights to purchase shares of
such Capital Stock) except (i) to the Company or a Wholly Owned Restricted
Subsidiary, (ii) issuances or sales to foreign nationals of shares of Capital
Stock of foreign Restricted Subsidiaries, to the extent required by applicable
law, (iii) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary and
any Investment in such Person remaining after giving affect to such issuance or
sale would have been permitted to be made under Section 4.04 if made on the
date of such issuance or sale, (iv) the sale of Common Stock of Restricted
Subsidiaries that is not Disqualified Stock, if the proceeds of such issuance
or sale are applied in accordance with clause (A) or (B) of the first paragraph
of Section 4.12 or (v) the transfer of up to 3% of the Common Stock of each
Restricted Subsidiary to employees of such Restricted Subsidiary in connection
with such employment.
SECTION 4.07. Limitation on Issuances of Guarantees by
Restricted Subsidiaries. The Company shall not permit any Restricted Subsidiary
(other than the Guarantor), directly or indirectly, to Guarantee any
Indebtedness of the Company or the Guarantor ("Guaranteed Indebtedness"),
unless (i) such Restricted Subsidiary simultaneously executes and delivers
a supplemental indenture to this Indenture providing for a Guarantee (a
"Subsidiary Guarantee") of payment of the Securities by such Restricted
Subsidiary and (ii) such Restricted Subsidiary waives and will not
in any manner whatsoever claim or take the benefit or advantage of, any rights
of reimbursement, indemnity or subrogation or any other rights against the
Company or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Subsidiary Guarantee; provided that this
paragraph shall not be applicable to any Guarantee of any Restricted Subsidiary
that (x) existed at the time such Person became a Restricted Subsidiary and (y)
was not Incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary. If the Guaranteed Indebtedness is (A) pari
passu with the Securities or the Security Guarantee, then the Guarantee of such
Guaranteed Indebtedness shall be pari passu with, or subordinated to, the
Subsidiary Guarantee or (B) subordinated to the Securities or the Security
Guarantee, then the Guarantee of such Guaranteed Indebtedness shall be
subordinated to the Subsidiary Guarantee at least to the extent that the
Guaranteed Indebtedness is subordinated to the Securities or the Security
Guarantee, as the case may be.
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Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary shall provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the
Company's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by the Indenture) or (ii) the release or
discharge of the Guarantee which resulted in the creation of such Subsidiary
Guarantee, except a discharge or release by or as a result of payment under
such Guarantee.
SECTION 4.08. Limitation on Transactions with Shareholders and
Affiliates. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, enter into, renew or extend any
transaction (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service) with any
holder (or any Affiliate of such holder) of 5% or more of any class of Capital
Stock of the Company or with any Affiliate of the Company or any Restricted
Subsidiary, except upon fair and reasonable terms no less favorable to the
Company or such Restricted Subsidiary than could be obtained, at the time of
such transaction or at the time of the execution of the agreement providing
therefor, in a comparable arm's-length transaction with a Person that is not
such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply
to (i) transactions (A) approved by a majority of the disinterested members of
the Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized U.S.
investment banking firm stating that the transaction is fair to the Company or
such Restricted Subsidiary from a financial point of view; (ii) any transaction
solely between the Company and any of its Wholly Owned Restricted Subsidiaries
or solely between Wholly Owned Restricted Subsidiaries; (iii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company; (iv) any payments or other transactions pursuant to
any tax-sharing agreement between the Company and any other Person with which
the Company files a consolidated tax return or with which the Company is part
of a consolidated group for tax purposes; or (v) any Restricted Payments not
prohibited by Section 4.04 (other than pursuant to clause (iv) of the
definition of "Permitted Investment"). Notwithstanding the foregoing, any
transaction or series of transactions covered by the first paragraph of this
Section 4.08 and not covered by clauses (ii) through (iv) of this paragraph,
the aggregate amount of which exceeds $1 million in value, must be approved or
determined to be fair in the manner provided for in clause (i)(A) or (B) above.
SECTION 4.09. Limitation on Liens. The Company shall not, and
shall not permit any Restricted Subsidiary to, create, incur, assume or suffer
to exist any Lien on any of its assets or properties of any character, or any
shares of Capital Stock or Indebtedness of any Restricted Subsidiary, without
making effective provision for all of the Securities and all other amounts due
under the Indenture to be directly secured equally and ratably with (or, if the
<PAGE> 54
47
obligation or liability to be secured by such Lien is subordinated in right of
payment to the Securities, prior to) the obligation or liability secured by
such Lien.
The foregoing limitation does not apply to (i) Liens existing
on the Closing Date; (ii) Liens granted after the Closing Date on any assets or
Capital Stock of the Company or its Restricted Subsidiaries created in favor of
the Holders; (iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or such other
Restricted Subsidiary; (iv) Liens securing Indebtedness which is Incurred to
refinance secured Indebtedness which is permitted to be Incurred under clause
(iii) of the second paragraph of Section 4.03; provided that such Liens do not
extend to or cover any property or assets of the Company or any Restricted
Subsidiary other than the property or assets securing the Indebtedness being
refinanced; (v) Liens on assets having a fair market value equal to no more
than 10% of the fair market value of the Adjusted Consolidated Net Tangible
Assets that are not subject to Liens on the Closing Date; or (vi) Permitted
Liens.
SECTION 4.10. Limitation on Sale-Leaseback Transactions.
The Company shall not, and shall not permit any Restricted Subsidiary to,
enter into any sale-leaseback transaction involving any of its assets or
properties whether now owned or hereafter acquired, whereby the Company or a
Restricted Subsidiary sells or transfers such assets or properties and then or
thereafter leases such assets or properties or any part thereof or any other
assets or properties which the Company or such Restricted Subsidiary, as the
case may be, intends to use for substantially the same purpose or purposes as
the assets or properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback
transaction if (i) the lease is for a period, including renewal rights, of not
in excess of three years; (ii) the transaction is between the Company and any
Wholly Owned Restricted Subsidiary or between Wholly Owned Restricted
Subsidiaries; or (iii) the Company or such Restricted Subsidiary, within six
months after the sale or transfer of any assets or properties is completed,
applies an amount not less than the net proceeds received from such sale in
accordance with clause (A) or (B) of the first paragraph of Section 4.12.
SECTION 4.11. [Reserved].
SECTION 4.12. Limitation on Asset Sales. The Company shall
not, and shall not permit any Restricted Subsidiary to, consummate any Asset
Sale, unless (i) the consideration received by the Company or such Restricted
Subsidiary is at least equal to the fair market value of the assets sold or
disposed of and (ii), except with respect to Customer Owned Transmission
Facilities, at least 85% of the consideration received consists of cash or
Temporary Cash Investments. In the event and to the extent that the Net Cash
Proceeds received by the Company or any of its Restricted Subsidiaries from one
or more Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed 10% of Adjusted Consolidated Net
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48
Tangible Assets (determined as of the date closest to the commencement of such
12-month period for which a consolidated balance sheet of the Company and its
Subsidiaries has been filed pursuant to Section 4.19), then the Company shall
or shall cause the relevant Restricted Subsidiary to (i) within six months
after the date Net Cash Proceeds so received exceed 10% of Adjusted
Consolidated Net Tangible Assets (A) apply an amount equal to such excess Net
Cash Proceeds to permanently repay unsubordinated Indebtedness of the Company
or any Restricted Subsidiary providing a Subsidiary Guarantee pursuant to
Section 4.07 or Indebtedness of any other Restricted Subsidiary, in each case
owing to a Person other than the Company or any of its Restricted Subsidiaries
or (B) invest an equal amount, or the amount not so applied pursuant to clause
(A), (or enter into a definitive agreement committing to so invest within six
months after the date of such agreement), in property or assets (other than
current assets) of a nature or type or that are used in a business (or in a
company having property and assets of a nature or type, or engaged in a
business) similar or related to the nature or type of the property and assets
of, or the business of, the Company and its Restricted Subsidiaries existing on
the date of such investment (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution) and (ii) apply (no later than the end of the six-month period
referred to in clause (i)) such excess Net Cash Proceeds (to the extent not
applied pursuant to clause (i)) as provided in the following paragraph of this
Section 4.12. The amount of such excess Net Cash Proceeds required to be
applied (or to be committed to be applied) during such six-month period as set
forth in clause (i) of the preceding sentence and not applied as so required by
the end of such period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Offer to Purchase
pursuant to this Section 4.12 totals at least $5 million, the Company must
commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders on a pro rata basis an
aggregate principal amount of Securities equal to the Excess Proceeds on such
date, at a purchase price equal to 101% of the principal amount of the
Securities, plus, in each case, accrued interest (if any) to the date of
purchase.
SECTION 4.13. Repurchase of Securities upon a Change of
Control. The Company must commence, within 30 days of the occurrence of a
Change of Control, and consummate an Offer to Purchase for all Securities then
outstanding, at a purchase price equal to 101% of the principal amount
thereof, plus accrued interest (if any) to the date of purchase. Prior to the
mailing of the notice to Holders commencing such Offer to Purchase, but in any
event within 30 days following any Change of Control, the Company covenants to
(i) repay in full all indebtedness of the Company that would prohibit the
repurchase of the Securities pursuant to such Offer to Purchase or (ii) obtain
any requisite consents under instruments governing any such indebtedness of the
Company to permit the repurchase of the Securities. The Company shall first
comply with the covenant in the preceding sentence before it shall be required
to repurchase Securities pursuant to this Section 4.13.
<PAGE> 56
49
SECTION 4.14. Existence. Subject to Articles Four and Five of
this Indenture, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and the existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of the Company and each such Subsidiary and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material licenses and franchises of the Company and each such
Subsidiary; provided that the Company shall not be required to preserve any
such right, license or franchise, or the existence of any Restricted Subsidiary
(other than itself and the Guarantor), if the maintenance or preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Restricted Subsidiaries taken as a whole.
SECTION 4.15. Payment of Taxes and Other Claims. The Company
shall pay or discharge and shall cause each of its Subsidiaries to pay or
discharge, or cause to be paid or discharged, before the same shall become
delinquent (i) all material taxes, assessments and governmental charges levied
or imposed upon (a) the Company or any such Subsidiary, (b) the income or
profits of any such Subsidiary which is a corporation or (c) the property of
the Company or any such Subsidiary and (ii) all material lawful claims for
labor, materials and supplies that, if unpaid, might by law become a lien upon
the property of the Company or any such Subsidiary; provided that the Company
shall not be required to pay or discharge, or cause to be paid or discharged,
any such tax, assessment, charge or claim the amount, applicability or validity
of which is being contested in good faith by appropriate proceedings and for
which adequate reserves have been established.
SECTION 4.16. Maintenance of Properties and Insurance. The
Company shall cause all properties used or useful in the conduct of its
business or the business of any of its Restricted Subsidiaries, to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided that nothing in this Section 4.16 shall prevent the Company or any
such Subsidiary from discontinuing the use, operation or maintenance of any of
such properties or disposing on any of them, if such discontinuance or disposal
is, in the judgment of the Company, desirable in the conduct of the business of
the Company or such Subsidiary.
The Company shall provide or cause to be provided, for itself
and its Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties, including, but
not limited to, products liability insurance and public liability insurance,
with reputable insurers or with the government of the United States of America,
or an agency or instrumentality thereof, in such amounts, with such deductibles
and by such methods as shall be customary for corporations similarly situated
in the industry in which the Company or such Restricted Subsidiary, as the case
may be, is then conducting business.
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SECTION 4.17. Notice of Defaults. In the event that the
Company or the Guarantor becomes aware of any Default or Event of Default, the
Company or the Guarantor, promptly after it becomes aware thereof, shall give
written notice thereof to the Trustee.
SECTION 4.18. Compliance Certificates. (a) The Company shall
deliver to the Trustee, within 90 days after the end of the Company's fiscal
year, an Officers' Certificate stating whether or not the signers know of any
Default or Event of Default that occurred during such fiscal year. Such
certificates shall contain a certification from the principal executive
officer, principal financial officer or principal accounting officer of the
Company that a review has been conducted of the activities of the Company and
the Restricted Subsidiaries and the Company's and the Restricted Subsidiaries'
performance under this Indenture and that, to the best knowledge of such
officer, the Company has complied with all conditions and covenants under this
Indenture. For purposes of this Section 4.18, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture. If any such officer knows of such a Default or
Event of Default, the certificate shall describe any such Default or Event of
Default and its status.
(b) The Company shall deliver to the Trustee, within 90
days after the end of its fiscal year, a certificate signed by the Company's
independent certified public accountants stating (i) that their audit
examination has included a review of the terms of this Indenture and the
Securities as they relate to accounting matters, (ii) that they have read the
most recent Officers' Certificate delivered to the Trustee pursuant to
paragraph (a) of this Section 4.18 and (iii) whether, in connection with their
audit examination, anything came to their attention that caused them to believe
that the Company or the Guarantor was not in compliance with any of the terms,
covenants, provisions or conditions of Article Four and Section 5.01 of this
Indenture as they pertain to accounting matters and, if any Default or Event of
Default has come to their attention, specifying the nature and period of
existence thereof; provided that such independent certified public accountants
shall not be liable in respect of such statement by reason of any failure to
obtain knowledge of any such Default or Event of Default that would not be
disclosed in the course of an audit examination conducted in accordance with
generally accepted auditing standards in effect at the date of such
examination.
(c) Within 90 days of the end of each of the Company's
fiscal years, the Company shall deliver to the Trustee a list of all
Significant Subsidiaries. The Trustee shall have no duty with respect to any
such list except to keep it on file and available for inspection by the
Holders.
SECTION 4.19. Commission Reports and Reports to Holders.
Whether or not the Company is required to file reports with the Commission, if
any Securities are outstanding, the Company shall file with the Commission all
such reports and other information as it would be required to file with the
Commission by Sections 13(a) or 15(d) under the Securities Exchange Act of
1934, as amended, if it were subject thereto, unless the Company shall be
unable to effect such filing or the Commission shall refuse to accept such
filing. The Company
<PAGE> 58
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shall supply the Trustee and each Holder of Securities or shall supply to the
Trustee for forwarding to each such Holder, without cost to such Holder, copies
of such reports and other information, whether or not the Company shall be
unable to effect such filing or the Commission refuses to accept such filing.
SECTION 4.20. Waiver of Stay, Extension or Usury Laws. Each
of the Company and the Guarantor covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law that would prohibit or forgive the Company or the
Guarantor, as the case may be, from paying all or any portion of the principal
of, premium, if any, or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each of the Company and the Guarantor hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 4.21. Additional Amounts. Any payments made by the
Guarantor under or with respect to the Securities pursuant to the Security
Guarantee will be made free and clear of and without withholding or deduction
for or on account of any present or future tax, duty, levy, impost, assessment
or other governmental charge (including penalties, interest and other
liabilities related thereto) imposed or levied by or on behalf of the
Government of the Republic of Argentina or of any subdivision, province or
territory thereof or by any authority or agency therein or thereof having power
to tax (hereinafter "Taxes"), unless the Guarantor is required to withhold or
deduct Taxes by law or by the interpretation or administration thereof. If the
Guarantor is required to withhold or deduct any amount for or on account of
Taxes from any payment made under or with respect to the Security Guarantee,
the Guarantor will, on or prior to the due date for the payment thereof, pay
any such Taxes to the appropriate governmental authority, and will pay such
additional amounts ("Additional Amounts") as may be necessary, so that the net
amount received by each Holder of Securities (including Additional Amounts)
after such withholding or deduction will not be less than the amount such
Holder would have received if such Taxes had not been withheld or deducted;
provided, however, that no Additional Amounts will be payable with respect to a
payment made to a Holder (an "Excluded Holder") (i) who is liable for taxes or
duties in respect of such Security by reason of its having some connection with
Argentina other than the mere holding of such Security or the receipt of
principal or interest in respect thereof; (ii) in respect of any estate,
inheritance, gift, sales, transfer or personal property tax or any similar tax,
assessment or governmental charge; or (iii) in respect of any tax, assessment
or other governmental charge which would not have been imposed but for any
failure to comply with certification, information or other report requirements
concerning the nationality, residence or identity of the Holder or beneficial
owner of such Security, if such compliance is required by statute or by
regulation of Argentina or of any political subdivision or taxing authority
thereof or therein as a precondition to relief or
<PAGE> 59
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exemption from such tax, assessment or other governmental charge. The
Guarantor will, upon written request of any Holder (other than an Excluded
Holder), reimburse such Holder for the amount of (i) any Taxes so levied or
imposed and paid by such Holder as a result of payments made under or with
respect to the Securities and (ii) any Taxes so levied or imposed with respect
to any reimbursement under the foregoing clause (i), but excluding any such
Taxes on such Holder's net income so that the net amount received by such
Holder after such reimbursement will not be less than the net amount the Holder
would have received if Taxes on such reimbursement had not been imposed.
At least 30 days prior to each date on which any payment under
or with respect to the Securities is due and payable, if the Guarantor will be
obligated to pay Additional Amounts with respect to such payment, the Guarantor
will deliver to the relevant Trustee and Paying Agents an Officers' Certificate
stating the amount of Taxes required to be deducted or withheld and certifying
that the Guarantor shall make such deduction or withholding and pay such Taxes
and stating the fact that such Additional Amounts will be payable and the
amounts so payable and will set forth such other information necessary to
enable the Trustee to pay such Additional Amounts to Holders on the payment
date. The Trustee and each Paying Agent shall be fully protected in relying
upon any Officers' Certificates furnished pursuant to this paragraph or upon
the failure of the Guarantor to furnish any such Officers' Certificate.
Whenever either in this Indenture or in the Securities there is mentioned, in
any context, the payment of principal (or premium, if any), Redemption Price,
interest or any other amount payable under or with respect to any Security,
such mention shall be deemed to include mention of the payment of Additional
Amounts to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Consolidation, Merger and Sale of Assets. Each
of the Company and the Guarantor shall not consolidate with, merge with or
into, or sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets (as an entirety or substantially
an entirety in one transaction or a series of related transactions) to, any
Person (other than a consolidation or merger with or into a Wholly Owned
Restricted Subsidiary with a positive net worth; provided that, in connection
with any such merger or consolidation, no consideration (other than Common
Stock in the surviving Person, the Company or the Guarantor, as the case may
be) shall be issued or distributed to the stockholders of the Company or the
Guarantor, as the case may be) or permit any Person to merge with or into the
Company or the Guarantor unless:
(i) the Company or the Guarantor, as the case may be, shall be the
continuing Person, or the Person (if other than the Company) formed by
such consolidation or into which the Company or the Guarantor, as the
case may be, is merged or that acquired or leased such property and
assets of the Company or the
<PAGE> 60
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Guarantor, as the case may be, shall be a corporation organized and
validly existing under the laws of the United States of America or any
jurisdiction thereof (or, in the case of a consolidation, merger or
sale, conveyance, transfer, lease or other disposition of all or
substantially all of the property or assets of the Guarantor, the
Republic of Argentina) and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, all of the
obligations of the Company or the Guarantor, as the case may be, with
respect to the Securities and under the Indenture;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a pro
forma basis, the Company or the Guarantor, as the case may be, or any
Person becoming the successor obligor of the Securities shall have a
Consolidated Net Worth equal to or greater than the Consolidated Net
Worth of the Company or the Guarantor, as the case may be, immediately
prior to such transaction;
(iv) immediately after giving effect to such transaction on a pro
forma basis the Company, or any Person becoming the successor obligor
of the Securities, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.03(a); and
(v) the Company or the Guarantor, as the case may be, delivers to
the Trustee an Officers' Certificate (attaching the arithmetic
computations to demonstrate compliance with clauses (iii) and (iv))
and Opinion of Counsel, in each case stating that such consolidation,
merger or transfer and such supplemental indenture complies with this
provision and that all conditions precedent provided for herein
relating to such transaction have been complied with; provided,
however, that clauses (iii) and (iv) above do not apply if, in the
good faith determination of the Board of Directors of the Company,
whose determination shall be evidenced by a Board Resolution, the
principal purpose of such transaction is to change the state of
incorporation of the Company; and provided further that any such
transaction shall not have as one of its purposes the evasion of the
foregoing limitations.
SECTION 5.02. Successor Substituted. Upon any consolidation
or merger, or any sale, conveyance, transfer or other disposition of all or
substantially all of the property and assets of the Company or the Guarantor in
accordance with Section 5.01 of this Indenture, the successor Person formed by
such consolidation or into which the Company or the Guarantor is merged or to
which such sale, conveyance, transfer or other disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or the Guarantor, as the case may be, under this Indenture with the
same effect as if such successor
<PAGE> 61
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Person had been named as the Company or the Guarantor, as the case may be,
herein; provided that the Company or the Guarantor, as the case may be, shall
not be released from its obligations to pay the principal of, premium, if any,
or interest on the Securities in the case of a lease of all or substantially
all of its property and assets.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" shall
occur with respect to the Securities if:
(a) default in the payment of principal of (or premium,
if any, on) any Security when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise;
(b) default in the payment of interest on any Security
when the same becomes due and payable, and such default continues for
a period of 30 days;
(c) the Company defaults in the performance of or
breaches any other covenant or agreement of the Company in this
Indenture or under the Securities and such default or breach continues
for a period of 30 consecutive days after written notice by the
Trustee or the Holders of 25% or more in aggregate principal amount
of the Securities;
(d) there occurs with respect to any issue or issues of
Indebtedness of the Company, the Guarantor or any Significant
Subsidiary having an outstanding principal amount of $5 million or
more in the aggregate for all such issues of all such Persons, whether
such Indebtedness now exists or shall hereafter be created, (I) an
event of default that has caused the holder thereof to declare such
Indebtedness to be due and payable prior to its Stated Maturity and
such Indebtedness has not been discharged in full or such acceleration
has not been rescinded or annulled within 30 days of such acceleration
and/or (II) the failure to make a principal payment at the final (but
not any interim) fixed maturity and such defaulted payment shall not
have been made, waived or extended within 30 days of such payment
default;
(e) any final judgment or order for the payment of money
in excess of $5 million in the aggregate for all such final judgments
or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered
against the Company, the Guarantor or any Significant Subsidiary and
shall not be paid or discharged, and either (A) an enforcement
proceeding shall have commenced by any creditor upon such judgment or
order
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or (B) there shall be any period of 30 consecutive days following
entry of the final judgment or order that causes the aggregate amount
for all such final judgments or orders outstanding and not paid or
discharged against all such Persons to exceed $5 million during which
a stay of enforcement of such final judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect;
(f) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company, the
Guarantor or any Significant Subsidiary in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Company, the Guarantor or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company, the
Guarantor or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company, the Guarantor or any
Significant Subsidiary and, in each case, such decree or order shall
remain unstayed and in effect for a period of 30 consecutive days;
(g) the Company, the Guarantor or any Significant
Subsidiary (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment
of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company,
the Guarantor or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company, the
Guarantor or any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors; or
(h) the Security Guarantee shall cease to be, or shall be
asserted in writing by the Company or the Guarantor not to be, in full
force and effect or enforceable in accordance with its terms.
SECTION 6.02. Acceleration. If an Event of Default (other
than an Event of Default specified in clause (f) or (g) of Section 6.01 that
occurs with respect to the Company) occurs and is continuing under this
Indenture, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Securities, then outstanding, by written notice to the Company
(and to the Trustee if such notice is given by the Holders), may, and the
Trustee at the request of such Holders shall, declare the principal of,
premium, if any, and accrued interest on the Securities to be immediately due
and payable. Upon a declaration of acceleration, such principal of, premium,
if any, and accrued interest shall be immediately due and payable. In the
event of a declaration of acceleration because an Event of Default set forth in
clause (d) of Section 6.01 has occurred and is continuing, such declaration of
acceleration shall be automatically rescinded and annulled if the event of
default triggering such Event of Default pursuant to
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clause (d) of Section 6.01 shall be remedied or cured by the Company or the
relevant Significant Subsidiary or waived by the holders of the relevant
Indebtedness within 60 days after the declaration of acceleration with respect
thereto, and no other Defaults under this Indenture have occurred and are
continuing after giving pro forma effect to such remedy, cure or waiver. If an
Event of Default specified in clause (f) or (g) of Section 6.01 occurs with
respect to the Company, the principal of, premium, if any, and accrued interest
on the Securities then outstanding shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holder.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the payment of principal of, premium, if any, or
interest on the Securities or to enforce the performance of any provision of
the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding.
SECTION 6.04. Waiver of Past Defaults. Subject to Sections
6.02, 6.07 and 9.02, the Holders of at least a majority in principal amount of
the outstanding Securities, by notice to the Trustee, may waive all past
Defaults and Events of Default and rescind and annul a declaration of
acceleration (except a Default in the payment of principal of, premium, if any,
or interest on any Security as specified in clause (a) or (b) of Section 6.01
or in respect of a covenant or provision of this Indenture which cannot be
modified or amended without the consent of the Holder of each outstanding
Security affected) if (i) all existing Events of Default, other than the
nonpayment of principal of, premium, if any, or interest on the Securities that
have become due solely by such declaration of acceleration, have been cured or
waived and (ii) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.
SECTION 6.05. Control by Majority. The Holders of at least a
majority in aggregate principal amount of the outstanding Securities may,
subject to Section 7.02(iv), direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee. However, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture, that may involve the
Trustee in personal liability, or that the Trustee determines in good faith may
be unduly prejudicial to the rights of Holders of Securities not joining in the
giving of such direction and may take any other action it deems proper that is
not inconsistent with any direction received from Holders of Securities
pursuant to this Section 6.05.
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SECTION 6.06. Limitation on Suits. A Holder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(i) the Holder gives the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25 % in aggregate principal
amount of outstanding Securities make a written request to the Trustee
to pursue the remedy;
(iii) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any costs, liabilities or expenses
which may be incurred in compliance with such request;
(iv) the Trustee does not comply with the request within
60 days after receipt of the written request and the offer of
indemnity; and
(v) during such 60-day period, the Holders of a majority
in aggregate principal amount of the outstanding Securities do not
give the Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 and this Section 6.06, the
Trustee shall comply with TIA Section 316(a) in making any determination of
whether the Holders of the required aggregate principal amount of outstanding
Securities have concurred in any request or direction of the Trustee to pursue
any remedy available to the Trustee or the Holders with respect to this
Indenture or the Securities or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Security to receive payment of the principal of, premium, if any, or
interest on such Security, or to bring suit for the enforcement of any such
payment, on or after the due date expressed in such Security, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default in payment of principal, premium or interest specified in clause (a) or
(b) of Section 6.01 occurs and is continuing, the Trustee may recover judgment
in its own name and as trustee of an express trust against the Company or any
other obligor of the Securities for the whole amount of principal, premium, if
any, and accrued interest remaining unpaid, together with interest on overdue
principal, premium, if any, and, to the extent that payment of such interest is
lawful, interest on overdue installments of interest, in each case at the rate
specified in the Securities, and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the
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reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Securities), its creditors or its
property and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Securities or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to empower the Trustee to authorize or consent to, or accept or adopt on
behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money
pursuant to this Article Six, it shall pay out the money in the following
order:
First: to the Trustee for all amounts due under Section
7.07;
Second: to the Holders for amounts then due and unpaid for
principal of, premium, if any, and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal, premium, if any, and interest, respectively; and
Third: to the Company or any other obligors of the
Securities, as their interests may appear, or as a court of competent
jurisdiction may direct.
The Trustee, upon prior written notice to the Company, may fix
a record date and payment date for any payment to Holders pursuant to this
Section 6.10.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court may
require any party litigant in such suit to file an undertaking to pay the costs
of the suit, and the court may assess reasonable costs, including reasonable
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attorneys' fees, against any party litigant in the suit having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by Holders of more than 10% in principal
amount of the outstanding Securities.
SECTION 6.12. Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then, and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Company, Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or wrongfully taken Securities in Section 2.09, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Six or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The duties and responsibilities of the
Trustee shall be as provided by the TIA and as set forth herein. Whether or
not herein expressly so provided, every provision of this Indenture relating to
the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA
Sections 315(a) through (d):
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(i) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper person. The Trustee need not investigate
any fact or matter stated in the document and may in good faith
conclusively rely as to the truth of the statements and the
correctness of the opinions therein;
(ii) before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel. The
Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such certificate, opinion and/or an
accountants' certificate;
(iii) the Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any
attorney or agent appointed with due care;
(iv) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders, unless such Holders shall
have offered to the Trustee security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities that
might be incurred by it in compliance with such request or direction;
(v) the Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized
or within its rights or powers or for any action it takes or omits to
take in accordance with the direction of the Holders of a majority in
principal amount of the outstanding Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture; provided that the Trustee's conduct
does not constitute negligence or bad faith;
(vi) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(vii) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
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entitled to examine the books, records and premises of the Company or
the Guarantor personally or by agent or attorney; and
(viii) any request or direction of the Company or the
Guarantor mentioned herein shall be sufficiently evidenced by a
Company Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution.
SECTION 7.03. Individual Rights of Trustee. The Trustee, in
its individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with the Company, the Guarantor or their
Affiliates with the same rights it would have if it were not the Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to TIA
Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the
Securities, (ii) shall not be accountable for the Company's use or application
of the proceeds from the Securities and (iii) shall not be responsible for any
statement in the Securities other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event
of Default occurs and is continuing and if such Default or Event of Default is
known to an officer assigned to administer corporate trust matters of the
Trustee, the Trustee shall mail to each Holder in the manner and to the extent
provided in TIA Section 313(c) notice of the Default or Event of Default within
45 days after it occurs, unless such Default or Event of Default has been
cured; provided, however, that, except in the case of a default in the payment
of the principal of, premium, if any, or interest on any Security, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days
after each May 15, beginning with May 15, 1997, the Trustee shall mail to each
Holder as provided in TIA Section 313(c) a brief report that complies with TIA
Section 313(a) dated as of such May 15, if required by TIA Section 313(a).
SECTION 7.07. Compensation and Indemnity. The Company and the
Guarantor, jointly and severally, shall pay to the Trustee from time to time
such compensation as shall be agreed upon in writing for its services. The
compensation of the Trustee shall not be limited by any law on compensation of
a trustee of an express trust. The Company and the Guarantor, jointly and
severally, shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses (including costs of collection) and advances incurred or
made by the Trustee. Such expenses shall include the reasonable compensation
and expenses of the Trustee's agents and counsel.
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The Company and the Guarantor, jointly and severally, shall
indemnify the Trustee for, and hold it harmless against, any loss or liability
or expense incurred by it without negligence or bad faith on its part in
connection with the acceptance or administration of this Indenture and its
duties under this Indenture and the Securities, including, without limitation,
the costs and expenses of investigating or defending itself against any claim
or liability and of complying with any process served upon it or any of its
officers in connection with the exercise or performance of any of its powers or
duties under this Indenture and the Securities.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee, in its capacity as Trustee, except
money or property held in trust to pay principal of, premium, if any, and
interest on particular Securities.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (f) or (g) of Section
6.01, the expenses and the compensation for the services will be intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
SECTION 7.08. Replacement of Trustee. A resignation or
removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee's acceptance of appointment as
provided in this Section 7.08.
The Trustee may resign at any time by so notifying the Company
in writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the consent of the Company. The Company may at any time
remove the Trustee, by Company Order given at least 30 days prior to the date
of the proposed removal if: (i) the Trustee is no longer eligible under Section
7.10; (ii) the Trustee is adjudged a bankrupt or an insolvent; (iii) a
receiver or other public officer takes charge of the Trustee or its property;
or (iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists
in the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the outstanding Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company. If the successor Trustee does not deliver its written acceptance
required by the next succeeding paragraph of this Section 7.08 within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance,
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subject to the lien provided in Section 7.07, (i) the retiring Trustee shall
transfer all property held by it as Trustee to the successor Trustee, (ii) the
resignation or removal of the retiring Trustee shall become effective and (iii)
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If the Trustee is no longer eligible under Section 7.10, any
Holder who satisfies the requirements of TIA Section 310(b) may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
The Company shall give notice of any resignation and any
removal of the Trustee and each appointment of a successor Trustee to all
Holders. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue
indefinitely for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the
Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation or
national banking association, the resulting, surviving or transferee
corporation or national banking association without any further act shall be
the successor Trustee with the same effect as if the successor Trustee had been
named as the Trustee herein.
SECTION 7.10. Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee
shall have a combined capital and surplus of at least $25,000,000 as set forth
in its most recent published annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee shall not be
liable for interest on any money received by it except as the Trustee may agree
in writing with the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law and except for
money held in trust under Article Eight of this Indenture.
SECTION 7.12. Withholding Taxes. The Trustee, as agent for
the Company, shall exclude and withhold from each payment of principal and
interest and other amounts due hereunder or under the Securities any and all
withholding taxes applicable thereto as required by the federal law of the
United States or the law of the State of New York or any political subdivision
thereof ("U.S. Taxes"). The Trustee agrees to act as such withholding agent
and, in connection therewith, whenever any present or future U.S. Taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Securities, to withhold such amounts and timely pay the same
to the appropriate authority in the name of and
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on behalf of the holders of the Securities, that it will file any necessary
withholding tax returns or statements when due, and that, as promptly as
possible after the payment thereof, it will deliver to each holder of a
Security appropriate documentation showing the payment thereof, together with
such additional documentary evidence as such holders may reasonably request
from time to time.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Securities and this Indenture if:
(i) all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities that have been
replaced or Securities that are paid pursuant to Section 4.01 or
Securities for whose payment money or securities have theretofore been
held in trust and thereafter repaid to the Company, as provided in
Section 8.05) have been delivered to the Trustee for cancellation and
the Company has paid all sums payable by it hereunder; or
(ii) (A) the Securities mature within one year or all of
them are to be called for redemption within one year under
arrangements satisfactory to the Trustee for giving the notice of
redemption, (B) the Company or the Guarantor irrevocably deposits in
trust with the Trustee during such one-year period, under the terms of
an irrevocable trust agreement in form and substance satisfactory to
the Trustee, as trust funds solely for the benefit of the Holders for
that purpose, money or U.S. Government Obligations sufficient (in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee), without consideration of any reinvestment of any
interest thereon, to pay principal, premium, if, any, and interest on
the Securities to maturity or redemption, as the case may be, and to
pay all other sums payable by it hereunder, (C) no Default or Event of
Default with respect to the Securities shall have occurred and be
continuing on the date of such deposit, (D) such deposit will not
result in a breach or violation of, or constitute a default under,
this Indenture or any other agreement or instrument to which the
Company or the Guarantor is a party or by which it is bound and (E)
the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the satisfaction and
discharge of this Indenture have been complied with.
With respect to the foregoing clause (i), the Company's
obligations under Section 7.07 shall survive. With respect to the foregoing
clause (ii), the Company's and the Guarantor's obligations in Sections 2.02,
2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 4.21,
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7.07, 7.08, 8.04, 8.05 and 8.06 and Article Ten shall survive until the
Securities are no longer outstanding. Thereafter, only the Company's and the
Guarantor's obligations in Sections 7.07, 8.05 and 8.06 shall survive. After
any such irrevocable deposit, the Trustee upon request shall acknowledge in
writing the discharge of the Company's and the Guarantor's obligations under
the Securities and this Indenture except for those surviving obligations
specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The
Company will be deemed to have paid and will be discharged from any and all
obligations in respect of the Securities on the 123rd day (or, to the extent
applicable under clause (B) below, one year) after the deposit referred to in
clause (A) of this Section 8.02 if:
(A) the Company has irrevocably deposited or caused to be
irrevocably deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10) and conveyed all right, title and
interest for the benefit of the Holders, under the terms of an
irrevocable trust agreement in form and substance satisfactory to the
Trustee as trust funds in trust, specifically pledged to the Trustee
for the benefit of the Holders as security for payment of the
principal of, premium, if any, and interest, if any, on the
Securities, and dedicated solely to, the benefit of the Holders, in
and to (1) money in an amount, (2) U.S. Government Obligations that,
through the payment of interest, premium, if any, and principal in
respect thereof in accordance with their terms, will provide, not
later than one day before the due date of any payment referred to in
this clause (A), money in an amount or (3) a combination thereof in an
amount sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, without
consideration of the reinvestment of such interest and after payment
of all federal, state and local taxes or other charges and assessments
in respect thereof payable by the Trustee, the principal of, premium,
if any, and accrued interest on the outstanding Securities at the
Stated Maturity of such principal or interest; provided that the
Trustee shall have been irrevocably instructed to apply such money or
the proceeds of such U.S. Government Obligations to the payment of
such principal, premium, if any, and interest with respect to the
Securities;
(B) the Company shall have delivered to the Trustee (i)
either (x) an Opinion of Counsel to the effect that Holders will not
recognize income, gain or loss for United States federal income tax
purposes as a result of the Company's or the Guarantor's exercise of
its option under this Section 8.02 and will be subject to United
States federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such option had
not been exercised, which Opinion of Counsel must be based upon (and
accompanied by a copy of) a ruling of the United States Internal
Revenue Service to the same effect unless there has been a change in
applicable United States federal income tax law after the Closing Date
such that a ruling is no longer required or (y) a ruling directed to
the Trustee received from the United States Internal Revenue Service
to the same effect as the aforementioned Opinion of Counsel; and (ii)
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an Opinion of Counsel to the effect that (x) the creation of the
defeasance trust does not violate the Investment Company Act of 1940
and (y) after the passage of 123 days following the deposit (except,
with respect to any trust funds for the account of any Holder who may
be deemed to be an "insider" for purposes of the United States
Bankruptcy Code, after one year following the deposit), the trust
funds will not be subject to the effect of Section 547 of the United
States Bankruptcy Code or Section 15 of the New York Debtor and
Creditor Law in a case commenced by or against the Company or the
Guarantor under either such statute, and either (I) the trust funds
will no longer remain the property of the Company or the Guarantor
(and therefore will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally) or (II) if a court were to rule under any
such law in any case or proceeding that the trust funds remained
property of the Company or the Guarantor (a) assuming such trust funds
remained in the possession of the Trustee prior to such court ruling
to the extent not paid to the Holders, the Trustee will hold, for the
benefit of the Holders, a valid and perfected security interest in
such trust funds that is not avoidable in bankruptcy or otherwise
(except for the effect of Section 552(b) of the United States
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute), (b) the Holders will be
entitled to receive adequate protection of their interests in such
trust funds if such trust funds are used in such case or proceeding
and (c) no property, rights in property or other interests granted to
the Trustee or the Holders in exchange for, or with respect to, such
trust funds will be subject to any prior rights of holders of other
Indebtedness of the Guarantor, the Company or any of its Subsidiaries;
(C) immediately after giving effect to such deposit on a
pro forma basis, no Default or Event of Default shall have occurred
and be continuing on the date of such deposit or during the period
ending on the 123rd day (or one year) after the date of such deposit,
and such deposit shall not result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(D) if the Securities are then listed on a national
securities exchange, the Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that the Securities will not be
delisted as a result of such deposit, defeasance and discharge; and
(E) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day
(or one year) period referred to in clause (B)(2)(y) of this Section 8.02, none
of the Company's or the Guarantor's obligations under this Indenture shall be
discharged. Subsequent to the end of such 123-day (or one year) period with
respect to this Section 8.02, the Company's and the
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Guarantor's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 4.21, 7.07, 7.08, 8.05 and 8.06 and Article Ten shall
survive until the Securities are no longer outstanding. Thereafter, only the
Company's and the Guarantor's obligations in Sections 7.07, 8.05 and 8.06 shall
survive. If and when a ruling from the United States Internal Revenue Service
or an Opinion of Counsel referred to in clause (B)(i) of this Section 8.02 may
be provided specifically without regard to, and not in reliance upon, the
continuance of the Company's obligations under Section 4.01 and the Guarantor's
obligations under Article Ten, then the Company's obligations under such
Section 4.01 and the Guarantor's obligations under Article Ten shall cease upon
delivery to the Trustee of such ruling or Opinion of Counsel and compliance
with the other conditions precedent provided for herein relating to the
defeasance contemplated by this Section 8.02.
After any such irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's and the Guarantor's
obligations under the Securities and this Indenture except for those surviving
obligations in the immediately preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Company
and the Guarantor may omit to comply with any term, provision or condition set
forth in clauses (iii) and (iv) of Section 5.01 and Sections 4.03 through 4.20,
and clause (c) of Section 6.01 with respect to clauses (iii) and (iv) of
Section 5.01 and Sections 4.03 through 4.20, and clauses (d) and (e) of Section
6.01 shall be deemed not to be Events of Default, in each case with respect to
the outstanding Securities if:
(i) the Company has irrevocably deposited or caused to be
irrevocably deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10) and conveyed all right, title and
interest to the Trustee for the benefit of the Holders, under the
terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee as trust funds in trust, specifically
pledged to the Trustee for the benefit of the Holders as security for
payment of the principal of, premium, if any, and interest, if any, on
the Securities, and dedicated solely to, the benefit of the Holders,
in and to (A) money in an amount, (B) U.S. Government Obligations
that, through the payment of interest and principal in respect thereof
in accordance with their terms, will provide, not later than one day
before the due date of any payment referred to in this clause (i),
money in an amount or (C) a combination thereof in an amount
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, without
consideration of the reinvestment of such interest and after payment
of all federal, state and local taxes or other charges and assessments
in respect thereof payable by the Trustee, the principal of, premium,
if any, and interest on the outstanding Securities on the Stated
Maturity of such principal or interest; provided that the Trustee
shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of such
principal, premium, if any, and interest with respect to the
Securities;
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(ii) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other
agreement or instrument to which the Guarantor, the Company or any of
its Subsidiaries is a party or by which it is bound;
(iii) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit;
(iv) the Company has delivered to the Trustee an Opinion
of Counsel to the effect that (A) the creation of the defeasance trust
does not violate the Investment Company Act of 1940, (B) the Holders
have a valid first-priority security interest in the trust funds, (C)
the Holders will not recognize income, gain or loss for United States
federal income tax purposes as a result of such deposit and the
defeasance of the obligations referred to in the first paragraph of
this Section 8.03 and will be subject to United States federal income
tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit and defeasance had not
occurred, and (D) after the passage of 123 days following the deposit
(except, with respect to any trust funds for the account of any Holder
who may be deemed to be an "insider" for purposes of the United States
Bankruptcy Code, after one year following the deposit), the trust
funds will not be subject to the effect of Section 547 of the United
States Bankruptcy Code or Section 15 of the New York Debtor and
Creditor Law in a case commenced by or against the Company or the
Guarantor under either such statute, and either (1) the trust funds
will no longer remain the property of the Company or the Guarantor
(and therefore will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally) or (2) if a court were to rule under any
such law in any case or proceeding that the trust funds remained
property of the Company or the Guarantor (x) assuming such trust funds
remained in the possession of the Trustee prior to such court ruling
to the extent not paid to the Holders, the Trustee will hold, for the
benefit of the Holders, a valid and perfected security interest in
such trust funds that is not avoidable in bankruptcy or otherwise
(except for the effect of Section 552(b) of the United States
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute), (y) the Holders will be
entitled to receive adequate protection of their interests in such
trust funds if such trust funds are used in such case or proceeding
and (z) no property, rights in property or other interests granted to
the Trustee or the Holders in exchange for, or with respect to, such
trust funds will be subject to any prior rights of holders of other
Indebtedness of the Guarantor, the Company or any of its Subsidiaries;
(v) if the Securities are then listed on a national
securities exchange, the Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that such deposit and defeasance
will not cause the Securities to be delisted; and
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(vi) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
SECTION 8.04. Application of Trust Money. Subject to Section
8.06, the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the
case may be, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with the Securities and this Indenture to
the payment of principal of, premium, if any, and interest on the Securities;
but such money need not be segregated from other funds except to the extent
required by law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.07,
8.01, 8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Company upon request any excess money held by them at any time and thereupon
shall be relieved from all liability with respect to such money. The Trustee
and the Paying Agent shall pay to the Company any money held by them for the
payment of principal, premium, if any, or interest that remains unclaimed for
two years; provided that the Trustee or such Paying Agent before being required
to make any payment may cause to be published at the expense of the Company
once in a newspaper of general circulation in the City of New York or mail to
each Holder entitled to such money at such Holder's address (as set forth in
the Security Register) notice that such money remains unclaimed and that after
a date specified therein (which shall be at least 30 days from the date of such
publication or mailing) any unclaimed balance of such money then remaining will
be repaid to the Company. After payment to the Company, Holders entitled to
such money must look to the Company for payment as general creditors unless an
applicable law designates another Person, and all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
Section 8.01, 8.02 or 8.03, as the case may be, by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and the Guarantor's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01, 8.02 or 8.03, as the case may be, until such time as
the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 8.01, 8.02 or 8.03, as the
case may be; provided that, if the Company or the Guarantor has made any
payment of principal of, premium, if any, or interest on any Securities because
of the reinstatement of its obligations, the Company or the Guarantor, as the
case may be, shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
SECTION 8.07. Insiders. With respect to the determination of
the Persons constituting beneficial owners of Securities and whether any such
Person is an "insider" for purposes of
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Sections 8.02(B)(ii)(y) and 8.03(iv)(E), the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Officers' Certificate.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company and the
Guarantor, when authorized by resolutions of their Boards of Directors, and the
Trustee may amend or supplement this Indenture or the Securities without notice
to or the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency in
this Indenture; provided that such amendments or supplements shall not
adversely affect the interests of the Holders in any material respect;
(b) to comply with Article Five;
(c) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
(d) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee; or
(e) to make any change that does not materially and
adversely affect the rights of any Holder.
SECTION 9.02. With Consent of Holders. Subject to Sections
6.04 and 6.07 and without prior notice to the Holders, the Company and the
Guarantor, when authorized by their Boards of Directors (as evidenced by a
Board Resolution), and the Trustee may amend this Indenture and the Securities
with the written consent of the Holders of a majority in principal amount of
the Securities then outstanding, and the Holders of a majority in principal
amount of the Securities then outstanding by written notice to the Trustee may
waive future compliance by the Company or the Guarantor with any provision of
this Indenture or the Securities.
Notwithstanding the provisions of this Section 9.02, without
the consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or
any installment of interest on, any Security, or reduce the principal
amount of, or premium, if any, or interest on, any Security, or
adversely affect any right of repayment at the option of any Holder of
any Security, or change the place or currency of payment of principal
of, or premium, if any, or interest on, any Security, or impair the
right to institute suit for the
<PAGE> 78
71
enforcement of any payment on or after the Stated Maturity (or, in the
case of a redemption, on or after the Redemption Date) of any
Security;
(ii) reduce the percentage of outstanding Securities the
consent of whose Holders is required for any supplemental indenture,
for any waiver of compliance with certain provisions of this Indenture
or for waiver of certain Defaults and their consequences provided for
in this Indenture;
(iii) waive a default in the payment of principal of,
premium, if any, or interest on the Securities;
(iv) release the Guarantor from its Security Guarantee; or
(v) modify any of the provisions of this Section 9.02,
except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each outstanding Security
affected thereby.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders affected thereby
a notice briefly describing the amendment, supplement or waiver. The Company
will mail supplemental indentures to Holders upon request. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an
amendment or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the Security of the
consenting Holder, even if notation of the consent is not made on any Security.
However, any such Holder or subsequent Holder may revoke the consent as to its
Security or portion of its Security. Such revocation shall be effective only
if the Trustee receives the notice of revocation before the date the amendment,
supplement or waiver becomes effective. An amendment, supplement or waiver
shall become effective on receipt by the Trustee of written consents from the
Holders of the requisite percentage in principal amount of the outstanding
Securities.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last two sentences of the immediately preceding paragraph,
those persons who were Holders at such record date (or their duly designated
<PAGE> 79
72
proxies) and only those persons shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given, whether or not
such persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder unless it is of the type described in any of clauses
(i) through (v) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (v) of Section 9.02, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Security that evidences the same indebtedness as the Security of the consenting
Holder.
SECTION 9.04. Notation on or Exchange of Securities. If an
amendment, supplement or waiver changes the terms of a Security, the Trustee
may require the Holder to deliver such Security to the Trustee. At the
Company's expense the Trustee may place an appropriate notation on the Security
about the changed terms and return it to the Holder and the Trustee may place
an appropriate notation on any Security thereafter authenticated.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms.
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article Nine is authorized or permitted by
this Indenture. Subject to the preceding sentence, the Trustee shall sign such
amendment, supplement or waiver if the same does not adversely affect the
rights, duties or immunities of the Trustee under this Indenture or otherwise.
The Trustee may, but shall not be obligated to, execute any such amendment,
supplement or waiver that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the TIA as then in effect.
ARTICLE TEN
GUARANTEE OF SECURITIES
SECTION 10.01. Security Guarantee. Subject to the provisions
of this Article Ten, the Guarantor hereby fully, unconditionally and
irrevocably guarantees to each Holder and to the Trustee on behalf of the
Holders: (i) the due and punctual payment of the principal of, premium, if any,
on and interest on each Security, when and as the same shall become due and
payable, whether, by acceleration, required repurchase (including by reason of
Change of
<PAGE> 80
73
Control), call for redemption or otherwise, the due and punctual payment of
interest on the overdue principal of and interest, if any, on the Securities,
to the extent lawful (in each case including interest accruing on or after
filing of any petition in bankruptcy or reorganization relating to the Company
or the Guarantor, whether or not a claim for post filing interest is allowed in
such proceeding), and the due and punctual performance of all other obligations
of the Company to the Holders or the Trustee, all in accordance with the terms
of such Security and this Indenture and (ii) in the case of any extension of
time of payment or renewal of any Securities or any of such other obligations,
that the same will be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, at Stated Maturity, by
acceleration, required repurchase (including by reason of Change of Control),
call for redemption or otherwise. The Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
merger or bankruptcy of the Company, any right to require a proceeding first
against the Company, the benefit of discussion, protest or notice with respect
to any such Security or the debt evidenced thereby and all demands whatsoever,
and covenants that this Security Guarantee will not be discharged as to any
such Security except by payment in full of the principal thereof and interest
thereon and as provided in Section 8.01 and Section 8.02 (subject to Section
8.06). The Guarantor hereby also irrevocably waives any right contemplated by
Articles 480 (second paragraph), 481 and 482 of the Argentine Commercial Code
as well as any rights and powers contemplated by Articles 1990, 1994, 2012,
2015, 2017, 2018, 2020, 2021 (except the right to oppose payment), 2022, 2023,
2024, 2025, 2026, 2028, 2029 (in the same extension as provided in the third
paragraph of this Section 10.01), 2043, 2044, 2045, 2046, 2047, 2049 (except in
the case of express prior written waiver issued by the Trustee), and 2050 of
the Argentine Civil Code, to the extent any such rights of defenses would
otherwise become applicable or available to the Guarantor. The obligations of
the Guarantor hereunder shall not be affected by any failure or delay of the
Trustee to exercise any right or remedy under this Indenture, the Securities or
this Security Guarantee. The maturity of the obligations guaranteed hereby may
be accelerated as provided in Article Six for the purposes of this Article Ten.
In the event of any declaration of acceleration of such obligations as provided
in Article Six, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantor for the purpose of this
Article Ten. In addition, without limiting the foregoing provisions, upon the
effectiveness of an acceleration under Article Six, the Trustee shall promptly
make a demand for payment on the Securities under the Security Guarantee
provided for in this Article Ten.
The Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against the Company
for liquidation or reorganization, should the Company become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant portion of the Company's assets, and if
the Trustee or the Holder of any Security is required by any court or otherwise
to return to the Company or the Guarantor, or any custodian, receiver,
liquidator, trustee, sequestrator or other similar official acting in relation
to the Company or the Guarantor, any amount paid to the Trustee or such Holder
in respect of a Security, this Security Guarantee, to the extent theretofore
discharged, shall continue to be effective or be reinstated in full force and
effect, as the case
<PAGE> 81
74
may be, all as though such payment has not been made. The Guarantor further
agrees, to the fullest extent that it may lawfully do so, that, as between it,
on the one hand, and the Holders and the Trustee, on the other hand, the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article Six hereof for the purposes of this Security Guarantee, notwithstanding
any stay, injunction or other prohibition extant under any applicable
bankruptcy law preventing such acceleration in respect of the obligations
Guaranteed hereby.
The Guarantor hereby irrevocably waives any claim or other
rights which it may now or hereafter acquire against the Company that arise
from the existence, payment, performance or enforcement of its obligations
under this Security Guarantee and this Indenture, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of the Holders
against the Company or any collateral which any such Holder or the Trustee on
behalf of such Holder hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including,
without limitation, the right to take or receive from the Company, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights until such time as
the Securities and all of the Company's other obligations being guaranteed
hereby shall have been indefeasibly paid in full. If any amount shall be paid
to the Guarantor in violation of the preceding sentence and the principal of,
premium, if any, and accrued interest on the Securities shall not have been
paid in full, such amount shall be deemed to have been paid to the Guarantor
for the benefit of, and held in trust for the benefit of, the Holders, and
shall forthwith be paid to the Trustee for the benefit of the Holders to be
credited and applied upon the principal of, premium, if any, and accrued
interest on the Securities. The Guarantor acknowledges that it will receive
direct and indirect benefits from the issuance of the Securities pursuant to
this Indenture and that the waivers set forth in this Section 10.01 are
knowingly made in contemplation of such benefits.
The Security Guarantee set forth in this Section 10.01 shall
not be valid or become obligatory for any purpose with respect to a Security
until the certificate of authentication on such Security shall have been signed
by or on behalf of the Trustee.
SECTION 10.02. Obligations Unconditional. This Guarantee is
absolute, unconditional and irrevocable irrespective of the genuineness,
validity, regularity, legality or enforceability of the Securities or this
Indenture or the obligations of the Company hereunder or thereunder, the
absence of any action to enforce the same, any merger, consolidation,
reorganization, winding-up or dissolution of the Company, any waiver or consent
or other action by any Holder of the Securities or by the Trustee with respect
to any provisions hereof or thereof, any release or amendment or waiver of any
term of any other guarantee of, or consent to departure from any requirement
of, any other guarantee of all or any of the Securities, the disallowance,
under Section 502 of the Bankruptcy Code, of all or any portion of the claims
of the Trustee or any of the Holders for payment of any of the Securities, the
obtaining of any judgment against the Company or any action to enforce the
same, the failure of the Company
<PAGE> 82
75
to pay any fees to the Guarantor, or any other circumstances whatsoever which
might in any manner or to any extent constitute a legal or equitable discharge
or defense available to the Company or to a guarantor or vary the risk of the
Guarantor.
The Guarantee shall be continuing and remain in full force and
effect and be binding upon the Guarantor and its successors and inure to the
benefit of the Trustee and the Holders, until all obligations of the Company
with respect to the Securities have been performed and indefeasiby paid in
full, except as otherwise provided in this Article Ten.
Subject to Section 10.05, nothing contained in this Article
Ten or elsewhere in this Indenture or in the Securities is intended to or shall
impair, as among the Guarantor and the holders of the Securities, the
obligation of the Guarantor, which is absolute, unconditional and irrevocable,
upon failure by the Company, to pay to the Holders of the Securities the
principal of, premium, if any, and interest on the Securities as and when the
same shall become due and payable in accordance with their terms, without the
necessity of action by the Trustee or any Holder, or is intended to or shall
affect the relative rights of the Holders of the Securities and creditors of
the Guarantor, nor shall anything herein or therein prevent the Holder of any
Security or the Trustee on their behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture.
Without limiting the foregoing, nothing contained in this
Article Ten will restrict the right of the Trustee or the Holders of the
Securities to take any action to declare the Security Guarantee to be due and
payable prior to the Stated Maturity of the Securities pursuant to Section 6.02
or to pursue any rights or remedies hereunder.
SECTION 10.03. Payments by Guarantor. The Guarantor agrees
that any payments made by it on the Securities will be paid strictly in
accordance with the terms and provisions thereof, regardless of any law,
statute, rule, regulation, decree or order, now or hereafter in effect in any
jurisdiction, purporting to affect in any manner any of the terms or provisions
of the Securities, this Indenture or this Security Guarantee or any of the
Guarantor's rights, obligations or remedies with respect thereto as against the
Company, the Trustee of the Holders or purporting to cause or permit to be
invoked any alteration in the time, amount, manner, place or terms of payment
by the Company or the Guarantor under the Securities.
SECTION 10.04. Notice to Trustee. The Guarantor shall give
prompt written notice to the Trustee of any fact known to the Guarantor which
would prohibit the making of any payment to or by the Trustee in respect of the
Security Guarantee pursuant to the provisions of this Article Ten.
SECTION 10.05. This Article Not to Prevent Events of Default.
The failure to make a payment on account of principal of, premium, if any, or
interest on the Securities by reason of any provision of this Article Ten will
not be construed as preventing the occurrence of an Event of Default.
<PAGE> 83
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SECTION 10.06. Net Worth Limitation. Notwithstanding any
other provision of this Indenture or the Securities, the Security Guarantee
shall not be enforceable against the Guarantor in an amount in excess of the
net worth of the Guarantor at the time that determination of such net worth is,
under applicable law, relevant to the enforceability of the Security Guarantee.
Such net worth shall include any claim of the Guarantor against the Company for
reimbursement and any claim against any grantor of a Subsidiary Guarantee for
contribution.
SECTION 10.07. Representation and Warranty of the Guarantor.
The Guarantor hereby represents and warrants that all acts, conditions and
things required to be done and performed and to have happened precedent to the
creation and issuance of this Security Guarantee, to constitute the same valid,
binding and legal obligation of the Guarantor, enforceable against the
Guarantor, its successors and assigns in accordance with its terms, have been
done and performed and have happened in compliance with all applicable laws.
The Guarantor acknowledges that this Security Guarantee is a guarantee of
payment and not of collection. The obligation of the Guarantor under this
Security Guarantee shall constitute a direct, general, irrevocable, unsecured
and unsubordinated obligations of the Guarantor. The Guarantor acknowledges
that it will receive direct and indirect benefits from the issuance of the
Securities pursuant to this Indenture and that the waivers set forth in this
Article Ten are knowingly made in contemplation of such benefits.
SECTION 10.08. Expenses. The Guarantor agrees to pay or
reimburse the Trustee upon its request for all expenses, disbursements, losses,
liabilities and advances (including the reasonable compensation and expenses
and disbursements of its counsel and of its agents) incurred or made by or on
behalf of it in accordance with any of the provisions of this Indenture,
including in particular, but without limitation, those incurred in connection
with the enforcement of any remedies or rights hereunder.
SECTION 10.09. Special Waiver. To the extent that the
Guarantor may be entitled to the benefit of any provision of law requiring the
Trustee or any Holder of the Securities, in any suit, action or proceeding
brought in a court of Argentina or other jurisdiction arising out of or in
connection with any of this Indenture or the Securities, to post security for
litigation costs or otherwise post a performance bond or guaranty ("cautio
judication solvi" or "excepcion de arraigo"), or to take any similar action,
the Guarantor hereby waives such benefit, in each case to the fullest extent
now or hereafter permitted under the laws of Argentina or, as the case may be,
such other jurisdiction.
<PAGE> 84
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SECTION 11.01. Trust Indenture Act of 1939. Prior to the
effectiveness of the Registration Statement, this Indenture shall incorporate
and be governed by the provisions of the TIA that are required to be part of
and to govern indentures qualified under the TIA. After the effectiveness of
the Registration Statement, this Indenture shall be subject to the provisions
of the TIA that are required to be a part of this Indenture and shall, to the
extent applicable, be governed by such provisions.
SECTION 11.02. Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail addressed as follows:
if to the Company:
Alferez Pareja 256
1107 Buenos Aires Argentina
Attention: Chief Executive Officer
if to the Guarantor:
Alferez Pareja 256
1107 Buenos Aires Argentina
Attention: President
if to the Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
The Company, the Guarantor or the Trustee by notice to the
other may designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to him at his address as it appears on the Security Register by first class
mail and shall be sufficiently given to him if so mailed within the time
prescribed. Copies of any such communication or notice to a Holder shall also
be mailed to the Trustee and each Agent at the same time.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
Except for a notice to the Trustee, which is deemed given only when received,
and except as otherwise provided in this Indenture, if a notice or
communication is mailed in the manner provided in this Section 11.02, it is
duly given, whether or not the addressee receives it.
<PAGE> 85
78
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 11.03. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company or the Guarantor to
the Trustee to take any action under this Indenture, the Company or the
Guarantor shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of
such Counsel, all such conditions precedent have been complied with.
SECTION 11.04. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each person signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based;
(iii) a statement that, in the opinion of each such person,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of
each such person, such condition or covenant has been complied with;
provided, however, that, with respect to matters of fact, an Opinion
of Counsel may rely on an Officers' Certificate or certificates of
public officials.
<PAGE> 86
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SECTION 11.05. Rules by Trustee, Paying Agent or Registrar.
The Trustee may make reasonable rules for action by or at a meeting of Holders.
The Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.06. Payment Date Other Than a Business Day. If an
Interest Payment Date, Redemption Date, Payment Date, Stated Maturity or date
of maturity of any Security shall not be a Business Day, then payment of
principal of, premium, if any, or interest on such Security, as the case may
be, need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Payment Date, Redemption Date, or at the Stated Maturity or date of
maturity of such Security; provided that no interest shall accrue for the
period from and after such Interest Payment Date, Payment Date, Redemption
Date, Stated Maturity or date of maturity, as the case may be.
SECTION 11.07. Governing Law; Consent to Jurisdiction and
Service. This Indenture and the Securities shall be governed by the laws of
the State of New York. Each of the Company and the Guarantor hereby (i)
acknowledges that it has irrevocably designated and appointed CT Corporation
System, 1633 Broadway, New York, New York 10019 (together with any successor,
the "Process Agent"), as its authorized agent upon which process may be served
in any suit, action or proceeding arising out of or relating to this Indenture
or the Securities or the transactions contemplated herein or brought under
federal or state securities laws that may be instituted in any federal or state
court in the State of New York, sitting in the city of New York, and
acknowledges that the Process Agent has accepted such designation, (ii) agrees
that service of process upon the Process Agent and written notice of such
service to the Company or the Guarantor, as the case may be (mailed or
delivered to the Chief Executive Officer of the Company at its principal office
at Alferez Pareja 256, 1107 Buenos Aires Argentina), shall be deemed in every
respect effective service of process upon the Company or the Guarantor, as the
case may be, in any such suit, action or proceeding and (iii) agrees to take
any and all action, including the execution and filing of any and all such
documents and instruments as may be necessary to continue such designation and
appointment of the Process Agent in full force and effect so long as any of the
Securities shall be outstanding. Each of the Company and the Guarantor hereby
agrees to submit to the nonexclusive jurisdiction of any such federal or state
court in the State of New York in any such suit, action or proceeding arising
out of or relating to this Indenture or the Securities or the transactions
contemplated herein and hereby waives to the fullest extent permitted by law
any defense to the institution or continuance of any such suit, action or
proceeding based upon lack of proper venue, inconvenient forum or similar
grounds.
SECTION 11.08. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company, the Guarantor or any Subsidiary of the Company. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
<PAGE> 87
80
SECTION 11.09. No Recourse Against Others. No recourse for
the payment of the principal of, premium, if any, or interest on any of the
Securities, or for any claim based thereon or otherwise in respect thereof, and
no recourse under or upon any obligation, covenant or agreement of the Company
or the Guarantor contained in this Indenture, or in any of the Securities, or
because of the creation of any Indebtedness represented thereby, shall be had
against any incorporator or against any past, present or future partner,
shareholder, other equity holder, officer, director, employee or controlling
person, as such, of the Company or the Guarantor or of any successor Person,
either directly or through the Company or the Guarantor or any successor
Person, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Securities.
SECTION 11.10. Successors. All agreements of the Company
and the Guarantor in this Indenture and the Securities shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 11.11. Duplicate Originals. The parties may sign
any number of copies of this Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement.
SECTION 11.12. Currency Indemnity. U.S. dollars are the sole
currency of account and payment for all sums payable by the Company or the
Guarantor under or in connection with the Securities or the Security Guarantee,
including damages. Any amount received or recovered in a currency other than
U.S. dollars (whether as a result of, or of the enforcement of, a judgment or
order of a court of any jurisdiction, in the winding-up or dissolution of the
Company or the Guarantor or otherwise) by any Holder of a Security in respect
of any sum expressed to be due to it from the Company or the Guarantor shall
only constitute a discharge to the Company or the Guarantor to the extent of
the U.S. dollar amount which the recipient is able to purchase with the amount
so received or recovered in that other currency on the date of that receipt or
recovery (or, if it is not practicable to make that purchase on that date, on
the first date on which it is practicable to do so). If that U.S. dollar
amount is less than the U.S. dollar amount expressed to be due to the recipient
under any Security or the Security Guarantee, the Company and the Guarantor
shall indemnify the recipient against any loss sustained by it as a result. In
any event, the Company and the Guarantor shall indemnify the recipient against
the cost of making any such purchase. For the purposes of this paragraph, it
will be sufficient for the Holder of a Security to certify in a satisfactory
manner (indicating the sources of information used) that it would have suffered
a loss had an actual purchase of U.S. dollars been made with the amount so
received in that other currency on the date of receipt or recovery (or, if a
purchase of U.S. dollars on such date had not been practicable, on the first
date on which it would have been practicable, it being required that the need
for a change of date be certified in the manner mentioned above). These
indemnities constitute a separate and independent obligation from the Company's
and the Guarantor's other obligations, shall give rise
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81
to a separate and independent cause of action, shall apply irrespective of any
indulgence granted by any Holder of a Security and shall continue in full force
and effect despite any other judgment, order, claim or proof for a liquidated
amount in respect of any sum due under any Security.
SECTION 11.13. Table of Contents, Headings, Etc. The Table of
Contents, Cross-Reference Table and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
<PAGE> 89
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
IMPSAT CORPORATION
By: /s/ RICARDO A. VERDAGUER
--------------------------------
Name: Ricardo A. Verdaguer
Title: President
By: /s/ ALBERTO MILVIO
--------------------------------
Name: ALBERTO MILVIO
Title: Attorney in fact
IMPSAT S.A.
By: /s/ Guillermo Jofre
--------------------------------
Name: [NAME]
Title: Attorney in fact
THE BANK OF NEW YORK
By: /s/ LLOYD A MCKENZIE
--------------------------------
Name: LLOYD A. McKENZIE
Title: ASSISTANT VICE PRESIDENT
<PAGE> 90
EXHIBIT A
[FACE OF NOTE]
IMPSAT CORPORATION
12 1/8% Senior Guaranteed Note Due 2003
[CUSIP________________][CINS_________]
No. $__________
IMPSAT Corporation, a Delaware corporation (the "Company",
which term includes any successor under the Indenture hereinafter referred to),
for value received, promises to pay to____________, or its registered assigns,
the principal sum of__________ ($_________) on July 15, 2003.
Interest Payment Dates: January 15 and July 15, commencing
January 15, 1997.
Regular Record Dates: January 1 and July 1.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
<PAGE> 91
A-2
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
IMPSAT CORPORATION
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
(Form of Trustee's Certificate of Authentication)
This is one of the 12 1/8% Senior Guaranteed Notes due 2003 described in the
within-mentioned Indenture.
Date: July 30, 1996 THE BANK OF NEW YORK,
as Trustee
By:
-------------------------------
Authorized Signatory
<PAGE> 92
A-3
[REVERSE SIDE OF NOTE]
IMPSAT CORPORATION
12 1/8% Senior Guaranteed Note due 2003
1. Principal and Interest.
The Company will pay the principal of this Note on July 15,
2003.
The Company promises to pay interest on the principal amount
of this Note on each Interest Payment Date, as set forth below, at the rate per
annum shown above.
Interest will be payable semiannually (to the holders of
record of the Notes at the close of business on the January 1 or July 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing January 15, 1997.
If an exchange offer registered under the Securities Act is
not consummated, and a shelf registration statement under the Securities Act
with respect to resales of the Notes is not declared effective by the
Commission, on or before January 30, 1997 in accordance with the terms of the
Registration Rights Agreement dated July 30, 1996 among the Company, the
Guarantor, Morgan Stanley & Co. Incorporated and Bear Stearns & Co. Inc., the
rate of interest will increase by 0.5% per annum to 12 5/8% per annum. If such
exchange offer is not consummated and a shelf registration statement is not
declared effective by July 30, 1997 in accordance with the terms of the
Registration Rights Agreement, the rate of interest will increase by an
additional 0.5% per annum to 13 1/8% per annum. Notwithstanding the preceding
two sentences, the failure to cause such exchange offer to be consummated or
such shelf registration statement to be declared effective shall be deemed not
to be a default or breach of a covenant for purposes of Section 6.01(c) of the
Indenture. Upon consummation of the exchange offer or the effectiveness of the
shelf registration statement, as the case may be, the rate of interest will
decrease to the original rate of interest as set forth on the face of this
Note. The Holder of this Note is entitled to the benefits of such Registration
Rights Agreement. To the extent there is a conflict between this Note and such
Registration Rights Agreement, such Registration Rights Agreement shall control
to the extent permitted by applicable law.
Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from July 30,
1996; provided that, if there is no existing default in the payment of interest
and this Note is authenticated between a Regular Record Date referred to on the
face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such Interest Payment Date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
<PAGE> 93
A-4
The Company shall pay interest on overdue principal and
premium, if any, and (to the extent lawful) interest on overdue installments of
interest at the rate per annum borne by the Notes.
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each January 15 and July 15 to the persons who are Holders (as
reflected in the Security Register at the close of business on the January 1
and July 1 immediately preceding the Interest Payment Date), in each case, even
if the Note is cancelled on registration of transfer or registration of
exchange after such record date; provided that, with respect to the payment of
principal, the Company will not make payment to the Holder unless this Note is
surrendered to a Paying Agent.
The Company will pay principal, premium, if any, and as
provided above, interest in money of the United States of America that at the
time of payment is legal tender for payment of public and private debts. If a
payment date is a date other than a Business Day at a place of payment, payment
may be made at that place on the next succeeding day that is a Business Day and
no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as authenticating agent,
Paying Agent and Registrar. The Company may change any authenticating agent,
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Limitations.
The Company issued the Notes under an Indenture dated as of
July 30, 1996 (the "Indenture"), among the Company, as issuer, IMPSAT S.A., as
guarantor, (the "Guarantor") and The Bank of New York, as trustee (the
"Trustee"). Capitalized terms herein are used as defined in the Indenture
unless otherwise indicated. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Notes are subject to all such terms, and Holders are
referred to the Indenture and the Trust Indenture Act for a statement of all
such terms. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Note and the terms of the Indenture,
the terms of the Indenture shall control.
The Notes are general unsecured unsubordinated indebtedness of
the Company, will rank pari passu in right of payment with all existing and
future unsecured, unsubordinated indebtedness of the Company and will be senior
in right of payment to all existing and future subordinated indebtedness of the
Company. The Indenture limits the original aggregate principal
<PAGE> 94
A-5
amount of the Notes to $125,00,000 plus any Exchange Securities that may be
issued pursuant to the Registration Rights Agreement.
5. Redemption.
At any time on or prior to July 15, 1999, the Company may, at
its option from time to time, redeem Securities having an aggregate principal
amount of up to $25 million at a redemption price equal to 112.125% of the
principal amount thereof on the redemption date, together with accrued and
unpaid interest thereon, with the Net Cash Proceeds of one or more public or
private issuances and sales of Common Stock of the Company; provided that (i)
Securities having an aggregate principal amount of at least $100 million remain
outstanding after each such redemption and (ii) each such redemption occurs
within 180 days after consummation of any such issuance and sale.
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at such Holder's last address as it appears in the Security Register.
Notes in original denominations larger than $1,000 may be redeemed in part;
provided that Notes will only be issued in denominations of $1,000 principal
amount or integral multiples thereof. On and after the Redemption Date,
interest ceases to accrue on Notes or portions of Notes called for redemption,
unless the Company defaults in the payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder
shall have the right to require the repurchase of its Notes by the Company in
cash pursuant to the offer described in the Indenture at a purchase price equal
to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30
days after any Change of Control occurs to each Holder at his last address as
it appears in the Security Register. Notes in original denominations larger
than $1,000 may be sold to the Company in part; provided that Notes will only
be issued in denominations of $1,000 principal amount or integral multiples
thereof. On and after the Change of Control Payment Date, interest ceases to
accrue on Notes or portions of Notes surrendered for purchase by the Company,
unless the Company defaults in the payment of the Change of Control Payment.
8. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in
denominations of $1,000 of principal amount and integral multiples thereof. A
Holder may register the transfer or exchange
<PAGE> 95
A-6
of Notes in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture.
The Registrar need not register the transfer or exchange of any Notes selected
for redemption. Also, it need not register the transfer or exchange of any
Notes for a period of 15 days before a selection of Notes to be redeemed is
made.
9. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all
purposes.
10. Unclaimed Money.
If money for the payment of principal, premium, if any, or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, Holders entitled to the money
must look to the Company for payment, unless an applicable law designates
another Person, and all liability of the Trustee and such Paying Agent with
respect to such money shall cease.
11. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes (a) to maturity, the Company
and the Guarantor will be discharged from the Indenture and the Notes, except
in certain circumstances for certain sections thereof, and (b) to the Stated
Maturity, the Company and the Guarantor will be discharged from certain
covenants set forth in the Indenture.
12. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency and make any change that
does not materially and adversely affect the rights of any Holder.
<PAGE> 96
A-7
13. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries, among other things, to incur
additional indebtedness; create liens; engage in sale-leaseback transactions;
pay dividends or make distributions in respect of their capital stock; make
investments or make certain other restricted payments; sell assets; issue or
sell stock of Restricted Subsidiaries; enter into transactions with
stockholders or affiliates; or, with respect to the Guarantor and the Company,
consolidate, merge or sell all or substantially all of their assets. Within 90
days after the end of the last fiscal quarter of each year, the Company must
report to the Trustee on compliance with such limitations.
14. Successor Persons.
Generally, when a successor person or other entity assumes all
the obligations of its predecessor under the Notes and the Indenture, the
predecessor person will be released from those obligations.
15. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Security when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise; (b) default in the payment of interest
on any Security when the same becomes due and payable, and such default
continues for a period of 30 days; (c) the Company defaults in the performance
of or breaches any other covenant or agreement of the Company in the Indenture
or under the Securities and such default or breach continues for a period of 30
consecutive days after written notice by the Trustee or the Holders of 25% or
more in aggregate principal amount of the Securities; (d) there occurs with
respect to any issue or issues of Indebtedness of the Company, the Guarantor or
any Significant Subsidiary having an outstanding principal amount of $5 million
or more in the aggregate for all such issues of all such Persons, whether such
Indebtedness now exists or shall hereafter be created, (I) an event of default
that has caused the holder thereof to declare such Indebtedness to be due and
payable prior to its Stated Maturity and such Indebtedness has not been
discharged in full or such acceleration has not been rescinded or annulled
within 30 days of such acceleration and/or (II) the failure to make a principal
payment at the final (but not any interim) fixed maturity and such defaulted
payment shall not have been made, waived or extended within 30 days of such
payment default; (e) any final judgment or order for the payment of money in
excess of $5 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or retention
as not so covered) shall be rendered against the Company, the Guarantor or any
Significant Subsidiary and shall not be paid or discharged, and either (A) an
enforcement proceeding shall have been commenced by any creditor upon such
judgment or order or (B) there shall be any period of 30 consecutive days
following entry of the final judgment or order that causes the aggregate amount
for all such final judgments or orders outstanding and not paid or discharged
against all such Persons to exceed $5 million during which a stay of
<PAGE> 97
A-8
enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; (f) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company, the
Guarantor or any Significant Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (B) appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Company, the Guarantor or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company, the Guarantor or any Significant Subsidiary or (C) the
winding up or liquidation of the affairs of the Company, the Guarantor or any
Significant Subsidiary and, in each case, such decree or order shall remain
unstayed and in effect for a period of 30 consecutive days; (g) the Company,
the Guarantor or any Significant Subsidiary (A) commences a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company, the Guarantor or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company, the Guarantor or any Significant Subsidiary or (C)
effects any general assignment for the benefit of creditors; or (h) the
Security Guarantee shall cease to be, or shall be asserted in writing by the
Company or the Guarantor not to be, in full force and effect or enforceable in
accordance with its terms.
If an Event of Default (other than an Event of Default
specified in clause (f) or (g) above that occurs with respect to the Company)
occurs and is continuing under the Indenture, the Trustee or the Holders of at
least 25% in aggregate principal amount of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by
the Holders), may, and the Trustee at the request of such Holders shall,
declare the principal, premium, if any, and accrued interest on the Notes to be
immediately due and payable. If a bankruptcy or insolvency default with
respect to the Company occurs and is continuing, the principal of, premium, if
any, and accrued interest on the Notes automatically becomes due and payable
without any declaration or other act on the part of the Trustee or any Holder.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders
of at least a majority in principal amount of the Notes then outstanding may
direct the Trustee in its exercise of any trust or power.
16. Additional Amounts.
Any payments by the Guarantor under or with respect to the
Notes may require the payment of Additional Amounts as may become payable under
Section 4.21 of the Indenture.
17. Guarantee.
The Company's obligations under the Notes are fully,
unconditionally and irrevocably guaranteed by the Guarantor.
<PAGE> 98
A-9
18. Trustee Dealings with Company or Guarantor.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from and perform services
for the Guarantor or the Company or their Affiliates and may otherwise deal
with the Guarantor or the Company or their Affiliates as if it were not the
Trustee.
19. No Recourse Against Others.
No incorporator or any past, present or future partner,
shareholder, other equity holder, officer, director, employee or controlling
person as such, of the Company or the Guarantor or of any successor Person
shall have any liability for any obligations of the Company or the Guarantor
under the Notes or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. Such waiver and release are part of
the consideration for the issuance of the Notes.
20. Authentication.
This Note shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Note.
21. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to IMPSAT
Corporation, [____________________________________________].
<PAGE> 99
A-10
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _____________________________________________ attorney to transfer
said Note on the books of the Company with full power of substitution in the
premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL SECURITIES OTHER THAN EXCHANGE SECURITIES,
OFFSHORE GLOBAL SECURITIES AND
OFFSHORE PHYSICAL SECURITIES]
In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of an effective Registration
Statement or (ii) the end of the period referred to in Rule 144(k) under the
Securities Act, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
/ / (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act of
1933, as amended, provided by Rule 144A thereunder.
or
/ / (b) this Note is being transferred other than in accordance
with (a) above and documents are being furnished which
comply with the conditions of transfer set forth in this
Note and the Indenture.
<PAGE> 100
A-11
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date:
-------------------------- ------------------------------------
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of the
within mentioned instrument in every
particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Date:
--------------------------- -----------------------------------
NOTICE: To be executed by an
executive officer
<PAGE> 101
A-12
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company
pursuant to Section 4.12 or Section 4.13 of the Indenture, check the Box: / /
If you wish to have a portion of this Note purchased by the
Company pursuant to Section 4.12 or Section 4.13 of the Indenture, state the
amount (in principal amount ): $_______________.
Date:
-----------------------------
Your Signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:
---------------------------------------------------------
<PAGE> 102
EXHIBIT B
Form of Certificate
___________ ____, ______
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: IMPSAT CORPORATION (the "Company")
12 1/8% Senior Guaranteed Notes
due 2003 (the "Securities")
Ladies and Gentlemen:
This letter relates to U.S. $____________ principal amount of
Securities represented by a Note (the "Legended Note") which bears a legend
outlining restrictions upon transfer of such Legended Note. Pursuant to
Section 2.02 of the Indenture (the "Indenture") dated as of July 30, 1996
relating to the Securities, we hereby certify that we are (or we will hold such
Securities on behalf of) a person outside the United States to whom the
Securities could be transferred in accordance with Rule 904 of Regulation S
promulgated under the U.S. Securities Act of 1933, as amended. Accordingly, you
are hereby requested to exchange the legended certificate for an unlegended
certificate representing an identical principal amount of Securities, all in
the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
------------------------------
Authorized Signature
<PAGE> 103
EXHIBIT C
Form of Certificate to be Delivered
in Connection with Transfers
Pursuant to Regulation S
--------------------------------------
___________ ____, ______
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: IMPSAT CORPORATION (the "Company")
12 1/8% Senior Guaranteed Notes
due 2003 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of U.S.
$__________________ aggregate principal amount of the Securities, we confirm
that such sale has been effected pursuant to and in accordance with Regulation
S under the Securities Act of 1933, as amended, and, accordingly, we represent
that:
(1) the offer of the Securities was not made to a person
in the United States;
(2) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in
the United States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act of 1933.
<PAGE> 104
C-2
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-------------------------------
Authorized Signature
<PAGE> 105
EXHIBIT D
Form of Certificate to be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
___________ ____, ______
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: IMPSAT CORPORATION (the "Company")
12 1/8% Senior Guaranteed Notes
due 2003 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of $_________
aggregate principal amount of the Securities, we confirm that:
1. We understand that any subsequent transfer of the
Securities is subject to certain restrictions and conditions set forth
in the Indenture dated as of July 30, 1996 relating to the Securities
(the "Indenture") and the undersigned agrees to be bound by, and not
to resell, pledge or otherwise transfer the Securities except in
compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the
Securities have not been registered under the Securities Act, and that
the Securities may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we
should sell any Securities, we will do so only (A) to the Company or
any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined
therein), (C) to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a U.S. broker-dealer) to you and to the Company a signed
letter substantially in the form of this letter, (D) outside the
<PAGE> 106
D-2
United States in accordance with Rule 904 of Regulation S under the
Securities Act, (E) pursuant to the provisions of Rule 144 under the
Securities Act or (F) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any
person purchasing any of the Securities from us a notice advising such
purchaser that resales of the Securities are restricted as stated
herein.
3. We understand that, on any proposed resale of any
Securities, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that
the Securities purchased by us will bear a legend to the foregoing
effect.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks of our investment in the Securities, and we and any accounts for
which we are acting are each able to bear the economic risk of our or
its investment.
5. We are acquiring the Securities purchased by us for
our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise
sole investment discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
------------------------------
Authorized Signature
<PAGE> 1
EXHIBIT 4.2
<PAGE> 2
July 25, 1996
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
IMPSAT Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to the several placement agents named in Schedule I
hereto (collectively, the "Placement Agents") $125 million principal amount of
its Senior Guaranteed Notes due 2003 (the "Notes") to be issued pursuant to the
provisions of an Indenture to be dated as of July 30, 1996 (the "Indenture")
between the Company and The Bank of New York, as Trustee. The Notes will be
guaranteed (the "Guarantee") by IMPSAT S.A., a company organized under the laws
of Argentina and a 51%-owned subsidiary of the Company (the "Guarantor").
The Notes will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers (as defined in Rule 144A under the Securities Act) in
compliance with the exemption from registration provided by Rule 144A under the
Securities Act ("Rule 144A"), in offshore transactions in reliance on Regulation
S under the Securities Act ("Regulation S") and to institutional accredited
investors (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) that deliver a letter in the form annexed to the Final Memorandum.
<PAGE> 3
2
In connection with the sale of the Notes, the Company has
prepared a preliminary private placement memorandum (the "Preliminary
Memorandum") and will prepare a final private placement memorandum (the "Final
Memorandum" and, with the Preliminary Memorandum, each a "Memorandum") setting
forth or including a description of the terms of the Notes, the terms of the
offering and a description of the Company and its business.
The purchasers of the Notes and their direct and indirect
transferees will be entitled to the benefits of a Registration Rights Agreement,
to be dated the Closing Date (as defined below) and to be substantially in the
form attached hereto as Exhibit A.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, you that as of the date hereof:
(a) The Preliminary Memorandum does not contain and the Final
Memorandum, in the form used by the Placement Agents to confirm sales
and on the Closing Date, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
warranties set forth in this Section 1(a) do not apply to statements or
omissions in either Memorandum based upon information relating to any
Placement Agent furnished to the Company in writing by such Placement
Agent through Morgan Stanley & Co. Incorporated expressly for use
therein.
(b) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of
Delaware, United States of America, has the corporate power and
authority to own its property and to conduct its business as described
in each Memorandum and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly incorporated
and is validly existing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its
property and to conduct its business as described in each Memorandum
and is duly qualified to transact business in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified would not have a material adverse effect on
such subsidiary. The Guarantor is a 51%-owned subsidiary of the
Company; IMPSAT S.A. ("ImpSat Colombia") is a 74.2%-owned subsidiary of
the Company; IMPSATEL del Ecuador S.A. ("ImpSat Ecuador") is a
wholly-owned subsidiary of the Company; IMPSAT S.A. de C.V.
<PAGE> 4
3
("ImpSat Mexico") is a 99.9%-owned subsidiary of the Company; and
Telecomunicaciones IMPSAT, S.A. ("ImpSat Venezuela") is a 75%-owned
subsidiary of the Company.
(d) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantor.
(e) The Registration Rights Agreement has been duly authorized
and, when executed and delivered by the Company and the Guarantor, will
be a valid and binding agreement of the Company and the Guarantor
enforceable in accordance with its terms, except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, (y) the
availability of equitable remedies may be limited by equitable
principles of general applicability and (z) any rights to indemnity and
contribution may be limited by federal and state securities laws and
public policy considerations.
(f) (i) The Notes have been duly authorized and, when executed,
authenticated and delivered in accordance with the terms of the
Indenture and paid for by the Placement Agents in accordance with the
terms of this Agreement, will (x) be valid and binding obligations of
the Company enforceable in accordance with their terms, except as (A)
the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (B) rights of
acceleration, if applicable, and the availability of equitable remedies
may be limited by equitable principles of general applicability and (y)
be entitled to the benefits of the Indenture and (ii) the Guarantee has
been duly authorized by the Guarantor and, when the Indenture has been
executed, authenticated and delivered by the Guarantor and the Notes
are duly executed, authenticated, delivered and paid for in accordance
with the Indenture and this Agreement, will be a valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as (A) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
(B) rights of acceleration, if applicable, and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(g) The Indenture has been duly authorized, executed and
delivered by the Company and the Guarantor, and is a valid and binding
agreement of the Company and the Guarantor, enforceable in accordance
with its terms except as (x) the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (y) rights of acceleration, if applicable, and the
availability of equitable remedies may be limited by equitable
principles of general applicability.
<PAGE> 5
4
(h) The execution and delivery by the Company and the Guarantor
of, and the performance by the Company and the Guarantor of their
respective obligations under, this Agreement, the Indenture, the
Registration Rights Agreement, the Notes (in the case of the Company),
the Guarantee (in the case of the Guarantor), and the issuance, sale
and delivery of the Notes will not contravene any provision of
applicable law or the certificate of incorporation or by-laws of the
Company or the Estatutos of the Guarantor or any agreement or other
instrument binding upon the Company or any of its subsidiaries or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company, the Guarantor or any other
subsidiary of the Company, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by the Company or the Guarantor of its
respective obligations under this Agreement, the Indenture, the
Registration Rights Agreement, the Notes (in the case of the Company),
the Guarantee (in the case of the Guarantor), and the issuance, sale
and delivery of the Notes, except such as may be required by the
securities or Blue Sky laws of the various states in connection with
the offer and sale of the Notes.
(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Preliminary Memorandum.
(j) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party
or to which any of the properties of the Company or any of its
subsidiaries is subject other than proceedings accurately described in
all material respects in each Memorandum and proceedings that would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole, or on the power or ability of the Company and the
Guarantor to perform their respective obligations under this Agreement,
the Indenture, the Registration Rights Agreement, the Notes (in the
case of the Company), the Guarantee (in the case of the Guarantor), to
consummate the transactions contemplated by each such agreement, or to
apply the net proceeds of the issuance of the Notes as described in the
Final Memorandum under the caption "Use of Proceeds."
(k) Each of the Company and its subsidiaries has all necessary
certificates, orders, permits, licenses, authorizations, consents and
approvals of and from, and has made all declarations and filings with,
all federal, state, local, foreign supranational, national, regional
and other governmental authorities and all courts and tribunals, to
own, lease, license and use its properties and assets and to conduct
its business in the manner described in the Final Memorandum, and
neither the Company nor any of its
<PAGE> 6
5
subsidiaries has received any notice of proceedings relating to
revocation or modification of any such certificates, orders, permits,
licenses, authorizations, consents or approvals, nor is the Company or
any of its subsidiaries in violation of, or in default under, any
federal, state, local, foreign supranational, national or regional law,
regulation, rule, decree, order or judgment applicable to the Company
or any of its subsidiaries the effect of which, singly or in the
aggregate, would have a material adverse effect on the prospects,
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole,
except as described in the Final Memorandum.
(l) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") of the
Company has directly, or through any agent (other than the Placement
Agents), (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the
Notes in a manner that would require the registration under the
Securities Act of the Notes or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering of
the Notes (as those terms are used in Regulation D under the Securities
Act) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
(m) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended.
(n) It is not necessary in connection with the offer, sale and
delivery of the Notes to the Placement Agents in the manner
contemplated by this Agreement to register the Notes under the
Securities Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended.
(o) The Company and its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
<PAGE> 7
6
(p) The Company has complied, to the extent applicable, with all
provisions of Section 517-075, Florida Statutes (Chapter 92-198, Laws of
Florida).
(q) None of the Company, its Affiliates or any person acting on its or
their behalf (other than the Placement Agents) has engaged in any directed
selling efforts (as that term is defined in Regulation S under the Securities
Act ("Regulation S")) with respect to the Notes and the Company and its
Affiliates and any person acting on its or their behalf (other than the
Placement Agents) have complied with the offering restrictions requirement of
Regulation S.
(r) Subsequent to the respective dates as of which information is given
in the Final Memorandum, (1) the Company and its subsidiaries have not incurred
any material liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (2) the Company has
not purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital stock
other than ordinary and customary dividends; and (3) there has not been any
material change in the capital stock, short-term debt or long-term debt of the
Company and its consolidated subsidiaries, except in each case as described in
or contemplated by the Final Memorandum.
(s) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Final Memorandum or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries, in each case except as described in or
contemplated by the Final Memorandum.
(t) No material labor dispute with the employees of the Company or any
of its subsidiaries exists, except as described in or contemplated by the Final
Memorandum, or, to the knowledge of the Company, is imminent; and the Company is
not aware of any existing, threatened or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors that
could result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
<PAGE> 8
7
(u) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor any such
subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries, taken as a whole,
except as described in or contemplated by the Final Memorandum.
(v) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that (1) transactions are executed in accordance with
management's general or specific authorizations; (2) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (3) access to assets is permitted only
in accordance with management's general or specific authorization; and
(4) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
2. Offering. You have advised the Company that you will make an
offering of the Notes purchased by you hereunder on the terms set forth in the
Final Memorandum as soon as practicable after this Agreement is entered into as
in your judgment is advisable.
3. Purchase and Delivery. The Company hereby agrees to sell to the
several Placement Agents, and the Placement Agents, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agree, severally and not jointly, to purchase from the
Company the respective principal amount of Notes set forth in Schedule I hereto
opposite their names at a purchase price of 97% of the principal amount thereof
plus accrued interest, if any, from July 30, 1996 to the date of payment and
delivery.
Payment for the Notes shall be made against delivery of the Notes at a
closing (the "Closing") to be held at the office of Shearman & Sterling, 599
Lexington Avenue, New York, New York, at 10:00 A.M., local time, on July 30,
1996, or at such other time on the same or such other date, not later than
August 9, 1996, as shall be designated in writing by you. The time and date of
such payment are herein referred to as the Closing Date. Payment for the Notes
shall be made by wire transfer, to accounts specified by the Company in writing,
in immediately available funds.
<PAGE> 9
8
Certificates for the Notes shall be registered in such names and in
such denominations as you shall request in writing not less than two full
business days prior to the Closing Date. The certificates evidencing the Notes
shall be delivered to you on the Closing Date, with any transfer taxes payable
in connection with the transfer of the Notes to the Placement Agents duly paid,
against payment of the purchase price therefor.
4. Conditions to Closing. The several obligations of the Placement
Agents under this Agreement to purchase the Notes will be subject to the
following conditions:
(a) Subsequent to the date of this Agreement and prior to the Closing
Date,
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial
or otherwise, or in the earnings, business or operations, of the
Company and its subsidiaries, taken as a whole, from that set forth in
the Preliminary Memorandum that, in the judgment of Morgan Stanley &
Co. Incorporated, is material and adverse and that makes it, in the
judgment of Morgan Stanley & Co. Incorporated, impracticable to market
the Notes on the terms and in the manner contemplated in the Final
Memorandum.
(b) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a)(i) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date and that the Company has complied with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date an opinion of Arnold &
Porter, United States counsel for the Company, each dated the Closing Date, to
the effect set forth in Exhibit B.
<PAGE> 10
9
(d) You shall have received on the Closing Date an opinion of
Nicolson & Cano, Argentine counsel for the Company and the Guarantor,
dated the Closing Date, to the effect set forth in Exhibit C.
(e) You shall have received on the Closing Date an opinion of
Portocarrero & Rodriguez, Colombian counsel for ImpSat Colombia, dated
the Closing Date, to the effect set forth in Exhibit D.
(f) You shall have received on the Closing Date an opinion of
Perez Bustamante & Perez, Ecuadoran counsel for ImpSat Ecuador, dated
the Closing Date, to the effect set forth in Exhibit E.
(g) You shall have received on the Closing Date an opinion of
Basham, Ringe & Correa, Mexican counsel for ImpSat Mexico, dated the
Closing Date, to the effect set forth in Exhibit F.
(h) You shall have received on the Closing Date an opinion of
Baumeister & Brewer, Venezuelan counsel for ImpSat Venezuela, dated the
Closing Date, to the effect set forth in Exhibit G.
(i) You shall have received on the Closing Date an opinion of
Perez Alati, Grondona, Benites, Arntsen & Martinez de Hoz (h),
Argentine counsel for the Placement Agents, with respect to such
matters as you may reasonably request.
(j) You shall have received on the Closing Date an opinion of
Shearman & Sterling, United States counsel for the Placement Agents,
dated the Closing Date, with respect to such matters as you may
reasonably request.
(k) You shall have received on each of the date hereof and the
Closing Date a letter, dated the date hereof or the Closing Date, as
the case may be, in form and substance satisfactory to you, from
Deloitte & Touche LLP, independent public accountants for the Company,
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Final Memorandum.
5. Covenants of the Company. In further consideration of the agreements
of the Placement Agents contained in this Agreement, the Company covenants as
follows:
(a) To furnish to each Placement Agent, without charge, during
the period mentioned in paragraph (c) below, as many copies of the
Final Memorandum, and any supplements and amendments thereto as you may
reasonably request and to
<PAGE> 11
10
deliver copies of the Final Memorandum to each Placement Agent prior to
5:00 P.M. (New York time) on the business day following the date
hereof.
(b) Before amending or supplementing either Memorandum, to furnish to
you a copy of each such proposed amendment or supplement and not to use any such
proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the date
on which all of the Notes shall have been sold by the Placement Agents, any
event shall occur or condition exist as a result of which it is necessary in
your judgment to amend or supplement the Final Memorandum in order to make the
statements therein, in the light of the circumstances when such Memorandum is
delivered to a purchaser, not misleading, or if, in the opinion of United States
counsel to the Placement Agents it is necessary to amend or supplement such
Memorandum to comply with applicable law, forthwith to prepare and furnish, at
its own expense, to the Placement Agents, either amendments or supplements to
such Memorandum so that the statements in such Memorandum as so amended or
supplemented will not, in the light of the circumstances when such Memorandum is
delivered to a purchaser, be misleading or so that such Memorandum, as so
amended or supplemented, will comply with applicable law.
(d) To endeavor to qualify the Notes for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) Whether or not any sale of such Notes is consummated, to pay all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the preparation of each Memorandum and all amendments and
supplements thereto, (ii) the preparation, issuance and delivery of the Notes,
(iii) the fees and disbursements of the Company's counsel and accountants and
the Trustee and its counsel, (iv) the qualification of such Notes under
securities or Blue Sky laws in accordance with the provisions of Section 5(d),
including filing fees and the fees and disbursements of counsel for the
Placement Agents in connection therewith and in connection with the preparation
of any Blue Sky or legal investment memoranda, (v) the printing and delivery to
the Placement Agents in quantities as hereinabove stated of copies of the
Memorandum and any amendments or supplements thereto, (vi) any fees charged by
rating agencies for the rating of such Notes, (vii) all document production
charges and expenses of counsel to the Placement Agents (but not including their
fees for professional services) in connection with the preparation of this
Agreement, (viii) the fees and expenses, if any, incurred in connection with the
admission of such Notes for trading in any appropriate market system and (ix)
any expenses incurred by the Company in connection with a "road show"
presentation to potential investors.
<PAGE> 12
11
(f) Neither the Company nor any Affiliate will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be integrated
with the sale of the Notes in a manner which would require the
registration under the Securities Act of such Notes.
(g) Not to solicit any offer to buy or offer or sell the Notes
by means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in
any manner involving a public offering within the meaning of Section
4(2) of the Securities Act.
(h) While any of the Notes remain outstanding, to make
available, upon request, to any seller of such Notes the information
specified in Rule 144A(d)(4) under the Securities Act, unless the
Company is then subject to Section 13 or 15(d) of the Exchange Act.
(i) To use its best efforts to permit the Notes to be designated
PORTAL securities in accordance with the rules and regulations adopted
by the National Association of Securities Dealers, Inc. relating to
trading in the PORTAL Market.
(j) None of the Company, its Affiliates or any person acting on
its or their behalf (other than the Placement Agents) will engage in
any directed selling efforts (as that term is defined in Regulation S)
with respect to the Notes, and the Company and its Affiliates and each
person acting on its or their behalf (other than the Placement Agents)
will comply with the offering restrictions of Regulation S.
6. Offering of Securities, Restrictions on Transfer. (a) Each Placement
Agent, severally and not jointly, represents and warrants that such Placement
Agent is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Notes by any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act and (ii) it will solicit offers for such Notes only from, and will offer
such Notes only to, persons that it reasonably believes to be (A) in the case of
offers inside the United States, (x) QIBs or (y) other institutional accredited
investors (as defined in Rule 501(a) (1), (2), (3) or (7) under the Securities
Act) ("institutional accredited investors") that, prior to their purchase of the
Notes, deliver to such Placement Agent a letter containing the representations
and agreements set forth in Annex A to the Final Memorandum and (B) in the case
of offers outside the United States, to persons other than U.S. persons
("foreign purchasers," which term shall include dealers or other professional
fiduciaries in the United States acting on a
<PAGE> 13
12
discretionary basis for foreign beneficial owners (other than an estate or
trust)) that, in each case, in purchasing such Notes are deemed to have
represented and agreed as provided in the Final Memorandum under the caption
"Transfer Restrictions."
(b) Each Placement Agent, severally and not jointly, represents,
warrants, and agrees with respect to offers and sales outside the United States
that:
(i) it understands that no action has been or will be taken in
any jurisdiction by the Company that would permit a public offering of
the Notes, or possession or distribution of either Memorandum or any
other offering or publicity material relating to the Notes, in any
country or jurisdiction where action for that purpose is required;
(ii) such Placement Agent will comply with all applicable laws
and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Notes or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Notes have not been and will not be registered under
the Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act;
(iv) such Placement Agent has offered the Notes and will offer
and sell the Notes (A) as part of its distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the
offering of the Notes and the Closing Date, only in accordance with
Rule 903 of Regulation S or another exemption from the registration
requirements of the Securities Act. Accordingly, neither such Placement
Agent, its Affiliates nor any persons acting on its or their behalf
have engaged or will engage in any directed selling efforts (within the
meaning of Regulation S) with respect to the Notes, and any such
Placement Agent, its Affiliates and any such persons have complied and
will comply with the offering restrictions requirements of Regulation
S;
(v) such Placement Agent (A) has not offered or sold and will
not offer or sell any Notes to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995 (the "Regulations"); (B) complied and will comply with
all applicable provisions of the Financial Services Act 1986 and the
Regulations with respect to anything done
<PAGE> 14
13
by it in relation to the Notes in, from or otherwise involving the
United Kingdom; and (C) only issued or passed on and will only issue or
pass on to any person in the United Kingdom any document received by it
in connection with the issue of the Notes if that person is of a kind
described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or is a person to
whom such document may otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that the Notes have not
been and will not be registered under the Securities and Exchange Law
of Japan, and represents that it has not offered or sold, and agrees
that it will not offer or sell, any of the Notes, directly or
indirectly in Japan or to any resident of Japan except (A) pursuant to
an exemption from the registration requirements of the Securities and
Exchange Law of Japan and (B) in compliance with any other applicable
requirements of Japanese law; and
(vii) such Placement Agent agrees that, at or prior to
confirmation of sales of the Notes, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Notes from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Notes covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may
not be offered and sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S (or
Rule 144A, if available) under the Securities Act. Terms used
above have the meaning given to them by Regulation S.
Terms used in this Section 6 have the meanings given to them by Regulation S.
7. Indemnification and Contribution. (a) Each of the Company and
the Guarantor agrees to indemnify and hold harmless each Placement Agent, and
each person, if any, who controls such Placement Agent within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, or is
under common control with, or is controlled by, such Placement Agent, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Placement
Agent or any such controlling or affiliated person in connection with defending
or investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in light of the
circumstances under which they were made not
<PAGE> 15
14
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for use
therein.
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless each of the Company and the Guarantor and each of
their respective directors, officers and each person, if any, who controls the
Company or the Guarantor within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company and the Guarantor to such Placement Agent,
but only with reference to information relating to such Placement Agent
furnished to the Company in writing by such Placement Agent through you
expressly for use in either Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm shall
be reasonably satisfactory to Morgan Stanley & Co. Incorporated in the case of
parties indemnified pursuant to paragraph (a) above and reasonably satisfactory
to the Company in the case of parties indemnified pursuant to paragraph (b)
above. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such
<PAGE> 16
15
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantor on the one hand, and the
Placement Agents, on the other hand, from the offering of such Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantor, on the one hand, and the Placement Agents, on the other hand, in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Guarantor,
on the one hand, and the Placement Agents, on the other hand, in connection with
the offering of such Notes shall be deemed to be in the same respective
proportions as the net proceeds from the offering of such Notes (before
deducting expenses) received by the Company and the total discounts and
commissions received by the Placement Agents in respect thereof bear to the
aggregate offering price of such Notes. The relative fault of the Company and
the Guarantor, on the one hand, and of the Placement Agents, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Guarantor or by the Placement Agents and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Placement Agents' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective principal amount of Notes they have purchased hereunder, and not
joint.
(e) The Company and the Guarantor and the Placement Agents agree
that it would not be just or equitable if contribution pursuant to this Section
7 were determined by pro rata allocation (even if the Placement Agents were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above,
<PAGE> 17
16
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Placement Agent shall be
required to contribute any amount in excess of the amount by which the total
price at which the Notes resold by it in the initial placement of such Notes
were offered to investors exceeds the amount of any damages that such Placement
Agent has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The indemnity and contribution provisions
contained in this Section 7 and the representations and warranties of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Placement Agents or any person
controlling the Placement Agents or by or on behalf of the Company or the
Guarantor or any officer or director thereof or any person controlling the
Company or the Guarantor and (iii) acceptance of and payment for any of the
Notes. The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
8. Termination. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange or the National Association
of Securities Dealers, Inc., (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events specified in clauses (a)(i)
through (iv), such event singly or together with any other such event makes it,
in your judgment, impracticable to market the Notes on the terms and in the
manner contemplated in the Final Memorandum.
9. Miscellaneous. If, on the Closing Date, any one or more of
the Placement Agents shall fail or refuse to purchase Notes that it or they have
agreed to purchase hereunder on such date, and the aggregate principal amount of
Notes which such defaulting Placement Agent agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of Notes
to be purchased on such date, the other Placement Agent shall be obligated
severally in the proportions that the principal amount of Notes set forth
opposite its name in Schedule I bears to the aggregate principal amount of Notes
set forth opposite the name of the non-defaulting Placement Agent, or in such
other proportions as you may specify, to purchase the Notes which such
defaulting Placement Agent agreed but failed or refused to purchase on such
date; provided that in no event shall
<PAGE> 18
17
the principal amount of Notes that any Placement Agent has agreed to purchase
pursuant to Section 3 be increased pursuant to this Section 9 by an amount in
excess of one-ninth of such principal amount of Notes without the written
consent of such Placement Agent. If, on the Closing Date any Placement Agent
shall fail or refuse to purchase Notes which it has agreed to purchase hereunder
on such date and the aggregate principal amount of Notes with respect to which
such default occurs is more than one-tenth of the aggregate principal amount of
Notes to be purchased on such date and arrangements satisfactory to you and the
Company for the purchase of such Notes are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Placement Agent or of the Company. In any such case either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Final Memorandum or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Placement
Agent from liability in respect of any default of such Placement Agent under
this Agreement.
This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
If this Agreement shall be terminated by the Placement Agents,
or either of them, because of any failure or refusal on the part of the Company
to comply with the terms or to fulfill any of the conditions of this Agreement,
or if for any reason the Company shall be unable to perform its obligations
under this Agreement, the Company will reimburse the Placement Agents or such
Placement Agents as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Placement Agents in
connection with this Agreement or the offering contemplated hereunder.
Each of the Company and the Guarantor hereby (i) acknowledges
that it has irrevocably designated and appointed CT Corporation System, 1633
Broadway, New York, New York 10036 (together with any successor, the "Process
Agent"), as its authorized agent upon which process may be served in any suit,
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated herein or brought under federal or state securities
laws that may be instituted in any federal or state court in the State of New
York, sitting in the city of New York, and acknowledges that the Process Agent
has accepted such designation, (ii) agrees that service of process upon the
Process Agent and written notice of such service to the Company or the
Guarantor, as the case may be (mailed or delivered to the Chief Executive
Officer of the Company at its principal office at Alferez Pareja 256, 1107
Buenos Aires Argentina), shall be deemed in every respect effective service of
process upon the Company or the Guarantor, as the case may be, in any such suit,
action or proceeding and (iii) agrees to take any and all action, including the
execution and filing of any and all such documents and instruments as may be
necessary to continue such
<PAGE> 19
18
designation and appointment of the Process Agent in full force and effect so
long as any of the Notes shall be outstanding. Each of the Company and the
Guarantor hereby agrees to submit to the nonexclusive jurisdiction of any such
federal or state court in the State of New York in any such suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated herein and hereby waives to the fullest extent permitted by law any
defense to the institution or continuance of any such suit, action or proceeding
based upon lack of proper venue, inconvenient forum or similar grounds.
To the extent that the Company or the Guarantor has or hereafter
may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, each of them hereby irrevocably waives such immunity in respect
of their obligations under this Agreement to the fullest extent permitted by
law.
This Agreement shall be governed by the laws of the State of
New York.
The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
<PAGE> 20
Please confirm your agreement to the foregoing by signing in the
space provided below for that purpose and returning to us a copy hereof,
whereupon this Agreement shall constitute a binding agreement between us.
Very truly yours,
IMPSAT CORPORATION
By /s/ Ricardo Verdaguer
------------------------------
Name:
Title: President
By /s/ Alberto Milvio
------------------------------
Name:
Title: Attorney in fact
IMPSAT S.A.
By /s/ Guillermo Jofre
-----------------------------
Name:
Title: Attorney in fact
Agreed, July 15, 1996
MORGAN STANLEY & CO. INCORPORATED
By /s/ C. L. Kelly
------------------------------
Name: Christopher Kelly
Title: Vice President
BEAR, STEARNS & CO. INC.
By
------------------------------
Name:
Title:
<PAGE> 21
Please confirm your agreement to the foregoing by signing in the
space provided below for that purpose and returning to us a copy hereof,
whereupon this Agreement shall constitute a binding agreement between us.
Very truly yours,
IMPSAT CORPORATION
By ______________________________
Name:
Title:
By ______________________________
Name:
Title:
IMPSAT S.A.
By ______________________________
Name:
Title:
Agreed, _____________, 1996
MORGAN STANLEY & CO. INCORPORATED
By ______________________________
Name:
Title:
BEAR, STEARNS & CO. INC.
By ______________________________
Name:
Title:
<PAGE> 22
SCHEDULE I
Principal Amount of
Placement Agent Notes To Be Purchased
--------------- ---------------------
Morgan Stanley & Co. Incorporated $ 87,500,000
Bear, Stearns & Co. Inc. $ 37,500,000
------------
Total.................. $125,000,000
============
<PAGE> 23
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
<PAGE> 24
Exhibit A
REGISTRATION RIGHTS AGREEMENT
Dated July 30, 1996
among
IMPSAT CORPORATION
IMPSAT S.A.
and
MORGAN STANLEY & CO. INCORPORATED
BEAR, STEARNS & CO. INC.
<PAGE> 25
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into July 30. 1996. among IMPSAT CORPORATION, a Delaware corporation
(the "Company"), IMPSAT S.A. (the "Guarantor") and MORGAN STANLEY & CO.
INCORPORATED and BEAR. STEARNS & CO. INC. (the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement dated
July 25, 1996, among the Company, the Guarantor and the Placement Agents (the
"Placement Agreement"), which provides for the sale by the Company to the
Placement Agents of an aggregate of $125 million principal amount of the
Company's 12 1/8% Senior Guaranteed Notes Due 2003 (the "Securities"). In order
to induce the Placement Agents to enter into the Placement Agreement. the
Company and the Guarantor have agreed to provide to the Placement Agents and
their direct and indirect transferees the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing under
the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
1934 Act" shall mean the Securities Exchange Act of 1934. as
amended from time to time.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
"Exchange Offer Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2(a) hereof.
<PAGE> 26
2
"Exchange Offer Registration Statement" shall mean an
exchange offer registration statement on Form S-4 (or, if applicable,
on another appropriate form) and all amendments and supplements to such
registration statement. in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by
reference therein.
"Exchange Securities" shall mean securities issued by the
Company and guaranteed on an unsubordinated basis by the Guarantor
under the Indenture containing terms identical to the Securities
(except that (i) interest thereon shall accrue from the last date on
which interest was paid on the Securities or, if no such interest has
been paid. from July 30, 1996 and (ii) the Exchange Securities will not
provide for an increase in the rate of interest and will not contain
terms with respect to transfer restrictions) and to be offered to
Holders of Securities in exchange for Securities pursuant to the
Exchange Offer.
"Holder" shall mean the Placement Agents, for so long as it owns
any Registrable Securities, and each of their successors, assigns and
direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture: provided that for purposes
of Sections 4 and 5 of this Agreement. the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Securities
dated as of July 30, 1996 among the Company, the Guarantor and The Bank
of New York, as trustee, and as the same may be amended from time to
time in accordance with the terms thereof.
Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities:
provided that whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder.
Registrable Securities held by the Company or any of its affiliates
(other than the Placement Agents or any other Holder deemed an
affiliate solely by reason of its holding one or more Registrable
Notes) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage or
amount.
"Person" shall mean an individual, partnership, corporation.
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the
preamble.
"Placement Agreement" shall have the meaning set forth in the
preamble.
<PAGE> 27
3
"Prospectus" shall mean the prospectus in a Registration
Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement,
including a prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by a
Shelf Registration Statement, and by all other amendments and
supplements to such prospectus, and in each case including all material
incorporated by reference therein.
'Registrable Securities" shall mean the Securities; provided,
however, that the Securities shall cease to be Registrable Securities
(i) when a Registration Statement with respect to such Securities shall
have been declared effective under the 1933 Act and such Securities
shall have been disposed of pursuant to such Registration Statement,
(ii) when such Securities have been sold to the public pursuant to Rule
144(k) (or any similar provision then in force. but not Rule 144A)
under the 1933 Act or (iii) when such Securities shall have ceased to
be outstanding; provided, further, that the Securities with respect to
which the Company and the Guarantor have caused to be filed and
declared effective an Exchange Offer Registration Statement and have
commenced an Exchange Offer, in each case pursuant to and in accordance
with Section 2 hereof, and which have not been tendered by the last
Exchange Date (as defined in Section 2(a)(ii) hereof) by the Holder
thereof shall be deemed not to be Registrable Securities.
"Registration Expenses" shall mean any and all expenses incident
to performance of or compliance by the Company and the Guarantor with
this Agreement, including without limitation: (i) all SEC, stock
exchange or National Association of Securities Dealers. Inc.
registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws
(including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of
any of the Exchange Securities or Registrable Securities), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto. any underwriting
agreements. securities sales agreements and other documents relating to
the performance of and compliance with this Agreement, (v) all rating
agency fees, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii) the
fees and disbursements of counsel for the Company and the Guarantor
and. in the case of a Shelf Registration Statement, the fees and
disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel
for the Placement Agents) and (viii) the fees and disbursements of the
independent public accountants of the Company and the Guarantor,
including the expenses of any special audits or "comfort" letters
required by or incident to such
<PAGE> 28
4
performance and compliance. but excluding fees and expenses of counsel
to the underwriters (other than fees and expenses set forth in clause
(ii) above) or the Holders and underwriting discounts and commissions
and transfer taxes. if any, relating to the sale or disposition of
Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement
of the Company and the Guarantor that covers any of the Exchange
Securities or Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant
to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and the Guarantor pursuant to the provisions
of Section 2(b) of this Agreement which covers all of the Registrable
Securities (but no other securities unless approved by the Holders
whose Registrable Securities are covered by such Shelf Registration
Statement) on an appropriate form under Rule 415 under the 1933 Act, or
any similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference
therein.
"Trustee" shall mean the trustee with respect to the Securities
under the Indenture.
"Underwritten Registration" or "Underwritten Offering" shall
mean a registration in which Registrable Securities are sold to an
Underwriter (as hereinafter defined) for reoffering to the public.
2. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the Staff of the SEC, the Company and the Guarantor
shall use their best efforts to cause to be filed an Exchange Offer Registration
Statement covering the offer by the Company and the Guarantor to the Holders to
exchange all of the Registrable Securities for Exchange Securities and to have
such Registration Statement remain effective until the closing of the Exchange
Offer. The Company and the Guarantor shall commence the
<PAGE> 29
5
Exchange Offer promptly after the Exchange Offer Registration Statement has been
declared effective by the SEC and use their best efforts to have the Exchange
Offer consummated not later than 6O days after such effective date. The Company
and the Guarantor shall commence the Exchange Offer by mailing the related
exchange offer Prospectus and accompanying documents to each Holder stating, in
addition to such other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities
validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such notice is
mailed) (the "Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement including any right to
have the interest rate thereon increased pursuant hereto);
(iv) that Holders electing to have a Registrable Security
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Security, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election,
not later than the close of business on the last Exchange Date, by
sending to the institution and at the address (located in the Borough
of Manhattan, The City of New York) specified in the notice a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Securities delivered for
exchange and a statement that such Holder is withdrawing his election
to have such Securities exchanged.
As soon as practicable after the last Exchange Date, the Company
shall:
(i) accept for exchange Registrable Securities or portions
thereof tendered and not validly withdrawn pursuant to the Exchange
Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted
for exchange by the Company and issue, and cause the Trustee to
promptly authenticate and mail to each Holder, an
<PAGE> 30
6
Exchange Security equal in principal amount to the principal amount of
the Registrable Securities surrendered by such Holder.
The Company and the Guarantor shall use their best efforts to complete the
Exchange Offer as provided above and shall comply with the applicable
requirements of the 1934 Act and other applicable laws and regulations in
connection with the Exchange Offer. The Exchange Offer shall not be subject to
any conditions, other than that the Exchange Offer does not violate applicable
law or any applicable interpretation of the Staff of the SEC. The Company shall
inform the Placement Agents of the names and addresses of the Holders to whom
the Exchange Offer is made, and the Placement Agents shall have the right,
subject to applicable law, to contact such Holders and otherwise facilitate the
tender of Registrable Securities in the Exchange Offer.
(b) In the event that (i) the Company and the Guarantor determine that
the Exchange Offer Registration provided for in Section 2(a) above is not
available or may not be consummated as soon as practicable after the last
Exchange Date because it would violate applicable law or the applicable
interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any
other reason consummated by January 30, 1997 or (iii) the Exchange Offer has
been completed and in the opinion of counsel for the Placement Agents a
Registration Statement must be filed and a Prospectus must be delivered by the
Placement Agents in connection with any offering or sale of Registrable
Securities, the Company and the Guarantor shall use their best efforts to cause
to be filed as soon as practicable after such determination, date or notice of
such opinion of counsel is given to the Company, as the case may be, a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities and to have such Shelf Registration Statement declared
effective by the SEC (such obligation, arising solely under clause (ii) above,
to have filed a Shelf Registration Statement shall be deemed satisfied with
respect to any Holder upon consummation of the Exchange Offer with respect to
such Holder). The Company and the Guarantor agree to use their best efforts to
keep the Shelf Registration Statement continuously effective until the third
anniversary of the Closing Date or such shorter period that will terminate when
all of the Registrable Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement. The Company and the
Guarantor further agree to supplement or amend the Shelf Registration Statement
if required by the rules, regulations or instructions applicable to the
registration form used by the Company and the Guarantor for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration or if reasonably requested by a Holder with
respect to information relating to such Holder, and to use their best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as thereafter practicable. The Company and
the Guarantor agree to furnish to the Holders of Registrable Securities copies
of any such supplement or amendment promptly after its being used or filed with
the SEC.
<PAGE> 31
7
(c) The Company and the Guarantor shall pay all Registration Expenses
in (c) connection with the registration pursuant to Section 2(a) or Section
2(b). Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that, if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have become effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. As provided for in the Indenture, in
the event the Exchange Offer is not consummated and the Shelf Registration
Statement is not declared effective on or prior to January 30, 1997, the
interest rate on the Securities will increase by 0.5% to 12 5/8% per annum. If
such Exchange Offer IS not consummated and a Shelf Registration Statement is not
declared effective on or prior to July 30, 1997, the rate of interest will
increase by an additional 0.5% per annum to 13 1/8% per annum. Upon consummation
of the Exchange Offer or the effectiveness of the Shelf Registration Statement,
as the case may be, the rate of interest will decrease to the original rate of
interest of 12 1/8% per annum. If a Shelf Registration Statement is required
solely by the matters referred to in clause (iii) of the first sentence of
Section 2(b). such increase in interest rate shall be payable only to the
Placement Agents. with respect to Notes held by them, and only with respect to
any period (after January 30, 1997) during which such Shelf Registration
Statement is not effective.
(e) Without limiting the remedies available to the Placement Agents and
the Holders, the Company and the Guarantor acknowledge that any failure by the
Company and the Guarantor to comply with their obligations under Section 2(a)
and Section 2(b) hereof may result in material irreparable injury to the
Placement Agents or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Placement Agents or any Holder may
obtain such relief as may be required to specifically enforce the Company's and
the Guarantor's obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of the Company and the
Guarantor with respect to the Registration Statements pursuant to Section 2(a)
and Section 2(b) hereof, the Company and the Guarantor shall as expeditiously as
possible:
<PAGE> 32
8
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act. which form (x) shall be selected by the
Company and the Guarantor and (y) shall. in the case of a Shelf Registration. be
available for the sale of the Registrable Securities by the selling Holders
thereof and available (z) shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith. and use their best
efforts to cause such Registration Statement to become effective and remain
effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the 1933 Act: to keep each
Prospectus current during the period described under Section 4(3) and Rule 174
under the 1933 Act that is applicable to transactions by brokers or dealers with
respect to the Registrable Notes or Exchange Notes:
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Placement Agents, to counsel for the
Holders and to each Underwriter of an Underwritten Offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus. including
each preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder or Underwriter may reasonably request, in order
to facilitate the public sale or other disposition of the Registrable
Securities; and the Company and the Guarantor consent to the use of such
Prospectus and any amendment or supplement thereto in accordance with applicable
law by each of the selling Holders of Registrable Securities and any such
Underwriters in connection with the offering and sale of the Registrable
Securities covered by and in the manner described in such Prospectus or any
amendment or supplement thereto in accordance with applicable law:
(d) use their best efforts to register or qualify the Exchange and
Registrable Securities under all applicable state securities or "blue sky" laws
of such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC, to cooperate
with such Holders IN connection with any filings required to be made with the
National Association of Securities Dealers, Inc., and do any and all other acts
and things which may be reasonably necessary or advisable to enable such Holder
to consummate the disposition in each such jurisdiction of such Exchange and
Registrable Securities owned by such Holder, provided, however, that neither the
Company nor the Guarantor shall be required to
<PAGE> 33
9
(i) qualify as a foreign corporation or as a dealer in securities in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (ii) file any general consent to service of process or (iii)
subject itself to taxation in any such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities. counsel for the Holders and counsel for the Placement
Agents promptly and, if requested by any such Holder or counsel, confirm such
advice in writing (i) when a Registration Statement has become effective and
when any post-effective amendment thereto has been filed and becomes effective,
(ii) of any request by the SEC or any state securities authority for amendments
and supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company and the
Guarantor contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to the offering cease to be true and
correct in all material respects or if the Company and the Guarantor receive any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the happening of any event during the period
a Shelf Registration Statement is effective which makes any statement made in
such Registration Statement or the related Prospectus untrue in any material
respect or which requires the making of any changes in such Registration
Statement or Prospectus in order to make the statements therein not misleading
and (vi) of any determination by the Company and the Guarantor that a
post-effective amendment to a Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide immediate notice to each Holder of the withdrawal of
any such order;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates
<PAGE> 34
10
representing Registrable Securities to be sold and not bearing any restrictive
legends and enable such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and registered in such names
as the selling Holders may reasonably, request at least two business days
prior to the closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(e)(v) hereof, use their best efforts to prepare
and file with the SEC a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company and the Guarantor agree to
notify the Holders to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holders hereby agree to suspend
use of the Prospectus until the Company and the Guarantor have amended or
supplemented the Prospectus to correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus after
initial filing of a Registration Statement, provide copies of such document to
the Placement Agents and their counsel (and, in the case of a Shelf Registration
Statement, the Holders and their counsel) and make such of the representatives
of the Company and the Guarantor as shall be reasonably requested by the
Placement Agents or their counsel (and, in the case of a Shelf Registration
Statement, the Holders or their counsel) available for discussion of such
document, and shall not at any time file or make any amendment to the
Registration Statement, any Prospectus or any amendment of or supplement to a
Registration Statement or a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus, of
which the Placement Agents and their counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel) shall not have previously
been advised and furnished a copy or to which the Placement Agents or their
counsel (and, in the case of a Shelf Registration Statement, the Holders or
their counsel) shall reasonably object;
(k) obtain a CUSIP number for all Exchange Securities, as the case may
be, not later than the effective date of a Registration Statement;
(l) cause the Indenture to be qualified under the Trust Indenture Act
of 1939, as amended (the "TIA"), in connection with the registration of the
Exchange
<PAGE> 35
11
Securities or Registrable Securities, as the case may be, cooperate with the
Trustee and the Holders to effect such changes to the Indenture as may be
required for the Indenture to be so qualified in accordance with the terms of
the TIA and execute, and use their best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for inspection
by a representative of the Holders of the Registrable Securities, any
Underwriter participating in any disposition pursuant to such Shelf Registration
Statement, and attorneys and accountants designated by the Holders, at
reasonable times and in a reasonable manner, all financial and other records,
pertinent documents and properties of the Company and the Guarantor, and cause
the respective officers, directors and employees of the Company and the
Guarantor to supply all information reasonably requested by any such
representative, Underwriter, attorney or accountant in connection with a Shelf
Registration Statement;
(n) in the case of a Shelf Registration, use their best efforts to
cause all Registrable Securities to be listed on any securities exchange or any
automated quotation system on which the Securities are then listed if requested
by the Majority Holders, to the extent such Registrable Securities satisfy
applicable listing requirements;
(o) use their best efforts to cause the Exchange Securities or
Registrable Securities, as the case may be, to be rated by two nationally
recognized statistical rating organizations (as such term is defined in Rule
436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable Securities
covered by a Registration Statement, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information with respect to such
Holder as such Holder reasonably requests to be included therein and (ii) make
all required filings of such Prospectus supplement or such post-effective
amendment as soon as the Company and the Guarantor have received notification of
the matters to be incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith (including
those requested by the Holders of a majority of the Registrable Securities being
sold) in order to expedite or facilitate the disposition of such Registrable
Securities including, but not limited to, an Underwritten Offering and in such
connection, (i) to the extent possible, make such representations and warranties
to the Holders and any Underwriters of such Registrable Securities with respect
to the business of the
<PAGE> 36
12
Company and its subsidiaries, the Registration Statement, Prospectus
and documents incorporated by reference or deemed incorporated by
reference, if any, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings
and confirm the same if and when requested, (ii) obtain opinions of
counsel to the Company and the Guarantor (which counsel and opinions,
in form, scope and substance, shall be reasonably satisfactory to the
Holders and such Underwriters and their respective counsel) addressed
to each selling Holder and Underwriter of Registrable Securities,
covering the matters customarily covered in opinions requested in
underwritten offerings, (iii) obtain "cold comfort" letters from the
independent certified public accountants of the Company and the
Guarantor (and, if necessary, any other certified public accountant of
any subsidiary of the Company, or of any business acquired by the
Company and the Guarantor for which financial statements and financial
data are or are required to be included in the Registration Statement)
addressed to each selling Holder and Underwriter of Registrable
Securities, such letters to be in customary form and covering matters
of the type customarily covered in "comfort" letters in connection with
underwritten offerings, and (iv) deliver such documents and
certificates as may be reasonably requested by the Holders of a
majority in principal amount of the Registrable Securities being sold
or the Underwriters, and which are customarily delivered in
underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company and the Guarantor made
pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company and
the Guarantor may require each Holder of Registrable Securities to furnish to
the Company and the Guarantor such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company and the Guarantor may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e)(v) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to a
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by the Company, such Holder will deliver to the Company (at its
expense) all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. The Company may give any such
notice only twice during any 365 day period and any such suspensions may not
exceed 30 days for each suspension and there may not be more than two
suspensions in effect during any 365 day period.
<PAGE> 37
13
The Holders of Registrable Securities covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an Underwritten Offering. In any such Underwritten Offerings, the investment
banker or investment bankers and manager or managers (the "Underwriters") that
will administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.
4. Participation of Broker-Dealers in Exchange Offer.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Securities that were acquired by such
broker-dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), may be deemed to be an "underwriter" within the
meaning of the 1933 Act and must deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of such Exchange Securities.
The Company and the Guarantor understand that it is the Staff's
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the
Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligation under the 1933 Act in connection with resales of Exchange
Securities for their own accounts, so long as the Prospectus otherwise meets the
requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions
of this Agreement, the Company and the Guarantor agree that the provisions of
this Agreement as they relate to a Shelf Registration shall also apply to an
Exchange Offer Registration to the extent, and with such reasonable
modifications thereto as may be, reasonably requested by the Placement Agents or
by one or more Participating Broker-Dealers, in each case as provided in clause
(ii) below, in order to expedite or facilitate the disposition of any Exchange
Securities by Participating Broker-Dealers consistent with the positions of the
Staff recited in Section 4(a) above, provided that:
(i) the Company and the Guarantor shall not be required to amend
or supplement the Prospectus contained in the Exchange Offer
Registration Statement, as would otherwise be contemplated by Section
3(i), for a period exceeding 180 days after the last Exchange Date (as
such period may be extended pursuant to the penultimate paragraph of
Section 3 of this Agreement) and Participating Broker-Dealers shall not
be authorized by the Company and the Guarantor to deliver and shall not
deliver such Prospectus after such period in connection with the
resales contemplated by this Section 4; and
<PAGE> 38
14
(ii) the application of the Shelf Registration procedures set
forth in Section 3 of this Agreement to an Exchange Offer Registration,
to the extent not required by the positions of the Staff of the SEC or
the 1933 Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to the Company and the
Guarantor by the Placement Agents or with the reasonable request in
writing to the Company and the Guarantor by one or more broker-dealers
who certify to the Placement Agents, the Company and the Guarantor in
writing that they anticipate that they will be Participating
Broker-Dealers; and provided further that, in connection with such
application of the Shelf Registration procedures set forth in Section 3
to an Exchange Offer Registration, the Company and the Guarantor shall
be obligated (x) to deal only with one entity representing the
Participating Broker-Dealers, which shall be Morgan Stanley & Co.
Incorporated unless it elects not to act as such representative. (y) to
pay the fees and expenses of only one counsel representing the
Participating Broker-Dealers. which shall be counsel to the Placement
Agents unless such counsel elects not to so act and (z) to cause to be
delivered only one, if any, "cold comfort" letter with respect to the
Prospectus in the form existing on the last Exchange Date and with
respect to each subsequent amendment or supplement, if any, effected
during the period specified in clause (i) above.
(c) The Placement Agents shall have no liability to the Company,
the Guarantor or any Holder with respect to any request that it may make
pursuant to Section 4(b) above.
5. Indemnification and Contribution.
(a) The Company and the Guarantor agree to indemnify and hold
harmless the Placement Agents. each Holder and each person, if any, who controls
the Placement Agents or any Holder within the meaning of either Section 15 of
the 1933 Act or Section 20 of the 1934 Act. or is under common control with. or
is controlled by, the Placement Agents or any Holder, from and against all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by the Placement Agents, any Holder
or any such controlling or affiliated person in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Exchange Securities or
Registrable Securities were registered under the 1933 Act, including all
documents incorporated therein by reference. or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading. or caused by any
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Company and the Guarantor shall
have furnished any amendments or supplements thereto). or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein in light of the circumstances
<PAGE> 39
15
under which they were made not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to the Placement Agents or any Holder furnished to the Company and the Guarantor
in writing by the Placement Agents or any Holder expressly for use therein;
provided, however, that the foregoing indemnity shall not inure to the benefit
of any of the foregoing parties from whom the person asserting any such losses,
claims, damages or liabilities purchased the Securities or Exchange Securities,
or any person controlling any of the foregoing parties, if such party failed to
send or give a copy of the Prospectus (as amended or supplemented if the Company
shall have furnished such amendments or supplements thereto) to such person
within the time required by the Securities Act (and if so required), and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages or liabilities. In connection with any
Underwritten Offering permitted by Section 3, the Company and the Guarantor will
also indemnify the Underwriters, if any, selling brokers, dealers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of the Securities Act and the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Holders, if requested
in connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company and the Guarantor, the Placement Agents and the
other selling Holders, and each of their respective directors, officers who sign
the Registration Statement and each Person, if any, who controls the Company and
the Guarantor, the Placement Agents and any other selling Holder within the
meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to
the same extent as the foregoing indemnity from the Company and the Guarantor to
the Placement Agents and the Holders, but only with reference to information
relating to such Holder furnished to the Company and the Guarantor in writing by
such Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded
<PAGE> 40
16
parties) include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (a) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Placement
Agents and for all Holders and all persons, if any, who control the Placement
Agents and any Holders within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act, unless the Placement Agents determine in their
sole discretion that such a joint representation of the Placement Agents and the
Holders would involve differences or potential differences that render such
joint representation inadvisable, in which case the indemnifying party shall not
be responsible for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Holders and all persons, if any, who
control any Holders within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act and (ii) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Placement Agents and
all persons, if any, who control the Placement Agents within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act, and (b) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company and the Guarantor, their directors, their officers who
sign the Registration Statement and each person, if any, who controls the
Company and the Guarantor within the meaning of either such Section, and that
all such fees and expenses shall be reimbursed as they are incurred. In such
case involving the Placement Agents and persons who control the Placement
Agents, such firm shall be designated in writing by the Placement Agents. In
such case involving the Holders and such persons who control Holders, such firm
shall be designated in writing by the Majority Holders. In all other cases, such
firm shall be designated by the Company and the Guarantor. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but, if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party for such fees
and expenses of counsel in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which such indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
<PAGE> 41
17
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities. then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company and the Guarantor and the Holders shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Guarantor or by the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Holders' respective
obligations to contribute pursuant to this Section 5(d) are several in
proportion to the respective number of Registrable Securities of such Holder
that were registered pursuant to a Registration Statement.
(e) The Company and the Guarantor and each Holder agree that it
would not be just or equitable if contribution pursuant to this Section 5 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in paragraph (d) above shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5. no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Securities were sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Placement Agents, any Holder or any person controlling the Placement
Agents or any Holder, or by or on behalf of the Company and the Guarantor, their
officers or directors or any person controlling the
<PAGE> 42
18
Company and the Guarantor, acceptance of any of the Exchange Securities and (iv)
any sale of Registrable Securities pursuant to a Shelf Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company and the Guarantor
have not entered into, and on or after the date of this Agreement will not enter
into, any agreement which is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's and the Guarantor's other issued and outstanding securities under
any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company and the Guarantor have obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or consent; provided, however, that no amendment,
modification, supplement, waiver or consents to any departure from the
provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Securities unless consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Placement Agreement; and (ii) if to the Company and
the Guarantor, initially at the Company's address set forth in the Placement
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered, five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the second succeeding business day if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee, at
the address specified in the Indenture.
<PAGE> 43
19
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Placement Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such person shall be entitled to receive the benefits hereof. The
Placement Agents (in their capacity as Placement Agents) shall have no liability
or obligation to the Company and the Guarantor with respect to any failure by a
Holder to comply with, or any breach by any Holder of, any of the obligations of
such Holder under this Agreement.
(e) Purchases and Sales of Notes. The Company and the Guarantor
shall not, and shall use their best efforts to cause their affiliates (as
defined in Rule 405 under the 1933 Act) not to, purchase and then resell or
otherwise transfer any Notes.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantor, on the one hand, and the Placement Agents, on the other hand, and
shall have the right to enforce such agreements directly to the extent they
deem such enforcement necessary or advisable to protect their rights or the
rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate 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.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. This Agreement shall be governed by the laws
of the State of New York.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
<PAGE> 44
20
(k) Submission to Jurisdiction; Service of Process. Each of the
Company and the Guarantor hereby (i) acknowledges that it has irrevocably
designated and appointed CT Corporation System, 1633 Broadway, New York, New
York 10019 (together with any successor, the "Process Agent"), as authorized
agent upon which process may be served in any suit, action or proceeding arising
out of or relating to this Agreement or the transactions contemplated herein or
brought under federal or state securities laws that may be instituted in any
federal or state court in the State of New York, sitting in the city of New
York, and acknowledges that the Process Agent has accepted such designation,
(ii) agrees that service of process upon the Process Agent and written notice of
such service to the Company or the Guarantor, as the case may be (mailed or
delivered to the Chief Executive Officer of the Company at its principal office
at Alferez Pareja 256, 1107 Buenos Aires Argentina), shall be deemed in every
respect effective service of process upon the Company or the Guarantor, as the
case may be, in any such suit, action or proceeding and (iii) agrees to take any
and all action, including the execution and filing of any and all such
documents and instruments as may be necessary to continue such designation and
appointment of the Process Agent in full force and effect so long as any of the
Notes shall be outstanding. Each of the Company and the Guarantor hereby agrees
to submit to the nonexclusive jurisdiction of any such federal or state court in
the State of New York in any such suit, action or proceeding arising out of or
relating to this Agreement or the transactions contemplated herein and hereby
waives to the fullest extent permitted by law any defense to the institution or
continuance of any such suit, action or proceeding based upon lack of proper
venue, inconvenient forum or similar grounds.
(l) Waiver of Immunity. To the extent that the Company or the
Guarantor has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service of notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, each of them hereby irrevocably waives such
immunity in respect of their obligations under this Agreement to the fullest
extent permitted by law.
<PAGE> 45
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
IMPSAT CORPORATION
By _____________________
Name:
Title:
By _____________________
Name:
Title:
IMPSAT S.A.
By _____________________
Name:
Title:
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
By _____________________
Name:
Title:
BEAR, STEARNS & CO. INC.
By _____________________
Name:
Title:
<PAGE> 46
Exhibit B
ARNOLD & PORTER NEW YORK
555 TWELFTH STREET, N.W. DENVER
WASHINGTON, D.C. 20004-1202 LOS ANGELES
LONDON
(202) 942-5000
FACSIMILE (202) 942-5999
July 30, 1996
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
The Bank of New York
101 Barclay Street
New York, New York 10286
Ladies and Gentlemen:
We have acted as special United States counsel to IMPSAT Corporation
(the "Company") and to IMPSAT S.A. (the "Guarantor") in connection with the
Placement Agreement, dated as of July 25, 1996 (the "Placement Agreement"),
among the Company, the Guarantor, Morgan Stanley & Co. Incorporated and Bear,
Stearns & Co. Inc. relating to the issue and sale of the Company's $125,000,000
12 1/8% Senior Guaranteed Notes due 2003 (the "Notes"). The Notes will be issued
pursuant to an Indenture dated as of July 30, 1996 (the "Indenture") among the
Company, the Guarantor and The Bank of New York. Capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the Placement
Agreement.
This opinion is furnished to you pursuant to Section 4(c) of the
Placement Agreement.
In connection with this opinion, we have examined the following
documents:
(i) the Placement Agreement, executed by the parties thereto;
(ii) the Registration Rights Agreement, executed by the parties
thereto;
<PAGE> 47
ARNOLD & PORTER
Morgan Stanley & Co. Incorporated, et al.
July 30, 1996
Page 2
(iii) The Indenture, executed by the parties thereto, including
the forms of the Notes and other exhibits thereto (the Indenture,
together with the Placement Agreement, the Registration Rights
Agreement and the Notes, being referred to herein as the "Documents");
(iv) the global Note representing the Notes;
(v) the letter from the Process Agent accepting appointment as
agent for service of process for the Company and the Guarantor in the
State of New York, United States of America (the "Process Agent
Acceptance"); and
(vi) the Offering Memorandum dated July 25, 1996, relating to
the Notes.
We have further examined such other records, agreements,
certificates and other documents as we have considered appropriate for
purposes of this opinion.
We have assumed for purposes of this opinion: (a) that each of
the Documents and the Process Agent Acceptance and all other documents
to be executed and delivered thereunder have been duly authorized by
the appropriate party or parties thereto (other than the Company), that
each of the Documents and the Process Agent Acceptance and all other
documents to be executed and delivered thereunder have been duly
executed and delivered thereunder by the appropriate party or parties
thereto (other than the Company and the Guarantor) and that each such
party (other than the Company) has adequate power, authority and legal
right to enter into the Documents and the Process Agent Acceptance to
which it is a party and to perform its obligations under each of the
Documents and the Process Agent Acceptance to which it is a party; (b)
the authenticity of all documents examined by us (and the completeness
of and conformity to the originals of any copies thereof submitted to
us) and the genuineness of all signatures; (c) the accuracy of the
certified English translation of each of the documents examined by us
the original of which is in the Spanish language; and (d) that under
the law of the Republic of Argentina, each of the Documents and all
other documents to be executed and delivered
<PAGE> 48
ARNOLD & PORTER
Morgan Stanley & Co. Incorporated, et al.
July 30, 1996
Page 3
thereunder have been duly executed and delivered by the Guarantor. We
have relied, as to factual matters, on the documents we have examined.
Based on the foregoing and subject to the qualifications,
assumptions and comments set forth below, we are of the opinion that:
1. The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to own its property
and to conduct its business as described in the Final Memorandum;
2. The Placement Agreement has been duly authorized, executed
and delivered by the Company pursuant to the law of the State of New
York, and, to the extent applicable, to the law of the State of
Delaware;
3. The Indenture has been duly authorized, executed and
delivered by the Company and has been duly executed and delivered by
the Guarantor pursuant to the law of the State of New York, and, to the
extent applicable, to the law of the State of Delaware, and is a valid
and binding obligation of the Company and the "Guarantor, enforceable
against the Company and the Guarantor in accordance with its terms;
4. The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and has been duly executed and
delivered by the Guarantor pursuant to the law of the State of New
York, and, to the extent applicable, to the law of the State of
Delaware, and is a valid and binding obligation of the Company and the
Guarantor, enforceable against the Company and the Guarantor in
accordance with its terms;
5. The Notes have been authorized by the Company, and when
executed, authenticated and delivered in accordance with the terms of
the Indenture and paid for in accordance with the terms of the
Placement Agreement, will constitute valid and binding obligations of
the Company, enforceable against the Company in accordance with their
terms and entitled to the benefits of the Indenture;
<PAGE> 49
ARNOLD & PORTER
Morgan Stanley & Co. Incorporated, et al.
July 30, 1996
Page 4
6. The execution and delivery by the Company of the Placement
Agreement, the Indenture, the Registration Rights Agreement and the
Notes, the performance by the Company of its obligations under the
Documents (including the issuance and sale of the Notes), and the
execution of the Placement Agreement, the Indenture and the
Registration Rights Agreement by the Guarantor will not result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, (a) the Certificate of Incorporation or Bylaws of the
Company, (b) to our knowledge, any statute, rule, regulation or order
of general applicability of any United States federal, New York or
Delaware governmental agency, body or court, (c) to our knowledge, any
judgment, decree or order of any United States federal, New York or
Delaware governmental agency, body or court or (d) any of the
agreements or instruments listed in Schedule 1 hereto;
7. No consent, approval, authorization or order of, or
qualification with, any court or governmental agency or body of the
United States, New York or Delaware is required for the performance by
the Company and the Guarantor of their respective obligations under the
Documents or the issuance, sale and delivery of the Notes, except in
each case as may be required by the securities or Blue Sky laws of the
various states of the United States in connection with the offer and
sales of the Notes;
8. After reasonable inquiry, we are not aware of any legal or
governmental proceedings pending or threatened against the Company or
any of its subsidiaries or against any of the Company's or its
subsidiaries respective properties other than proceedings fairly
summarized in the Final Memorandum and proceedings which we believe are
not likely to have a material adverse effect on the Company and its
subsidiaries taken as a whole or on the ability of the Company to
perform its obligations under the Documents or to consummate the
transactions contemplated by the Documents;
9. The Company is not an "investment company" within the meaning
of the United States Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the offer and sale of the Notes in the
manner
<PAGE> 50
ARNOLD & PORTER
Morgan Stanley & Co. Incorporated, et al.
July 30, 1996
Page 5
contemplated by Placement Agreement does not require registration of
the Company as an "investment company" under the Investment Company
Act;
10. The statements set forth in the Final Memorandum under the
captions "Description of the Notes and "Private Placement" (except for
the ultimate paragraph thereunder, as to which we express no opinion),
insofar as such statements constitute a summary of the legal matters
and documents referred to therein, accurately summarize such matters
and documents in all material respects;
11. The statements set forth in the Final Memorandum under the
caption "Business Operations in Other Countries - IMPSAT USA -
Regulation," insofar as such statements constitute matters of law,
accurately describe the legal matters referred to therein;
12. The discussion set forth in the Final Memorandum under the
caption "Certain United States Federal Income Tax Considerations," to
the extent such discussion constitutes matters of law or legal
conclusions, accurately describes the material United States federal
income tax consequences of an investment in the Notes; and
13. No registration of the Notes under the United States
Securities Act of 1933, as amended, is required for the offering or
sale of the Notes to the Placement Agents or in connection with the
initial resale of such Notes by the Placement Agents in accordance with
Section 6 of the Placement Agreement, it being understood that no
opinion is expressed as to any subsequent resale of any Notes in the
manner contemplated by the Placement Agreement. In connection with the
rendering of this opinion, we have assumed the veracity and accuracy of
the representations and agreements of the Placement Agents contained in
Section 6 of the Placement Agreement and the representations and
warranties of the Company contained in Sections 1(l) and (q) and
Sections 5(f), (g) and (h) of the Placement Agreement.
The foregoing opinions are subject to the following assumptions
and qualifications:
<PAGE> 51
ARNOLD & PORTER
Morgan Stanley & Co. Incorporated, et al.
July 30, 1996
Page 6
(a) Our opinions in paragraphs 2 through 5 above are subject to
general principles of equity (regardless of whether considered in a
proceeding in equity or at law). Such principles of equity are of
general application, and in applying such principles a court, among
other things, might not allow a creditor to accelerate the maturity of
a debt upon the occurrence of default deemed immaterial by such court
or might decline to order that a covenant be performed. Such principles
applied by a court might include, among other things, a requirement
that creditors act with reasonableness and good faith. Such a
requirement might be applied, among other situations, to the provisions
of any Document requiring the payment of an indemnity or compensation
to any party thereto or purporting to authorize conclusive
determinations by any party thereto;
(b) Our opinions contained in paragraphs 2 through 5 above are
subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and to the possible judicial application of foreign laws or
governmental action affecting the enforcement of creditors' rights;
(c) We express no opinion as to the enforceability of any
arrangement under the Registration Rights Agreement as to
indemnification for or contribution with respect to liabilities arising
under the federal securities laws of the United States or the
securities law of any state of the United States;
(d) We express no opinion as to whether courts other than state
or federal courts in the State of New York would give effect to the
choice of New York law governing the Documents;
(e) With respect to our opinion in paragraph 3 above as it
relates to the Guarantee contained in the Indenture, we express no
opinion with respect to the enforceability of the Guarantee to the
extent that the obligations of the Company being guaranteed are
unenforceable due to illegality or the fact that the Trustee or the
Holders had voluntarily released the Company's liability with respect
to obligations subject to the Guarantee or due to any other
circumstance constituting a defense available to the Company;
<PAGE> 52
ARNOLD & PORTER
Morgan Stanley & Co. Incorporated, et al.
July 30, 1996
Page 7
(f) With respect to our opinion in paragraph 6(d) above as it
relates to the Indenture dated as of November 29, 1993, among the
Guarantor, The Bank of New York, as Trustee, Co-Registrar and Principal
Paying Agent, Banque Internationale a Luxembourg S.A., as Paying Agent
and Transfer Agent and The Bank of New York, S.A., as Registrar and
Paying Agent, relating to the Guarantor's U.S.$30,000,000 9.5%
Negotiable Obligations due 1996, we have relied upon a certificate of
the Guarantor, a copy of which is attached hereto as Annex A, regarding
the satisfaction of the conditions precedent to the Defeasance
Agreement dated as of July 25, 1996, between the Guarantor and the Bank
of New York, as Trustee.
(g) Insofar as our opinions in paragraphs 2 through 5 above
relate to the provisions of the Documents regarding jurisdiction,
service of process and venue (and the defense of an inconvenient
forum), such opinions are limited to: (i) jurisdiction and service of
process in respect of any action arising out of or related to the
Placement Agreement, the Registration Rights Agreement, the Indenture
or the Notes (each, a "Related Proceeding") brought, or sought to be
brought, in the Supreme Court of the State of New York or the United
States District Court, in each case sitting in the City of New York;
and (ii) the defense of an inconvenient forum in a Related Proceeding
brought, or sought to be brought, in the Supreme Court of the State of
New York, sitting in the City of New York (but not in the United States
District Court);
(h) The foregoing opinion is limited to the law of the State of
New York, the State of Delaware and the federal law of the United
States of America, and we do not express any opinion herein concerning
any other law (including, without limitation any law of any
jurisdiction other than the State of New York or the State of Delaware
wherein any party to any of the Documents may be located or wherein
enforcement of any of the Documents may be sought). We are not
qualified to practice Argentine law. To the extent that the law of the
Republic of Argentina may be relevant to our opinions in paragraphs 2
through 5 above, we have relied upon the opinion of Nicholson & Cano,
Argentine counsel to the Company and the Guarantor, and the foregoing
opinion is subject to the limitations and exceptions set
<PAGE> 53
ARNOLD & PORTER
Morgan Stanley & Co. Incorporated, et al.
July 30, 1996
Page 8
forth in such opinion. With your consent, our reliance upon such
opinion is without our having made any independent investigation with
respect thereto.
This opinion speaks only as of its date. In the absence of a
specific request, we assume no obligation to supplement or update this
opinion as of any date occurring hereafter. This opinion is limited to
the matters on which you have requested our opinion, and this opinion
should not be read as expressing any opinion except on the matters
expressly set forth herein. This opinion may not be relied upon by any
person other than the addressees hereof, the Company and the Guarantor.
Very truly yours,
<PAGE> 54
ARNOLD & PORTER
Schedule 1
----------
1. Subscription Agreement dated as of November 23, 1993, among IMPSAT
S.A., Lehman Brothers International, Banque Indosuez and Banco de
Galicia y Buenos Aires S.A.
2. Indenture dated as of November 29, 1993, among IMPSAT S.A., The
Bank of New York, as Trustee, Co-Registrar and Principal Paying
Agent, Banque Internationale a Luxembourg S.A., as Paying Agent and
Transfer Agent and The Bank of New York, S.A., as Registrar and
Paying Agent.
3. IMPSAT S.A. U.S.$30,000,000 9.5% Negotiable Obligations due 1996.
4. Global Commercial Paper Program Agreement dated as of October 27,
1994, among IMPSAT S.A., Lehman Brothers International (Europe) and
Lehman Brothers Inc.
5. Issuing and Paying Agency Agreement dated as of October 27, 1994,
among IMPSAT S.A., The Bank of New York and The Bank of New York
S.A.
6. Loan and Repayment Agreement dated April 9, 1996, between IMPSAT
S.A. and Credit Lyonnais.
7. U.S.$498,474.52 Promissory Note dated January 9, 1995 between
IMPSAT S.A. and Citibank, N.A.
8. U.S.$1,663,871.58 Promissory Note dated December 19, 1994 between
IMPSAT S.A. and Citibank, N.A.
9. U.S.$1,647,978.46 Promissory Note dated November 25, 1994 between
IMPSAT S.A. and Citibank, N.A.
10. U.S.$1,789,257.41 Promissory Note dated October 26, 1994 between
IMPSAT S.A. and Citibank, N.A.
11. Share Retention Agreement dated as of March 2, 1994, among IMPSAT
S.A., Colinvertel S.A., Corporacion Impsa S.A., Compania
Suramericana de
<PAGE> 55
ARNOLD & PORTER
Seguros S.A., Compania Suramericana de Capitalizacion and the Inter-American
Investment Corporation, as amended by the Assignment, Assumption, Release and
Amendment Agreement dated as of November 24, 1994, among IMPSAT S.A.,
Colinvertel S.A., Corporacion Impsa S.A., Compania Suramericana de Seguros
S.A., Compania Suramericana de Capitalizacion, IMPSAT Corporation and the
Inter-American Investment Corporation.
<PAGE> 56
July 30, 1996
Arnold & Porter
Thurman Arnold Building
555 12th Street, N.W.
Washington, D.C. 20004
RE: 12-1/8% Senior Guaranteed Notes due 2003
----------------------------------------
Ladies and Gentlemen:
Reference is made to:
(i) the Placement Agreement dated as of July 25, 1996, among IMPSAT
Corporation, IMPSAT S. A. (the "Guarantor"), Morgan Stanley & Co.
Incorporated and Bear, Stearns & Co. Inc., (the "Placement Agreement"),
relating to the issue and sale of the Company's $125,000,000 12-1/8% Senior
Guaranteed Notes due 2003;
(ii) the Indenture dated as of November 29, 1993, among the Guarantor, The
Bank of New York, as Trustee, Co-Registrar and Principal Paying Agent,
Banque Internationale a Luxembourg S. A., as Paying Agent and Transfer
Agent and The Bank of New York, S. A., as Registrar and Paying Agent,
relating to the Guarantor's U.S. $30,000,000 9.5% Negotiable Obligations
due 1996, (the "Eurobond Indenture");
(iii) the First Supplemental Indenture dated as of July 25, 1996 between
the Guarantor and The Bank of New York, as Trustee, Co-Registrar and
Principal Paying Agent, relating to the Eurobond Agreement (the "First
Supplemental Indenture"); and
(iv) the Defeasance Agreement dated as of July 25, 1996 between the
Guarantor and The Bank
<PAGE> 57
of New York, as Trustee under the Eurobond Indenture and the First
Supplemental Indenture (the "Defeasance Agreement").
IMPSAT S. A. hereby certifies that the conditions precedent to the
satisfaction and discharge of the Eurobond Indenture, as amended by the First
Supplemental Indenture, including the delivery to the Trustee on the payment
contemplated by Section 1 of the Defeasance Agreement, have been effected, and
accordingly the Eurobond Indenture, as amended by the First Supplemental
Indenture, has been satisfied and discharged.
You may rely on this certification in connection with rendering any
opinion in connection with the Placement Agreement.
Sincerely,
IMPSAT S. A.
By: /s/ JOSE R. TORRES
-------------------------------
Name: Jose R. Torres
Title: Manager of Treasury
<PAGE> 58
[Nicholson y Cano Abogados letterhead]
July 30, 1996.
Messrs
MORGAN STANLEY & CO. INCORPORATED
BEAR, STEARNS & CO. INC.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
U.S.A.
Dear Sirs:
We have acted as Argentine counsel to IMPSAT S.A. (the "Company"), a
company incorporated under the laws of Argentina, and have acted in such
capacity in connection with (i) the issue and sale by IMPSAT CORPORATION, a
company incorporated under the laws of Delaware, U.S.A., of up to $125,000,000
principal amount of its 12-1/8% Senior Guaranteed Notes due 2003 (the "Notes"),
and (ii) the issue of a guarantee on the Notes on a senior unsecured basis by
IMPSAT S.A. (the "Guarantee"), pursuant to and subject to the terms and
conditions set forth in (a) a Placement Agreement, dated as of July 30, 1996
(the "Placement Agreement"), among IMPSAT CORPORATION, IMPSAT S.A., MORGAN
STANLEY & CO INCORPORATED and the other several placement agents named in
Schedule I thereto; (b) an Indenture, dated as of July 30, 1996 (the
"Indenture"), among IMPSAT CORPORATION, IMPSAT S.A., THE BANK OF NEW YORK, as
trustee (the "Trustee"); and (c) a Registration Rights Agreement, dated as of
July 30, 1996 (the "Registration Rights Agreement"), among IMPSAT CORPORATION,
IMPSAT S.A., MORGAN STANLEY & CO INCORPORATED and BEAR, STEARNS & CO. INC.
<PAGE> 59
As such counsel we have examined the originals, or copies identified to
our satisfaction, of such corporate records of IMPSAT S.A., and its
subsidiaries, such agreements and instruments, and such other documents as we
have deemed necessary as a basis for opinions hereinafter expressed. In such
examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
We are qualified to practice in the jurisdiction of the city of Buenos
Aires, and the opinions stated herein are limited to the laws thereof and the
federal laws of Argentina.
Based upon the foregoing, and having regard of such legal
considerations as we deem relevant, we are of the opinion that:
(A) IMPSAT S.A. has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
organisation, has the corporate power and authority to own its property and to
conduct its business as described in the Final Memorandum, dated July 25, 1996
(the "Final Memorandum") and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries taken as a
whole;
(B) each subsidiary of IMPSAT S.A. has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction
of its organisation, has the corporate power and authority to own its property
and to conduct its business as described in the Final Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on
the Company and its subsidiaries taken as a whole;
(C) the Placement Agreement has been duly authorized, executed and delivered by
IMPSAT S.A.
(D) the Guarantee has been duly authorized by IMPSAT S.A. and, when the
Indenture has been duly authorized, executed and delivered by IMPSAT S.A. and
assuming the Notes have been executed, authenticated and delivered and paid for
<PAGE> 60
In accordance with the terms of the Placement Agreement, and assuming the
Guarantee is enforceable under New York state law, the Guarantee will be
enforceable against IMPSAT S.A. in accordance with its terms;
(E) the Registration Rights Agreement has been duly authorized, executed and
delivered by IMPSAT S.A., and assuming that the Registration Rights Agreement
is a valid and binding agreement of IMPSAT S.A. under the New York state law,
the Registration Rights Agreement will be enforceable against IMPSAT S.A. in
accordance with its terms;
(F) the Indenture has been duly authorized, executed and delivered by IMPSAT
S.A., and assuming that the Indenture has been duly authorized, executed and
delivered by the Company and is valid and binding agreement of IMPSAT S.A.
under the New York state law, the Indenture will be enforceable in accordance
with its terms;
(G) (i) the execution and delivery by IMPSAT S.A. of, and the performance by
IMPSAT S.A. of its obligations under, the Placement Agreement, the Indenture,
the Registration Rights Agreement and the Guarantee will not contravene (A) any
provision of applicable Argentine Law, (B) the certificate of incorporation or
by-laws of IMPSAT S.A., (C) to our knowledge, any agreement or other instrument
binding upon IMPSAT S.A. or any of its subsidiaries that is material to IMPSAT
S.A. and its subsidiaries, taken as whole, provided that the obligations of the
Company, under the loan agreements between IMPSAT S.A. and Inter American
Investment Corporation, dated as of March 14, 1991, and Banco de Galicia S.A.,
dated as of October 31, 1995, as amended on May 2, 1996, respectively, are
terminated by payment with the proceeds of the Notes; or (D) to our knowledge,
any judgement, order or decree of any governmental body, agency or court having
jurisdiction over IMPSAT S.A. or any subsidiary, and (ii) no consent, approval,
authorization or order of, or qualification with any governmental body or
agency is required for the performance by Impsat S.A. of its obligations under
de Placement Agreement, the Indenture, the Registration Rights Agreement and
the Guarantee;
(H) After due inquiry, we do not know of any legal or governmental proceedings
pending or threatened to which IMPSAT S.A. or any of its subsidiaries is a
party or to which any of the properties of IMPSAT S.A. or any of its
subsidiaries is subject other than proceedings fairly summarized in all
material respects in the Final Memorandum and proceedings which we believe are
not likely to have a material adverse effect on Impsat S.A. and its
subsidiaries, taken as a whole, or on the power or ability of IMPSAT S.A. to
perform its obligations under the Placement Agreement, the Indenture, the
Registration Rights Agreement and the Guarantee or to consummate the
transactions contemplated by the Final Memorandum.
<PAGE> 61
(I) Each of IMPSAT S.A. and its subsidiaries has all necessary certificates,
orders, permits, licenses, authorizations, consents and approval of and from,
and has made all declarations and filings with, all Argentine governmental
authorities, all self-regulatory organizations and all courts and tribunals, to
own, lease, license and use its properties and assets and to conduct its
business in the manner described in the Final Memorandum, and neither IMPSAT
S.A. nor any of its subsidiaries has received any notice of proceedings
relating to revocation or modification of any such certificates, orders,
permits, licenses, authorizations, consents, or approvals, nor is IMPSAT S.A.
or any of its subsidiaries in violation of, or in default under, any federal,
state, local, foreign supranational, national or regional law, regulation,
rule, decree, order or judgement applicable to IMPSAT S.A. or any of its
subsidiaries the effect of which, singly or in the aggregate, would have a
material adverse effect on the prospects, condition, financial or otherwise, or
in the earnings, business or operations of the Company and its subsidiaries,
taken as a whole, except as described in the Final Memorandum; and
(J) The statements in the Final Memorandum under the caption "Risk Factors -
Government Regulation; Regulatory Uncertainty" and "Business - Description of
Country Operations - IMPSAT Argentina - Regulation", in each case insofar as
such statements constitute summaries of the Argentine legal matters, documents
or proceedings referred to therein, are accurate in all material respects and
fairly summarize all matters referred to therein.
(K) There are no restrictions (legal, contractual or otherwise) on the ability
of IMPSAT S.A. to declare and pay any dividend or make any payment or transfer
of property or assets to its stockholders other than those described in the
Final Memorandum (including, without limitation, the description of withholding
taxes contained therein) and such restrictions as would not have a material
adverse effect on the prospects, condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries, taken as
a whole; and such descriptions, if any, fairly summarize such restrictions.
(L) The provisions in the Placement Agreement and the Indenture as to the
submission of IMPSAT S.A. to the jurisdiction of any federal or state court in
the State of New York in any action under the Placement Agreement and the
Indenture and the waivers of immunity contained in the Placement Agreement and
the Indenture, are each valid, binding and enforceable under Argentine law; and
judgement obtained under the Placement Agreement or the Indenture in any such
court shall be enforceable in Argentina without further review of the merits,
including, without limitation, any final judgement for payment of money
rendered by any such court, provided that; (i) the U.S. court had jurisdiction
over the original proceeding; (ii) the judgement is final and conclusive on the
merits and is
<PAGE> 62
for a definite sum of money; (iii) the judgement does not contravene Argentine
public policy; (iv) the judgement is not for a tax, penalty or judgement arrived
at by doubling, trebling or otherwise multiplying a sum assessed as compensation
for the loss or damage sustained; (v) the judgement has not been obtained by
fraud; (vi) the defendant against whom the enforcement of the judgement is
sought was duly served with a summons in the original proceeding; and (vii) the
judgement is not contrary to a prior or simultaneous judgement of an Argentine
court.
(M) Neither IMPSAT S.A. nor any of its properties or assets has any immunity
from jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgement, attachment in aid of
execution, execution or otherwise).
(N) To ensure the legality, validity, enforceability, priority or admissibility
in evidence. In Argentina of the Placement Agreement, the Indenture or any other
document or instrument provided for therein, it is not necessary that the
Placement Agreement, the indenture or any another document or instrument
provided for therein be submitted to or recorded or filed with any court or
other authority in Argentina or that any tax or charge be paid in respect of the
Placement Agreement, the Indenture or any other document or instrument provided
for hereby or thereby (other than a court tax of up to 3% of the amount in
controversy imposed with respect to the institution of any judicial proceeding
to enforce in Argentina the Placement Agreement or the Indenture).
This opinion is subject to the following additional qualifications:
(i) The ability of the Company to perform obligations payable in non-Argentine
currency, and the ability of any person to remit out of Argentina the proceeds
of any judgement award in non-Argentine currency issued by a court in Argentina
will be subject to the exchange regulations which may be in effect at the time
of payment or of such remittance, no exchange restrictions being in place as of
the date hereof in connection therewith.
(ii) The recognition and enforcement of foreign judgements in Argentina is
conditioned as described in the Final Memorandum.
(iii) Nothing herein is to be taken as an indication that the remedy of an order
for specific performance or the issue of an injunction would be available in a
court of Argentina, if such remedies are available only at the discretion of the
courts.
(iv) The enforceability of IMPSAT S.A.'s obligations may be limited by
bankruptcy, insolvency or similar laws proceedings affecting creditors' rights
generally, and under such proceedings to the existence of reciprocity.
<PAGE> 63
This opinion is furnished to you pursuant to Section 4(d) of the
Placement Agreement and may also be relied upon by the Bank of New York, as
Trustee under the Indenture, and Arnold & Porter, United States counsel to
IMPSAT S.A. Therefore this opinion may not be relied upon by any other person
or entity or used for any purpose and neither its contents nor its existence
may be disclosed without our prior written consent.
Very truly yours,
/s/ MARIA FRAGUAS
-----------------------------
Maria Fraguas
<PAGE> 64
EXHIBIT D
[S.E. CONSULTORES ASOCIADOS LTDA. LETTERHEAD]
July 30, 1996
MORGAN STANLEY & CO. INCORPORATED
BEAR, STEARNS & CO. INC.
c/o Morgan Stanley and Co. Incorporated
1585 Broadway
New York, New York 10036
U.S.A.
- ------------------------------------------
Ladies & Gentlemen:
(A) IMPSAT S.A. ("IMPSAT COLOMBIA") has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the Republic of
Colombia, has the corporate power and authority to own its property and to
conduct its business as described in the Final Memorandum dated July 25, 1996
(the "Final Memorandum") and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a meterial adverse effect in Impsat Colombia and its subsidiaries as a
whole;
(B) IMPSAT COLOMBIA has all necessary certificates, orders, permits, licenses,
authorizations, consents and approvals of and from, and has made all
declarations and filings with, all Colombian governmental authorities, courts
and tribunals, to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Final Memornadum, and Impsat
Colombia has not received any notice of proceedings relating to revocation or
modification of any such certificates, odrers, permits, licenses,
authorizations, consents or approvals, nor is Impsat Colombia in violation of,
or in default under, any federal, state, local, foregoing supranational,
national or regional law, regulation, rule, decree, order or judgement
applicable to Impsat Colombia the effect of which, singly or in the aggregate,
would have a material adverse effect on the prospects, condition, financial
or otherwise, or in the earnings, business or operation of the Company and its
subsidiaries, taken as a whole, except as described in the Final Memorandum;
(C) The statements in the Final Memorandum under the caption "IMPSAT
COLOMBIA-REGULATION" insofar as such statements constitute summaries of the
Colombia legal matters, documents or proceedings referred to therein, are
accurate in all material respects and fairly summarize all matters referred to
therein, and
<PAGE> 65
(D) There are no restrictions (legal, contractual or otherwise) on the ability
of IMPSAT COLOMBIA to declare and pay any dividends or make any payment or
transfer of property or ooooto to its stockholders other than those described
in the Final Memorandum (including, without limitation, the description of
withholding taxes contained therein) and such restrictions as would not have a
material adverse effect on the prospects, condition, financial or otherwise, or
in the earnings, business or operations of the Company and its subsidiaries,
taken as a whole; and such descriptions, if any, fairly summarize such
restrictions.
/s/ Saturia Esguerra
-----------------------------------------
SATURIA ESGUERRA PORTOCARRERO
Legal Representative
<PAGE> 66
[PEREZ, BUSTAMANTE Y PEREZ LETTERHEAD]
Exhibit E
July 30, 1996
Morgan, Stanley & Co. Incorporated
Bear Stearns & Co. Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
In relation to ImpSatel del Ecuador, S.A. (ImpSat Ecuador), a wholly-owned
subsidiary of ImpSat Corporation, I am pleased to give you the following
opinion:
(A) ImpSat Ecuador has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
organization, has the corporate power and authority to own its property and to
conduct its business as described in the Final Memorandum dated July 25, 1996
(the "Final Memorandum"), and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company taken as a whole.
(B) ImpSat Ecuador has all necessary certificates, orders, permits,
licenses, authorizations, consents and approvals of and from, and has made all
declarations and filings with, all Ecuadorian governmental authorities, all
self-regulatory organizations, and all courts and tribunals, to own, lease,
license and use its properties and assets and to conduct it business in the
manner described in the Final Memorandum, and ImpSat Ecuador has not received
any notice of proceedings relating to revocation or modification of any such
<PAGE> 67
2
[PEREZ, BUSTAMANTE Y PEREZ LOGO]
certificates, orders, permits, licenses, authorizations, consents or approval,
and ImpSat Ecuador is not in default under any federal, state, local, foreign,
supranational, national or regional law, regulation, rule, decree, order or
judgment applicable to ImpSat Ecuador, the effect of which, singly or in the
aggregate, would have a material adverse effect on the prospects, condition,
financial or otherwise, or in the earnings, business or operations of the
Company, except as described in the Final Memorandum.
(C) the statements in the Final Memorandum under the captions
"Business--Description of Country Operations--IMPSAT Ecuador-Regulation",
insofar as such statements constitute summaries of the legal matters in
Ecuador, documents or proceedings referred to therein, are accurate in all
material respects and fairly summarize all matters referred to therein;
(D) there are no restrictions (legal, contractual or otherwise) on the
ability of ImpSat Ecuador to declare and pay any dividends or make any payment
or transfer of property or assets to its stockholders other than those
described in the Final Memorandum (including, without limitation, the
description of withholding taxes contained therein), and such restrictions as
would not have a material adverse effect on the prospects, condition, financial
or otherwise, or in the earnings, business or operations of the Company, and
such descriptions, if any, fairly summarize such restrictions.
Very truly yours,
/s/ Federico Chiriboga
-------------------------------
Federico Chiriboga
<PAGE> 68
Exhibit F
[BASHAM, RINGE Y CORREA, S.C. LETTERHEAD]
July 30, 1996
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
We have acted as local counsel for IMPSAT, S.A. de C.V. ("IMPSAT
Mexico") since its incorporation and have most recently provided services in
connection with the private placement offering contemplated by its parent
company IMPSAT Corporation (the "Company").
With respect to the private placement offer, you have asked us to
provide a legal opinion as to the organization, existence, business, and
properties of IMPSAT Mexico as they relate to the information provided in the
Offering Memorandum, dated July 25, 1996 ("Final Memorandum").
In connection with this opinion we have examined:
(a) The Final Memorandum.
(b) The Mexican laws and regulations governing the
organization, existence, business, and properties of
IMPSAT Mexico.
(c) The special legislation, decrees, resolutions and other
legal instruments, such as IMPSAT Mexico's permit to
provide dedicated link services, as in our judgment are
necessary or appropriate to render this opinion.
<PAGE> 69
BASHAM, RINGE Y CORREA, S.C. 2
(d) Our files on IMPSAT MEXICO.
On the basis of the foregoing and to the best of our knowledge, we are of the
opinion that:
(A) IMPSAT Mexico has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
organization, has the corporate power and authority to own its property and to
conduct its business as described in the Final Memorandum under the caption
"Business -- Description of Country Operations -- IMPSAT Mexico -- Regulation"
and is duly qualified to transact business and is in good standing in each
Mexican jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualifications, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company taken as a whole;
(B) IMPSAT Mexico has all necessary certificates, orders, permits, licenses;
authorizations, consents and approvals of and from, and has made all
declarations and filings with, all Mexican governmental authorities, all
self-regulatory organizations and all courts and tribunals, to own, lease,
license and use its properties and assets and to conduct its business in the
manner described in the Final Memorandum under the caption "Business --
Description of Country Operations -- IMPSAT Mexico -- Regulation", and IMPSAT
Mexico has received no notice of proceedings relating to the revocation or
modification of any such certificates, orders, permits, licenses,
authorizations, consents or approvals, nor is IMPSAT Mexico in violation of, or
in default under, any federal, state, local, national or regional law,
regulation, rule, decree, order or judgment applicable to IMPSAT Mexico the
effect of which, singly or in the aggregate, would have a material adverse
effect on the prospects, condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a whole,
except as described in the Final Memorandum, and
(C) The statements in the Final Memorandum under the caption "Business --
Description of Country Operations -- IMPSAT Mexico -- Regulation", insofar as
such statements constitute summaries of the Mexican legal matters, documents or
proceedings referred to
<PAGE> 70
BASHAM, RINGE Y CORREA, S.C. 3
therein, are accurate in all material respects, and fairly summarize all matters
referred to therein.
(D) There are no restrictions (legal, contractual or otherwise) on the ability
of IMPSAT Mexico to declare and pay any dividends or make any payment or
transfer of property or assets to its stockholders other than those described
in the Final Memorandum (including without limitation, the description of
withholding taxes contained therein) and such restrictions as would not have a
material adverse effect on the prospects, condition, financial or otherwise, or
in the earnings, business or operations of the Company and its subsidiaries,
taken as a whole; and such descriptions, if any, fairly summarize such
restrictions.
Sincerely,
/s/ H. Kiehnle
-------------------------
Herman Kiehnle
<PAGE> 71
[BAUMEISTER & BREWER LETTERHEAD]
Caracas, July 30, 1996
Morgan Stanley
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ref: Legal Opinion
Telecomunicaciones Impsat, S.A.
Ladies and Gentlemen:
We are acting as legal counsel for Telecomunicaciones Impsat, S.A.,
(ImpSat Venezuela) a corporation incorporated and organized under the laws of
the Republic of Venezuela, in connection with the issuance and sale of
$125,000,000 aggregate principal amount of 12 1/8% Senior Guaranteed Notes due
2003 (the "Notes") of IMPSAT Corporation (the "Company").
We have reviewed the Final Memorandum dated July 25, 1996 (the "Final
Memorandum"). We have also made such inquiries, and examined originals or
copies of such documents, corporate records and other instruments as we have
deemed necessary for the purpose of this opinion. In our examination, we have
assumed the legal capacity of all natural persons, the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such latter
documents. In making our examination of documents executed by parties other
than the Company, we have assumed that such parties had the power, corporate or
other, to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or other, and
execution
<PAGE> 72
[BAUMEISTER & BREWER LETTERHEAD]
and delivery by such parties of such documents and the validity and binding
effect thereof. As to any facts material to the opinions expressed herein which
were not independently established or verified, we have relied upon oral or
written statements and representations of the Company, its officers and others.
Based on the foregoing, we are the opinion that:
(A) ImpSat Venezuela has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
organization, has the corporate power and authority to own its property and to
conduct its business as described in the Final Memorandum and is duly qualified
to transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or to be
in good standing would not have a material adverse effect on the Company and
its subsidiaries as a whole;
(B) ImpSat Venezuela has no subsidiaries.
(C) ImpSat Venezuela, to our better knowledge, has all necessary
certificates, orders, permits, licenses, authorizations, consents and approvals
of and from, and has made all declarations, and filings with, all Venezuelan
Governmental authorities, all self regulatory organizations and all Courts and
Tribunals, to own, lease, license, and use its properties and assets and to
conduct its business in the manner described in the Final Memorandum. Up to
this date, ImpSat Venezuela has not received any notice of proceedings,
relating to revocation or modification of any such certificates, orders,
permits, licenses, authorizations, consents or approvals, nor is ImpSat
Venezuela in violation of, or in default under, any Federal, State, Local,
Foreign, Supranational, National or Regional law, regulation, rule, decree,
order or judgment applicable to ImpSat Venezuela the effect of which, singly or
in the aggregate would have a material adverse effect on the prospects,
condition, financial or otherwise, or in the earnings, business or operations
of the Company, taken as a whole, except as described in the Final Memorandum;
and
(D) The Statements in the Final Memorandum under the captions
(including, without limitation, the description of withholding taxes contained
therein) "Business -- Description of Country Operation -- IMPSAT Venezuela
Regulation," insofar as such statements constitute summaries of the Venezuelan
legal matters, documents or proceedings referred to therein, are accurate in
all material respects and fairly summarize all matters referred to therein.
(E) There are no restrictions (legal, contractual or otherwise) on the
ability of ImpSat Venezuela to declare and pay dividends or make payment or
transfer of property or assets to its stockholders other than those described
in the Final Memorandum.
<PAGE> 73
[BAUMEISTER & BREWER LETTERHEAD]
(including, without limitation, the description of withholding taxes contained
therein) and such restrictions as would not have a material adverse effect on
the prospects, condition, financial or otherwise, or in the earnings, business
or operations of the Company and its subsidiaries, taken as a whole; and such
descriptions, if any, fairly summarize such restrictions.
Yours sincerely,
/s/ Gustavo Linares /s/ Desmond Dillon
---------------------- -------------------------
Gustavo Linares Desmond Dillon
<PAGE> 1
EXHIBIT 4.3
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
Dated July 30, 1996
among
IMPSAT CORPORATION
IMPSAT S.A.
and
MORGAN STANLEY & CO. INCORPORATED
BEAR, STEARNS & CO. INC.
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into July 30, 1996, among IMPSAT CORPORATION, a Delaware corporation
(the "Company"), IMPSAT S.A. (the "Guarantor") and MORGAN STANLEY & CO.
INCORPORATED and BEAR, STEARNS & CO. INC. (the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement
dated July 25, 1996, among the Company, the Guarantor and the Placement Agents
(the "Placement Agreement"), which provides for the sale by the Company to the
Placement Agents of an aggregate of $125 million principal amount of the
Company's 12 1/8% Senior Guaranteed Notes Due 2003 (the "Securities"). In order
to induce the Placement Agents to enter into the Placement Agreement, the
Company and the Guarantor have agreed to provide to the Placement Agents and
their direct and indirect transferees the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing under
the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Exchange Offer" shall mean the exchange offer by the Company
of Exchange Securities for Registrable Securities pursuant to Section
2(a) hereof.
"Exchange Offer Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2(a) hereof.
<PAGE> 4
2
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by
reference therein.
"Exchange Securities" shall mean securities issued by the
Company and guaranteed on an unsubordinated basis by the Guarantor
under the Indenture containing terms identical to the Securities
(except that (i) interest thereon shall accrue from the last date on
which interest was paid on the Securities or, if no such interest has
been paid, from July 30, 1996 and (ii) the Exchange Securities will not
provide for an increase in the rate of interest and will not contain
terms with respect to transfer restrictions) and to be offered to
Holders of Securities in exchange for Securities pursuant to the
Exchange Offer.
"Holder" shall mean the Placement Agents, for so long as it
owns any Registrable Securities, and each of their successors, assigns
and direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture; provided that for purposes
of Sections 4 and 5 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the
Securities dated as of July 30, 1996 among the Company, the Guarantor
and The Bank of New York, as trustee, and as the same may be amended
from time to time in accordance with the terms thereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities;
provided that whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or any of its affiliates
(other than the Placement Agents or any other Holder deemed an
affiliate solely by reason of its holding one or more Registrable
Notes) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage or
amount.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the
preamble.
"Placement Agreement" shall have the meaning set forth in the
preamble.
<PAGE> 5
3
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by
a Shelf Registration Statement, and by all other amendments and
supplements to such prospectus, and in each case including all material
incorporated by reference therein.
"Registrable Securities" shall mean the Securities; provided,
however, that the Securities shall cease to be Registrable Securities
(i) when a Registration Statement with respect to such Securities shall
have been declared effective under the 1933 Act and such Securities
shall have been disposed of pursuant to such Registration Statement,
(ii) when such Securities have been sold to the public pursuant to Rule
144(k) (or any similar provision then in force, but not Rule 144A)
under the 1933 Act or (iii) when such Securities shall have ceased to
be outstanding; provided, further, that the Securities with respect to
which the Company and the Guarantor have caused to be filed and
declared effective an Exchange Offer Registration Statement and have
commenced an Exchange Offer, in each case pursuant to and in accordance
with Section 2 hereof, and which have not been tendered by the last
Exchange Date (as defined in Section 2(a)ii hereof) by the Holder
thereof shall be deemed not to be Registrable Securities.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company and the
Guarantor with this Agreement, including without limitation: (i) all
SEC, stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws
(including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of
any of the Exchange Securities or Registrable Securities), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements and other documents relating to
the performance of and compliance with this Agreement, (iv) all rating
agency fees, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii) the
fees and disbursements of counsel for the Company and the Guarantor
and, in the case of a Shelf Registration Statement, the fees and
disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel
for the Placement Agents) and (viii) the fees and disbursements of the
independent public accountants of the Company and the Guarantor,
including the expenses of any special audits or "comfort" letters
required by or incident to such
<PAGE> 6
4
performance and compliance, but excluding fees and expenses of counsel
to the underwriters (other than fees and expenses set forth in clause
(ii) above) or the Holders and underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement
of the Company and the Guarantor that covers any of the Exchange
Securities or Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company and the Guarantor pursuant to the
provisions of Section 2(b) of this Agreement which covers all of the
Registrable Securities (but no other securities unless approved by the
Holders whose Registrable Securities are covered by such Shelf
Registration Statement) on an appropriate form under Rule 415 under the
1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Trustee" shall mean the trustee with respect to the
Securities under the Indenture.
"Underwritten Registration" or "Underwritten Offering" shall
mean a registration in which Registrable Securities are sold to an
Underwriter (as hereinafter defined) for reoffering to the public.
2. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the Staff of the SEC, the Company and the
Guarantor shall use their best efforts to cause to be filed an Exchange
Offer Registration Statement covering the offer by the Company and the
Guarantor to the Holders to exchange all of the Registrable Securities
for Exchange Securities and to have such Registration Statement remain
effective until the closing of the Exchange Offer. The Company and the
Guarantor shall commence the
<PAGE> 7
5
Exchange Offer promptly after the Exchange Offer Registration Statement
has been declared effective by the SEC and use their best efforts to
have the Exchange Offer consummated not later than 60 days after such
effective date. The Company and the Guarantor shall commence the
Exchange Offer by mailing the related exchange offer Prospectus and
accompanying documents to each Holder stating, in addition to such
other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities
validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such notice is
mailed) (the "Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement (including any right to
have the interest rate thereon increased pursuant hereto);
(iv) that Holders electing to have a Registrable Security
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Security, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election,
not later than the close of business on the last Exchange Date, by
sending to the institution and at the address (located in the Borough
of Manhattan, The City of New York) specified in the notice a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Securities delivered for
exchange and a statement that such Holder is withdrawing his election
to have such Securities exchanged.
As soon as practicable after the last Exchange Date, the
Company shall:
(i) accept for exchange Registrable Securities or portions
thereof tendered and not validly withdrawn pursuant to the Exchange
Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted
for exchange by the Company and issue, and cause the Trustee to
promptly authenticate and mail to each Holder, an
<PAGE> 8
6
Exchange Security equal in principal amount to the principal amount of
the Registrable Securities surrendered by such Holder.
The Company and the Guarantor shall use their best efforts to complete the
Exchange Offer as provided above and shall comply with the applicable
requirements of the 1933 Act, the 1934 Act and other applicable laws and
regulations in connection with the Exchange Offer. The Exchange Offer shall not
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the Staff of the SEC.
The Company shall inform the Placement Agents of the names and addresses of the
Holders to whom the Exchange Offer is made, and the Placement Agents shall have
the right, subject to applicable law, to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
(b) In the event that (i) the Company and the Guarantor
determine that the Exchange Offer Registration provided for in Section 2(a)
above is not available or may not be consummated as soon as practicable after
the last Exchange Date because it would violate applicable law or the applicable
interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any
other reason consummated by January 30, 1997 or (iii) the Exchange Offer has
been completed and in the opinion of counsel for the Placement Agents a
Registration Statement must be filed and a Prospectus must be delivered by the
Placement Agents in connection with any offering or sale of Registrable
Securities, the Company and the Guarantor shall use their best efforts to cause
to be filed as soon as practicable after such determination, date or notice of
such opinion of counsel is given to the Company, as the case may be, a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities and to have such Shelf Registration Statement declared
effective by the SEC (such obligation, arising solely under clause (ii) above,
to have filed a Shelf Registration Statement shall be deemed satisfied with
respect to any Holder upon consummation of the Exchange Offer with respect to
such Holder). The Company and the Guarantor agree to use their best efforts to
keep the Shelf Registration Statement continuously effective until the third
anniversary of the Closing Date or such shorter period that will terminate when
all of the Registrable Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement. The Company and the
Guarantor further agree to supplement or amend the Shelf Registration Statement
if required by the rules, regulations or instructions applicable to the
registration form used by the Company and the Guarantor for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration or if reasonably requested by a Holder with
respect to information relating to such Holder, and to use their best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as thereafter practicable. The Company and
the Guarantor agree to furnish to the Holders of Registrable Securities copies
of any such supplement or amendment promptly after its being used or filed with
the SEC.
<PAGE> 9
7
(c) The Company and the Guarantor shall pay all Registration
Expenses in connection with the registration pursuant to Section 2(a) or Section
2(b). Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to
Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b)
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that, if, after it has been declared
effective, the offering of Registrable Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. As provided for in
the Indenture, in the event the Exchange Offer is not consummated and the Shelf
Registration Statement is not declared effective on or prior to January 30,
1997, the interest rate on the Securities will increase by 0.5% to 12 5/8% per
annum. If such Exchange Offer is not consummated and a Shelf Registration
Statement is not declared effective on or prior to July 30, 1997, the rate of
interest will increase by an additional 0.5% per annum to 13 1/8% per annum.
Upon consummation of the Exchange Offer or the effectiveness of the Shelf
Registration Statement, as the case may be, the rate of interest will decrease
to the original rate of interest of 12 1/8% per annum. If a Shelf Registration
Statement is required solely by the matters referred to in clause (iii) of the
first sentence of Section 2(b), such increase in interest rate shall be payable
only to the Placement Agents, with respect to Notes held by them, and only with
respect to any period (after January 30, 1997) during which such Shelf
Registration Statement is not effective.
(e) Without limiting the remedies available to the Placement
Agents and the Holders, the Company and the Guarantor acknowledge that any
failure by the Company and the Guarantor to comply with their obligations under
Section 2(a) and Section 2(b) hereof may result in material irreparable injury
to the Placement Agents or the Holders for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries precisely
and that, in the event of any such failure, the Placement Agents or any Holder
may obtain such relief as may be required to specifically enforce the Company's
and the Guarantor's obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of the Company and the
Guarantor with respect to the Registration Statements pursuant to Section 2(a)
and Section 2(b) hereof, the Company and the Guarantor shall as expeditiously as
possible:
<PAGE> 10
8
(a) prepare and file with the SEC a Registration Statement on
the appropriate form under the 1933 Act, which form (x) shall be
selected by the Company and the Guarantor and (y) shall, in the case of
a Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and (z) shall comply as to
form in all material respects with the requirements of the applicable
form and include all financial statements required by the SEC to be
filed therewith, and use their best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period and cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the 1933 Act; to keep each Prospectus
current during the period described under Section 4(3) and Rule 174
under the 1933 Act that is applicable to transactions by brokers or
dealers with respect to the Registrable Notes or Exchange Notes;
(c) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, to counsel for the Placement Agents,
to counsel for the Holders and to each Underwriter of an Underwritten
Offering of Registrable Securities, if any, without charge, as many
copies of each Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto and such other documents as such
Holder or Underwriter may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Securities; and
the Company and the Guarantor consent to the use of such Prospectus and
any amendment or supplement thereto in accordance with applicable law
by each of the selling Holders of Registrable Securities and any such
Underwriters in connection with the offering and sale of the
Registrable Securities covered by and in the manner described in such
Prospectus or any amendment or supplement thereto in accordance with
applicable law;
(d) use their best efforts to register or qualify the Exchange
and Registrable Securities under all applicable state securities or
"blue sky" laws of such jurisdictions as any Holder of Registrable
Securities covered by a Registration Statement shall reasonably request
in writing by the time the applicable Registration Statement is
declared effective by the SEC, to cooperate with such Holders in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. and do any and all other acts
and things which may be reasonably necessary or advisable to enable
such Holder to consummate the disposition in each such jurisdiction of
such Exchange and Registrable Securities owned by such Holder;
provided, however, that neither the Company nor the Guarantor shall be
required to
<PAGE> 11
9
(i) qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (ii) file any general consent to service of process or (iii)
subject itself to taxation in any such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for the Holders and counsel for the
Placement Agents promptly and, if requested by any such Holder or
counsel, confirm such advice in writing (i) when a Registration
Statement has become effective and when any post-effective amendment
thereto has been filed and becomes effective, (ii) of any request by
the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Company and the
Guarantor contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to the offering
cease to be true and correct in all material respects or if the Company
and the Guarantor receive any notification with respect to the
suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation of any proceeding for such
purpose, (v) of the happening of any event during the period a Shelf
Registration Statement is effective which makes any statement made in
such Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements
therein not misleading and (vi) of any determination by the Company and
the Guarantor that a post-effective amendment to a Registration
Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at
the earliest possible moment and provide immediate notice to each
Holder of the withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, without charge, at least one
conformed copy of each Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference
or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates
<PAGE> 12
10
representing Registrable Securities to be sold and not bearing any
restrictive legends and enable such Registrable Securities to be in
such denominations (consistent with the provisions of the Indenture)
and registered in such names as the selling Holders may reasonably
request at least two business days prior to the closing of any sale of
Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence
of any event contemplated by Section 3(e)(v) hereof, use their best
efforts to prepare and file with the SEC a supplement or post-effective
amendment to a Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company and the Guarantor
agree to notify the Holders to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and the
Holders hereby agree to suspend use of the Prospectus until the Company
and the Guarantor have amended or supplemented the Prospectus to
correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of
such document to the Placement Agents and their counsel (and, in the
case of a Shelf Registration Statement, the Holders and their counsel)
and make such of the representatives of the Company and the Guarantor
as shall be reasonably requested by the Placement Agents or their
counsel (and, in the case of a Shelf Registration Statement, the
Holders or their counsel) available for discussion of such document,
and shall not at any time file or make any amendment to the
Registration Statement, any Prospectus or any amendment of or
supplement to a Registration Statement or a Prospectus or any document
which is to be incorporated by reference into a Registration Statement
or a Prospectus, of which the Placement Agents and their counsel (and,
in the case of a Shelf Registration Statement, the Holders and their
counsel) shall not have previously been advised and furnished a copy or
to which the Placement Agents or their counsel (and, in the case of a
Shelf Registration Statement, the Holders or their counsel) shall
reasonably object;
(k) obtain a CUSIP number for all Exchange Securities, as the
case may be, not later than the effective date of a Registration
Statement;
(1) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange
<PAGE> 13
11
Securities or Registrable Securities, as the case may be, cooperate
with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute, and use their best
efforts to cause the Trustee to execute, all documents as may be
required to effect such changes and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable
Securities, any Underwriter participating in any disposition pursuant
to such Shelf Registration Statement, and attorneys and accountants
designated by the Holders, at reasonable times and in a reasonable
manner, all financial and other records, pertinent documents and
properties of the Company and the Guarantor, and cause the respective
officers, directors and employees of the Company and the Guarantor to
supply all information reasonably requested by any such representative,
Underwriter, attorney or accountant in connection with a Shelf
Registration Statement;
(n) in the case of a Shelf Registration, use their best
efforts to cause all Registrable Securities to be listed on any
securities exchange or any automated quotation system on which the
Securities are then listed if requested by the Majority Holders, to the
extent such Registrable Securities satisfy applicable listing
requirements;
(o) use their best efforts to cause the Exchange Securities or
Registrable Securities, as the case may be, to be rated by two
nationally recognized statistical rating organizations (as such term is
defined in Rule 436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable
Securities covered by a Registration Statement, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information with respect to such Holder as such Holder reasonably
requests to be included therein and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as
the Company and the Guarantor have received notification of the matters
to be incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such
customary agreements and take all such other actions in connection
therewith (including those requested by the Holders of a majority of
the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities including,
but not limited to, an Underwritten Offering and in such connection,
(i) to the extent possible, make such representations and warranties to
the Holders and any Underwriters of such Registrable Securities with
respect to the business of the
<PAGE> 14
12
Company and its subsidiaries, the Registration Statement, Prospectus
and documents incorporated by reference or deemed incorporated by
reference, if any, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings
and confirm the same if and when requested, (ii) obtain opinions of
counsel to the Company and the Guarantor (which counsel and opinions,
in form, scope and substance, shall be reasonably satisfactory to the
Holders and such Underwriters and their respective counsel) addressed
to each selling Holder and Underwriter of Registrable Securities,
covering the matters customarily covered in opinions requested in
underwritten offerings, (iii) obtain "cold comfort" letters from the
independent certified public accountants of the Company and the
Guarantor (and, if necessary, any other certified public accountant of
any subsidiary of the Company, or of any business acquired by the
Company and the Guarantor for which financial statements and financial
data are or are required to be included in the Registration Statement)
addressed to each selling Holder and Underwriter of Registrable
Securities, such letters to be in customary form and covering matters
of the type customarily covered in "comfort" letters in connection with
underwritten offerings, and (iv) deliver such documents and
certificates as may be reasonably requested by the Holders of a
majority in principal amount of the Registrable Securities being sold
or the Underwriters, and which are customarily delivered in
underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company and the Guarantor made
pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company and
the Guarantor may require each Holder of Registrable Securities to furnish to
the Company and the Guarantor such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company and the Guarantor may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e)(v) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to a
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by the Company, such Holder will deliver to the Company (at its
expense) all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. The Company may give any such
notice only twice during any 365 day period and any such suspensions may not
exceed 30 days for each suspension and there may not be more than two
suspensions in effect during any 365 day period.
<PAGE> 15
13
The Holders of Registrable Securities covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an Underwritten Offering. In any such Underwritten Offering, the investment
banker or investment bankers and manager or managers (the "Underwriters") that
will administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.
4. Participation of Broker-Dealers in Exchange Offer.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Securities that were acquired by such
broker-dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), may be deemed to be an "underwriter" within the
meaning of the 1933 Act and must deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of such Exchange Securities.
The Company and the Guarantor understand that it is the
Staff's position that if the Prospectus contained in the Exchange Offer
Registration Statement includes a plan of distribution containing a statement to
the above effect and the means by which Participating Broker-Dealers may resell
the Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligation under the 1933 Act in connection with resales of Exchange
Securities for their own accounts, so long as the Prospectus otherwise meets the
requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other
provisions of this Agreement, the Company and the Guarantor agree that the
provisions of this Agreement as they relate to a Shelf Registration shall also
apply to an Exchange Offer Registration to the extent, and with such reasonable
modifications thereto as may be, reasonably requested by the Placement Agents or
by one or more Participating Broker-Dealers, in each case as provided in clause
(ii) below, in order to expedite or facilitate the disposition of any Exchange
Securities by Participating Broker-Dealers consistent with the positions of the
Staff recited in Section 4(a) above; provided that:
(i) the Company and the Guarantor shall not be required to
amend or supplement the Prospectus contained in the Exchange Offer
Registration Statement, as would otherwise be contemplated by Section
3(i), for a period exceeding 180 days after the last Exchange Date (as
such period may be extended pursuant to the penultimate paragraph of
Section 3 of this Agreement) and Participating Broker-Dealers shall
not be authorized by the Company and the Guarantor to deliver and shall
not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 4; and
<PAGE> 16
14
(ii) the application of the Shelf Registration procedures set
forth in Section 3 of this Agreement to an Exchange Offer Registration,
to the extent not required by the positions of the Staff of the SEC or
the 1933 Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to the Company and the Guarantor
by the Placement Agents or with the reasonable request in writing to
the Company and the Guarantor by one or more broker-dealers who certify
to the Placement Agents, the Company and the Guarantor in writing that
they anticipate that they will be Participating Broker-Dealers; and
provided further that, in connection with such application of the Shelf
Registration procedures set forth in Section 3 to an Exchange Offer
Registration, the Company and the Guarantor shall be obligated (x) to
deal only with one entity representing the Participating
Broker-Dealers, which shall be Morgan Stanley & Co. Incorporated unless
it elects not to act as such representative, (y) to pay the fees and
expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Placement Agents unless
such counsel elects not to so act and (z) to cause to be delivered only
one, if any, "cold comfort" letter with respect to the Prospectus in
the form existing on the last Exchange Date and with respect to each
subsequent amendment or supplement, if any, effected during the period
specified in clause (i) above.
(c) The Placement Agents shall have no liability to the
Company, the Guarantor or any Holder with respect to any request that it may
make pursuant to Section 4(b) above.
5. Indemnification and Contribution.
(a) The Company and the Guarantor agree to indemnify and hold
harmless the Placement Agents, each Holder and each person, if any, who controls
the Placement Agents or any Holder within the meaning of either Section 15 of
the 1933 Act or Section 20 of the 1934 Act, or is under common control with, or
is controlled by, the Placement Agents or any Holder, from and against all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by the Placement Agents, any Holder
or any such controlling or affiliated person in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Exchange Securities or
Registrable Securities were registered under the 1933 Act, including all
documents incorporated therein by reference, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or caused by any
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Company and the Guarantor shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein in light of the circumstances
<PAGE> 17
15
under which they were made not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to the Placement Agents or any Holder to the Company and the Guarantor in
writing by the Placement Agents or any Holder furnished expressly for use
therein; provided, however, that the foregoing indemnity shall not inure to the
benefit of any of the foregoing parties from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities or Exchange
Securities, or any person controlling any of the foregoing parties, if such
party failed to send or give a copy of the Prospectus (as amended or
supplemented if the Company shall have furnished such amendments or supplements
thereto) to such person within the time required by the Securities Act (and if
so required), and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or liabilities. In
connection with any Underwritten Offering permitted by Section 3, the Company
and the Guarantor will also indemnify the Underwriters, if any, selling brokers,
dealers and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls such
Persons (within the meaning of the Securities Act and the Exchange Act) to the
same extent as provided above with respect to the indemnification of the
Holders, if requested in connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantor, the Placement Agents
and the other selling Holders, and each of their respective directors, officers
who sign the Registration Statement and each Person, if any, who controls the
Company and the Guarantor, the Placement Agents and any other selling Holder
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act to the same extent as the foregoing indemnity from the Company and the
Guarantor to the Placement Agents and the Holders, but only with reference to
information relating to such Holder furnished to the Company and the Guarantor
in writing by such Holder expressly for use in any Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or supplement
thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded
<PAGE> 18
16
parties) include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (a) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Placement
Agents and for all Holders and all persons, if any, who control the Placement
Agents and any Holders within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act, unless the Placement Agents determine in their
sole discretion that such a joint representation of the Placement Agents and the
Holders would involve differences or potential differences that render such
joint representation inadvisable, in which case the indemnifying party shall not
be responsible for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Holders and all persons, if any, who
control any Holders within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act and (ii) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Placement Agents and
all persons, if any, who control the Placement Agents within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act, and (b) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company and the Guarantor, their directors, their officers who
sign the Registration Statement and each person, if any, who controls the
Company and the Guarantor within the meaning of either such Section, and that
all such fees and expenses shall be reimbursed as they are incurred. In such
case involving the Placement Agents and persons who control the Placement
Agents, such firm shall be designated in writing by the Placement Agents. In
such case involving the Holders and such persons who control Holders, such firm
shall be designated in writing by the Majority Holders. In all other cases, such
firm shall be designated by the Company and the Guarantor. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but, if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party for such fees
and expenses of counsel in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which such indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
<PAGE> 19
17
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company and the Guarantor and the Holders shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Guarantor or by the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Holders' respective
obligations to contribute pursuant to this Section 5(d) are several in
proportion to the respective number of Registrable Securities of such Holder
that were registered pursuant to a Registration Statement.
(e) The Company and the Guarantor and each Holder agree that
it would not be just or equitable if contribution pursuant to this Section 5
were determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in paragraph (d) above shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Securities were sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Placement Agents, any Holder or any person controlling the Placement
Agents or any Holder, or by or on behalf of the Company and the Guarantor, their
officers or directors or any person controlling the
<PAGE> 20
18
Company and the Guarantor, (iii) acceptance of any of the Exchange Securities
and (iv) any sale of Registrable Securities pursuant to a Shelf Registration
Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company and the Guarantor
have not entered into, and on or after the date of this Agreement will not enter
into, any agreement which is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's and the Guarantor's other issued and outstanding securities under
any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company and the Guarantor have obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or consent; provided, however, that no amendment,
modification, supplement, waiver or consents to any departure from the
provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Securities unless consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section. 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Placement Agreement; and (ii) if to the Company and
the Guarantor, initially at the Company's address set forth in the Placement
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(c).
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the second succeeding business day if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee, at
the address specified in the Indenture.
<PAGE> 21
19
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Placement Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such person shall be entitled to receive the benefits hereof. The
Placement Agents (in their capacity as Placement Agents) shall have no liability
or obligation to the Company and the Guarantor with respect to any failure by a
Holder to comply with, or any breach by any Holder of, any of the obligations of
such Holder under this Agreement.
(e) Purchases and Sales of Notes. The Company and the
Guarantor shall not, and shall use their best efforts to cause their affiliates
(as defined in Rule 405 under the 1933 Act) not to, purchase and then resell or
otherwise transfer any Notes.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantor, on the one hand, and the Placement Agents, on the other hand, and
shall have the right to enforce such agreements directly to the extent they
deems such enforcement necessary or advisable to protect their rights or the
rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate 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.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. This Agreement shall be governed by the
laws of the State of New York.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
<PAGE> 22
20
(k) Submission to Jurisdiction, Service of Process. Each of
the Company and the Guarantor hereby (i) acknowledges that it has irrevocably
designated and appointed CT Corporation System, 1633 Broadway, New York, New
York 10019 (together with any successor. the "Process Agent"), as its authorized
agent upon which process may be served in any suit, action or proceeding arising
out of or relating to this Agreement or the transactions contemplated herein or
brought under federal or state securities laws that may be instituted in any
federal or state court in the State of New York, sitting in the city of New
York, and acknowledges that the Process Agent has accepted such designation,
(ii) agrees that service of process upon the Process Agent and written notice of
such service to the Company or the Guarantor, as the case may be (mailed or
delivered to the Chief Executive Officer of the Company at its principal office
at Alferez Pareja 256, 1107 Buenos Aires Argentina), shall be deemed in every
respect effective service of process upon the Company or the Guarantor, as the
case may be, in any such suit, action or proceeding and (iii) agrees to take any
and all action, including the execution and filing of any and all such documents
and instruments as may be necessary to continue such designation and appointment
of the Process Agent in full force and effect so long as any of the Notes shall
be outstanding. Each of the Company and the Guarantor hereby agrees to submit to
the nonexclusive jurisdiction of any such federal or state court in the State of
New York in any such suit, action or proceeding arising out of or relating to
this Agreement or the transactions contemplated herein and hereby waives to the
fullest extent permitted by law any defense to the institution or continuance of
any such suit, action or proceeding based upon lack of proper venue,
inconvenient forum or similar grounds.
(1) Waiver of Immunity. To the extent that the Company or the
Guarantor has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service of notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, each of them hereby irrevocably waives such
immunity in respect of their obligations under this Agreement to the fullest
extent permitted by law.
<PAGE> 23
IN WITNESS WHEREOF. the parties have executed this Agreement
as of the date first written above.
IMPSAT CORPORATION
By /s/ Illegible
--------------------------------------
Name:
Title: President
By /s/ Alberto Milvio
-------------------------------------
Name: Alberto Milvio
Title: Attorney in fact
IMPSAT S.A.
By /s/ Illegible
--------------------------------------
Name:
Title: Attorney in fact
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
By /s/ Christopher Kelly
--------------------------------
Name: Christopher Kelly
Title: Vice President
BEAR, STEARNS & CO. INC.
By
--------------------------------
Name:
Title:
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
IMPSAT CORPORATION
By
--------------------------------------
Name:
Title:
By
--------------------------------------
Name:
Title:
IMPSAT S.A.
By
-------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
By
--------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By /s/ Illegible
--------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.6
<PAGE> 2
Draft Dated ______, 1996 Exhibit 4.6
LETTER OF TRANSMITTAL
IMPSAT Corporation
Offer to Exchange
all outstanding
12-1/8% Senior Guaranteed Notes due 2003
for
12-1/8% Senior Guaranteed Notes due 2003,
which have been registered under the
Securities Act of 1933, as amended,
pursuant to the Prospectus,
dated _____, 1996
_________________
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON ________, 1996 UNLESS EXTENDED ("THE EXPIRATION DATE)
_________________
THE BANK OF NEW YORK, Exchange Agent
By Mail, Hand or
Overnight Delivery:
The Bank of New York,
101 Barclay Street
New York, New York 10286
Attention: Securities Processing Window
Ground Level Reorganization, 7E
By Registered or Certified Mail:
The Bank of New York,
101 Barclay Street
New York, New York 10286
Attention: Corporation Trust Operations, 7E
By Facsimile: (212) 571-3080
Confirm by Telephone: (212) 815-2742
<PAGE> 3
Delivery of this instrument to an address other than as set forth
above, or transmission of instructions via facsimile other than as set forth
above, will not constitute a valid delivery.
The undersigned acknowledges that he or she has received and reviewed
the Prospectus, dated, _____, 1996 (the "Prospectus"), of IMPSAT Corporation, a
Delaware corporation (the "Company"), and this Letter of Transmittal (the
"Letter"), which together constitute the Company's offer (the "Exchange Offer")
to exchange an aggregate principal amount of up to $125,000,000 of the
Company's 12-1/8% Senior Guaranteed Notes Due 2003 (the "New Notes"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which the Prospectus
is part, for a like principal amount of the issued and outstanding 12-1/8%
Senior Guaranteed Notes Due 2003 (the "Old Notes") of the Company from the
registered holders (the "Holders") thereof.
For each Old Note accepted for exchange, the Holder of such Old Note
will receive a New Note having a principal amount equal to that of the
surrendered Old Note. Accordingly, registered holders of New Notes on the
relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from July 30, 1996. Old Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange Offer. Holders
whose Old Notes are accepted for exchange will not receive any payment in
respect of accrued interest on such Old Notes otherwise payable on any interest
payment date the record date for which occurs on or after consummation of the
Exchange Offer.
This Letter is to be completed by a Holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Old Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer--Book-Entry Transfer" section of the Prospectus. Holders of Old
Notes whose certificates are not immediately available, or who are unable to
deliver their certificates or confirmation of the book-entry tender of their
Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility
(a "Book-Entry Confirmation") and all other documents required by this Letter
to the Exchange Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed
this Letter to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD
NOTES" BELOW AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD
NOTES AS SET FORTH IN SUCH BOX BELOW.
List below the Old Notes to which this Letter relates. If the space provided
below is inadequate, the certificate numbers and principal amount of Old Notes
should be listed on a separate signed schedule affixed hereto.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOX
<PAGE> 4
DESCRIPTION OF 12-1/8% SENIOR GUARANTEED NOTES DUE 2003
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Aggregate Principal
Principal Amount Tendered
Amount (must be in
Names and address(es) of Represented Integral
Registered Holders Certificate by multiples
(Please fill in, if blank) Number(s) Certificate(s) of $1,000)*
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------
</TABLE>
* Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of 12-1/8% Senior Guaranteed Notes due 2003 will be
deemed to have tendered the entire aggregate principal amount
represented by the column labeled "Aggregated Principal Amount
Represented by Certificates(s)."
If the space provided above is inadequate, list the certificate numbers
and principal amounts on a separate signed schedule and affix the list
to this Letter of Transmittal.
The minimum permitted tender is $1,000 in principal amount of 12-1/8%
Senior Guaranteed Notes due 2003. All other tenders must be in
integral multiples of $1,000.
/ / CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC
AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREIN
DEFINED) ONLY):
Name of Tendering Institution_________________________________________
Account Number________________________________________________________
Transaction Code Number_______________________________________________
<PAGE> 5
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE
FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered Old Noteholder(s)_________________________________
Date of Execution of Notice of Guaranteed Delivery______________________
Window Ticket Number (if available)_____________________________________
Name of Institution which Guaranteed Delivery___________________________
Account Number (if delivered by book entry transfer)____________________
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY (i) if certificates for Old Notes not tendered, or New
Notes issued in exchange for Old Notes accepted for exchange, are to be issued
in the name of someone other than the undersigned, or (ii) if Old Notes
tendered by book-entry transfer which are not exchanged are to be returned by
credit to an account maintained at Depository Trust Company ("DTC").
Issue certificate(s) to:
Name___________________________________________________________________________
(Please Print)
Address________________________________________________________________________
_______________________________________________________________________________
(Include Zip Code)
_______________________________________________________________________________
(Tax Identification or Social Security No.)
Credit Old Notes not exchanged and delivered by book-entry transfer to the DTC
account set forth below:
__________________________
DTC Account Number
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY if certificates for Old Notes not tendered, or New Notes
issued in exchange for Old Notes accepted for exchange, are to be sent to
someone other than the undersigned, or to the undersigned at an address other
than that shown above.
Mail to:
Name___________________________________________________________________________
(Please Print)
Address________________________________________________________________________
_______________________________________________________________________________
(Include Zip Code)
_______________________________________________________________________________
(Tax Identification or Social Security No.)
<PAGE> 6
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated below. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title
and interest in and to such Old Notes as are being tendered hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent its
agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Company) with respect to the tendered Old Notes with
full power of substitution to (i) deliver certificates for such Old Notes, or
transfer ownership of such Old Notes on the account books maintained by DTC, to
the Company and deliver all accompanying evidences of transfer and authenticity
to, or upon the order of, the Company and (ii) present such Old Notes for
transfer on the books of the Company and receive all benefits and otherwise
exercise all rights of beneficial ownership of such Old Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claim when the same are accepted by the Company.
The undersigned hereby further represents that any New Notes acquired in
exchange for Old Notes tendered hereby will have been acquired in the ordinary
course of business of the person receiving such New Notes, whether or not such
person is the undersigned, that neither the Holder of such Old Notes nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes and that neither the Holder
of such Old Notes nor any such other person is an "affiliate," as defined in
Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"),
of the Company.
The undersigned also acknowledges that this Exchange Offer is being
made in reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued pursuant to the Exchange Offer in exchange
for Old Notes may be offered for resale, resold and otherwise transferred by
Holders thereof (other than any such Holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary
course of such Holders' business and such Holders have no arrangement with any
person to participate in a distribution of such New Notes. However, the SEC has
not considered the Exchange Offer in the context of a no-action letter and
there can be no assurance that the staff of the SEC would make a similar
determination with respect to the Exchange Offer as in other circumstances. If
the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of New Notes
and has no arrangement or understanding to participate in a distribution of New
Notes. If any Holder is an affiliate of the Company, is engaged in or intends
to engage in, or has any arrangement or understanding with any person to
participate in, a distribution of the New Notes to be acquired pursuant to the
Exchange Offer, such Holder (i) could not rely on the applicable
interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive New Notes for its own account pursuant to the Exchange Offer,
it represents that the Old Notes to be exchanged for the New Notes were
acquired by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon
<PAGE> 7
the successors, assigns, heirs, executors, administrators, trustees in
bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
This tender may be withdrawn only in accordance with the procedures set forth
in "The Exchange Offer--Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please issue the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not exchanged) in the
name of the undersigned or, in the case of a book-entry delivery of Old Notes,
please credit the account indicated above maintained at the Book-Entry Transfer
Facility. Similarly, unless otherwise indicated under the box entitled "Special
Delivery Instructions" below, please send the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
to the undersigned at the address shown above in the box entitled "Description
of Old Notes."
<PAGE> 8
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete accompanying Substitute W-9 on reverse side)
Dated:___________, 1996
X
____________________________ ___________
Date
X
____________________________ ___________
Signature(s) of Owner Date
Area Code and Telephone Number:______________
If a holder is tendering any Old Notes, this letter must be signed by
the registered holder(s) as the name(s) appear(s) on the certificate(s) for the
Old Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a
fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s): ________________________________________________________
________________________________________________________
(Please Type or Print)
Capacity: ________________________________________________________
Address: ________________________________________________________
________________________________________________________
(Including Zip Code)
SIGNATURE GUARANTEE (if required by instruction 3)
Signature(s) Guaranteed by an Eligible Institution: ___________________________
(Authorized Signature)
___________________________________________________
(Title)
___________________________________________________
(Name and Firm)
Dated:________________, 1996
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES. This
Letter is to be completed by holders of Old Notes either if certificates are to
be forwarded herewith or if tenders are to be made pursuant to the procedures
for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Old Notes, or Book-Entry Confirmation, as the case may be,
as well as a properly completed and duly executed Letter (or manually signed
facsimile hereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Old Notes are not immediately available
or who cannot deliver their certificates and all other required documents to
the Exchange Agent on or prior to the Expiration Date, or who cannot complete
the procedure for book-entry transfer on a timely basis, may tender their Old
Notes pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution;
(ii) on or prior to 5:00 p.m., New York City time, on the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram,
telex, facsimile transmission, mail or hand delivery), setting forth the name
and address of the holder of Old Notes and the amount of Old Notes tendered
stating that the tender is being made thereby and guaranteeing that within
three New York Stock Exchange ("NYSE") trading days after the date of execution
of the Notice of Guaranteed Delivery, the certificates for all physically
tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation,
as the case may be, and any other documents required by this Letter will be
deposited by the Eligible Institution with the Exchange Agent; and (iii) the
certificates for all physically tendered Old Notes, in proper form for
transfer, or Book-Entry Confirmation, as the case may be, and all other
documents required by this Letter, are deposited by the Eligible Institution
within three NYSE trading days after the date of execution of the Notice of
Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all other
required documents is at the election and risk of the tendering Holders, but
the delivery will be deemed made only when actually received or confirmed by
the Exchange Agent. If Old Notes are sent by mail, it is suggested that the
mailing be registered mail, properly insured, with return receipt requested,
and made sufficiently in advance of the Expiration Date to permit delivery to
the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration
Date.
Only a holder of Old Notes may tender such Old Notes in the Exchange
Offer. Any beneficial holder of Old Notes who is not the registered holder and
who wishes to tender should arrange with the registered holder to execute and
deliver this Letter of Transmittal on his behalf or must, prior to completing
and executing this Letter of Transmittal and delivering his Old Notes, either
make appropriate arrangements to register ownership of the Old Notes in such
holder's name or obtain a properly completed bond power from the registered
holder.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Issuer in its sole discretion, which determination
will be final and binding. The Issuer reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Issuer's
acceptance of which would, in the opinion of counsel for the Issuer, be
unlawful. The Issuer also reserves the right to waive any irregularities or
conditions of tender as to particular Old Notes. The Issuer's interpretation of
the terms and conditions of the Exchange Offer (including the instructions in
this Letter of Transmittal) shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
must be cured within such time as the Issuer shall determine. Neither the
Issuer, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old Notes,
nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such defects or
<PAGE> 10
irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders of Old Notes, unless otherwise provided in this
Letter of Transmittal, as soon as practicable following the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If less than all of the Old Notes evidenced by a submitted
certificate are to be tendered, the tendering Holder(s) should fill in the
aggregate principal amount of Old Notes to be tendered in the box above
entitled "Description of Old Notes--Principal Amount Tendered." A reissued
certificate representing the balance of nontendered Old Notes will be sent to
such tendering holder, unless otherwise provided in the appropriate box of this
Letter, promptly after the Expiration Date. All of the Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
3. SIGNATURES ON THIS LETTER, BOND POWERS AND ENDORSEMENTS, GUARANTEE OF
SIGNATURES. If this Letter is signed by the registered holder of the Old Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate copies of this letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder or holders of the
Old Notes specified herein and tendered hereby, no endorsements of certificates
or separate bond powers are required. If, however, the New Notes are to be
issued, or any untendered Old Notes are to be reissued, to a person other than
the registered holder, then endorsements of any certificates transmitted hereby
or separate bond powers are required. Signatures on such certificate(s) must be
guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder
or holders of any certificate(s) specified herein, such certificate(s) must be
endorsed accompanied by appropriate bond powers, in either case signed exactly
as the name or names of the registered holder or holders appear(s) on the
certificate(s) and signatures on such certificate(s) must be guaranteed by an
Eligible Institution.
If this Letter or any certificates or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must
be submitted.
Endorsements on certificates for Old Notes or signatures on bond
powers required by this Instruction 3 must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchanges Medallion Program (each, an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Notes are tendered: (i) by a registered holder of
Old Notes who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on this Letter, or (ii) for
the account of an Eligible Institution.
<PAGE> 11
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders of Old Notes
should indicate in the applicable box the name and address to which New Notes
issued pursuant to the Exchange Offer and/or substitute certificates evidencing
Old Notes not exchanged are to be issued or sent, if different from the name or
address of the person signing this Letter. In the case of issuance in a
different name, the employer identification or social security number of the
person named must also be indicated. Noteholders tendering Old Notes by
book-entry transfer may request that Old Notes not exchanged be credited to
such account maintained at the Book-Entry Transfer Facility as such noteholder
may designate hereon. If no such instructions are given, such Old Notes not
exchanged will be returned to the name and address of the person signing this
Letter.
5. TRANSFER TAXES. The Company will pay all transfer taxes, if any, applicable
to the transfer of Old Notes to it or its order pursuant to the Exchange Offer.
If, however, New Notes and/or substitute Old Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other than the
person signing this Letter, or if a transfer tax is imposed for any reason
other than the transfer of Old Notes to the Company or its order pursuant to
the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed to such tendering holder and the Exchange Agent will retain possession
of an amount of New Notes with a face amount equal to the amount of such
transfer taxes due by such tendering holder pending receipt by the Exchange
Agent of the amount of such taxes.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.
6. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
7. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or contingent
tenders will be accepted. All tendering holders of Old Notes, by execution of
this Letter, shall waive any right to receive notice of the acceptance of their
Old Notes for exchange.
Although the Company intends to notify holders of defects or
irregularities with respect to tenders of Old Notes, neither the Company, the
Exchange Agent nor any other person shall incur any liability for failure to
give any such notice.
8. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old Notes
have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
9. WITHDRAWAL OF TENDERS. Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent as its address set forth above prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number
or numbers and principal amount of such Old Notes), (iii) be signed by the
holder in the same manner as the original signature on this Letter (including
any required signature guarantees) or be accompanied by documents of transfer
sufficient to have the trustee under the Indenture register the transfer of
such Old Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such Old Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Old Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer. Any Old Notes that have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder as
<PAGE> 12
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following the
procedures described above at any time on or prior to 5:00 p.m., New York City
time, on the Expiration Date.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus, this Letter and other related documents may be directed to the
Exchange Agent, at the address and telephone number indicated above.
11. IMPORTANT TAX INFORMATION. Under current federal income tax law, a holder
of New Notes is required to provide the Company (as payor) with such holder's
correct taxpayer identification number ("TIN") on Substitute Form W-9 or
otherwise establish a basis for exemption from backup withholding to prevent
backup withholding on any New Notes delivered pursuant to the Exchange Offer
and any payments received in respect of the New Notes. If a holder of New Notes
is an individual, the TIN is such holder's social security number. If the
Company is not provided with the correct taxpayer identification number, a
holder of New Notes may be subject to a $50 penalty imposed by the Internal
Revenue Service. Accordingly, each prospective holder of New Notes to be issued
pursuant to Special Issuance Instructions should complete the attached
Substitute Form W-9. The Substitute Form W-9 need not be completed if the box
entitled Special Issuance Instructions has not been completed.
Certain holders of New Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
and reporting requirements. Exempt prospective holders of New Notes should
indicate their exempt status on Substitute Form W-9. A foreign individual may
qualify as an exempt recipient by submitting to the Company, through the
Exchange Agent, a properly completed Internal Revenue Service Form W-8 (which
the Exchange Agent will provide upon request) signed under penalty of perjury,
attesting to the holder's exempt status. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Company is required to withhold 31%
of any payment made to the holder of New Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
To prevent backup withholding on any New Notes delivered pursuant to
the Exchange Offer and any payments received in respect of the New Notes, each
prospective holder of New Notes to be issued pursuant to Special Issuance
Instructions should provide the Company, through the Exchange Agent, with
either: (i) such prospective holder's correct TIN by completing the form below,
certifying that the TIN provided on Substitute Form W-9 is correct (or that
such prospective holder is awaiting a TIN) and that (A) such prospective holder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of a failure to report all interest or
dividends or (B) the Internal Revenue Service has notified such prospective
holder that he or she is no longer subject to backup withholding; or (ii) an
adequate basis for exemption.
The prospective holder of New Notes to be issued pursuant to Special
Issuance Instructions is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the prospective
record owner of the New Notes. If the New Notes will be held in more than one
name or are not held in the name of the actual owner, consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional guidance regarding which number to report.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder
is subject to backup withholding as a result of a failure to report all
interest or dividends or (iii) the Internal Revenue Service has notified the
holder that such holder is no longer subject to backup withholding. If the
<PAGE> 13
tendering holder of Old Notes is a nonresident alien or foreign entity not
subject to backup withholding, such holder must give the Company a completed
Form W-8, Certificate of Foreign Status. These forms may be obtained from the
Exchange Agent. If the Old Notes are in more than one name or are not in the
name of the actual owner, such holder should consult the W-9 Guidelines for
instructions on which TIN to report. If such holder does not have a TIN, such
holder should consult the W-9 Guidelines for instructions on applying for a
TIN, check the box in Part 2 of the Substitute Form W-9 and write "applied for"
in lieu of its TIN. Note: Checking this box and writing "applied for" on the
form means that such holder has already applied for a TIN or that such holder
intends to apply for one in the near future. If such holder does not provide
its TIN to the Company within 60 days, backup withholding will begin and
continue until such holder furnishes its TIN to the Company.
<PAGE> 14
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: IMPSAT Corporation
SUBSTITUTE
FORM W-9
PART I--PLEASE PROVIDE YOUR TIN IN THE TIN:_____________________
BOX AT RIGHT AND CERTIFY BY SIGNING AND (Social Security Number or
DATING BELOW. Employer Identification
Number)
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
PART II--TIN Applied for//
CERTIFICATION UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me);
(2) I am not subject to backup withholding either because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal Revenue
Service (the 'IRS') that I am subject to backup withholding as a result of
failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding; and
(3) any other information provided on this form is true and correct.
Signature:_______________________________
Date:_____________________
You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and you have not
been notified by the IRS that you are no longer subject to backup withholding.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF
SUBSTITUTE FORM W-9
<PAGE> 15
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by the time of the
exchange, 31 percent of all reportable payments made to me thereafter will be
withheld until I provide a number.
Signature:
-------------------------------
Date: ---------------------
<PAGE> 16
NOTICE OF GUARANTEED DELIVERY FOR IMPSAT CORPORATION
This form or one substantially equivalent hereto must be used to accept
the Exchange Offer of IMPSAT Corporation (the "Company") made pursuant to the
Prospectus, dated _________________, 1996 (the "Prospectus"), if certificates
for the outstanding 12-1/8% Senior Guaranteed Notes Due 2003 of the Company
(the "Old Notes") are not immediately available or if the procedure for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Exchange Agent prior to 5:00 p.m.,
New York City time, on the Expiration Date of the Exchange Offer. Such form may
be delivered or transmitted by telegram, telex, facsimile transmission, mail or
hand delivery to The Bank of New York ("Exchange Agent") as set forth below. In
addition, in order to utilize the guaranteed delivery procedure to tender Old
Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of
Transmittal (or facsimile thereof) must also be received by the Exchange Agent
prior to 5:00 p.m., New York City time, on the Expiration Date. Capitalized
terms not defined herein are defined in the Prospectus.
THE BANK OF NEW YORK, Exchange Agent
By Mail, Hand or
Overnight Delivery:
The Bank of New York, 101 Barclay Street, Floor 21 West, New York,
New York 10286
Attention: Securities Processing Window
Ground Level Reorganization, 7E
By Facsimile: (212) 571-3080
Confirm by Telephoned: (212) 815-2742
DELIVERY OF THIS INSTRUMENT TO ANY ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the accompanying
Letter of Transmittal, the undersigned hereby tenders to the Company the
principal amount of Old Notes set forth below, pursuant to the guaranteed
delivery procedure described in The Exchange Offer--Guaranteed Delivery
Procedures section of the Prospectus.
Principal Amount of Old Notes Tendered: If Old Notes will be delivered to
Depository Trust Company, provide
account number.
$__________________
Certificate Nos. (if available):
___________________
Total Principal Amount Represented by Certificate(s):
$__________________ Account Number:____________
<PAGE> 17
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
PLEASE SIGN HERE
X __________________________ _________________________
Date
X __________________________ _________________________
Signatures of Owner(s) or Date
Authorized Signatory
Area Code and Telephone Number: _______________
Must be signed by the holder(s) of Old Notes as their name(s) appear(s)
on certificates for Old Notes or on a security position listing, or by
person(s) authorized to become registered holder(s) by endorsement and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
set forth his or her full title below. If Old Notes will be delivered by
book-entry transfer to The Depository Trust Company, provide account number.
Please print name(s) and address(es)
Name(s): _________________________________________________________________
Capacity: _________________________________________________________________
Address(es): _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Account Number: _____________________________
GUARANTEE
The undersigned, a financial institution (including most banks, savings
and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program, hereby
guarantees that the undersigned will deliver to the Exchange Agent the
certificates representing the Old Notes being tendered hereby or confirmation
of book-entry transfer of such Old Notes into the Exchange Agent's account at
The Depository Trust Company, in proper form for transfer, together with any
other documents required by the Letter of Transmittal within three New York
Stock Exchange trading days after the Expiration Date.
<PAGE> 18
Name of Firm: ___________________________________
Address: ___________________________________
___________________________________
Area Code & Telephone No.: _______________________
_______________________________
Authorized Signature
_______________________________
Name (Please Type or Print)
_______________________________
Title
_______________________________
Dated
NOTE: DO NOT SEND CERTIFICATES OR OLD NOTES WITH THIS FORM. CERTIFICATES OF OLD
NOTES SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED LETTER OF
TRANSMITTAL.
<PAGE> 1
November 20, 1996
IMPSAT Corporation
Alferez Pareja 256
1107 Buenos Aires, Argentina
Ladies and Gentlemen:
We have acted as special United States counsel for IMPSAT Corporation,
a Delaware corporation (the "Company"), in connection with the preparation of
the registration statement under Form S-4, Registration No. 333-12977 (the
"Registration Statement"), filed with the Securities and Exchange of 1933, as
amended (the "Act"), pursuant to which the Company is registering $125,000,000
aggregate principal amount of 12 1/8% Senior Guaranteed Notes due 2003 (the
"Exchange Notes"), under an Indenture dated as of July 30, 1996, among the
Company, IMPSAT S.A., an Argentine company and The Bank of New York (the
"Trustee"), to be issued in exchange for $125,000,000 aggregate principal
amount of the Company's 12 1/8% Senior Guaranteed Notes (the "Exchange Offer").
The terms and conditions of the Exchange Notes and the Exchange Offer are as
set forth in the Registration Statement and the prospectus (the "Prospectus")
contained therein.
In rendering the opinion expressed below, we examined the Certificate
of Incorporation of the Company (as amended) and the Bylaws of the Company (as
amended) and the minutes of the Board of Directors of the Company with respect
to the filing of the Registration Statement and the issuance of the Exchange
Notes. We also have examined such certificates of public officials, corporate
documents and records and other certificates and instruments, and have made
such other investigations, as we have deemed necessary in connection with the
opinion set forth herein. Furthermore, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, and
the conformity to authentic originals of all documents submitted to us as
copies.
<PAGE> 2
IMPSAT Corporation
November 20, 1996
Page 2
This opinion is limited to the federal laws of the United States and
the laws of the State of New York, and we do not express any opinion herein
concerning the laws of any other jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that
the Exchange Notes have been duly authorized by the Company and when the
Exchange Notes have been duly executed by the Company and authenticated by the
Trustee in accordance with the terms of the Indenture and issued in accordance
with the terms of the Exchange Offer, the Exchange Notes will constitute valid
and legally binding obligations of the Company under the laws of the State of
New York.
We are also of the opinion that the U.S. Federal income tax
consequences described under the caption "Certain United States Federal Income
Tax Considerations" in the Prospectus accurately describe the material United
States federal income tax consequences of the purchase, ownership, and
disposition of the Exchange Notes.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the headings
"Certain United States Federal Income Tax Consequences" and "Legal Matters" in
the Registration Statement. In giving the foregoing consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission thereunder.
This opinion is solely for your information and is not to be quoted in
whole our in part, summarized or otherwise referred to without our written
consent. This opinion is as of the date hereof. We disclaim any responsibility
to update or supplement this opinion to reflect any events or state of facts
which may hereafter come to our attention or any changes in statutes or
regulations or any court decisions which may hereafter occur.
Very truly yours,
ARNOLD & PORTER
<PAGE> 1
EXHIBIT 9.1
<PAGE> 2
SHAREHOLDERS AGREEMENT
----------------------
This agreement (the "Agreement") is made and effective as of this 16th day of
December of 1994.
BY AND AMONG
STET INTERNATIONAL NETHERLANDS NV (HEREINAFTER REFERRED TO AS "SIN"), a company
duly organized and existing under the laws of The Netherlands, having is
headquarters at Amsterdam, Hoeckenrode 6-8, through its representative Mr.
Renato De Rimini,
on one side, and
- - NEVASA HOLDINGS LTD. (HEREINAFTER REFERRED TO AS "NEVASA"), a company duly
organized and existing under the laws of Ireland, having its headquarters at
First Floor, 17 Dame Street, First Floor, Dublin 2, represented by Mr.
Guillermo Valentin Pardo.
- - LAIF-LATIN AMERICAN INVESTMENT AND FINANCE TRUST REG. (HEREINAFTER REFERRED
TO AS "LAIF"), a company duly organized and existing under the laws of
Liechtenstein, having its headquarters at Austrasse 27, Vaduz, represented by
Mr. Robin Bolli.
- - JASDAN LTD. (HEREINAFTER REFERRED TO AS "JASDAN"), a company duly organized
and existing under the laws of Ireland, having its headquarters at One Stokes
Place, St. Stephens Green, Dublin, represented by Mr. Stephan Muller.
<PAGE> 3
- - PEREMTORY SA (HEREINAFTER REFERRED TO AS "PEREMTORY"), a company duly
organized and existing under the laws of Uruguay, having its headquarters at
Plaza Independencia 811, Montevideo, represented by Mr. Ricardo A. Verdaguer.
(LAIF, JASDAN and PEREMTORY hereinafter are also jointly referred to
collectively as the "Minority Stockholders")
- - CORPORACION IMPSA S.A. (HEREINAFTER REFERRED TO AS "CORIM") a company duly
organized and existing under the laws of Argentina, having its headquarters at
Av. E. Madero 940, 19th floor, Buenos Aires, represented by Mr. Enrique M.
Pescarmona;
- - MR. RICARDO ANIBAL VERDAGUER (HEREINAFTER REFERRED TO AS "VERDAGUER") an
individual with Pas# 10.909.609, residing at Av. L.N.Alem 619, Piso Primero,
Buenos Aires, Argentina; and
- - MR. ROBERTO ABEL VIVO CHANETON (HEREINAFTER REFERRED TO AS "VIVO"), an
individual with Pas# B-332.763, residing at Av. L.N.Alem 619, Piso Primero,
Buenos Aires, Argentina;
(CORIM, Verdaguer and Vivo hereinafter also jointly referred to as "Grupo A")
on the other side.
2
<PAGE> 4
Both SIN and NEVASA hereinafter are also jointly referred to collectively as
the "Shareholders" and all of the parties hereto being hereinafter collectively
referred to as the "Parties".
WHEREAS
A. SIN and GRUPO A have executed on March 21st, 1994, a Memorandum of
Understanding (the "MoU") and on August 3rd, 1994, an Agreement both
establishing the main principles of a possible cooperation and joint venture
in Central and Latin America relating to certain areas of activity in the
field of voice, data and image transmission through satellite technologies
such as VSAT, IBS Dataplus and VAS services including any media and
technology related thereto.
B. Grupo A has established in the State of Delaware, through its 100% subsidiary
NEVASA a wholly owned holding company denominated Impsat Corporation (the
"Company") duly organized and validly existing under the laws of Delaware
headquarters at Corporation Trust Center, 209 Orange Street, Wilmington,
County of Newcastle, Delaware, United States of America and that directly
and/or indirectly owns the share capital of different companies including,
without limitations, Resis Ingenieria S.A., Impsat, S.A., the Colinvertel
S.A. subsidiary, and Telecommunicaciones IMPSAT S.A., the Pajo AG subsidiary,
as set forth in Exhibit 1. Furthermore, the Company has the purpose of
controlling shares and coordinating management of all the companies set forth
in Exhibit 1, and the other companies that in the future could be established
by the Company (both, the companies set forth in Exhibit 1 and such future
companies are hereinafter referred as "the Companies") in order to operate in
the field of the Business under the licenses already granted or to be
granted.
3
<PAGE> 5
C. Concurrently with the execution of this Agreement, SIN purchased - as
detailed in point D below - such number of shares in the Company which
equals the 25% of the entire issued and outstanding capital stock of the
Company itself (the "Shares") as set forth in Exhibit 2.
D. The Parties intend to define and regulate herein their respective roles,
rights and obligations within the Company, based also on the representations
and warranties set forth in the agreement (the "SPA") executed among SIN,
NEVASA and the Minority Stockholders, on the date hereof, attached hereto as
Exhibit 3.
Now therefore the Parties, in consideration of the foregoing and in express
reliance upon the mutual premises and representations contained herein.
AGREE AS FOLLOWS:
1. ENTIRE AGREEMENT
1. The aforesaid premises, together with the Exhibits and the Annexes,
constitute an integral and substantial part of this Agreement.
2. DEFINITIONS
For the purpose of this Agreement, the following terms shall have the
following meanings:
2.1. "BUSINESS" shall mean certain Telecommunication Services directed to
private networks and Value Added Services using all the available
technologies. Initially the Companies will provide services such as VSAT,
Dataplus, IBS, MCW (Microwaves) and Value Added Services (VAS).
4
<PAGE> 6
2.2. A "SUBSIDIARY" of a Party shall mean a company in which such Party owns
beneficially and of record, directly or indirectly, more than fifty percent
(50%) of the voting rights in the issued and outstanding capital stock of
such company.
2.3. The "TERRITORY" shall mean the territories generally known under the names
of Latin America and the Caribbean.
2.4. "CONTROL" shall mean the direct or indirect holding of more than 50% of the
shares or of the voting rights.
2.5. "INITIAL BUSINESS PLAN" shall mean the seven (7) years projections of the
Company and each of the Companies agreed among the Parties and attached
hereto as Exhibit 2.5.
2.6. "FUTURE BUSINESS PLANS" shall mean every four (4) years projections of the
Company and each of the Companies to be approved in each Fiscal year by the
Company's BoD.
2.7. "AFFILIATE" of a Party shall mean a company and/or a person which
controls, is controlled by or is under common control with said Party.
3. OBJECTIVES
The objectives of the Shareholders in entering into this Agreement are common
in purpose:
3.1. to strengthen and improve the Business of the Company to make it
competitive, and
5
<PAGE> 7
3.2. to expand the services within the Business of the company.
4. MISSION OF THE COMPANY
In addition to the provision established in point B of the premises herein
above, the Company has the mission through its Board of Directors to:
4.1. Define the General Strategy of the Company and its Subsidiaries and the
Operative Strategies of each of the Companies.
4.2. Define, manage and control the financial matters of the Company and of
each of the Companies.
5. ORGANIZATION OF THE COMPANY
5.1. Each Shareholder undertakes with the others to exercise all voting rights
available to it as a shareholder and to procure its representative
directors to exercise all powers available to them in relation to the
Company and/or the Companies so as to give full effect to the terms and
conditions of this Agreement.
5.2. All the Directors of the Company and the Companies shall act for the best
interest of the Company and the Companies.
Should the Board of Directors of the Company and/or the Companies cannot
take a decision due to the negative vote of any Director/s, such Director/s
shall have to give the reasons of such negative vote.
5.3. The Company shall be managed by a Board of Directors ("BoD") which shall
have the authority to approve, inter alia, the Company's strategy,
operating budgets, capital budgets, investment activities and major
contractual agreements.
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<PAGE> 8
The BoD shall consist of eight (8) Directors of whom one shall be Chairman.
SIN shall have the right to designate, remove and substitute 2 (two)
directors in the Company's BoD. SIN shall promptly notice Grupo A of the
name of the directors to be appointed, as well as for any respective
changes, and Grupo A shall promptly cause the appointment of such
directors in the BoD.
The Shareholders agree that SIN shall have the right at any time to
designate, remove and substitute the 25% of the directors representing the
Company at the Companies BoD; such proportion of 25% represents the
shareholding SIN owns of the Company. SIN will be entitled to designate by
no means never more than 25% of the directors that the Company is able to
designate in the Companies, but in any case, at least one member.
5.4. The meetings of the BoD of the Company shall be held whenever called by the
President or by one of the directors, at such time and place as may be
specified in the respective notices thereof.
5.5. Notice of the meetings of the Board of Directors of the Company, their
agenda and the relevant necessary documentation shall be mailed directly to
each director, addressed to him at his residence or usual place of business
and received by him, at least seven (7) days before the day on which the
meeting is to be held, or shall be sent to him at such place by telegram,
telex or fax, or shall be delivered to him personally, not later than five
(5) days before the day on which the meeting is to be held.
5.6. The BoD decisions shall validly be made with the favorable vote of at least
51% of the members attending to the meeting, except for the major decisions
referred to in Clause 5.7 hereof.
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<PAGE> 9
5.7. The BoD members will be required to pass resolution on the following
matters with the affirmative vote of at least one of the members designated
by SIN:
a. - any change of the Company or Companies' deed of incorporation and/or
by-laws or any amendment thereto;
b. - proposals of capital increase or decrease of the Company and/or the
Companies;
c. - disposition of assets in excess of twenty percent (20%) of the last duly
approved Business Plan, including but not limited to the disposition of
the shareholding ownership in the Companies and except any transfer of
assets among the Company and/or the Companies;
d. - give any guarantee to secure the liabilities or obligations of any person
other than the Companies;
e. - any substantial change in the nature or operation of the Businesses in
the Company and/or adoption of new business initiative of the Company
and/or the Companies, other than the Business;
f. - the appointment of a reputable, internationally recognized independent
firm of certified accounts to audit the books and records of the Company
annually at the expense of the Company;
g. - adoption and/or amendment of the Future Business Plans;
h. - Increase of indebtness in excess of twenty percent (20%) of the last duly
approved Business Plan;
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<PAGE> 10
i. - the establishment of a dividend policy, and any amendment thereto; unless
otherwise unanimously stated by the Shareholders, the Company, to the
extent permitted by law, shall pay to its Shareholders every year dividends
equal to 100% of the total amount of the net profits;
j. - the determination of the remuneration of the Chairman, the Chief Executive
Officers and the Directors of the Company and of the Companies provided
that such remuneration is in excess of standards of the industry;
k. - any decision in the field of the international activities of the Company
and/or of the Companies out of the Territory, except the activities between
the Territory and the United States of America (USA);
l. - any act, agreement and/or understandings between the Company and/or each of
the Companies on one side and directly and/or indirectly each of the
Shareholders and/or the Parties on the other side;
m. - formation of subsidiaries or the entering into any joint venture or other
similar arrangements either directly or through any of the Companies,
including the material terms thereof;
n. - liquidation, dissolution and wind-up of the Company;
5.8. It will be considered that the Directors designated by SIN have approved
any of the matters requiring the special vote in the case that the
Directors designated by SIN don't assist to the Board Meeting or don't vote
the matter in question by fax before the Board Meeting, provided that all
the requirements set forth in 5.5 of this Agreement have been executed.
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<PAGE> 11
5.9. The Shareholders shall cause that in the General Shareholders Meeting
be voted accordingly to the decisions made by the Board of Directors.
The Shareholders shall cause that the members designated by each of them
within the BoD of each of the Companies shall vote accordingly to the
decision adopted by the Company's BoD.
5.10. The selection and choice of the "key managers" of the Companies that
shall be the highest level below the Managing Director, shall be based
on the best skills available, taking into consideration the interest of
the Companies and the proposals made by SIN and NEVASA. One of the said
"key managers" of each of the Companies shall be indicated by SIN
subject to the approval of the respective CEO of each of the Companies.
The Shareholders acknowledge and agree that SIN is entitled to propose
and designate, and NEVASA shall consequently cause the appointment of
the following "key managers" of the Company: (i) Responsable de Control
de Gestion, (ii) Responsable de New Business Development. Should the
Company's Chief Executive Officers (CEO) not approve the "key managers"
proposed by SIN, taking into account the best interest of the Company,
SIN shall be entitled to propose another candidate for the same position
and in any case such position shall be covered by SIN's candidates.
5.11. The Company shall use its best effort, on a continuing basis to promptly
refine and/or modify the Initial and Future Business Plan when and as
refinements and/or modifications become appropriate. Furthermore NEVASA
shall cause that the Future Business Plans will be submitted each Fiscal
Year to the Company's BoD. The Parties acknowledge and agree that the
Budget of the Company and of the Companies shall be the first year
projection respectively of the Initial and Future Business Plan.
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<PAGE> 12
6. Technological and Technical Assistance
NEVASA shall cause and SIN shall vote in favor that each of STET International
S.p.A., on SIN's side, and one company which will be designated by NEVASA, on
NEVASA's side, shall be entitled to execute no later than nine (9) months after
the date hereof with each and any of the Companies a technological and
technical assistance agreement substantially similar to the form, attached
hereto as Exhibit 6 (the "TTAA"), according to which they shall receive for
eight (8) years the following royalty: 1% in 1995, 3% in 1996 and 1997 and 3.5%
from 1998 to 2002 of each of the Companies' revenues in consideration for the
availability of the Parties' know-how. Such royalty shall distributed: 25% for
STET International SpA and 75% for the company that NEVASA will designate.
7. Restrictions on transfer of the Shares
7.1. For the period of the first six (6) years from the date hereof, no
Company shares shall be validly assigned, transferred, encumbered,
disposed or otherwise removed from the direct ownership of each of
the Shareholders unless otherwise mutually agreed by the Parties. The
above mentioned provision shall be applied also respectively both to the
shares representing the control exercised by CORIM, PEREMTORY and JASDAN
on NEVASA provided however that CORIM, PEREMTORY and JASDAN shall in any
case be prevented from assigning, transferring or otherwise disposing
any of their shares in NEVASA to any Telecommunications operator during
such period, and to the shares representing the control exercised by
STET INTERNATIONAL SpA on SIN. The above mentioned provision shall not
apply to the shares owned by the Minority Stockholders.
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<PAGE> 13
7.2. RIGHT OF FIRST REFUSAL: After the lapse of six (6) years from the date
hereof, the Shares shall be freely transferable, provided however that
the Shareholders shall each have a right of first refusal to acquire the
shares of the capital stock of the Company which another Shareholder
intends to sell, under the following terms:
(A) The Shareholder wishing to sell all or part of its shares (the
"Selling Shareholder") shall notify the other Shareholder in writing of
its intention to sell such shares to third parties, stating the name of
the proposed purchaser, the terms and conditions of the proposed sale
and, without limitation, the price and conditions of payment, not less
than thirty (30) days prior to the proposed completion of such sale.
During such thirty (30) days notice period, the other Shareholder shall
have the right, to acquire all of the shares offered by the Selling
Shareholder, at the price and on the terms and conditions specified in
the written notice of intention. The other Shareholder not wishing to
purchase the shares, shall so notify the Selling Shareholder in writing.
(B) In the event the Selling Shareholder receives notice that the other
Shareholder does not intend to acquire such shares or if the Selling
Shareholder does not receive a notice that the other Shareholder intends
to exercise the right of first refusal to acquire the shares within such
period of 30 days, the Selling Shareholder shall have the right to sell
such shares, within sixty (60) days from receipt of such notice, at the
same terms and conditions and to the same proposed purchaser specified
in the notice.
7.3. After the lapse of six (6) years from the date hereof, in the event
NEVASA decides to sell and/or transfer the Shareholding control of the
Company to any third party (the Transfer Control), NEVASA shall notify
SIN in writing of its intention specifying the name of the proposed
purchaser, the number of the shares
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<PAGE> 14
to be sold, the price and any other terms and conditions of the transaction
(Written Notice of Intention), not less than thirty (30) days prior to the
proposed completion of such transaction (the Notice Period). During such
Notice Period, SIN shall have the right to sell all of its shares, at the
price and on the terms and conditions specified in the Written Notice of
Intention. If SIN wishes to sell its shares and so notifies within the
Notice Period, then NEVASA, if confirms its intention to make the Transfer
Control, shall be obliged, in case of effective Transfer of Control, to
acquire SIN's shares or to take any action so that SIN's shares will be
transferred on the same terms and conditions specified in the Written
Notice of Intention, together with its own shares; consequently the
Transfer Control shall take place only in case NEVASA acquires or transfers
SIN shares if SIN so notify in compliance with this Article 7.3.
In the event NEVASA does not receive the notice that SIN intends to sell
its Shares pursuant this Section within the Notice Period, NEVASA shall
have the right to sell and transfer the control to any third party.
As used in this Article 7.3., Transfer of Control means any transfer of
shares so that after such transfer SIN and NEVASA jointly hold less than
the 51% of the shares of the Company.
7.4. Notwithstanding the foregoing, nothing in this Agreement shall be construed
as prohibiting transfer of the Company shares to any Affiliate of each of
the Parties with which the link of control with the original shareholder be
at least 51%, provided however that: (i) said transfer shall not relieve
the respective Party from any of its obligations hereunder; (ii) in the
event the above recalled minimum control link of 51% ceases to be met, the
respective transferring Party shall immediately repurchase the transferred
shares: and; (iii) for the period of the first six (6) years set forth in
Article 7.1 herein above, NEVASA, LAIF, JASDAN and
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<PAGE> 15
PEREMTORY shall in any case be prevented from transferring, assigning or
otherwise disposing their Company shares to any of their respective
Affiliate partially owned by Telecommunications operators.
8. CERTAIN DUTIES OF THE PARTIES
8.1. With reference to the specific liability of each NEVASA and CORIM as to the
obligations set forth in the Agreement, it is hereby established the joint
and several liability of each of them and of their respective heirs and
successors with the others as to the compliance with any of the obligations
and duties stated in this Agreement.
8.2. It is intention of the Shareholders and Grupo A, whenever needed by the
Companies and/or IMPSAT Corporation, to grant to SIN and NEVASA and/or
their affiliates the possibility to provide to the Companies products,
services, know-how, satellite capacities and the activities related to the
design, engineering and implementation of the network, at arms length
condition to be agreed between the Shareholders, whether through direct
specific agreements or otherwise.
8.3. The Shareholders and Grupo A will make their best efforts to contribute to
the Company all of the shares they own directly or through their respective
affiliates in IMPSAT S.A. (Argentina), and to effect such contribution not
later than March 31, 1995.
8.4. Grupo A will contribute its shares of IMPSAT Comunicacoes Ltda. ("Brazil")
in IMPSAT Corporation as soon as SIN will assure the supply of the
Business, except VAS, in the Brazilian market on an exclusive basis through
the Company; such contribution will be valued at the documented cost
incurred by Grupo A until such time for obtaining the license described
below. Grupo A represents that it is
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<PAGE> 16
currently negotiating a license in the field of the Business in Brazil
through IMPSAT Comunicacoes Ltda. Should IMPSAT Comunicacoes Ltda. obtain
the license before the said contribution by Grupo A of their shares in
IMPSAT Corporation, such contribution will be valued at the documented
costs incurred by Grupo A for obtaining the license.
8.5. The Shareholders and Grupo A agree that IMPSAT Corporation will establish
an activity in the field of Business in the United States of America,
probably in Miami area (the "U.S. Activity"), with the purpose of providing
services between the Territory and USA.
8.6. The Parties acknowledge and agree that Grupo A hereby commits itself to
cause:
(i) Resis SA, the current satellite capacity provider of most of the
Companies, to assign at a no cost basis, to two wholly owned subsidiaries
of the Company to be formed (hereinafter the "assignees") any and all the
agreements under which said satellite capacity and technical service and
assistance are supplied to the Companies, effective not later than sixty
(60) days from the date hereof; and
(ii) the Assignees not to terminate, breach or unaccomplish any of their
undertakings thereunder, and
(iii) the Assignees to grant, time by time, the most favorable conditions
in providing know-how, services, assistance and satellite capacity to the
Company and the Companies.
8.7. Each of SIN on one side and NEVASA and Grupo A directly and/or indirectly
also through their affiliates on the other side hereby acknowledge, agree
and undertake that any new business initiative in the Business except VAS
within the
15
<PAGE> 17
Territory shall be initiated, pursued and carried out by the Company,
unless otherwise agreed in writing among SIN, NEVASA and Grupo A,
provided, however, that any party shall not be, directly and/or indirectly,
prevented in any case from participating in any privatization process or in
any tender and/or directly or indirectly supporting or carrying on any
business initiative in the telecommunication field not focused on the
Business alone and in such case the provisions of this section 8.7 shall
not apply. As used in this section 8.7 "SIN" means any company directly or
indirectly controlled by SIN and/or its parent company STET INTERNATIONAL
SpA and/or STET Societa Finanziaria Telefonica p.A.
8.8 NEVASA and Grupo A acknowledge and agree to grant the Companies and the
Company full right worldwide, and exclusive within the Territory, of use of
"Impsat" trademark on a royalty free basis.
8.9 Should each of the Parties intend to initiate, pursue and/or carry out any
new business initiative in the Telecommunication field - other than the
Business-in the Territory such Party may submit, or may cause to be
submitted, such new business to the Company's BoD. If the Company's BoD
does not approve such matter or SIN exercises its veto right envisaged in
Art 5.7.e; such Party will be free to carry out such new business through
any other of its Affiliates, other than the Company itself and/or each of
the Companies and of the other subsidiaries that in the future could be
established.
In such case, the Parties will make their best efforts in order to assure
to the Company and/or the Companies specific commercial contracts or
agreements for the best interest of the Company and/or the Companies
themselves.
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<PAGE> 18
8.10. The Parties agree that all international Telecommunications traffic
produced by the Companies within the Territory and the U.S.A. and terminated
outside the Territory and the U.S.A., will be enrouted on networks that will
be indicated by SIN at competitive terms and conditions in comparison to
comparable circumstances.
8.11. The Parties agree that all international switched telephone traffic
originated in the IMPSAT Network and directed to outside the Territory
(included traffic directed to U.S.A.), will be enrouted on networks that will
be indicated by SIN at competitive terms and conditions in comparison to
comparable circumstances.
8.12. SIN will provide -not on an exclusive basis- to the Company and/or the
Companies the access to STET integrated Telecommunications system generally
known as Global Offer Service as well as to STET's Value Added Services. The
Company and/or the Companies will be entitled to distribute only STET Global
Offer within the Territory, unless SIN decides to provide the same access to
other companies competing with the Companies in the Business.
9. ASSIGNMENT
9.1. Neither this Agreement nor any interest herein may be assigned, in whole
or in part, by any Party without the prior written consent of the other
Party, which consent shall not be unreasonably withheld as to assignments by
a Party to its subsidiary.
9.2. Assignments to subsidiaries shall not relieve the assigning Party from
the obligations arising out of this Agreement, nor from the liability for
breach of its provisions whether breach is before or after such assignment.
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<PAGE> 19
9.3. Nothing in this Clause 9 shall supersede the restrictions established in
Clause 7 of this Agreement.
10. CONFIDENTIALITY
Other than as may be required by law or as may be agreed in writing by the
Parties, the Parties shall not disclose the existence of this Agreement, the
terms and conditions hereof nor any confidential information exchanged between
them as a result of this Agreement, without the previous written consent of the
other Party.
11. SEVERABILITY
Except as otherwise expressly provided by this Agreement, the invalidity of any
one or more provisions hereof or of any other agreement or instrument given
pursuant to or in connection with this Agreement shall not affect the remaining
portions of this Agreement or any such other agreement or instrument or any
part thereof, all of which are inserted conditionally on their being held valid
in law; in the event that one or more of the provisions contained herein or
therein should be invalid, or should operate to render this Agreement or any
such other agreement or instrument invalid, this Agreement and such other
agreements and instruments shall be construed as if such invalid provisions had
not been inserted: provided, however, that such severability of the remaining
portions of this Agreement or any such other agreements, whichever is the case,
shall be conditional upon substitution by the Parties, adopting good faith and
diligent negotiation and agreement within 30 days, of new provision(s) which
will as closely as possible replicate the void provision(s) and which will be
valid and enforceable.
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<PAGE> 20
12. CUMULATIVE REMEDIES
Each right, power and remedy provided for herein or now or hereafter existing
at law, in equity, by statute or otherwise, shall be cumulative, and the
exercise or the forbearance of exercise by any Party of one or more of such
rights, powers or remedies shall not preclude the simultaneous or later
exercise by such Party of any or all such other rights, powers or remedies.
13. APPLICABLE LAW - JURISDICTION/ARBITRATION
This Agreement is governed by and construed in accordance with the Laws of
Switzerland. Any dispute, controversy or claim between the Parties hereto
arising out of or in connection with this Agreement, either during or after the
term hereof, shall be solely and finally settled by arbitration conducted in
the English language in Geneva, Switzerland, in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of Commerce of Paris
("ICC") by three arbitrators selected and acting according to the said Rules.
The arbitrators shall be independent experts in international business
transactions. The Parties hereto shall abide by all awards rendered in
arbitration proceedings and expressly hereby waive and renounce any right
appeal of the arbitration award to any competent court; all such awards may be
enforced and executed in any court having jurisdiction over the Party against
whom enforcement of such award is sought. All arbitration awards hereunder
should be rendered and paid in United States Dollars.
14. NOTICES
Any notice, request, statement or other writing required or permitted by this
Agreement shall be deemed to have been sufficiently given when delivered
personally, sent by international courier, mailed by certified or registered
mail, postage prepaid, or
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<PAGE> 21
sent by facsimile (with the original to promptly follow by personal delivery or
international courier, or with answerback confirmed), address as follows:
STET International Netherlands NV
6-8 Hoeckenrode
Amsterdam
The Netherlands
Attn. of: Mr. Renato De Rimini
Telephone No.: _________________
Facsimile No.: _________________
NEVASA Holdings Ltd.
17 Dame Street, First Floor, Dublin 2, Ireland
Attn. of: Mr. Ronald Steinmann
Telephone No.: 00353-1-679 64 77
Facsimile No.: 00353-1-679 21 88
GRUPO A
Av. Madero 940 Piso 19, Buenos Aires, Argentina
Attn. of: Mr. Enrique M. Pescarmona
Tel: (54-1) 315-2400
Fax: (54-1) 315-2388
15. CONSTRUCTION
The article and section members and captions appearing in this Agreement are
inserted only as a matter of convenience and are in no way intended to define,
limit, construe or describe the scope or interest of such articles or sections
of this Agreement, or in any way affect this Agreement. Words in the singular
shall be read and construed as though in either of the other genders, where the
context so requires.
<PAGE> 22
16. EXHIBITS AND ANNEXES
The attachments to this Agreement are:
Exhibit 1 : The Companies
Exhibit 2 : The Shares
Exhibit 3 : The SPA
Exhibit 2.5 : The Initial Business Plan
Exhibit 6 : The TTAA
17. ENTIRE AGREEMENT-AMENDMENTS
This Agreement, the SPA together with their Exhibits and Annexes ("Agreement")
constitutes the entire agreement and understandings between the Parties and
supersedes any and all prior understandings, contracts and agreements. No
amendments or additions shall be valid unless executed by means of a formal
written amendment by duly authorized officers of the Parties.
18. TERMINATION
This Agreement may be terminated at any time by NEVASA and "Grupo A" in the
event SIN and/or its affiliates owns beneficially and of record less than 20%
of the capital stock of the Company. The above mentioned provision shall not
apply only if SIN and/or its affiliates has been prevented by the law from
participating in capital calls.
19. SURVIVAL
The provisions of Clauses 10 and 13 hereinunder shall survive any termination
of this Agreement.
<PAGE> 23
20. THE MINORITY STOCKHOLDERS:
The Minority Stockholders execute and delivery this Agreement in order to
constitute an exclusive binding obligation under the provisions of the Article
7.2. -irrespective to the period of six (6) years set forth therein- and Article
7.4, except that they are entitled to sell freely their shares to the colombian
company Suramericana de Seguros SA and/or Credit Suisse or any of its
affiliates and/or subsidiary companies.
In witness whereof, the Parties have signed and delivered this Agreement in any
number of counterparts each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
/s/ Renato De Remini /s/ Guillermo V. Pardo
STET INTERNATIONAL NETHERLANDS NEVASA HOLDINGS LTD.
By: Renato De Rimini By: Guillermo V. Pardo
Title: [PROXY] Title: [PROXY]
---------------- -----------------
/s/ Enrique M. Pescarmona
CORPORACION IMPSA S.A.
By: Enrique M. Pescarmona
Title: Presidente
--------------------
/s/ Ricardo Anibal Verdaguer /s/ Roberto Abel Vivo Chaneton
- --------------------------- ------------------------------
Mr. Ricardo Anibal Verdaguer Mr. Roberto Abel Vivo Chaneton
/s/ Robin Bolli /s/ Stephan Muller /s/ Ricardo A. Verdaguer
LAIF JASDAN LTD. PEREMTORY
By: Robin Bolli By: Stephan Muller By: Ricardo A. Verdaguer
Title: [PROXY] Title: [PROXY] Title: [PROXY]
--------------- ------------ ---------------
<PAGE> 1
EXHIBIT 10.1
<PAGE> 2
EXHIBIT 10.1
EXCHANGE AGENT AGREEMENT
This EXCHANGE AGENT AGREEMENT (this "Agreement") dated as of October
___, 1996 between IMPSAT Corporation, a Delaware Corporation ("IMPSAT"), and
The Bank of New York, a banking corporation formed under the laws of the State
of [New York, United States] (the "Exchange Agent").
W I T N E S S E T H:
WHEREAS, IMPSAT is offering to exchange (the "Exchange Offer") all of
its outstanding 12 1/8% Senior Guaranteed Notes due 2003 (the "Old Notes"), of
which an aggregate of $125,000,000 in principal amount are outstanding as of
the date hereof, for an equal principal amount of newly issued 12 1/8% Senior
Guaranteed Notes due 2003 (the "New Notes"), on the terms and in the manner set
forth in the Prospectus, dated October ___, 1996 (the "Exchange Offer
Prospectus"); and
WHEREAS, IMPSAT wishes to appoint the Exchange Agent as its agent for
the purpose of administering the Exchange Offer and the Exchange Agent wishes
to accept such appointment.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties agree as follows:
1. Appointment of Exchange Agent; Performance of Duties. IMPSAT hereby
appoints the Exchange Agent as its agent for the exchange of its Old Notes for
its New Notes, and the Exchange Agent accepts such appointment subject to the
terms and conditions contained in this Agreement.
2. Documents. IMPSAT shall provide the Exchange Agent with copies of a
letter of transmittal substantially in the form of Exhibit A attached hereto
(the "Letter of Transmittal"). The Exchange Agent shall request from The
Depository Trust Company ("DTC") no later than the effective date of the
Exchange Offer a Special Security Position Listing of all participants eligible
to participate in the Exchange Offer (the "Participants") and the amount of Old
Notes owned of record by each such Participant; provided, however, that
<PAGE> 3
the Exchange Agent shall not be responsible for any changes in the Participants
or of the beneficial ownership of the Old Notes during the Exchange Offer. The
Exchange Agent shall make copies of the Letter of Transmittal available to
Holders (as such term is defined in the Letter of Transmittal) and the
Participants upon requests directed to The Bank of New York, Corporate Trust
Administration, 101 Barclay Street, Floor 21 West, New York, New York 10286 by
registered or certified mail or by overnight courier.
3. Exchange Agent Responsibilities. The Exchange Agent shall examine
the Letters of Transmittal (or a facsimile thereof) and other documents
received by it or ascertain that (a) each Letter of Transmittal is completed
and duly executed in accordance with the instructions therefor and (b) any
other document required by the instructions accompanying the Letters of
Transmittal is completed and duly executed in accordance with such
instructions. Except as otherwise provided in this Paragraph 3, Old Notes shall
not be deemed to be properly tendered unless all of the foregoing requirements
are met prior to the Expiration Date (as defined in the Exchange Offer
Prospectus). The Exchange Agent shall take all steps as it shall deem
reasonable and appropriate to cause the person tendering Old Notes pursuant to
the Exchange Offer to correct any defect that exists in any Letter of
Transmittal or accompanying document. In the event that the Exchange Agent is
unable to cause the correction of any such defect, the Exchange Agent shall
promptly send to IMPSAT any Letter of Transmittal or other document or copies
thereof containing any defect therein, which in its judgment would prevent
acceptance thereof, together with a request for instructions as to actions to
be taken with respect thereto in accordance with Paragraph 8(f) of this
Agreement. All questions with respect to the duties of the Exchange Agent under
this Paragraph 3 will be determined by IMPSAT, which determination shall be
final and binding for the purposes of this Agreement. IMPSAT reserves the
right, if it so elects in its discretion, to waive the failure of any delivery
of Old Notes, Letter of Transmittal or other document pursuant to the Exchange
Offer to comply with any requirement of this Paragraph 3 of the Letter of
Transmittal. IMPSAT reserves the right to terminate or, prior to the Expiration
Date, amend the Exchange Offer as provided in the Exchange Offer Prospectus. If
notified by IMPSAT of termination of the Exchange Offer, the Exchange Agent
shall promptly return all tendered Old Notes to the tendering Holders. If
notified by IMPSAT of an
- 2 -
<PAGE> 4
amendment of the Exchange Offer, the Exchange Agent shall follow the reasonable
instruction of IMPSAT contained in such notice to the extent consistent with
this Agreement. Each day upon which the Exchange Agent receives one or more
Letters of Transmittal, the Exchange Agent shall provide IMPSAT with a written
account of the following information: (1) the number of properly tendered Old
Notes submitted that day; (2) the cumulative number of properly tendered Old
Notes submitted and not properly withdrawn through such day; (3) the number of
Old Notes covered by defective tenders submitted that day; (4) the number of
Old Notes which are submitted that day pursuant to the guaranteed delivery
procedures contained in the Letter of Transmittal; and (5) the cumulative
number of Old Notes covered by uncorrected defective tenders as of such date.
4. Acceptances and Exchange.
(a) At any time after the Expiration Date (as defined in the
Exchange Offer Prospectus), upon receiving a notice from IMPSAT directing the
exchange of properly tendered Old Notes, the Exchange Agent shall, as agent of
IMPSAT and subject to all the conditions of the Exchange Offer, accept for
exchange all Old Notes properly tendered in accordance with this Agreement
which are not properly withdrawn prior to the Expiration Date (as defined in
the Exchange Offer Prospectus). Thereafter, unless notified otherwise by
IMPSAT, the Exchange Agent shall continue to accept for exchange all Old Notes
which are properly delivered to the Exchange Agent pursuant to Notices of
Guaranteed Delivery (as defined in the Exchange Offer Prospectus) by shall not
accept any other Old Notes for exchange.
(b) Following such acceptance of Old Notes, the Exchange Agent shall
promptly present all such Old Notes to the registrar with instructions to cause
such Old Notes to be marked as "cancelled" in the name of IMPSAT in the
appropriate registers. The Exchange Agent promptly shall notify The Bank of New
York, as Registrar and Transfer Agent for the New Notes (in such capacity, the
"Registrar") of (A) the names of the Holders on whose behalf Old Notes have
been so presented and the number of Old Notes so presented on behalf of each
and (B) the instructions for delivery of New Notes provided in the Letters of
Transmittal submitted by each such Holder. The Exchange Agent shall from time
to time request the Registrar to issue such New Notes as are required for
delivery hereunder.
- 3 -
<PAGE> 5
5. Assignees; Signatures. If a New Note or beneficial ownership
thereof is to be delivered to, or reflected on the records of the Depository
Trust Company ("DTC") as belonging to, an assignee of the Holder or beneficial
owner of the surrendered Old Notes, the assignee of the Holder or the
beneficial owner shall pay to the Exchange Agent the amount of any transfer
taxes applicable to such transfer unless satisfactory evidence of the payment
of such tax, or exception therefrom, is submitted.
The signature (or signatures, in the case of any Old Notes owned by two
or more joint holders) on a Letter of Transmittal must correspond exactly with
the name(s) appearing on the records of the Registrar.
6. Records. The Exchange Agent shall maintain, on a continuing basis,
in addition to the information required by Paragraphs 3 and 4 hereof, a record
showing the following: (i) the names and addresses of all Holders who have
tendered Old Notes for exchange and of all Holders to whom New Notes will be or
have been issued or to whose DTC account New Notes will be or have been
credited, (ii) the face amount of Old Notes held by each such Holder, and (iii)
the face amount of Old Notes tendered by and New Notes to be issued to each
such Holder. Upon the request of IMPSAT, the Exchange Agent shall provide
IMPSAT with a report setting forth the information maintained pursuant to this
Paragraph 6, together with such other information as may from time to time by
reasonably requested.
7. Fees. IMPSAT shall pay all reasonable out-of-pocket expenses of the
Exchange Agent for postage, stationery, printing, telephone, facsimile, telex
and other similar items (other than those specifically described below) and the
reasonable fees and disbursements of legal counsel to the Exchange Agent
incurred in rendering services hereunder at cost, pursuant to monthly invoices
from the Exchange Agent. In no case, however, unless agreed to in advance by
IMPSAT, shall the payment of IMPSAT of the fees and disbursements of legal
counsel to the Exchange Agent exceed the sum of _________________. In addition,
IMPSAT shall pay such fees as IMPSAT and the Exchange Agent may agree in
writing from time to time.
8. Limitation of Duties. As Exchange Agent hereunder the Exchange
Agent:
- 4 -
<PAGE> 6
(a) shall have no duties or obligations other than those specifically
set forth herein;
(b) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness of any
Old Notes or New Notes or any Letter of Transmittal or other document deposited
with or delivered to the Exchange Agent hereunder or any signature or
endorsement in connection therewith and will not be required to and will not
make any representation as to their validity, value or genuineness;
(c) shall not be obligated to take any legal action hereunder which
might in the judgment of the Exchange Agent involve any expense or liability
unless the Exchange Agent shall have been furnished with indemnity acceptable
to it;
(d) may rely on and shall be protected in acting upon any certificate,
instrument, opinion, notice, letter, telegram or other document or security
delivered to the Exchange Agent without gross negligence, bad faith or without
misconduct to be genuine and to have been signed by the proper party or parties;
(e) shall not be liable for any action taken or omitted by the
Exchange Agent, or any action suffered by it to be taken or omitted, without
gross negligence, bad faith or willful misconduct on its part, by reason of or
as a result of the administration of its duties hereunder, and it may rely on
and shall be protected in acting upon the written instructions of any person
reasonably believed by it to be a proper officer or representative of IMPSAT
relating to the Exchange Agent's duties hereunder;
(f) may apply to IMPSAT for written instructions with respect to any
matter arising in connection with the Exchange Agent's duties and obligations
arising under this Agreement, and the application by the Exchange Agent for
written instructions from IMPSAT may, at the option of the Exchange Agent, set
forth in writing any action proposed to be taken or omitted by the Exchange
Agent with respect to its duties or obligations under this Agreement and the
date or dates on or after which such action shall be taken, and the Exchange
Agent shall not be liable for any action taken or omitted in accordance with a
proposal included in any such application on or
- 5 -
<PAGE> 7
after the date specified therein (which date shall not, without IMPSAT's
consent, be less than five business days after IMPSAT is deemed to have
received such application) unless, prior to taking or omitting any such action,
the Exchange Agent has received written instructions from IMPSAT in response to
such application specifying the action to be taken or omitted. The right
conferred by this Paragraph 8(f) shall be restricted by the requirement of
Paragraph 3 hereof that, with respect to defects in any Letter of Transmittal
or accompanying document, the Exchange Agent shall take such steps as it shall
deem reasonable and appropriate to correct the same before applying to IMPSAT
under this Paragraph 8(f) for instructions; and
(g) may consult counsel satisfactory to the Exchange Agent and IMPSAT,
and the opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion of such counsel.
9. Court Orders. If any property subject hereto is at any time
attached, garnished or levied upon under any court order or in case the
payment, assignment, transfer, conveyance or delivery of any such property
shall be stayed or enjoined by any court order, or in case any order, judgment
or decree shall be made or entered by any court affecting such property or any
part thereof, then and in any such event the Exchange Agent is authorized, in
its sole discretion, to rely upon and comply with any such order, writ,
judgment or decree which it is advised by legal counsel of its own choosing is
binding upon them, and, if it complies with any such order, writ, judgment or
decree, it shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance even through such
order, writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
10. Indemnification. IMPSAT agrees to indemnify the Exchange Agent and
hold it harmless from and against any loss, liability or expense (including
reasonable counsel fees and expenses) incurred by the Exchange Agent without
gross negligence, bad faith or willful misconduct on its part arising out of or
in connection with the admiration of its duties and any action taken or omitted
to be taken hereunder and otherwise in connection with the Exchange Offer and
against any stock transfer or other tax. The Exchange Agent agrees to
-6-
<PAGE> 8
indemnify IMPSAT and hold harmless from and against any loss, liability or
expense (including reasonable counsel fees and expenses) incurred by IMPSAT as
a result of gross negligence, bad faith or willful misconduct on the part of
the Exchange Agent arising out of or in connection with the administration of
its duties and any action taken or omitted to be taken hereunder and otherwise
in connection with the Exchange Offer.
11. Amendments. This Agreement may be amended only by an instrument
in writing executed by the parties hereto or their successors and assigns.
12. Reports; Notices. All reports, notices, applications (including
applications for instructions in accordance with Paragraph 8(f) hereof) and
other communications required or permitted hereunder shall be in writing and
shall be deemed given when addressed and delivered by facsimile transmission
(confirmed by telephone call), which delivery may be followed by delivery by
hand or overnight delivery service, to the address for the party set forth
below or at such other address as a party may furnish by like notice to the
other parties hereto:
If to IMPSAT:
IMPSAT Corporation
Alferez Pareja 256
1107 Buenos Aires, Argentina
Attn: Mr. Guillermo Jofre, Vice President,
Finance
Facsimile Number: (582) 362-5030
With a copy to:
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attn: Neil M. Goodman, Esq.
Facsimile Number: (202) 942-5999
If to the Exchange Agent:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attn: Corporate Trust Administration
Facsimile Number: (212) 571-3080
- 7 -
<PAGE> 9
Delivery of a notice sent by facsimile transmission shall be deemed to
be effective 24 hours after delivery has been confirmed by telephone.
13. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but both of which together
shall constitute but one agreement.
14. Termination. This Agreement shall terminate on [December 31,
1996], or on such earlier date as may be agreed in a signed writing between
IMPSAT and the Exchange Agent. Upon termination, copies of all information
maintained by the Exchange Agent for IMPSAT under this Agreement shall be
delivered to IMPSAT as soon as practicable following IMPSAT's request for such
information. The right of the Exchange Agent to be reimbursed for out-of-pocket
expenses as provided in Paragraph 7 and the indemnification provisions of
Paragraph 10 hereof shall survive termination of this Agreement.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, IMPSAT Corporation and The Bank of New York have
duly executed this Agreement as of the date first set forth above.
IMPSAT CORPORATION
By:
-------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-------------------------
Name:
Title:
- 8 -
<PAGE> 1
EXHIBIT 10.2
CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE> 2
DOMESTIC DATA SERVICE AGREEMENT
This Domestic Data Service Agreement (the "Agreement") is made and
entered into this 7th day of April, 1992, by and between Alpha Lyracom Space
Communications, Inc. ("Alpha Lyracom") a Delaware corporation, and Resis, S.A.,
organized and existing under the laws of Argentina ("Customer").
1. This Agreement applies to the provision of Domestic Data Space
Segment Service as defined herein and pursuant to the Terms and Conditions for
Data Service set forth in Appendix A hereto, (the "Service").
2. Alpha Lyracom agrees to provide and Customer agrees to accept
Service from C-band capacity in the North Beam of the PAS-1 Satellite, in
accordance with the Service Specifications set forth in Appendix B (as
applicable) and the requirements set forth in paragraph 6 below and Table 1
(see attached). The capacity will accommodate the equivalent of forty-five full
duplex 64 kbps channels between Customer's 6.1 meter master earth station with
a minimum G/T of 26.2 dB/K located in Bogota, Columbia and 2.4 meter remote
stations with a minimum G/T of 18.4 dB/K within the -3 dB contour of the
assigned North Beam Transponder. Alpha Lyracom may, at its sole discretion,
substitute equivalent capacity on other North Beam Transponders. The Service is
based on Customer's use of R 1/2 FEC QPSK for the simplex circuits to the 2.4m
earth stations and R 3/4 FEC QPSK for the simplex circuits to the 6.1m earth
station.
1
<PAGE> 3
3. The Customer's obligations in using the Service include the
following:
a) Customer shall operate uplink and/or downlink earth
stations itself or contract with third parties to operate earth stations
between points within Colombia as specified in paragraph 2 of this Agreement,
meeting the performance and operational requirements set forth in Appendix B
hereto. Customer shall demonstrate compliance of its earth stations with these
requirements pursuant to standard Alpha Lyracom test procedures attached hereto
as Table 2. Such demonstration may be accomplished by the testing of standard
configurations of earth station hardware which are duplicated at multiple
locations. Alpha Lyracom and Customer will agree under these conditions to
waive portions of the test procedures contained in Table 2. Customer shall be
required to change carrier power levels and center frequencies whenever such
changes are deemed necessary by Alpha Lyracom.
b) Customer warrants that the Service is primarily for
domestic use within Colombia. Notwithstanding the previous sentence:
(i) Customer may utilize a portion of the Service for International
service from Colombia to the United States, on a simplex basis only,
subject to prior written approval of Alpha Lyracom. All such simplex
service to the United States using the Service provided pursuant to this
Agreement shall be operated in the United States through Alpha Lyracom's
facility. Such simplex circuits shall be matched against similar
capacity provided by Alpha Lyracom under separate agreement for the
establishment of full duplex circuits, and
(ii) Customer may also utilize a portion of the Service for
international service between other countries (other than the United
States) in which Customer is
2
<PAGE> 4
authorized to provide satellite communications services or has entered
into an operating agreement with a carrier licensed to provide such
services. Any additional international service requirements may also be
ordered by Customer, subject to availability, through separate agreement
with Alpha Lyracom.
c) Customer further warrants that it has all the
necessary authorizations to enter into this Agreement and accept the Service in
Columbia.
4. The term of this Agreement (the "Term") shall commence upon the
first date above written and shall terminate at the end of the life of the
satellite, estimated at December 31, 2001, unless otherwise terminated, in
accordance with Section 8 of Appendix A. The "Service Term" of this Agreement
shall start on or before November 1, 1992 (the "Service Date") and end on the
same date as the Term.
5. For each month of the Service Term beginning on the Service Date,
Customer agrees to pay a monthly service fee ("Monthly Service Fee") of [
]* Customer
shall deposit with Alpha Lyracom [
]* which shall be due and payable on or before
execution of this Agreement, (the "Deposit"). The Deposit shall be applied to
the Monthly Service Fee for the first and last months of the Service Term.
Monthly Service Fees are payable in advance, in accordance with Section 4 of
Appendix A. The Monthly Service Fees due from Customer shall be guaranteed by
Invertel pursuant to Appendix E of this Agreement.
6. The attached Table 1 contains the transmission parameters for the
Service. The bandwidth and EIRP specifications are based on the assumption that
the Service is designed to accommodate forty-five full-duplex 64 kbps links
between a 6.1m hub in
3
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 5
Bogota and 2.4m remote stations that lie on or within the -3dB downlink gain
contour of the assigned North Beam Transponder. Customer shall provide Alpha
Lyracom, in writing, with specific earth station information for each circuit
including location, antenna size, G/T, transmit gain, transmit power, threshold
levels, and any other information Alpha Lyracom requires, prior to activation
of the circuit. In addition, Customer shall comply with the earth station
testing requirements contained in Appendix B and Table 2. Alpha Lyracom will
provide Customer with an initial carrier transmission plan within 30 days of
receiving the above information from Customer. This initial transmission plan
will accommodate the forty-five 64 kbps full-duplex data links using the
capacity specified in Table 1.
7. Customer may request that Alpha Lyracom change the transmission
plan to accommodate other carrier sizes, transmission parameters or other earth
station sizes or locations primarily within Colombia. Any request for deviation
from the initial carrier transmission plan must be submitted in writing to
Alpha Lyracom for its review and approval at least 30 days prior to the
requested date of implementation. Customer may utilize carriers with speeds
between 32 kbps and 512 kbps, QPSK or BPSK modulation and may employ any FEC
desired, other earth station sizes, or operate from other locations within
Colombia which are situated outside the Reference Contour, as long as these
changes can be accommodated within the assigned capacity and power allocations
set forth in this Agreement and are in compliance with the above procedure.
Alpha Lyracom shall work with Customer to simplify and expedite the above
mentioned process.
8. Customer agrees to fully comply with all Operations Requirements
set forth in Appendix B, including the requirement to change carrier power
levels and center
4
<PAGE> 6
frequencies whenever such changes are deemed necessary by Alpha Lyracom to avoid
harmful interference.
9. The following attachments hereto are included and form part of
this Agreement:
Table 1 Transmission Parameters
Table 2 Earth Station Testing Procedures
Appendix A. Terms and Conditions for Data Service
Appendix B. Service Specifications and Operational
Requirements Applicable to Alpha Lyracom's
C-band Digital Transmission Service (North
Beam)
Appendix C. Separate Systems Requirements of the United
States Federal Communications Commission
Appendix D. Definitions
Appendix E. Guarantee
IN WITNESS WHEREOF, each of the parties hereto has duly
executed and delivered this Agreement as of the day and year first
written above.
ALPHA LYRACOM SPACE RESIS, S.A.
COMMUNICATIONS, INC.
By: /s/ Signature Illegible By:
------------------------------ --------------------------
Name: Name Illegible Name:
Title: President Title:
AGREED TO AND ACCEPTED WITH RESPECT TO SECTION 5 AND APPENDIX E:
INVERTEL, S.A.
By: /s/ RICARDO VERDAGER
------------------------------
Name: Ricardo Verdager
Title: President
5
<PAGE> 7
Table 1
Transmission Parameters
for
7.9 MHz Capacity on the PAS-1 North Beam
Transponder Center Frequency (Uplink) [ ]* MHz
Transponder Center Frequency (Downlink) [ ]* MHz
Uplink Polarization Horizontal
Downlink Polarization Horizontal
Total Transponder Bandwidth [ ]* MHz
Maximum Available Bandwidth (Note 1) [ ]* MHz
<TABLE>
<CAPTION>
Reference
Bogota Contour
<S> <C> <C>
Satellite G/T (Note 2) [ ]* db/K [ ]* db/K
Aggregate Operating Flux Density (Note 2, 3) [ ]* dBw/m [ ]* dBw/m
Maximum Available EIRP (Note 2, 3) [ ]* dBw [ ]* dBw
Nominal Intermodulation Density (Note 2, 4) [ ]* dBw/Hz [ ]* dBw/Hz
Minimum Co-Channel C/I [ ]* dB [ ]* dB
</TABLE>
- -------------------------------------------------------------------------------
Notes: 1) A minimum guard band must be provided at each end of the
allocated bandwidth which is equal to 5% of the bandwidth of the
carrier adjacent to that band edge.
2) Reference contour shown on attached Figures 1 & 2.
3) Powers shown are aggregate across all carriers within bandwidth
allocated to impact. Aggregate EIRP must not be exceeded & input
drive levels will be adjusted accordingly.
4) Intermod noise density is expected average over allocated
bandwidth. Peak density may exceed average by [ ]*. Transponder
is operated at a nominal output backoff of [ ]* dB.
5) Capacity is based on [ ]* simplex [ ]* kbps R1/2 QPSK
circuits and [ ]* kbps R3/4 simplex circuits.
- -------------------------------------------------------------------------------
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 8
Figure 2 - North Beam Downlink Reference Contour (See Table 1)
<PAGE> 9
Figure 1 - North Beam Uplink Reference Contour (See Table 1)
<PAGE> 10
Table 2
EARTH STATION QUALIFICATION PROCEDURE
PAN AMERICAN SATELLITE
PURPOSE
THIS DOCUMENT OUTLINES TEST, VERIFICATION PROCEDURES WHICH MUST BE
COMPLETED BY ALL EARTH STATIONS PRIOR TO RECEIVING AUTHORIZATION TO TRANSMIT RF
POWER (ILLUMINATE THE TRANSPONDERS) TO ALPHA LYRACOM SPACE COMMUNICATIONS
SATELLITES.
PROCEDURES FOR SERVICE MONITORING PROCEDURES ARE ALSO INTRODUCED. THESE
PROCEDURES MUST BE IMPLEMENTED BY ALL STATIONS ILLUMINATING ALPHA LYRACOM SPACE
COMMUNICATIONS TRANSPONDERS TO ASSURE THAT ALL COMMUNICATIONS OPERATIONS ARE
CARRIED OUT ON A NON-INTERFERING BASIS WITH ALL OTHER COMMUNICATIONS ON THE
TARGET SATELLITE AND ALL ADJACENT SATELLITES.
THE AUTHORIZATION TO ILLUMINATE PAS-1 TRANSPONDERS MAY BE REVOKED AT
ANY TIME IF IT SHOWN THAT OPERATIONS BY ANY STATION VIOLATES THE PREMISE OF
NON-INTERFERING OPERATION BY ALL STATIONS.
SCOPE
THIS PROCEDURE IS APPLICABLE TO ALL STATIONS THAT ARE SEEKING AUTHORITY
TO ILLUMINATE ALPHA LYRACOM PAN AMERICAN SATELLITE (PAS-1) TRANSPONDERS AND
STATIONS THAT WISH TO MAINTAIN AUTHORITY TO ILLUMINATE PAS-1 OR OTHER ALPHA
LYRACOM SATELLITE TRANSPONDERS.
PROCEDURE
[A] VERIFICATION TEST PROCEDURES
(1) CROSS-POLARIZATION RATIO
(a) EACH STATION WILL BE REQUIRED TO SHOW THAT THE STATION CAN ACHIEVE
CO-POLAR TO CROSS-POLAR SIGNAL RATIOS 33 dB OR BETTER FOR
TRANSMITTED CARRIERS IN THE TRANSPONDERS OF INTEREST.
(b) IF DESIRED AND BANDWIDTH IS AVAILABLE, HOMESTEAD WILL RADIATE A
CARRIER IN THE CROSS-POLARIZATION TRANSPONDER TO ALLOW STATIONS TO
VERIFY RECEIVE CROSS-POLARIZATION AT THE SAME TIME THAT THEY
VERIFY TRANSMIT POLARIZATION PERFORMANCE.
(c) HOMESTEAD WILL MAKE SPECTRUM ANALYZER PLOTS OF THE
CROSS-POLARIZATION PERFORMANCE FOR STATION RECORD PURPOSES, AND
WILL FURNISH A COPY OF THESE PLOTS TO THE TESTING STATION.
<PAGE> 11
page 2
(2) ANTENNA PATTERNS
(a) ALL STATIONS WILL PERFORM BOTH TRANSMIT AND RECEIVE ANTENNA PATTERNS
WITH THE PAN AMERICAN SATELLITE GATEWAY EARTH STATION AT HOMESTEAD,
FLORIDA TO ASSURE THAT THE STATION MEETS INTERNATIONAL, AND WHERE
APPLICABLE DOMESTIC, ANTENNA PERFORMANCE REQUIREMENTS.
(b) EACH STATION WILL NOTIFY THE HOMESTEAD STATION OF THE DESIRE TO TEST
AND WILL PROVIDE THE EXACT LATITUDE AND LONGITUDE OF THE STATION TO
ALLOW GENERATION OF POINTING ANGLES TO PAS-1 AND OTHER ADJACENT
SATELLITES.
(c) HOMESTEAD WILL GENERATE POINTING ANGLES WHICH WILL DETERMINE THE
MINIMUM ANGULAR TRAVEL THAT WILL BE REQUIRED TO DETERMINE THE
ANTENNA'S SIDELOBE PERFORMANCE AND THE POSSIBLE INTERFERENCE THAT
COULD RESULT FROM SIDELOBE POWER INTO ADJACENT SATELLITES.
(d) AS A MINIMUM, STATIONS WILL BE REQUIRED TO MAKE THE FOLLOWING ANTENNA
TRANSMIT PATTERN CUTS:
(1) plus and minus 7 degree azimuth
(2) plus and minus 1 degree azimuth
(3) plus and minus 7 degree elevation
(4) plus and minus 1 degree elevation
(e) STATIONS SHOULD PERFORM RECEIVE CUTS AT THE SAME TIME THAT TRANSMIT
CUTS ARE BEING MADE. HOMESTEAD WILL RADIATE A CARRIER FOR THIS
PURPOSE.
(f) ADDITIONAL CUTS MAY BE REQUIRED TO DETERMINE THE INTERFERENCE PATTERN
THAT COULD OCCUR WITH OTHER SATELLITES ADJACENT TO PAS-1.
(g) HOMESTEAD WILL PERFORM SIMULTANEOUS CO-POLARIZATION AND
CROSS-POLARIZATION PATTERNS ON EACH OF THE ABOVE CUTS.
(h) HOMESTEAD WILL MAKE A RECORDING OF ALL CUTS AND WILL PROVIDE A COPY
OF ALL TEST DATA TO THE TESTING STATION.
(3) RF FREQUENCY AND POWER STABILITY
(a) THE TESTING STATION WILL RADIATE A CARRIER AT A POWER LEVEL AND
FREQUENCY SELECTED BY THE HOMESTEAD STATION.
<PAGE> 12
page 3
(b) AFTER THE TEST CARRIER HAS BEEN SET, THE TESTING STATION MUST BE
PREPARED TO LEAVE THE CARRIER ON WITHOUT FURTHER ADJUSTMENT FOR A
MINIMUM OF 72 HOURS. THE ACTUAL TIME OF THE TEST WILL BE DICTATED BY
THE HOMESTEAD STATION FROM THE RESULTS OBTAINED DURING THE TEST
PERIOD.
(c) HOMESTEAD WILL MAKE PERIODIC TESTS OF THE LEVEL AND FREQUENCY TO
ASSURE THAT THE CARRIER IS STABLE IN BOTH POWER AND FREQUENCY.
(d) ALL MEASUREMENTS DONE AT HOMESTEAD WILL BE DONE AT RF TO REMOVE THE
POSSIBILITY OF FREQUENCY ERROR BEING INTRODUCED BY TRANSLATION
EQUIPMENT AT HOMESTEAD.
(e) TO ASSURE POWER AND FREQUENCY OF THE TEST CARRIER, HOMESTEAD WILL
RADIATE A VERIFICATION CARRIER THAT IS GENERATED BY A VERY STABLE
FREQUENCY SYNTHESIZER ADJACENT TO THE TEST CARRIER.
(f) THE FREQUENCY OF THIS VERIFICATION CARRIER WILL BE MEASURED BY A
FREQUENCY COUNTER AND THE RADIATED POWER OF THE VERIFICATION CARRIER
WILL BE MEASURED AT THE TRANSMIT INPUT TO THE FEED OF THE ANTENNA TO
ASSURE THAT THE SATELLITE IS BEING ILLUMINATED WITH THE PROPER POWER
AND FREQUENCY FROM THE VERIFICATION STATION.
(g) THE VERIFICATION STATION WILL MEASURE THE FREQUENCY AND POWER
DIFFERENCES BETWEEN THE VERIFICATION CARRIER AND THE TEST CARRIER TO
DETERMINE THE STABILITY OF THE TEST CARRIER. (1) DURING THESE PERIODS
OF MEASUREMENT, WHICH WILL BE PERFORMED AT A MINIMUM OF 6 HOURS APART
TO ASSURE THAT DRIFT DUE TO SATELLITE DIURNAL VARIATIONS ARE
ELIMINATED, HOMESTEAD WILL ALSO PERFORM SHORT TERM STABILITY
MEASUREMENTS FOR 15 MINUTE PERIODS. UP TO 4 SHORT TERM STABILITY
MEASUREMENTS WILL BE MADE.
(h) AT TIMES WHEN THE ACTUAL VERIFICATION TEST IS NOT BEING PERFORMED,
HOMESTEAD WILL RECORD THE FREQUENCY AND POWER OF THE CARRIER ON A
STRIP CHART RECORDER TO ASSURE THAT NO GROSS CHANGES HAVE OCCURRED
DURING THE TEST PERIOD.
(i) HOMESTEAD WILL PROVIDE COPIES OF ALL TEST DATA TO THE TESTING STATION.
<PAGE> 13
page 4
(4) SPURIOUS FREQUENCY AND INTERMODULATION TEST
(a) THE TEST STATION WILL RADIATE A CARRIER AT MAXIMUM EIRP TO FREE SPACE
AT AN ELEVATION ANGLE OF AT LEAST 10 DEGREES ABOVE THAT REQUIRED FOR
PAS-1 ACCESS.
(1) INITIALLY, A SINGLE, UNMODULATED CARRIER WILL BE RADIATED.
(b) THE TEST STATION WILL SCAN THE TRANSMIT SPECTRUM AT THE ANTENNA AND IN
THE STATION TO VERIFY THAT NO SPURIOUS SIGNALS ARE GENERATED WITHIN
THE STATION AT THE MAXIMUM POWER LEVEL.
(c) THE TEST STATION WILL NOTE THE MAXIMUM SINGLE CARRIER EIRP AND THE
SPURIOUS CARRIERS DISCOVERED DURING THE TEST AND WILL REPORT THIS DATA
TO HOMESTEAD FOR INCLUSION IN THE FINAL TEST REPORT.
(d) THE TEST STATION WILL REMOVE ALL TRANSMIT CARRIERS AND REACQUIRE THE
SATELLITE.
(e) AT THE DIRECTION OF THE VERIFICATION STATION, THE TEST STATION WILL
RADIATE TWO CARRIERS AT RF POWER LEVELS AT SPECIFIED POWER LEVELS
SIMULTANEOUSLY AND WILL MONITOR THE TRANSMIT SPECTRUM TO DETERMINE IF
INTERMODULATION PRODUCTS ARE BEING RADIATED WITH THE DESIRED CARRIERS.
(1) THE VERIFICATION STATION WILL MONITOR THE SATELLITE SPECTRUM TO
DETERMINE IF INTERMODULATION PRODUCTS ARE SEEN ON THE SATELLITE.
(2) THE TEST STATION WILL NOTE THE EIRP LEVEL AT WHICH
INTERMODULATION CARRIERS ARE NOTED.
(f) THE VERIFICATION WILL RECORD ALL DATA FOR THE FINAL VERIFICATION
REPORT.
(B) DATA SERVICE INITIATION PROCEDURES
(1) CARRIER LEVEL SET AND VERIFICATION
(a) THE TEST STATION AND THE VERIFICATION STATION AND/OR THE CORRESPONDING
COMMUNICATION STATION WILL RADIATE DATA CARRIERS AT FREQUENCIES AND
POWER LEVELS SPECIFIED BY THE VERIFICATION STATION.
(1) INITIALLY, THE CARRIERS WILL BE UNMODULATED.
<PAGE> 14
page 5
(b) THE VERIFICATION STATION WILL MEASURE THE RECEIVED POWER LEVEL OF
EACH OF THE CARRIERS AND WILL NOTE THE EIRP LEVEL OF EACH TRANSMIT
STATION REQUIRED TO ACHIEVE THAT LEVEL.
(c) THE VERIFICATION STATION WILL NOTE THE SATELLITE SPECTRUM AND
VERIFY THAT NO SPURIOUS CARRIERS OR INTERMODULATION PRODUCTS ARE
PRESENT AS A RESULT OF THESE CARRIERS.
(d) THE STATIONS WILL MODULATE THE CARRIERS AND WILL NOTE WHETHER OR
NOT MODEM LOCK IS ACHIEVED AT EACH STATION OPERATING IN SATELLITE
LOOP-BACK MODE.
(1) AS THE CARRIERS ARE MODULATED, THE STATIONS WILL NOTE THAT THE
EIRP DOES NOT CHANGE FROM THE UNMODULATED CARRIER EIRP. THIS IS
COMMON FOR SOME MODULATORS AND MUST BE CHECKED CLOSELY.
(2) BIT ERROR RATE PERFORMANCE TEST
(a) THE STATIONS WILL SEND A BIT ERROR RATE SIGNAL THROUGH EACH OF THE
MODEMS AND WILL NOTE THE PERFORMANCE OF THE MODEM IN SATELLITE
LOOP-BACK FOR 15 MINUTES.
(1) IF ERRORS ARE ACCUMULATED DURING THIS PERIOD, THE STATION WILL
INVESTIGATE INTERNALLY TO DETERMINE THE SOURCE OF THE ERRORS.
(b) AFTER ALL STATIONS HAVE VERIFIED THAT THEY OPERATE IN THE SATELLITE
LOOP-BACK MODE, THEY WILL CHANGE THE SERVICE TO END-TO-END
OPERATION.
(c) THE STATIONS WILL CONDUCT END-TO-END BIT ERROR RATE TESTS FOR UP TO
24 HOURS OR AS REQUIRED TO RESOLVE PROBLEMS.
(1) DURING THIS PERIOD OF TESTING, THE TESTING STATION WILL
MEASURE AND RECORD THE CARRIER FREQUENCY AND EIRP EVERY TWO HOURS
TO ASSURE THAT THERE IS NO DRIFT IN THESE PARAMETERS.
(d) IF THE STATIONS PASS THE END-TO-END TEST, THEY WILL, AT THE
DIRECTION OF THE VERIFICATION STATION, LOWER THE EIRP IN ONE dB
STEPS AND PERFORM 30 MINUTE BIT ERROR RATE TESTS TO DETERMINE THE
OPERATION AT LEVELS BELOW THE ASSIGNED LEVEL AND TO DETERMINE THE
OPERATING MARGIN OF THE CARRIERS.
<PAGE> 15
page 6
(3) SERVICE CUTOVER
(a) AT THIS POINT IN THE SYSTEM TESTING, STATIONS WILL TEST BIT ERROR
RATE AND CLOCK STABILITY WITH THE CUSTOMER.
(1) THE CUSTOMER WILL BE ALLOWED TO TEST END-TO-END TO ASSURE
TOTAL LINK OPERATIONAL CAPABILITY.
(b) THE TESTING STATION WILL PROVIDE HOMESTEAD WITH CONTACT NAMES AND
TELEPHONE NUMBERS FOR THEIR CUSTOMER AT THE DISTANT POINT AND
CIRCUIT ROUTING AND OTHER INFORMATION THAT WILL BE HELPFUL IN
TROUBLESHOOTING THE CIRCUIT IN THE EVENT THAT TROUBLES DEVELOP
LATER.
(c) HOMESTEAD WILL MAINTAIN A FILE ON ALL CIRCUITS INCLUDING A HISTORY
OF ALL TROUBLES THAT WILL BE MADE AVAILABLE TO ANY PARTY DESIGNATED
BY THE CUSTOMER'S REPRESENTATIVE.
(d) THE CUSTOMER WILL BE GIVEN 24 HOURS TO TEST THE CIRCUIT AND 48
HOURS OF END-TO-END SERVICE TO ASSURE THAT NO SERVICE ANOMALIES
PRIOR TO FINAL ACCEPTANCE OF THE SERVICE.
(e) AT THE END OF THE PRESCRIBED TIME, THE CUSTOMER WILL ACCEPT THE
CIRCUIT OR WILL REQUEST FURTHER TEST TIME.
(1) IF FURTHER TEST TIME IS REQUIRED, THE CUSTOMER WILL FULLY
EXPLAIN THE REASON FOR THIS REQUIREMENT.
(2) FURTHER TEST TIME CAN BE GRANTED AT THE DISCRETION OF ALPHA
LYRACOM PAN AMERICAN SATELLITE PERSONNEL ONLY.
(3) FURTHER TEST TIME WILL NOT BE GRANTED IF THE CUSTOMER IS NOT
READY FOR THE CIRCUIT.
(f) AT THE END OF THE TEST PERIOD, THE CUSTOMER WILL SIGN THE CIRCUIT
ACCEPTANCE FORM SIGNIFYING THAT THE CIRCUIT, OPERATIONAL CONTACT
INFORMATION AND OPERATIONAL AND TROUBLE RESOLUTION PROCEDURES ARE
ACCEPTABLE.
<PAGE> 16
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(c) VIDEO SERVICE INITIATION PROCEDURE
(1) VIDEO CARRIER LINE-UP
(a) ALPHA LYRACOM WILL FURNISH THE CUSTOMER WITH LINK CALCULATIONS
FOR THE VIDEO SERVICE, AND RF CARRIERS FROM THE TRANSMITTING
STATION WILL BE SET ACCORDING TO THESE LINK CALCULATIONS.
(b) THE TRANSMIT CARRIER WILL BE SET TO THE PROPER TRANSPONDER POWER
BY THE HOMESTEAD GATEWAY STATION, AND CROSS-POLARIZATION
ISOLATION MEASUREMENTS WILL BE MADE ON THE CARRIER, IF
APPLICABLE. IT IS EXPECTED THAT C-BAND CARRIERS WILL ACHIEVE AN
ISOLATION RATIO OF 33 dB OR GREATER.
(c) A CARRIER-TO-NOISE RATIO TEST WILL BE PERFORMED AT THE TIME THE
CARRIER IS ESTABLISHED.
(d) THE HOMESTEAD GATEWAY STATION WILL ALSO PERFORM A CARRIER POWER
AND FREQUENCY STABILITY TEST TO ASSURE STABILITY OF THESE
PARAMETERS.
(1) IF A LONG TERM TEST IS PERFORMED, THE TEST WILL BE CONDUCTED
AT 13 dB BELOW THE OPERATIONAL POWER.
(e) THE STATION ORIGINATING THE VIDEO CARRIER WILL TEST MODULATE THE
VIDEO CARRIER AT THE PRESCRIBED POWER WITHOUT RADIATING THIS
CARRIER TO THE SATELLITE AND WILL ASSURE THAT WITHIN THE
TRANSMITTING STATION THAT NO SPURIOUS SIGNALS OR INTERMODULATION
PRODUCTS ARE PRESENT PRIOR TO RADIATING THE CARRIER TO THE
SATELLITE.
(f) THE ORIGINATING STATION WILL RADIATE THE CARRIER AT THE EIRP USED
FOR THE POWER AND FREQUENCY STABILITY TEST WITH A STANDARD TEST
PATTERN, NOT COLOR BARS, MODULATING THE CARRIER AT THE SPECIFIED
VIDEO DEVIATION.
(g) AT THE DIRECTION OF THE HOMESTEAD GATEWAY STATION, THE
ORIGINATING STATION WILL RAISE THE EIRP IN PRESCRIBED STEPS WHILE
THE HOMESTEAD GATEWAY STATION SCANS OTHER SATELLITE OPERATIONAL
RESOURCES TO ASSURE THAT THE CARRIER DOES NOT CAUSE INTERFERENCE
WITH OTHER TRANSPONDER OPERATIONS.
(h) AT THE PRESCRIBED EIRP, THE HOMESTEAD GATEWAY EARTH STATION WILL
MAKE VIDEO MEASUREMENTS AND WILL RECORD THIS DATA FOR FUTURE
REFERENCE.
<PAGE> 17
page 8
(2) VIDEO CARRIER END-TO-END LINE-UP AND ACCEPTANCE
(a) AT THE COMPLETION OF THE ABOVE PROCEDURE, THE HOMESTEAD GATEWAY
STATION WILL TURN THE SERVICE OVER TO THE CUSTOMER FOR END-TO-END
TESTING, VERIFICATION AND ACCEPTANCE.
(b) IT IS EXPECTED THAT THE CUSTOMER WILL ACCEPT THE SERVICE WITHIN
24 HOURS OR REJECT THE SERVICE PROVIDING SUFFICIENT TECHNICAL
INFORMATION REGARDING THE SERVICE DEFICIENCIES WHICH PROMPTED THE
REJECTION.
(c) IF THE SERVICE IS REJECTED, ALPHA LYRACOM PAN AMERICAN SATELLITE
WILL TAKE ANY CORRECTIVE ACTION POSSIBLE TO PROVIDE THE SERVICE.
(d) IF THE SERVICE IS ACCEPTED, THE CUSTOMER WILL SIGN THE SERVICE
AGREEMENT SIGNIFYING THAT THE SERVICE, OPERATIONAL PROCEDURES AND
TROUBLE REPORTING AND RESTORATION PROCEDURES ARE SUFFICIENT AND
ACCEPTABLE.
(D) SERVICE MONITORING PROCEDURES
(1) SERVICE QUALITY VERIFICATION AND REPORTING
(a) IT IS THE DESIRE OF ALPHA LYRACOM PAN AMERICAN SATELLITE THAT ALL
SATELLITE SERVICES BE PROVIDED WITH THE UTMOST QUALITY AND
WITHOUT CAUSING INTERFERENCE TO OTHER SERVICES USING THE
SATELLITE RESOURCES OR RECEIVING INTERFERENCE FROM THESE OTHER
SERVICES.
(b) IN THIS REGARD, IT IS OUR PROCEDURE THAT EACH CUSTOMER WILL
MONITOR HIS OWN TRAFFIC TO ASSURE THAT THAT TRAFFIC IS NOT BEING
INTERFERED WITH BY OTHER TRAFFIC AND, MORE IMPORTANTLY, THAT HIS
TRAFFIC IS NOT INTERFERING WITH OTHER SERVICES.
(c) SUCH INTERFERENCE, EVEN SELF-GENERATED INTERFERENCE, MUST BE
REPORTED TO THE HOMESTEAD GATEWAY EARTH STATION IMMEDIATELY.
(2) INTERFERENCE AND TROUBLE RESOLUTION
(a) SELF-GENERATED INTERFERENCE MUST BE CORRECTED IMMEDIATELY EVEN IF
THAT REQUIRES REMOVING THE INTERFERING CARRIER FROM SERVICE.
<PAGE> 18
page 9
(b) FAILURE TO CORRECT AN INTERFERENCE PROBLEM, ESPECIALLY WHEN
DIRECTED TO CORRECT THE PROBLEM BY THE HOMESTEAD GATEWAY EARTH
STATION CAN RESULT IN LOSS OF PRIVILEGES TO USE THE SATELLITE AND
TERMINATION OF THE CONTRACT.
(c) IF THE HOMESTEAD GATEWAY EARTH STATION CONTACTS A STATION TO TEST
FOR POSSIBLE INTERFERENCE WITH OTHER STATIONS, THE PARTY CALLED
MUST COOPERATE WITH THE HOMESTEAD GATEWAY TO ASSURE THAT THE
INTERFERING CARRIER(s) IS FOUND AND THE PROBLEM CORRECTED
IMMEDIATELY.
(d) IF THE HOMESTEAD GATEWAY REPORTS A TROUBLE THAT IS
NON-INTERFERING, BUT POTENTIALLY SERVICE DEGRADING SUCH AS
OVER-DEVIATION AND/OR SHOULDERS ON A DIGITAL MODULATOR, THE
ASSIGNED STATION WILL WORK TO CORRECT THESE PROBLEMS IMMEDIATELY.
(1) AFTER CORRECTION OF THE PROBLEM, THE STATION WILL REPORT THE
CORRECTION TO THE HOMESTEAD GATEWAY WHO WILL OBSERVE AND TEST THE
CORRECTION TO ASSURE THAT THE PROBLEM HAS BEEN FULLY CORRECTED.
(3) TROUBLE REPORTING
(a) THE HOMESTEAD GATEWAY EARTH STATION WILL SERVE AS THE NETWORK
OPERATIONS CONTROL (NOC) CENTER FOR ALPHA LYRACOM PAN AMERICAN
SATELLITE SPACE COMMUNICATIONS, AND ALL TROUBLES RELATED TO
SATELLITE SERVICE WILL BE REPORTED TO THIS CENTER.
(b) THE HOMESTEAD GATEWAY EARTH STATION WILL BE MANNED 24 HOURS PER
DAY, SEVEN DAYS PER WEEK STARTING IN MAY, 1989.
(c) EACH TROUBLE REPORTED BY ANY STATION WILL BE ASSIGNED A TROUBLE
NUMBER AND A TROUBLE HISTORY OR TROUBLE TICKET WILL BE OPENED ON
THAT TROUBLE.
(d) ALL REPORTED TROUBLES WILL BE ANALYZED BY THE TECHNICAL STAFF OF
THE NOC AND THE TROUBLE REPORT WILL BE ANNOTATED WITH THE RESULTS
OF THAT ANALYSIS.
(e) TROUBLES THAT ARE FOUND NOT TO BE SATELLITE RELATED, SUCH AS
TERRESTRIAL LINK PROBLEMS EFFECTING SATELLITE SERVICES WILL BE
REFERRED TO THE PROPER STATION AND THE TROUBLE REPORT WILL BE
CLOSED.
<PAGE> 19
page 10
(f) AS NOTED ABOVE, WHEN THE NOC NOTIFIES A STATION THAT SERVICES
BEING PERFORMED FROM THAT STATION ARE INTERFERING OR POTENTIALLY
INTERFERING WITH OTHER SATELLITE SERVICES, THAT STATION MUST
ASSIST THE NOC IN DETECTION OF THE SOURCE AND QUICK RESOLUTION OF
THAT PROBLEM.
(g) THE NOC WILL SEND RECORDS OF ANY OUTAGE OR TROUBLE RELATED TO A
STATION TO THE DESIGNATED REPRESENTATIVE OF THAT ENTITY FOR
REVIEW AND/OR PERMANENT RECORDS OF SERVICE ONLY WHEN DESIGNATED
BY THE CONTRACTUALLY DESIGNATED REPRESENTATIVE OF THAT STATION.
APPROVED:____________________________________________________________
FRED LANDMAN, PRESIDENT
ALPHA LYRACOM
PAN AMERICAN SATELLITE
SPACE COMMUNICATIONS
<PAGE> 20
APPENDIX A
TERMS AND CONDITIONS FOR DOMESTIC DATA SERVICES
1. SPACE SEGMENT. Alpha Lyracom will provide the Service to Customer
on a non-preemptible basis. Alpha Lyracom may, however, preempt or interrupt
this Service to protect the overall health and performance of the PAS-1
Satellite in unusual, abnormal or other emergency situations or may substitute
another frequency to facilitate Alpha Lyracom's transponder loading
requirements.
2. CUSTOMER -- PROVIDED FACILITIES. Customer shall be responsible for
the installation, operation and maintenance of all Customer-Provided Facilities
in accordance with the terms and conditions of this Agreement. Alpha Lyracom
shall not be responsible for the installation, maintenance or operation of, or
the generation, transmission or reception of signals by Customer-Provided
Facilities, or for securing any and all permits, licenses, variances and other
authorizations required by governmental jurisdictions for the installation and
operation of such Facilities. Customer shall operate the Customer-Provided
Facilities, including, without limitation, any earth stations used by Customer
to transmit signals to and/or receive signals from the Satellite, in compliance
with the Operational Requirements set forth in Appendix B hereto.
3. USE RESTRICTIONS. Customer shall comply with any restrictions on
Customer's receipt of Service applicable in any country in which Customer uses
the Service, and any restrictions that prevent or limit Customer's use of the
Service in, between, or among any countries, including all requisite intelsat
authorizations and the United States Separate Systems Requirements, if
applicable.
4. MANNER OF PAYMENT. For each month of the Service Term, Customer
agrees to pay the Monthly Service Fee, in advance, on or before the first
business day of the month. All payments by Customer hereunder shall be made in
U.S. dollars; shall be deemed to be made only upon receipt by Alpha Lyracom of
collected funds; and shall be made by bank wire transfer to such bank account
as Alpha Lyracom may designate by notice to Customer. Any and all transfer,
exchange or similar charges are the responsibility of the Customer.
5. OUTAGE CREDITS. If there is a "Confirmed Outage" of Service, Alpha
Lyracom shall give Customer an "Outage Credit" (applicable against Customer's
future Service Fee obligations) equal to the pro rata Service Fee due for that
portion of the Service during which a Confirmed Outage shall
<PAGE> 21
A2
be deemed to have occurred. Customer shall not be entitled to any Outage Credit
for any Service failure that does not constitute a Confirmed Outage.
6. FAILURE OF SERVICE, RESTORATION. In the event Service fails on a
Confirmed Basis, Alpha Lyracom shall, to the extent technically feasible,
employ any available uncommitted substitute equipment or transponders on a PAS
satellite to restore Service to Customer.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS. Alpha Lyracom and
Customer each represents and warrants to the other that it has the right, power
and authority to enter into and perform its obligations under this Agreement.
8. TERMINATION OF AGREEMENT. This Agreement shall automatically
terminate in any of the following events: a) there is a failure of Service on a
Confirmed Basis and Alpha Lyracom does not, within sixty days of such failure
on a Confirmed Basis, restore the Service; (b) Alpha Lyracom takes the
Satellite out of service; or (c) on notice by Alpha Lyracom to Customer, if
Customer fails (i) to make payment of any amount due hereunder and such amount
remains unpaid within ten (10) days after receiving from Alpha Lyracom a notice
of such nonpayment, or (ii) to cease any activity in violation of the
Operational Requirements upon receiving telephone or telecopy notice from Alpha
Lyracom, or (iii) if applicable, to comply with the Separate Systems
Requirements, or (iv) to cease any other activity in violation of Customer's
obligations under this Agreement within thirty (30) days after receiving from
Alpha Lyracom a notice of such violation. Upon termination of this Agreement in
accordance with either of Sections 8(a) or (b) above, Alpha Lyracom shall
promptly refund to Customer any portion of the Service Fee applicable to any
period during which Customer has not received Service. Upon termination of this
Agreement in accordance with Section 8(c). In addition to all of Alpha
Lyracom's other remedies at law or in equity, Alpha Lyracom shall be entitled
to declare immediately due and payable the Service Fee for each month that
would have remained in the Service Term on and after the date of such
termination, and to use the Service, and Customer shall not be entitled to any
equitable relief with respect to such use or any refund of amounts paid to
Alpha Lyracom hereunder. Customer acknowledges that the foregoing rights of
Alpha Lyracom are reasonable under all of the circumstances existing as of the
date hereof; constitute liquidated damages for the loss of a bargain; and do
not constitute a penalty. The termination of this Agreement for any reason
shall extinguish all of Alpha Lyracom's obligations to provide, and Customer's
obligations to take, Service, but shall not relieve either party of any
obligation that may have arisen prior to such termination.
<PAGE> 22
A3
9. FORCE MAJEURE. Any failure or delay in the performance by Alpha
Lyracom of its obligation to commence or to continue to provide Service shall
not be a breach of this Agreement and shall not constitute a failure for
purposes of determining whether a Confirmed Outage or a failure on a Confirmed
Basis has occurred, if such failure or delay results from any Act of God,
governmental action (whether in its sovereign or contractual capacity), or any
other circumstance reasonably beyond the control of Alpha Lyracom, including,
but not limited to, receive earth station sun outage, meteorological or
astronomical disturbances, earthquake, snowstorm, fire, flood, strikes or labor
disputes (excluding any strikes or labor disputes by Alpha Lyracom employees),
war, civil disorder, epidemics, quarantines, embargoes, or acts or omissions of
Customer or any third parties, including, without limitation, any failure of
Customer to provide, or the failure of, any of the Customer-Provided Facilities.
10. CONFIDENTIALITY. Alpha Lyracom and Customer shall hold in
confidence the information contained in this Agreement. Notwithstanding the
foregoing, disclosure, on a confidential basis, by either party to its
principals, auditors, attorneys, investors, lenders, insurance agents, and
proposed and actual successors in interest is permitted.
11. LIMITATION OF LIABILITY. ANY AND ALL EXPRESS AND IMPLIED
WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PURPOSE OR USE, ARE EXPRESSLY EXCLUDED AND DISCLAIMED. IT IS
EXPRESSLY AGREED THAT ALPHA LYRACOM'S SOLE OBLIGATION AND CUSTOMER'S EXCLUSIVE
REMEDIES FOR ANY CAUSE WHATSOEVER ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY ARE LIMITED TO THOSE SET FORTH IN
SECTION 5 (OUTAGE CREDITS) AND SECTION 8 (TERMINATION OF AGREEMENT) HEREOF, AND
ALL OTHER REMEDIES OF ANY KIND ARE EXPRESSLY EXCLUDED. In no event shall Alpha
Lyracom be liable for any incidental or consequential damages or loss of
revenues, whether foreseeable or not, occasioned by any defect in the Alpha
Lyracom-Provided Facilities, or the provision of Service thereon, any delay in
the provision of Service to Customer any failure of Alpha Lyracom to provide
Service, or any other cause whatsoever. Alpha Lyracom makes no warranty,
express or implied, to any person or entity concerning the Alpha
Lyracom-Provided Facilities. Without limiting the generality of the foregoing,
Customer, acknowledges and agrees that it shall have no right of recovery for
the satisfaction of any cause whatsoever, arising out of or relating to this
Agreement and/or the transactions contemplated hereby, against any and all
members of the Alpha Lyracom Group, other than Alpha Lyracom itself.
<PAGE> 23
A4
12. INDEMNIFICATION. Customer shall defend and indemnify any and all
members of the Alpha Lyracom Group from any claims, liabilities, losses, costs,
or damages, including attorney's fees and costs, arising out of the provision
of Service from, or Customer's use of, the Alpha Lyracom-Provided Facilities,
that (a) is caused by the fault or negligence of Customer, (b) arises under a
warranty, representation, or statement by Customer, to any third party in
connection with transmissions over the Alpha Lyracom-Provided Facilities, or
(c) arises out of libel, slander, infringement of copyright, infringement of
patents, breach in the privacy or security of transmissions, changes in
facilities, operations or procedures, or from the furnishing of facilities or
capacity hereunder.
13. ASSIGNMENT. Customer agrees that Alpha Lyracom may Assign all or
any part of Alpha Lyracom's right, title and interest in, the Alpha
Lyracom-Provided Facilities or this Agreement and any or all sums due or to
become due pursuant to this Agreement to an Assignee for any reason. Customer
agrees that upon receipt of written notice from Alpha Lyracom of such
Assignment, Customer shall perform all of its obligations hereunder directly
for the benefit of the Assignee and shall pay all sums due or to become due
hereunder directly to the Assignee, if so directed. Upon receipt of notice of
such Assignment, Customer agrees to execute and deliver to Alpha Lyracom such
documentation as Assignee may reasonably require. Customer may not assign its
right to Service, or the rights and obligations set forth herein with respect
thereto, to any third party, without Alpha Lyracom's written consent, not to be
unreasonably withheld. Subject to all the provisions concerning Assignments,
above, this Agreement shall be binding on and shall inure to the benefit of any
successors and assigns of the parties, provided that no Assignment shall
relieve either party hereto of its obligations to the other party. Any
purported assignment by either party not in compliance with the provisions of
this Agreement shall be null and void.
14. LATE PAYMENT. Any payment due from Customer to Alpha Lyracom that
is not received by Alpha Lyracom on the date that it is due shall be subject to
a delinquency charge (liquidated damages) at the rate of 1.5 percent per month
(or the highest rate allowed by law, if such rate is less than the foregoing)
on such overdue amount from the due date until it is actually received by Alpha
Lyracom. Customer acknowledges that such delinquency charge is reasonable under
all the circumstances existing as of the date hereof. Acceptance by Alpha
Lyracom of any late payment or delinquency charge shall in no event constitute
a waiver by Alpha Lyracom of Customer default, nor shall such acceptance
prevent Alpha Lyracom from exercising any or all other rights or remedies that
it may have.
<PAGE> 24
A5
15. APPLICABLE LAW AND ENTIRE AGREEMENT. The existence, validity,
construction, operation and effect of this Agreement shall be determined in
accordance with and be governed by the laws of the State of Connecticut, U.S.A.
Customer agrees that any action or proceeding arising out of this agreement
shall be brought and maintained in Connecticut, and hereby consents to the
jurisdiction of courts located in Connecticut. This Agreement constitutes the
entire Agreement between the parties, is intended as the complete and exclusive
statement of the terms of the agreement between the parties, and supersedes all
previous understandings, commitments or representations concerning its subject
matter. Each party acknowledges that the other party has not made any
representations other than those which are contained herein. This Agreement may
not be amended or modified in any way, and none of its provisions may be waived,
except by a writing signed by an authorized officer of the party against whom
the amendment, modification or waiver is sought to be enforced.
16. SEVERABILITY. Nothing contained in this Agreement shall be
construed so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provision of this Agreement and any
statute, law, ordinance, order or regulation, such statute, law, ordinance,
order or regulation shall prevail; PROVIDED, HOWEVER, that in such event the
provisions of this Agreement so affected shall be curtailed and limited only to
the extent necessary to permit compliance with the minimum legal requirement,
and no other provisions of this Agreement shall be affected thereby and all
other such provisions shall continue in full force and effect.
17. TAXES AND OTHER CHARGES. Customer is solely responsible for any
taxes, charges, levies, or duties which may be asserted by any local, state,
national, public or quasi-public governmental entity in Colombia as a result of
the Service provided to Customer and/or Customer's use of said Service.
18. DOCUMENTS. Each party hereto agrees to execute, and, if necessary,
to file with the appropriate governmental entities and international
organizations, such documents as the other party hereto shall reasonably
request in order to carry out the purposes of this Agreement.
19. GENERAL NOTICES. All notices and other communications from either
party to the other, except as otherwise expressly provided shall be in writing
and, shall be deemed received upon actual delivery or completed facsimile
addressed to the other party as follows:
<PAGE> 25
A6
To Alpha Lyracom at: One Pickwick Plaza
Greenwich, Connecticut 06830
Attention: General Counsel
Facsimile: 203/622/9163
To Customer at:
Each party will advise the other of any change in the address, designated
representative or telephone or facsimile number.
21. NO THIRD PARTY BENEFICIARY. The provisions of this Agreement are
for the benefit only of the parties hereto, and no third party, other than Pan
American Satellite, may seek to enforce or benefit from those provisions,
except that both parties acknowledge and agree that the Operational
Requirements are intended for the benefit of both Alpha Lyracom and all other
Transponder owners, lessees, customers or any of their respective assignees,
and that the provisions of Sections 11 and 12 ("Limitation of Liability" and
"Indemnification") hereof are intended for the benefit of the Alpha Lyracom
Group and any and all members thereof.
22. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute but one and the same instrument.
<PAGE> 26
11/21/91
APPENDIX B
SERVICE SPECIFICATIONS AND OPERATIONAL REQUIREMENTS
APPLICABLE TO ALPHA LYRACOM'S C-BAND DIGITAL TRANSMISSION SERVICE
(NORTH BEAM)
1.0 SERVICE SPECIFICATIONS
Alpha Lyracom's North Beam digital transmission service will provide sufficient
satellite bandwidth and EIRP to yield a minimum clear-sky Bit-Error-Rate (BER)
of 10-8, and a minimum annual satellite link availability of 89.6% (relative to
a threshold BER of 10-6), when the earth station facilities meet the
requirements set forth in this document.
2.0 CARRIER TRANSMISSION PARAMETERS
2.1 REFERENCE PARAMETERS
While the user of Alpha Lyracom's digital transmission service may, subject to
Alpha Lyracom's consent (see 2.2 below), select virtually any digital carrier
type which best meets its unique requirements, a set of reference transmission
parameters has been established for the purpose of specifying system
performance. Unless otherwise specified in the service agreement between Alpha
Lyracom and Alpha Lyracom's customer, the reference parameters set forth below
and in Table 1 for the applicable Kbps promised shall be controlling.
Table 1 lists the reference transmission parameters for a wide variety of
digital carrier types, ranging in size from 55 kbps to 8.448 Mbps. These
reference parameters are based on the following:
(1) QPSK modulation with Rate 1/2 FEC is assumed for all carrier sizes;
(2) for bit rates lower than 1.544 Mbps, the use of sequential decoding is
assumed; for higher bit rates, either sequential or Viterbi decoding
is assumed:
(3) the occupied bandwidth is assumed to be 0.6 times the transmission
rate;
(4) the allocated bandwidth is assumed to be 0.7 times the transmission
rate, rounded up to the nearest multiple of 25 kHz;
(5) the carrier spacing is a multiple of 25kHz.
2.2 TRANSMISSION ALTERNATIVES
Carrier sizes other than those listed in Table 1 may be permitted, subject to
review and approval by Alpha Lyracom: The service charges for such carriers
will be determined on a case-by-case basis, taking into account the satellite
resources required (bandwidth and satellite EIRP), relative to the requirements
of the reference carriers.
In some circumstances, generally when very large earth stations are employed,
an increase in satellite transponder capacity can be achieved by the use of
Rate 3/4 FEC rather than Rate 1/2. Under such
<PAGE> 27
-B2-
circumstances. Rate 3/4 FEC may be allowed subject to Alpha Lyracom's consent,
and an appropriate modification made to the service charge.
BPSK modulation may also be employed. In conjunction with either Rate 3/4 or
Rate 1/2 FEC, subject to Alpha Lyracom approval. The service charges for such
carriers will be established on a case-by-case basis taking into account their
relative use of transponder bandwidth and EIRP.
3.0 SPACECRAFT PERFORMANCE CHARACTERISTICS
The PAS-1 satellite is positioned at 45 degrees West Longitude. North Beam
digital service is provided in transponder 9 and 18. Transponder 9 operates on
the uplink over the frequency range 6027-to-6063 MHz and on the downlink over
the frequency range 3802-to-3838 MHz. Transponder 18 operates on the uplink over
the frequency range 6349-to-6421 MHz and on the downlink over the frequency
range 4124-to-4196 MHz. Earth stations must be capable of operation over the
full operating bandwidth of both transponder 9 and 18.
C-band carriers transmitted to the satellite via the North Uplink beam must be
horizontally polarized. Carriers received from the North Downlink beam are also
horizontally polarized.
The satellite communications subsystem translates uplink frequencies in the 6
DHz band to downlink frequencies in the 4 GHz band by a net frequency
translation of 2225 MHz. The net frequency translation error of the satellite
transponder is expected to be less than +/-5 kHz over a one month period and
no more than +/ 10 kHz over the lifetime of the satellite.
Time delay variations of the received signal are caused by the normal diurnal
motion of the satellite and by longitudinal drift. The maximum transmission
delay variation due to satellite motion is expected to be 0.6 milliseconds
(peak-to-peak, uplink plus downlink).
4.0 EARTH STATION REQUIREMENTS
4.1 EIRP
The required earth station Equivalent Isotropic Radiated Power (EIRP) per
carrier is a function of the following:
(1) the satellite receiver sensitivity (G/T).
(2) the outage margin provided.
(3) the location of the transmit and receive earth stations within
the uplink and downlink beams, and.
(4) the loading of the transponder (i.e., the number, type and
frequency assignment of the various carriers within the
transponder).
Earth stations within the reference uplink gain contour shown in Figure 1 must
be capable of transmitting the maximum clear sky uplink EIRP levels given in
Table 2. The actual uplink EIRP for a given earth station and carrier type will
be established by Alpha Lyracom in consultation with the user. In general, the
actual operating EIRP for most earth station locations will be 2-to-4 dB lower
than the values listed in Table 2.
<PAGE> 28
-B3-
Unless otherwise agreed by Alpha Lyracom in customer's service agreement, earth
stations that lie outside of the reference uplink contour must be capable of
transmitting maximum carrier EIRPs greater than those shown in Table 2. The
required maximum carrier EIRPs for earth stations which lie outside of the
reference uplink contour will be determined by Alpha Lyracom on a case-by-case
basis.
In determining the HPA size for a given earth station, it is necessary not only
for the user's earth station to meet the maximum EIRP requirements for each
carrier transmitted but also to meet the emission constraints set forth in
Section 4.6. If a given earth station is to transmit more than one carrier the
HPA may have to operate at an output backoff of several dB in order to meet the
emission constraints and must be sized accordingly.
4.2 MINIMUM EARTH STATION G/T
Unless otherwise agreed by Alpha Lyracom in the customer's service agreement,
Earth Stations which lie within the downlink reference contour shown in Figure
2 must have a minimum G/T of 19.7 dB/K (@ 3950 MHz) in order for the service
specifications given in Section 1.0 to be achieved.
Earth stations which lie outside of the downlink reference contour generally
must have a G/T higher than 19.7 dB/K. The required G/T for earth stations which
lie outside of the downlink reference contour will be determined by Alpha
Lyracom on a case-by-case basis.
4.3 ANTENNA SIDELOBES
The transmit pattern of the antenna shall be such that the gain of 90 percent
of the sidelobe peaks does not exceed an envelope described by:
G < = 29-25 log (theta) dBi, 1 degree < theta < = 7 degree
10
G < = 8 dBi, 7 degree < theta < = 9.2 degree
G < = 32-25 log (theta) dBi, 9.2 degree < theta < = 48 degree
10
G < = -10 dBi, theta > 48 degree
where G is the gain of the sidelobe envelope, relative to an isotropic antenna,
in the direction of the geostationary orbit and theta is the angle in degrees
between the main beam axis and the direction considered.
While not mandatory, it is recommended that the receive sidelobes also conform
to the envelope described above for the transmit sidelobes. As a minimum,
however, the receive sidelobes must satisfy the envelope defined by:
G = 30-25 log(theta) dBi
where G and theta are as previously defined.
4.4 TRANSMIT AND RECEIVE POLARIZATION
C-band earth stations used for Alpha Lyracom digital transmission service must
operate on the horizontal polarization for both transmit and receive if they
are accessing North beam transponders.
The cross-pol isolation on the uplink must be 30 dB or greater. The cross-pol
isolation on the downlink must also be 30 dB or greater.
<PAGE> 29
-B4-
4.5 MODEM REQUIREMENTS
Achievement of the service specifications given in Section 1.0 is predicated on
the use of a modem that operates at a BER of 10-8 or better (in the presence
of multiple, adjacent, equal amplitude carriers), when the C/N in the occupied
carrier bandwidth is equal to or greater than the C/N listed in column 5 of
Table 1. The modem must also provide a BER of 10-6 or better when the C/N in
the occupied bandwidth is equal to or greater than the C/N listed in column 6
of Table 1.
Scrambling must also be provided by the modem to ensure that a uniform spectral
spreading is applied to the transmitted carrier at all times. A data scrambler
built in accordance with CCITT Rec V.35, or a functionally equivalent unit with
similar spectrum spreading characteristics, must be employed.
4.6 EMISSION CONSTRAINTS
The EIRP density of intermodulation products resulting from multicarrier
operation of the earth station wideband RF equipment must not exceed 4 dBW/4
kHz within the frequency range 5925 to 6425 GHz.
The EIRP outside of the bandwidth assigned to Alpha Lyracom's digital services
resulting from spurious tones, bands of noise, and all other unwanted signals
(with the exception of multicarrier intermodulation products) must not exceed 4
dBW in any 4 kHz band within frequency range 5925 to 6425 GHz.
Spurious products falling in any 4 kHz band within the transponders allocated
to Alpha Lyracom's digital service, must be at least 40 dB below the transmitted
carrier level for carriers whose information rate is less than or equal to
2.048 Mbits/sec, and 50 dB below the transmitted carrier level for carriers
having information rates greater than 2.048 Mbits/sec.
The EIRP density in the frequency range 0.35R to 0.5R Hz away from the nominal
carrier center frequency must be at least 16 dB below the peak EIRP density,
measured in a 4 kHz band, where R is the transmission rate into the QPSK
modulator (i.e., after FEC coding has been applied). The EIRP density outside
of the allocated bandwidth of the carrier which results from spectral regrowth
due to earth station non-linearities shall be at least 26 dB below the main
carrier spectral density measured in a 4 kHz band.
4.7 HPA REQUIREMENTS
In determining the HPA size for a given earth station, it is necessary not only
to meet the maximum EIRP requirements for each carrier transmitted, as given in
Section 4.1, but also to satisfy the emission constraints set forth in Section
4.6. If a given earth station is to transmit more than one carrier the HPA may
have to operate at an output backoff of several dB in order to meet the
emission constraints and must be sized accordingly.
4.8 GROUP DELAY COMPENSATION
In general, the group delay characteristics of the PAS-1 satellite are such
that it will not be necessary to use equalizers in the earth station transmit
chain except, possibly, for carriers whose occupied bandwidth is greater than
2.5 MHz. Additional information is available upon request with regard to group
delay characteristics, channel gain flatness, and amplitude linearity.
4.9 CARRIER FREQUENCY ASSIGNMENTS
The initial assigned center frequency for each carrier will be determined by
Alpha Lyracom in consultation with the user. It may on occasion, however, be
necessary to change carrier frequency assignments in order
<PAGE> 30
- B5 -
to make efficient use of transponders providing digital service. Accordingly,
earth stations must be designed in such a way that changes in transmit and
receive frequency can be made expeditiously. If required, in order to meet this
requirement, it is recommended that earth station modems be equipped with
frequency synthesizers that provide independent transmit and receive frequency
agility, in steps of 25 kHz, over a full 38 MHz.
4.10 GENERAL DESIGN CONSIDERATIONS
When a given earth station is to transmit multiple digital carriers,
consideration should be given to the use of an antenna larger than 3.5 meters
in order to minimize the HPA power requirement. It may also be necessary to use
a larger than minimum size antenna in order to meet the G/T specification, if
the earth station is located outside of the downlink reference gain contour
given in Figure 2.
Although the design of the earth station is the sole responsibility of the
user, to avoid service problems, Alpha Lyracom's customers are encouraged to
consult with Alpha Lyracom. In advance of selecting equipment, to ensure that
their selection of the optimum antenna and HPA size are in compliance with the
requirements set forth herein.
5.0 TRANSMISSION REQUIREMENTS
In order to ensure that the transmissions of a given earth station do not
interfere with the transmissions of other earth stations utilizing the PAS-1
satellite, or adjacent satellites, it is necessary that certain operational
requirements be met. Specifically, users of Alpha Lyracom's digital
transmission services must observe the following:
(1) The EIRP in the direction of the satellite must be maintained to
within +/- 1.5 dB of the value specified by Alpha Lyracom, except
under adverse weather conditions. This EIRP tolerance limit includes
all earth station factors which affect EIRP variation, including HPA
output power level stability and antenna pointing errors.
(2) The center frequency of all transmitted carriers must be maintained to
within +/- 0.025 R Hz (up to a maximum of +/1 10 kHz) of the value
assigned by Alpha Lyracom. [Note - The transmission rate (R) is
defined as the bit rate entering the QPSK modulator. i.e., it is the
information rate plus overhead multiplied by the inverse of the FEC
code rate.]
(3) The frequency stability of the earth station receive chain must be
consistent with the frequency acquisition and tracking capabilities of
the demodulator. As a minimum it is recommended that the short term
(24 hour) receive chain stability be less than +/- 2 kHz and the long
term stability (7 day) be less than +/- 10 kHz.
(4) Any earth station transmitting to the PAS-1 satellite must be under
the active control of the user. Specifically, the user must provide a
means for immediate cessation of transmission in the event that
notification is received from Alpha Lyracom that such a step is
necessary to avoid harmful interference to other users or other
satellite systems.
5.0 CARRIER LINE-UP and IN-SERVICE MONITORING
Facilities must be provided by the user to measure the link parameters and
transmission characteristics during initial carrier line-up. In addition,
in-service monitoring by the user of the carrier EIRP and the received BER
is required.
<PAGE> 31
- B6 -
In order to perform initial carrier line-up the user must provide a means to
measure and adjust the transmitted carrier level. This requirement can be
satisfied if a directional coupler of known coupling factor is placed between
the HPA output and the antenna feed input so as to permit accurate carrier
power measurements to be performed. Means must also be provided by the user to
allow the transmitted power level to be adjusted to an accuracy of +/- 0.5 dB,
over the range 0 to minus 15 dB of the maximum EIRP specified in Table 2.
During initial carrier line-up it is also necessary for the user to be able to
measure the Eb/No of the received carrier, either with a spectrum analyzer or
through a filter of known bandwidth, and to perform bit-error-rate measurements
using a pseudo-random test pattern.
During normal in-service operation, the user must monitor the carrier EIRP and
the BER. The letter requirement can be satisfied through the use of the BER
monitoring facility built into most digital modems.
7.0 NETWORK INTERFACE CONSIDERATIONS
If carriers transmitted via Alpha Lyracom's digital transmission service are to
be interfaced with a synchronous data network or other synchronous equipment,
it may be necessary for the user to equip the receive station with elastic
buffer storage facilities (or their equivalent) to allow for time delay
variations caused by satellite motion. The amount of storage necessary is a
function of the carrier transmission rate, the maximum diurnal satellite
motion, and the longitudinal drift rate. The maximum delay variation due to
satellite motion is given in Section 3.0.
Data encryption may be employed by the user, provided that the basic
transmission characteristics of the carrier are not affected (i.e., provided
that the emission constraints set forth in Section 4.6 are satisfied).
While users are free to utilize any digital modem that meets the basic
performance requirements outlined in this document, it is the users
responsibility to ensure that the modems used on BOTH ends of a given link are
compatible, and that the network interface requirements for the users
particular application are satisfied.
8.0 ADDITIONAL CONTRACTUAL REQUIREMENTS WITH RESPECT TO THE UPLINK
8.1 NON-INTERFERENCE RESTRICTIONS
Customer's radio transmissions to and from the Satellite shall comply with all
applicable governmental laws, rules and regulations. Customer will follow
established practices and procedures for frequency coordination and will not
use the Service Transponder, or any portion thereof, in a manner which would or
might, under standard engineering practice, interfere with the use of any other
Transponder, the Satellite, or any other satellite or transponder on such
satellite, or cause physical harm to the Service Transponder, any other
Transponder, the Satellite, or any other in-orbit satellite or transponder on
such satellite.
8.2 CUSTOMER'S TRANSMITTING STATIONS
Customer will configure, equip and operate its transmit facilities so that the
interface of these facilities, in space, with the Satellite shall conform to
the characteristics and technical parameters of the Satellite. Customer will
follow Alpha Lyracom's procedures for initiating or terminating any
transmission to the Satellite. Customer will operate all transmit facilities
in a manner that allows for cessation of, and will cease transmission
immediately upon receiving telephone or telecopy notice from Alpha Lyracom.
Customer will
<PAGE> 32
- B7 -
furnish information on a continuing basis as required by Alpha Lyracom to
prepare for, initiate, provide, maintain and immediately discontinue the use of
the Service upon notice by Alpha Lyracom.
Alpha Lyracom shall have the right, but not the obligation, to inspect any
Customer transmit facilities, together with associated facilities and
equipment. Alpha Lyracom will use its reasonable best efforts to schedule such
inspections to minimize the disruption of the operation of such facilities, and
Customer shall make such facilities available for inspection at all reasonable
times. Customer shall, upon Alpha Lyracom's request, provide a measured proof
that any such Customer transmit facility meets or exceeds the sidelobe envelope
described in Section 4.3, above.
8.3 INTERFERENCE AND PREEMPTION NOTICES
Customer shall maintain, at each Customer transmit facility, and shall provide
Alpha Lyracom with, a telephone number that is continuously staffed, at all
times during which Customer is transmitting or receiving signals to or from the
Satellite, and an automatic telecopy number that shall be maintained in
operation and capable of receiving messages from Alpha Lyracom, at all times.
Said telephone and telecopy shall be maintained for the purpose of receiving
notices from Alpha Lyracom regarding interference or other problems arising out
of the provision of Service on, or Customer's or any Assignee's use of, the
Service Transponder, including, without limitation, any decision by Alpha
Lyracom to preempt or interrupt Service to Customer pursuant to the Agreement.
It is mandatory that the person who receives such messages has the technical
capability and absolute authority to immediately terminate or modify the
transmission if notified by Alpha Lyracom pursuant to the foregoing. All such
notices shall be effective upon the placement of a telephone call or
transmission of a telecopier message by Alpha Lyracom to Customer. If, for any
reason, Customer's telephone is not answered and its telecopier is incapable of
receiving transmission, Alpha Lyracom's notice shall be deemed to have occurred
at the time it attempts to place a telephone call or transmit a telecopier
message to Customer. Alpha Lyracom shall promptly confirm telephone notices
in writing.
<PAGE> 33
Table 1
REFERENCE TRANSMISSION PARAMETERS FOR ALPHA LYRACOM'S
NORTH BEAM DIGITAL TRANSMISSION SERVICE CARRIERS
<TABLE>
<CAPTION>
Information Transmission Occupied Allocated Carrier-to-Noise Ratio
Rate Rate Bandwidth Bandwidth ----------------------
- ----------- ------------ --------- --------- (BER=10-8) (BER=10-6)
(bits/sec) (bits/sec) (Hz) (Hz) (dB) (dB)
<S> <C> <C> <C> <C> <C>
56 k 112 k 67.2 k 100 k 5.3 4.8
64 k 128 k 76.8 k 100 k 5.3 4.8
128 k 256 k 153.6 k 200 k 5.4 4.9
256 k 512 k 307.2 k 375 k 5.5 5.0
384 k 768 k 460.8 k 550 k 5.5 5.0
512 k 1.024 M 614.4 k 725 M 5.5 5.0
1.544 M 3.088 M 1.853 M 2.175 M 6.1 5.7
2.048 M 4.096 M 2.458 M 2.876 M 6.1 5.7
4.096 M 8.192 M 4.915 M 5.750 M 6.1 5.7
5.312 M 12.624 M 7.574 M 8.850 M 6.1 5.7
8.448 M 16.896 M 10.138 M 11.850 M 6.1 5.7
</TABLE>
<PAGE> 34
Table 2-MAXIMUM EARTH STATION EIRP FOR ALPHA LYRACOM'S NORTH BEAM
DIGITAL TRANSMISSION SERVICE CARRIERS
<TABLE>
<CAPTION>
Information EIRP
Rate ----
- ----------- (dBW)
(bits/sec)
<S> <C>
56 k 47.6
64 k 48.2
128 k 51.3
256 k 54.4
384 k 56.1
512 k 57.4
1.544 M 62.8
2.048 M 64.0
4.096 M 67.0
6.312 M 68.9
8.448 M 70.2
</TABLE>
<PAGE> 35
FIGURE 2
NORTH BEAM DOWNLINK GAIN CONTOUR
--------------------------------
ALPHA LYRACOM
SPACE COMMUNICATION
ENGINEERING AND OPERATIONS GROUP
<PAGE> 36
FIGURE 1
NORTH BEAM UPLINK GAIN CONTOUR
--------------------------------
ALPHA LYRACOM
SPACE COMMUNICATION
ENGINEERING AND OPERATIONS GROUP
<PAGE> 37
APPENDIX C
U.S. FEDERAL COMMUNICATIONS COMMISSION ("FCC")
SEPARATE SYSTEMS REQUIREMENTS(1)
Customer represents and warrants to, and agrees with, Alpha Lyracom that
with respect to any PAS-1 satellite communications between the United States and
any other country (a "U.S.-Connecting Country"):
1. NO INTERCONNECTION WITH THE PUBLIC-SWITCHED NETWORK. Customer shall
not, and it shall not permit any of its customers to, interconnect Service to
any public switched message network within the United States or any
U.S.-Connecting Country (the "PSN Restriction"). Any violation of the PSN
Restriction shall entitle Alpha Lyracom immediately to terminate Service to
Customer and any or all of its customers. In addition, any and all of
Customer's tariffs, other published terms and conditions of service, or
agreements, written or oral, that it may have with its customers, as applicable,
under which it provides Service to its customers, shall give Customer and/or
Alpha Lyracom the right immediately to terminate service to Customer's customers
in the event of any violation of the PSN Restriction. Alpha Lyracom shall be
considered to be, and shall expressly be made, a third-party beneficiary of such
tariffs, terms and conditions, or agreements for purposes of enforcing the
provisions of the preceding sentence.
2. COMPLIANCE BY CARRIERS AND OTHERS. In the event Customer provides
Service to its customers pursuant to a U.S. common carrier authorization, it
acknowledges and agrees that such authorizations shall be conditioned upon its
compliance with the PSN Restriction. In the event Customer provides Service to
its customers pursuant to enhanced service provider or shared use agreements,
such agreements shall: (i) be in writing; (ii) contain explicit language
requiring compliance with the PSN Restriction; and (iii) be filed by Customer
with the FCC.
3. PBX INTERCONNECTION. Customer shall not, and it shall not permit any of
its customers to, interconnect Service to a PBX or similar telephone switch
equipment.(2)
4. ALPHA LYRACOM RIGHT OF INSPECTION. Alpha Lyracom shall have the right
to inspect Customer's facilities to insure compliance with the PSN Restrictions,
subject to national security requirements.
5. MINIMUM ONE-YEAR TERM. Customer's tariffs, other published terms and
conditions of service, and/or agreements with its customers, governing their
receipt of Service, shall have a minimum term of one year.
6. CUSTOMER ENFORCEMENT. Customer shall use its reasonable best efforts
to enforce all of the foregoing with respect to all of its customers. To the
extent that Alpha Lyracom may permit Customer to permit its customers to
provide Service to their customers, Customer shall require its customers to
impose all of the foregoing requirements on their customers.
----------------------------
(1) Alpha Lyracom is required by the FCC to impose and enforce these
restrictions. Alpha Lyracom is actively seeking the elimination of these
restrictions and, to the extent that Alpha Lyracom is successful in having
these restrictions eliminated or reduced, any applicable elimination or
reduction shall apply.
(2) Under certain additional restrictions that prevent interconnec-
tion to the public-switched message networks, PBX interconnection may be
permitted. If such PBX Interconnection is desired, additional information
should be requested from Alpha Lyracom. No such PBX Interconnection shall
be permitted without Alpha Lyracom's express written consent and applicable
legal compliance.
<PAGE> 38
APPENDIX D
DEFINITIONS
As used in this Agreement, the following capitalized terms have the
following meanings:
"ALPHA LYRACOM GROUP" means any or all of the following: Alpha Lyracom,
Pan American Satellite, any and all suppliers of services or equipment thereto,
and all affiliates of such successors, and all officers, directors, employees
and agents of any of the foregoing entities;
"ALPHA LYRACOM-PROVIDED FACILITIES" means the Satellite, the Service
Transponder and any facilities to be provided by Alpha Lyracom for a
terrestrial extension of Service.
"ASSIGN" means to grant, sell, assign, encumber, otherwise convey,
license, lease, sublease or permit the utilization of, directly or indirectly,
in whole or in part. An "ASSIGNEE," means the recipient of an "ASSIGNMENT,"
pursuant to the foregoing sentence;
Failure of Service on a "CONFIRMED BASIS" means if, after the Service
Date, Alpha Lyracom fails to furnish Service meeting Service Specifications for
a cumulative period of twelve (12) hours during any consecutive 30-day period.
Any failure of Service shall be measured commencing from the later to occur of
(i) Customer's cessation of use of the Service and (ii) notice from Customer to
Alpha Lyracom of such failure. Any such failure shall be deemed to have ended
upon the earlier to occur of (i) Customer's resumption of the use of the
Service and (ii) notice from Alpha Lyracom to Customer that Service is capable
of meeting the Service Specifications;
"CONFIRMED OUTAGE" means a failure of Service to meet the Service
Specifications for a continuing and uninterrupted period of four hours or more.
Any such failure shall be measured commencing from the later to occur of (i)
Customer's cessation of use of the Service and (ii) notice from Customer to
Alpha Lyracom of such failure. Any such failure shall be deemed to have ended
upon the earlier to occur of (i) Customer's resumption of the use of the Service
and (ii) notice from Alpha Lyracom to Customer that Service is capable of
meeting the Service Specifications;
"CUSTOMER-PROVIDED FACILITIES" means all facilities necessary to the
provision, receipt, or use of the Service other than those facilities expressly
defined as Alpha Lyracom-Provided Facilities;
"DOMESTIC DATA SPACE SEGMENT SERVICE" means space segment satellite
reception and retransmission service supplied in outerspace by Alpha Lyracom for
two-way private line voice and data communications, primarily within Colombia.
"FCC" means the United States Federal Communications Commission and any
successor agency thereto;
"OPERATIONAL REQUIREMENTS" means the requirements set forth in Appendix B;
"PAN AMERICAN SATELLITE" means a sole proprietorship which owns the
Satellite (Alpha Lyracom is the exclusive managing agent for Pan American
Satellite with respect to services to be offered from the Satellite);
"SATELLITE" or "PAS-1" means that certain communications satellite of the
GE astro Space 3000 series type, owned by and licensed to Pan American
Satellite and launched on June 15, 1988;
"SEPARATE SYSTEMS REQUIREMENTS" means the requirements set forth in
Appendix C;
<PAGE> 39
"SERVICE TRANSPONDER" means the Transponder, to be designated by Alpha
Lyracom, from which Service shall initially be provided to Customer. In order
to coordinate the provision of Service to Customer with the provision of
Service to other customers on the Satellite, the Service Transponder used to
provide Service may be changed, from time to time, on notice from Alpha Lyracom
to Customer;
"SPARE EQUIPMENT" means certain spare equipment capacity in the event of
failure of a Transponder. This Spare Equipment consists of the following;
1. For C-Band narrowband Transponders (Transponder Nos. 1 through 12): one
spare SSPA (solid-state-power-amplifier) backing up the six vertically
polarized SSPAs and one spare SSPA backing up the six horizontally
polarized SSPAs.
2. For C-Band wideband Transponders (Transponder Nos. 13 through 18): one
spare TWTA (traveling-wave-tube amplifier) backing up the three
vertically polarized TWTAs and one TWTA backing up the three
horizontally polarized TWTAs.
3. For Ku-Band Transponders (Transponder Nos. 19 through 24): one spare
TWTA backing up the six TWTAs.
"TRANSPONDER" means any transponder on the Satellite.
<PAGE> 40
APPENDIX E
GUARANTEE OF MONTHLY SERVICE FEE PAYMENT
By the execution hereof, Invertel, S.A., a company organized and existing under
the laws of Argentina, does hereby unconditionally guarantee to Alpha Lyracom,
its successors and assigns, the prompt payment of the Monthly Service Fees due
and payable by Resis to Alpha Lyracom under paragraph 5 of the Agreement.
Dated as of the day and year first above written.
By:__________________________________
Name:________________________________
Title:_______________________________
<PAGE> 41
AMENDMENT TO INTERNATIONAL DIGITAL SERVICE AGREEMENT
THIS AMENDMENT (this "Amendment") is made and entered into as of the
23rd day of April, 1993, by and between PanAmSat, L.P. (Limited Partnership), a
Delaware limited partnership, ("PanAmSat") and Resis, S.A., organized and
existing under the laws of Argentina ("Customer").
WHEREAS, Alpha Lyracom Space Communications, Inc. ("Alpha Lyracom") and
Customer entered into that certain "Domestic Data Service Agreement", on the
7th day of April, 1992 (the "Agreement").
WHEREAS, the Agreement was assigned by Alpha Lyracom to PanAmSat as of
October 31, 1992.
WHEREAS, the parties desire to amend the Agreement in certain respects
to include the provision of 5 MHz of PAS-1 Latin Beam capacity to the existing
7.9 MHz of existing PAS-1 North Beam capacity being provided under the
Agreement and other related changes to the Agreement as set forth below.
NOW, THEREFORE, in consideration of the above and other good and
valuable consideration acknowledged by the parties to have been given, the
parties mutually agree to amend the Agreement as follows:
1. All capitalized terms used in this Amendment, unless otherwise defined, have
the meanings ascribed to them in the Agreement.
2. In addition to the Service provided pursuant to the Agreement (7.9 MHz of
PAS-1 North Beam capacity), 5 MHz of PAS-1 Latin Beam capacity shall be
provided, in accordance with the Service Specifications set forth in
Appendix F and the Transmission Parameters set forth in Table 3 attached
hereto (the "Additional Services"). Such Additional Services shall commence
on April 23, 1993 and continue through end on the Service Term.
3. Hereafter, for the remainder of the Service Term, the Monthly Service Fee
shall be increased by [ ]*
4. An additional deposit of [ ]* shall be due on or before execution of
this Amendment (the "Additional Deposit") and shall be applied to the last
month's Service Fee.
5. Customer may utilize the Additional Service for itself or its subsidiaries
or may resell service in modulated bit rates only for the provision of value
added services to its end-user customers. Customer shall not resell
unmodulated capacity (i.e. bandwidth only) provided by PanAmSat under the
Agreement to any third party.
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 42
- 2 -
6. The Service Fees set forth in the Agreement are space segment fees based on
bandwidth limited rather than power limited capacity. In the event Customer
requires incremental additions to its satellite resource whereby the
aggregate satellite resource becomes power limited, PanAmSat will analyze
Customer's frequency plan to assess the additional service charges
associated to each individual carrier, if any. Such analysis will be
performed on a case-by-case basis to determine the appropriate service
charges and will, subject to availability, take into account the satellite
resources required (Bandwidth and Satellite EIRP) relative to the
requirements of the referenced carriers. PanAmSat shall determine, in its
sole judgment, the actual satellite utilization in the event this procedure
is deemed necessary.
7. A transmission plan for the Additional Services shall be provided by
Customer on or before execution of the Amendment.
All of the terms and conditions of the Agreement shall continue to apply, with
the exception of those provisions that are directly in conflict with the terms
and conditions of this Amendment. At the request of either party, the parties
shall cooperate with each other to prepare and execute a conformed copy of the
Agreement to reflect the changes made herein.
EACH OF THE UNDERSIGNED PARTIES has duly executed this Amendment as of
the day and year first above written.
PANAMSAT, L.P. RESIS, S.A.
(Limited Partnership), by
PANAMSAT, INC., General Partner
By: By: /s/ Guillermo Pardo
------------------------------- --------------------------------
Name: Name:
Title: Title:
<PAGE> 43
AMENDMENT TO INTERNATIONAL DIGITAL SERVICE AGREEMENT
THIS AMENDMENT (this "Amendment") is made and entered into as of the
28th day of October, 1993, by and between PanAmSat, L.P. (Limited Partnership),
a Delaware limited partnership, ("PanAmSat") and Resis, S.A., organized and
existing under the laws of Argentina ("Customer").
WHEREAS, Alpha Lyracom Space Communications, Inc. ("Alpha Lyracom") and
Customer entered into that certain "Domestic Data Service Agreement", on the
7th day of April, 1992, as amended (the "Agreement"),
WHEREAS, the Agreement was assigned by Alpha Lyracom to PanAmSat as of
October 31, 1992,
WHEREAS, the parties desire to amend the Agreement in certain respects
to include the provision of an additional 4.5 MHz of PAS-1 North Beam capacity
to the existing 7.9 MHz of existing PAS-1 North Beam capacity being provided
under the Agreement and other related changes to the Agreement as set forth
below.
NOW, THEREFORE, in consideration of the above and other good and
valuable consideration acknowledged by the parties to have been given, the
parties mutually agree to amend the Agreement as follows:
1. All capitalized terms used in this Amendment, unless otherwise defined, have
the meanings ascribed to them in the Agreement.
2. In addition to the Service provided pursuant to the Agreement, 4.5 MHz of
North Beam capacity on Transponder 16 of the PAS-1 satellite shall be
provided, in accordance with the North Beam Service Specifications set forth
in Appendix B of the Agreement and the Transmission Parameters set forth in
Table 4 attached hereto (the "Additional North Beam Service"). Such
Additional North Beam Service shall commence on November 1, 1993 and
continue through end on the Service Term.
3. Pursuant to Section 2 above, as of November 1, 1993 the Monthly Service Fee
shall be increased by [ ]* per month for the
remainder of the Service Term.
4. An additional deposit of [ ]* shall be due on or before execution of
this Amendment (the "Additional Deposit") and shall be applied to the first
and last month's Service Fee for the Additional North Beam Service.
5. Customer may utilize the Additional North Beam Service for itself or its
subsidiaries or may resell service in modulated hit rates only for the
provision of value added services to its end-user customers. Customer shall
not resell unmodulated capacity (i.e. bandwidth only) provided by PanAmSat
under the Agreement to any third party.
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 44
- 2 -
6. The Service and Service Fees set forth in this Amendment are based on
bandwidth limited rather than power limited capacity. In no event shall the
aggregate satellite resource become power limited.
7. A transmission plan for the Additional North Beam Service shall be provided
by Customer immediately upon execution of the Amendment.
All of the terms and conditions of the Agreement shall continue to apply, with
the exception of those provisions that are directly in conflict with the terms
and conditions of this Amendment. At the request of either party, the parties
shall cooperate with each other to prepare and execute a conformed copy of the
Agreement to reflect the changes made herein.
EACH OF THE UNDERSIGNED PARTIES has duly executed this Amendment as of the
day and year first above written.
PANAMSAT, L.P. RESIS, S.A.
(Limited Partnership), by
PANAMSAT, INC., General Partner
By: By: /s/ GUILLERMO PARDO
------------------------------- ---------------------------------
Name: Name:
Title: Title:
<PAGE> 45
PAN AM SAT L.P.
Additional 4.5 MHz Capacity on the PAS-1 North Beam
RESIS S.A.
Transponder Center Frequency (Uplink) [ ]* MHz
Transponder Center Frequency (Downlink) [ ]* MHz
Lower Band Edge [ ]* Mhz/[ ]* MHz
Upper Band Edge [ ]* MHz/[ ]* MHz
Uplink Polarization Horizontal
Downlink Polarization Horizontal
Total Transponder Bandwidth [ ]* MHz
Maximum Available Bandwidth [ ]* MHz
Bogota Reference
Contour
Satellite G/T (Note 2) [ ]* dB/K [ ]* dB/K
Aggregate Operating Flux Density (Note 2,3) [ ]* dBw/m [ ]* dBw/K
Maximum Available EIRP (Note 2,3) [ ]* dBw [ ]* dBw
Nominal Intermodulation Density (Note 2,4) [ ]* dBw/Hz [ ]* dBw/Hz
Minimum Co-Channel [ ]* dB [ ]* dB
Notes:
1) A minimum guard band must be provided at each end of the allocated
bandwidth which is equal to 5% of the bandwidth of the carrier adjacent
to that band edge.
2) Reference contour shown on attached Figures 1 & 2.
3) Powers shown are aggregate across all carriers within bandwidth
allocated to Impsat. Aggregate EIRP must not be exceeded & input drive
levels will be adjusted accordingly.
4) Intermod noise density is expected average over allocated bandwidth.
Peak density may exceed average by [ ]* dB. Transponder is operated at
a nominal output backoff of [ ]* dB.
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 46
THIRD AMENDMENT TO INTERNATIONAL DIGITAL SERVICE AGREEMENT
THIS AMENDMENT (this "Amendment") is made and entered into as of the
28th day of April, 1994, by and between PanAmSat, L.P. (Limited Partnership),
a Delaware limited partnership, ("PanAmSat"), and Resis S.A., organized and
existing under the laws of Argentina ("Customer").
WHEREAS, Alpha Lyracom Space Communications, Inc. ("Alpha Lyracom") and
Customer entered into that certain "Domestic Data Service Agreement," on the
7th day of April, 1992, as amended on the 23rd day of April, 1993, and on the
28th day of October, 1993 (the "Agreement").
WHEREAS, the Agreement was assigned by Alpha Lyracom to PanAmSat as of
October 31, 1992.
WHEREAS, the parties desire to amend the Agreement in certain respects
to include the provision of an additional 4 MHz of PAS-1 North Beam capacity to
the existing 12.4 MHz of PAS-1 North Beam capacity ("Existing North Beam
Capacity"), and 5 MHz of Latin Beam capacity, being provided under the
Agreement and other related changes to the Agreement as set forth below.
NOW, THEREFORE, in consideration of the above and other good and
valuable consideration acknowledged by the parties to have been given, the
parties mutually agree to amend the Agreement as follows:
1. All capitalized terms used in this Amendment, unless otherwise defined,
have the meanings ascribed to them in the Agreement.
2. In addition to the Service provided pursuant to the Agreement, 4 MHz of
North Beam capacity on Transponder 16 of the PAS-1 satellite shall be
provided, in accordance with the North Beam Service Specifications set
forth in Appendix B of the Agreement and the Transmission Parameters set
forth in Table 5 attached hereto (the "Second Additional North Beam
Service"). The Second Additional North Beam Service shall commence on
May 1, 1994 and continue until 23:59 Greenwich Mean Time on May 1, 1999
("Second Additional North Beam Service Term").
3. Pursuant to Section 2 above, as of May 1, 1994 the Monthly Service Fee
shall be increased by [ ]* per month until
the end of the Second Additional North Beam Service Term, at which time
the Second Additional North Beam Service shall end and the Monthly
Service Fee shall be [ ]* for the remainder of the Service Term of
the Agreement.
4. An additional deposit of [ ]* shall be due on or before execution
of this Amendment (the "Additional Deposit") and shall be applied to the
last month's Service Fee for the Second Additional North Beam Service.
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 47
-2-
5. Customer may utilize the Second Additional North Beam Service for itself
or its subsidiaries or may resell service in modulated bit rates only
for the provision of value added services to its end-user customers.
Customer shall not resell unmodulated capacity (i.e. bandwidth only)
provided by PanAmSat under the Agreement to any third party.
6. The Service and Service Fees set forth in this Amendment are based on
bandwidth limited rather than power limited capacity. In no event shall
the aggregate satellite resource become power limited.
7. A transmission plan for the Second Additional North Beam Service shall
be provided by Customer immediately upon execution of the Amendment.
All of the terms and conditions of the Agreement shall continue to apply, with
the exception of those provisions that are directly in conflict with the terms
and conditions of this Amendment. At the request of either party, the parties
shall cooperate with each other to prepare and execute a conformed copy of the
Agreement to reflect the changes made herein.
EACH OF THE UNDERSIGNED PARTIES has duly executed this Amendment as of
the day and year first above written.
PANAMSAT, L.P. RESIS S.A.
(Limited Partnership), by
PANAMSAT, INC., General Partner
By: /s/ Frederick A. Landman By: /s/ GUILLERMO PARDO
------------------------ -------------------------
Name: Frederick A. Landman Name: Guillermo Pardo
Title: President Title:
<PAGE> 48
PanAmSat
Transmission Parameters
for
4.0 MHz Capacity on the PAS-1 18 North Beam
IMPSAT Resis
Transponder Center Frequency (Uplink) [ ]* MHz
Assigned Center Frequency (Uplink) [ ]* MHz
Transponder Center Frequency (Downlink) [ ]* MHz
Assigned Center Frequency (Downlink) [ ]* MHz
Uplink Polarization Horizontal
Downlink Polarization Horizontal
Total Transponder Bandwidth [ ]* MHz
Maximum Available Bandwidth (Note 1) [ ]* MHz
<TABLE>
<CAPTION>
-3 dB Ref
Bogota Contour
<S> <C> <C>
Satellite G/T (Note 2) [ ]* dB/K [ ]* dB/K
Aggregate Operating Flux Density (Note 2,3) [ ]* dBw/m [ ]* dBw/m
Maximum Available EIRP (Note 2,3) [ ]* dBw [ ]* dBw
Nominal Intermodulation Density (Note 2,4) [ ]* dBw/Hz [ ]* dBw/HZ
Minimum Co-Channel C/1 [ ]* dB [ ]* dB
</TABLE>
NOTES: 1) A minimum guard band must be provided at each end of the allocated
bandwidth which is equal to 5% of the bandwidth of the carrier
adjacent to that band edge.
2) Reference contour shown on attached Figures 1&2.
3) Powers shown are aggregate across all carriers within bandwidth
allocated to Impsat. Aggregate EIRP must not be exceeded & input
drive levels will be adjusted accordingly.
4) Intermod noise density is expected average over allocated
bandwidth. Peak density may exceed average by [ ]* dB.
5) Transponder is operated at a nominal output backoff of [ ]* dB.
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 49
SECOND AMENDMENT TO DOMESTIC DATA SERVICE AGREEMENT
THIS AMENDMENT (this "Amendment") is made and entered into as of the
1st day of November, 1994, by and between PanAmSat, L.P. (Limited Partnership)
("PanAmSat") and RESIS S.A. ("Customer").
WHEREAS, PanAmSat and Customer entered into that certain "Domestic Data
Service Agreement" on the 30th day of May, 1991, as amended (the "Agreement"),
and
WHEREAS, Customer desires to provide certain telecommunications
services via PanAmSat (as required by the Bolivian PTT, Entel) to its customer
utilizing capacity acquired under the Agreement,
WHEREAS, pursuant to the foregoing, PanAmSat and Customer desire to
amend the Agreement in certain respects to reduce, during the term of this
Amendment, the amount of capacity provided to Customer by PanAmSat which
capacity PanAmSat shall contract with Entel to provide service to Customer's
customer.
NOW, THEREFORE, in consideration of the above and other good and
valuable consideration acknowledged by the parties to have been given, the
parties mutually agree to amend the Agreement as follows:
1. All capitalized terms used in this Amendment, unless otherwise defined,
have the meanings ascribed to them in the Agreement.
2. The Service on the Latin Beam of the PAS-1 Satellite as set forth in
the Agreement shall be reduced by one simplex 64 kbps circuit (the
"Reduced Capacity"), to a total of 79 full duplex and 1 simplex
64 kbps channels of capacity (the "Service"), effective November 1,
1994 (the "Effective Date") and shall continue until one year from
the Effective Date (the "Reduced Capacity Term").
3. This Amendment shall be effective as of the first date written above
and shall expire on the same date as the Reduced Capacity Term,
unless sooner.
4. During the Reduced Capacity Term, the Monthly Service Fee for the 79
full duplex and 1 simplex 64 kbps channels of PAS-1 Latin Beam capacity
shall be decreased by [ ]* per month to a total of [ ]*
per month.
5. During the Reduced Capacity Term, PanAmSat shall provide such 64 kbps of
reacquired capacity to Entel (Bolivia) under separate agreement for the
provision of service to Customer's customer (the "Entel Agreement"). In
the event the Entel Agreement is terminated for any reason prior to the
expiration of the Reduced Capacity Term, this Amendment shall
automatically terminate. The matching 64 kbps simplex circuit shall be
contracted for between Customer and Entel under separate Agreement.
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 50
- 2 -
6. Upon expiration of the Reduced Capacity Term, PanAmSat shall return to
Customer 64 kbps simplex channel of Latin Beam capacity, increasing the
total PAS-1 Latin Beam capacity provided by PanAmSat to Customer from
79 full duplex and 1 simplex kbps channels to 80 full duplex 64 kbps
channels.
7. Upon expiration or early termination of the Amendment as set forth
above, the Monthly Service Fee shall return to [ ]* for the
remaining Service Term of the Agreement.
8. PanAmSat hereby authorizes Customer to utilize the matching simplex
64 kbps circuit provided by Customer to Entel under separate agreement
(as referenced in Section 4 above) for service between Bolivia and
Venezuela, notwithstanding any use restrictions set forth in the
Agreement to the contrary.
All of the terms and conditions of the Agreement shall continue to apply, with
the exception of those provisions that are directly in conflict with the terms
and conditions of this Amendment. At the request of either party, the parties
shall cooperate with each other to prepare and execute a conformed copy of the
Agreement to reflect the changes made herein.
EACH OF THE UNDERSIGNED PARTIES has duly executed this Amendment as of
the day and year first above written.
PANAMSAT, L.P. RESIS S.A.
(Limited Partnership), by
PANAMSAT, INC., General Partner
By: /s/ Frederick A. Landman By: /s/ Guillermo V. Pardo
---------------------------- ---------------------------
Name: Frederick A. Landman Name: Guillermo V. Pardo
Title: President Title: President
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 51
AMENDMENT TO DOMESTIC DATA SERVICE AGREEMENT
THIS AMENDMENT (this "Amendment") is made and entered into as of the
9th day of January, 1995, by and between PanAmSat, L.P. (Limited Partnership)
("PanAmSat") and Resis, S.A. ("Customer").
WHEREAS, PanAmSat, as successor in interest to Alpha Lyracom Space
Communications, Inc., and Customer entered into that certain Domestic Data
Service Agreement on the 7th day of April, 1992, as amended (the "Agreement"),
and
WHEREAS, PanAmSat and Customer agree to amend the Agreement in certain
respects to include the provision of an additional 6 MHz of PAS-1 North Beam
capacity to the existing Service being provided under the Agreement and other
related changes to the Agreement as set forth below.
NOW, THEREFORE, in consideration of the above and other good and
valuable consideration acknowledged by the parties to have been given, the
parties mutually agree to amend the Agreement as follows:
1. All capitalized terms used in this Amendment, unless otherwise defined,
have the meanings ascribed to them in the Agreement.
2. ADDITIONAL CAPACITY. In addition to the Service provided under the
Agreement, PanAmSat agrees to provide, and Customer agrees to accept, 6
MHz of North Beam capacity on Transponder of the PAS-1 Satellite (the
"Additional Capacity Service") for a total of 22.4 MHz of North Beam
capacity pursuant to the terms set forth herein and in the Agreement. The
Additional Capacity shall be provided in accordance with the Service
Specifications contained in Appendix B to the Agreement and the
transmission parameters contained in Attachment 1 to this Amendment.
References in the Agreement and its appendices to the "Service" or to the
"space segment capacity" shall, in context, be deemed to include
references to the Additional Capacity Service.
3. ADDITIONAL CAPACITY SERVICE TERM. The service term for the Additional
Capacity Service ("Additional Capacity Service Term") shall start on
January 9, 1995 ("Additional Capacity Service Date") and expire on the
Service Date (the date service commences on the new Atlantic Ocean Region
Satellite ("PAS-3R")), as defined in the Full-Time Transponder Service
Agreement for Data Service Delivery (Pre-Launch) entered into between
Customer and PanAmSat on the 18th day of August, 1994, as amended by the
First Amendment thereto to be entered into simultaneously herewith.
4. SERVICE FEE. As of the Additional Capacity Service Date, the total Monthly
Service Fee shall be increased by [ ]* per month to a total of [
]* per month.
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 52
-2-
5. ADDITIONAL DEPOSIT. An additional deposit of [ ]* shall be due on or
before execution of this Amendment (the "Additional Deposit") and shall be
applied to the Monthly Service Fee for the last month of the Additional
Capacity Service Term.
6. Upon expiration of the Additional Capacity Service Term, the Service on
the North Beam shall be reduced by 6 MHz to a revised total of 16.4 MHz of
North Beam capacity on the PAS-1 Satellite.
7. Upon expiration of the Additional Capacity Service Term, the Monthly
Service Fee shall be reduced to [ ]* pursuant to the terms set
forth in the Agreement.
8. Void
9. The 5 MHz contracted in the Latin Beam as per amendment dated
April 23, 1993 remains unchanged.
All of the terms and conditions of the Agreement shall continue to apply, with
the exception of those provisions that are directly in conflict with the terms
and conditions of this Amendment. At the request of either party, the parties
shall cooperate with each other to prepare and execute a conformed copy of the
Agreement to reflect the changes made herein.
EACH OF THE UNDERSIGNED PARTIES has duly executed this Amendment as of
the day and year first above written.
PANAMSAT, L.P (Limited Partnership), RESIS, S.A.
by PANAMSAT, INC., General Partner
By: [Signature Illegible] By: /s/ GUILLERMO PARDO
---------------------- -------------------------
Name: Name:
Title: Regional V.P. Latin America Title:
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 53
PanAmSat L.P.
(Limited Partnership)
Transmission Parameters
for
6.0 MHz Capacity on the PAS-1 Transponder 7 North Beam
IMPSAT Resis
Transponder Center Frequency (Uplink) [ ]* MHz
Assigned Center Frequency (Uplink) [ ]* MHz
Transponder Center Frequency (Downlink) [ ]* MHz
Assigned Center Frequency (Downlink) [ ]* MHz
Uplink Polarization Horizontal
Downlink Polarization Horizontal
Total Transponder Bandwidth [ ]* MHz
Maximum Available Bandwidth (Note 1) [ ]* MHz
Beam Center
Satellite G/T (Note 2) [ ]* dB/K
Aggregate Operating Flux Density (Note 2,3) [ ]* dBW/m
Maximum Available EIRP (Note 2,3) [ ]* dBW
Nominal Intermodulation Density (Note 2,4) [ ]* dBW/Hz
Minimum Co-Channel C/1 [ ]* dB
Notes: 1) A minimum guard band must be provided at each end of the allocated
bandwidth which is equal to 5% of the bandwidth of the carrier
adjacent to that band edge.
2) Reference contour shown on attached Figure 1.
3) Powers shown are aggregate across all carriers within bandwidth
allocated to IMPSAT. Aggregate EIRP must not be exceeded & input
drive levels will be adjusted accordingly.
4) Intermod noise density is expected average over allocated bandwidth.
Peak density may exceed average by [ ]* dB.
5) Transponder is operated at a nominal output backoff of [ ]* dB.
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 54
FOURTH AMENDMENT TO DOMESTIC DATA SERVICE AGREEMENT
THIS AMENDMENT (this "Amendment") is made and entered into as of the
1st day of June, 1995, by and between PanAmSat Corporation ("PanAmSat") and
Resis, S.A. ("Customer").
WHEREAS, PanAmSat, as successor in interest to Alpha Lyracom Space
Communications, Inc., and Customer entered into that certain Domestic Data
Service Agreement on the 7th day of April 1992, as amended (the "Agreement"),
and
WHEREAS, PanAmSat and Customer agree to amend the Agreement in certain
respects.
NOW, THEREFORE, in consideration of the above and other good and
valuable consideration acknowledged by the parties to have been given, the
parties mutually agree to amend the Agreement as follows:
1. All capitalized terms used in this Amendment, unless otherwise
defined, have the meanings ascribed to them in the Agreement.
2. ADDITIONAL CENTRAL BEAM CAPACITY. In addition to the Service
provided under the Agreement, PanAmSat agrees to provide, and
Customer agrees to accept, 2 MHz of Central Beam capacity on the
PAS-1 Satellite (the "Additional Central Beam Capacity Service") for
a total of 2 MHz of Central Beam capacity pursuant to the terms set
forth herein and in the Agreement. The Additional Central Beam
Capacity shall be provided in accordance with the Service
Specifications contained in Appendix B to the Agreement and the
transmission parameters contained in Attachment 1 to this Amendment.
References in the Agreement and its appendices to the "Service" or
to the "space segment capacity" shall, in context, be deemed to
include references to the Additional Central Beam Capacity Service.
3. ADDITIONAL CENTRAL BEAM CAPACITY SERVICE TERM. The service term for
the Additional Central Beam Capacity Service ("Additional Central
Beam Capacity Service Term") shall start on May 1, 1995 and expire
on the "Service Date" for Customer's service on PanAmSat's new
Atlantic Ocean Region Satellite ("PAS-3R"), as defined in Section
7.1 of the Full-Time Transponder Service Agreement for Data Service
Delivery (Pre-Launch), entered into between Customer and PanAmSat on
the 18th day of August, 1994, as amended by the First Amendment
entered into on the 29th day of March, 1995.
4. SERVICE FEE. As of the Additional Central Beam Capacity Service
Date, the total Monthly Service Fee shall be increased by [ ]*
per month to a total of [ ]* per month.
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 55
- 2 -
5. ADDITIONAL DEPOSIT. An additional deposit of [ ]* shall be due
on or before execution of this Amendment (the "Central Beam Capacity
Additional Deposit") and shall be applied to the Monthly Service Fee
for the first and last month of the Additional Central Beam Capacity
Service Term.
6. Upon expiration of the Additional Central Beam Capacity Service
Term, the Service on the Central Beam shall be reduced by 2 MHz to a
revised total of 0 MHz of Central Beam capacity on the PAS-1
Satellite.
7. Upon expiration of the Additional Central Beam Capacity Service
Term, the Monthly Service Fee shall be reduced to [ ]*
pursuant to the terms set forth in the Agreement.
All of the terms and conditions of the Agreement shall continue to apply, with
the exception of those provisions that are directly in conflict with the terms
and conditions of this Amendment. At the request of either party, the parties
shall cooperate with each other to prepare and execute a conformed copy of the
Agreement to reflect the changes made herein.
EACH OF THE UNDERSIGNED PARTIES has duly executed this Amendment as of
the day and year first above written.
PANAMSAT CORPORATION RESIS, S.A.
By: /s/ Frederick A. Landman By: /s/ Guillermo Pardo
_________________________ ____________________________
Name: Frederick A. Landman Name:
Title: President Title:
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 56
PanAmSat
Transmission Parameters
for
Impsat Resis
2 MHz Capacity on the PAS-1 Transponder 17 Central Beam
(Corrected)
Transponder Center Frequency (Uplink) [ ]* MHz
2 MHz Assigned Center Frequency (Uplink) [ ]* MHz
Transponder Center Frequency (Downlink) [ ]* MHz
2 MHz Assigned Center Frequency (Downlink) [ ]* MHz
Uplink Polarization Horizontal
Downlink Polarization Horizontal
Total Transponder Bandwidth [ ]* MHz
Maximum Available Bandwidth (Note 1) [ ]* MHz
BEAM CENTER
Satellite G/T (Note 2) [ ]* dB/K
Aggregate Operating Flux Density (Note 2,3) [ ]* dBW/m
Maximum Available EIRP (Note 2,3) [ ]* dBW
Nominal Intermodulation Density (Note 2,4) [ ]* dBW/Hz
Minimum Co-Channel C/1 [ ]* dB
Notes: 1) A minimum guard band must be provided at each
end of the allocated bandwidth which is equal to
5% of the bandwidth of the carrier adjacent to that
band edge.
2) Reference contour shown on attached Figure 1.
3) Powers shown are aggregate across all carriers
within bandwidth allocated to Impsat Resis.
Aggregate EIRP must not be exceeded & input
drive levels will be adjusted accordingly.
4) Intermod noise density is expected average over
allocated bandwidth. Peak density may exceed
average by [ ]* dB.
5) Transponder is operated at a nominal output
backoff of [ ]* dB.
Attachment 1
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 57
AMENDMENT TO DOMESTIC DATA SERVICE AGREEMENT
THIS AMENDMENT (this "Amendment") is made and entered into as of the
1st day of August, 1995, by and between PanAmSat Corporation ("PanAmSat") and
Resis, S.A. ("Customer").
WHEREAS, PanAmSat, as successor in interest to PanAmSat, L.P., and
Customer entered into that certain Domestic Data Service Agreement on the 7th
day of April, 1992, as amended on the 23rd day of April, 1993; and on the 28th
day of October, 1993; and on the 28th day of April, 1994; and on the 23rd day
of January, 1995; and on the 1st day of June, 1995 (the "Agreement"), and
WHEREAS, PanAmSat and Customer agree to amend the Agreement in certain
respects.
NOW, THEREFORE, in consideration of the above and other good and
valuable consideration acknowledged by the parties to have been given, the
parties mutually agree to amend the Agreement as follows:
1. All capitalized terms used in this Amendment, unless otherwise
defined, have the meanings ascribed to them in the Agreement.
2. The "Additional Capacity Service Term" shall be revised to remain
effective until the end of the life of PAS-1, estimated at 13.25
years after reaching on-station status (June 28, 1988) (the
"Revised Additional Capacity Service Term").
All of the terms and conditions of the Agreement shall continue to apply, with
the exception of those provisions that are directly in conflict with the terms
and conditions of this Amendment. At the request of either party, the parties
shall cooperate with each other to prepare and execute a conformed copy of the
Agreement to reflect the changes made herein.
EACH OF THE UNDERSIGNED PARTIES has duly executed this Amendment as of
the day and year first above written.
PANAMSAT CORPORATION RESIS S.A.
By: /s/ Frederick A. Landman By: /s/ GUILLERMO PARDO
------------------------------ -------------------------------
Name: Frederick A. Landman Name:
Title: President Title:
<PAGE> 58
AMENDMENT TO DOMESTIC DIGITAL SERVICE AGREEMENT
THIS AMENDMENT (this "Amendment") is made and entered into as of the 26th
day of September, 1995, by and between PanAmSat Corporation ("PanAmSat"), Resis
S.A. ("Resis") and International Satellite Communication Holding Limited
("I.S.C.H.").
WHEREAS, PanAmSat, as successor in interest to PanAmSat, L.P., and Resis
entered into that certain Domestic Digital Service Agreement on the 7th day of
April, 1992, as amended on the 23rd day of April, 1993; and on the 28th day of
October, 1993; and on the 28th day of April, 1994; and on the 23rd day of
January, 1995; and on the 1st day of June, 1995; and on the 26th days of July,
1995 (the "Agreement"), and
WHEREAS, PanAmSat and the Parties agree to amend the Agreement in certain
respects.
NOW, THEREFORE, in consideration of the above and other good and valuable
consideration acknowledged by the parties to have been given, the parties
mutually agree to amend the Agreement as follows:
1. All capitalized terms used in this Amendment, unless otherwise defined,
have the meanings ascribed to them in the Agreement.
2. Effective immediately upon execution by the parties of this Amendment,
Resis hereby assigns all of its rights and obligations under the Agreement
to I.S.C.H., a corporation organized and existing under the laws of
Liechtenstein, and I.S.C.H. agrees to assume all of Resis' obligations with
respect to the Agreement and to be treated as Resis for all purposes under
the Agreement, which I.S.C.H. hereby acknowledges by signing in the space
indicated below. Notwithstanding anything herein or in the Agreement to the
contrary, Resis shall remain liable to PanAmSat for I.S.C.H.'s performance
and payment obligations under the Agreement. In furtherance of such
Agreement, and subject to I.S.C.H.'s acknowledgment and agreement hereto,
PanAmSat consents to this assignment and agrees to perform its duties and
fulfill its obligations under the Agreement for the benefit of I.S.C.H. as
the contracting party.
<PAGE> 59
All of the terms and conditions of the Agreement shall continue to apply, with
the exception of those provisions that are directly in conflict with the terms
and conditions of this Amendment. At the request of either party, the parties
shall cooperate with each other to prepare and execute a conformed copy of the
Agreement to reflect the changes made herein.
EACH OF THE UNDERSIGNED PARTIES has duly executed this Amendment as of the
day and year first above written.
PANAMSAT CORPORATION RESIS S.A.
By: /s/ Frederick A. Landman By: /s/ GUILLERMO PARDO
____________________________ ____________________________
Name: Frederick A. Landman Name:
Title: President Title:
Agreed to and Accepted:
INTERNATIONAL SATELLITE COMMUNICATION HOLDING LIMITED
By: K. Kindle
--------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.3
<PAGE> 2
EXHIBIT 10.3
CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
DOMESTIC DATA SERVICE AGREEMENT
This Domestic Data Service Agreement (the "Agreement") is made and
entered into this 30 day of May, 1991, by and between Alpha Lyracom Space
Communications, Inc. ("Alpha Lyracom") a Delaware corporation, and IMPSAT, S.A.
organized and existing under the laws of Argentina, ("IMPSAT" or "Customer").
1. This Agreement applies to the provision of Domestic Data Space
Segment Service as defined herein and pursuant to the Terms and Conditions for
Data Service set forth in Appendix A hereto, (the "Service"). IMPSAT shall
operate uplink and/or downlink earth stations between Buenos Aires and various
receive sites primarily within Argentina, as specified in paragraph 2 of this
Agreement and meeting the Operational Requirements set forth in Appendix B
hereto.
2. Alpha Lyracom agrees to provide and IMPSAT agrees to accept Service
from C-band capacity in the Latin Beam of the PAS-1 Satellite, in accordance
with the Service Specifications set forth in Appendix B, as applicable, and
paragraph 7. The capacity will accommodate the equivalent of 40 full duplex 64
kbps channels, based on IMPSAT's use of a 6.1 meter master earth station with a
minimum G/T of 26.2 dB/K in Buenos Aires and 3.7 meter remote stations with a
minimum G/T of 19.7 dB/K within the -6
<PAGE> 3
dB contour of Transponder 13, according to satellite EIRP and bandwidth
allocations specified in paragraph 7 below.
3. The Service shall be used primarily for communications within
Argentina. IMPSAT warrants that it has all the necessary authorizations to enter
into this Agreement and accept the Service in Argentina.
4. The term of this Agreement (the "Term") shall commence upon the
first date above written and shall terminate at the end of the life of the
satellite, estimated at December 31, 2001, unless otherwise terminated, in
accordance with Section 8 of Appendix A. The "Service Term" of this Agreement
shall start on or before December 1, 1991 (the "Service Date") and end on the
same date as the Term.
5. For each month of the Service Term beginning on the Service Date,
IMPSAT agrees to pay a Monthly Service Fee of [
]* IMPSAT shall deposit with Alpha Lyracom [ ]*
which shall be due and payable on or before execution of this Agreement, (the
"Deposit"). The Deposit shall be applied to the Monthly Service fee for the
first and second months of the Service Term. Monthly Service Fees are payable in
advance, in accordance with Section 4 of Appendix A.
6. The Monthly Service Fees due from IMPSAT shall be guaranteed by a
revolving standby letter of credit. This shall be an irrevocable confirmed
letter of credit in a form acceptable to Alpha Lyracom and in an
2
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 4
amount [ ]* delivered to Alpha Lyracom on or before
the Service Date. If Alpha Lyracom draws against the letter of credit for
failure of payment by IMPSAT, IMPSAT shall provide a replacement letter of
credit in the same amount.
7. The attached Table 1 contains the transmission parameters for the
IMPSAT Service. The bandwidth and EIRP specifications are based on the
assumption that the Service is designed to accommodate 40 full-duplex 64 kbps
links between a 6.1m hub in Buenos Aires and an unspecified number of 3.7m
remote stations that lie on or within the - 6dB downlink gain contour of
Transponder 13.
8. Alpha Lyracom will provide IMPSAT with a nominal carrier
transmission plan within 30 days of signing of the Service Agreement. This
nominal transmission plan is to accommodate a total of forty 64 kbps full-duplex
data links between a 6.1m Hub in Buenos Aires and a maximum of forty 3.7m remote
stations that lie within the -6 dB downlink gain contour of transponder 13. The
6.1m hub will have a minimum G/T of 26.2 dB/K and the remote 3.7m stations will
have a minimum G/T of 19.7 dB/K. QPSK R1/2 sequential decoding modems having a
maximum C/N requirement of 5.3 dB at a BER of 10-7 will be employed on all
links.
9. Alpha Lyracom will revise the nominal carrier transmission plan in
a timely matter upon receipt of information from IMPSAT concerning the location
of its remote stations.
3
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 5
10. Subject to prior approval by Alpha Lyracom, IMPSAT may change the
transmission plan to accommodate other carrier sizes, transmission parameters or
other earth station sizes or locations within Argentina, as indicated in
Paragraph 13 below
11. Any deviation from the nominal carrier transmission plan must be
submitted to Alpha Lyracom for its review and approval prior to implementation.
However Alpha Lyracom shall work with IMPSAT to devise a procedure to simplify
and expedite the above mentioned process.
12. IMPSAT agrees to fully comply with all Operations Requirements set
forth in Appendix B, including the requirement to change carrier power levels
and center frequencies whenever such changes are deemed necessary by Alpha
Lyracom to aviod harmful interference.
13. IMPSAT may utilize carriers of 32 kbps, 48 kbps, 64 kbps or 128
kbps data rates, other earth station sizes, or operate from locations outside
the Reference Contour within Argentina, as long as these changes can be
accommodated within the assigned capacity and power allocations set forth in
this Agreement and in compliance with the procedures established by Alpha
Lyracom. It is essential that IMPSAT submit in writing a proposed carrier
frequency plan, which shall be subject to Alpha Lyracom's prior review and
approval based upon standard engineering practice in the industry, at Alpha
Lyracom's sole discretion.
4
<PAGE> 6
14. The following Appendices, attached hereto are included and form
part of this Agreement.
A. Terms and Conditions for Data Service
B. Service Specifications and Operational Requirements Applicable to
Alpha Lyracom's C-band Digital Transmission Service (Latin Beam)
C. Separate Systems Requirements of the United States Federal
Communications Commission
D. Definitions
IN WITNESS WHEREOF, each of the parties hereto has duly executed and
delivered this Agreement as of the day and year first written above.
ALPHA LYRACOM SPACE IMPSAT S.A.
COMMUNICATIONS, INC.
By:_______________________________ By:________________________________
Patricio E. Northland Ricardo Verdaguer
Vice President/Data Services Chairman
5
<PAGE> 7
Table 1 - IMPSAT Transmission Parameters
Allocated Bandwidth [ ]* MHZ Note (1)
Available EIRP
Buenos Aires [ ]* DBW Note (2)
Reference Contour [ ]* DBW Note (2), (3)
IMPSAT Aggregate Operating Flux Density
Buenos Aires [ ]* DBW/m2 Note (4)
Reference Contour [ ]* DBW/m2 Note (4), (3)
Receiving System
Sensitivity (G/T)
Buenos Aires [ ]* dB/K Note (5)
Reference Contour [ ]* DBW/K Note (5), (3)
Intermod EIRP Density
Buenos Aires [ ]* DBW/Hz Note (6)
Reference Contour [ ]* DBW/Hz Note (6), (3)
Co-Channel C/l
Buenos Aires [ ]* Db Note (7)
Reference Contour [ ]* Db Note (7), (3)
Uplink Frequency Range
Minimum [ ]* Mhz
Maximum [ ]* Mhz
Up1ink Polarization Vertical
Downlink Frequency Range
Minimum [ ]* Mhz
Maximum [ ]* Mhz
Downlink Polarization Vertical
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 8
Figure 1 (Notes to Table 1)
<PAGE> 9
Notes To Table 1
1. A minimum guard band must be provided at each end of the allocated [ ]*
MHZ which is equal to 5% of the bandwidth of the carrier adjacent to
that band edge.
2. The available EIRP is based on a nominal transponder output backoff of
[ ]* dB.
3. The "Reference Contour" is the [ ]* dB downlink gain contour shown in
Figure 1.
4. The operating flux density is the maximum aggregate power flux density
incident on the satellite from all of IMPSAT's earth stations. The
value shown is based on a nominal transponder input backoff of [ ]*
dB. The actual operating flux density win vary depending upon the
loading of the entire transponder. Under no circumstance may the
actual aggregate operating flux density of IMPSAT's carriers exceed
the level which would result in a aggregate downlink EIRP in excess
of the "Available EIRP" shown in this table*.
5. The receiving system sensitivity (G/T) is the ratio of the satellite
antenna gain in the direction of the specified location and the system
noise temperature.
6. The intermod noise density shown is the expected average density
over the total Allocated Bandwidth. The peak intermod density
may exceed this average value by up to [ ]* dB.
7. The total level of co-channel interference over the Allocated Bandwidth
is not expected the level indicated.
* SFD = [ ]* - G/T, at [ ]* db attenuator setting
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 10
APPENDIX A
TERMS AND CONDITIONS FOR DOMESTIC DATA SERVICES
1. SPACE SEGMENT. Alpha Lyracom will provide the Service to Customer on
a non-preemptible basis. Alpha Lyracom may, however, preempt or interrupt this
Service to protect the overall health and performance of the PAS-1 Satellite in
unusual, abnormal or other emergency situations or may substitute another
frequency to facilitate Alpha Lyracom's transponder loading requirements.
2. CUSTOMER - PROVIDED FACILITIES. Customer shall be responsible for
the installation, operation and maintenance of all Customer-Provided Facilities
in accordance with the terms and conditions of this Agreement. Alpha Lyracom
shall not be responsible for the installation, maintenance or operation of, or
the generation, transmission or reception of signals by Customer-Provided
Facilities, or for securing any and all permits, licenses, variances and other
authorizations required by governmental jurisdictions for the installation and
operation of such Facilities. Customer shall operate the Customer-Provided
Facilities, including, without limitation, any earth stations used by Customer
to transmit signals to and/or receive signals from the Satellite, in compliance
with the Operational Requirements set forth in Appendix B hereto.
3. USE RESTRICTIONS. Customer shall comply with any restrictions on
Customer's receipt of Service applicable in any country in which Customer uses
the Service, and any restrictions that prevent or limit
<PAGE> 11
A-2
Customer uses the Service, any restrictions that prevent or limit
Customer's use of the Service in, between, or among any countries, including all
requisite Intelsat authorizations and the United States Separate Systems
Requirements, if applicable.
4. MANNER OF PAYMENT. For each month of the Service Term, Customer
agrees to pay the Monthly Service Fee, in advance, on or before the first
business day of the month. All payments by Customer hereunder shall be made in
U.S. dollars; shall be deemed to be made only upon receipt by Alpha Lyracom of
collected funds; and shall be made by bank wire transfer to such bank account
as Alpha Lyracom may designate by notice to Customer. Any and all transfer,
exchange or similar charges are the responsibility of the Customer.
5. OUTAGE CREDITS. If there is a "Confirmed Outage" of Service, Alpha
Lyracom shall give Customer an "Outage Credit" (applicable against Customer's
future Service Fee obligations) equal to the pro rate Service Fee due for that
portion of the Service during which a Confirmed Outage shall be deemed to have
occurred. Customer shall not be entitled to any Outage Credit for any Service
failure that does not constitute a Confirmed Outage.
6. FAILURE OF SERVICE, RESTORATION. In the event Service fails on a
Confirmed Basis, Alpha Lyracom shall, to the extent technically feasible,
employ any available uncommitted substitute equipment or transponders on a PAS
satellite to restore Service to Customer.
<PAGE> 12
A-3
7. REPRESENTATIONS, WARRANTIES AND COVENANTS. Alpha Lyracom and
Customer each represents and warrants to the other that it has the right, power
and authority to enter into and perform its obligations under this Agreement.
8. TERMINATION OF AGREEMENT. This Agreement shall automatically
terminate in any of the following events: a) there is a failure of Service on a
Confirmed Basis and Alpha Lyracom does not, within sixty days of such failure
on a Confirmed Basis, restore the Service; (b) Alpha Lyracom takes the
Satellite out of service; or (c) on notice by Alpha Lyracom to Customer, if
Customer fails (i) to make payment of any amount due hereunder and such amount
remains unpaid within ten (10) days after receiving from Alpha Lyracom a notice
of such nonpayment, or (ii) to cease any activity in violation of the
Operational Requirements upon receiving telephone or telecopy notice from Alpha
Lyracom, or (iii) if applicable, to comply with the Separate Systems
Requirements, or (iv) to cease any other activity in violation of Customer's
obligations under this Agreement within thirty (30) days after receiving from
Alpha Lyracom a notice of such violation. Upon termination of this Agreement in
accordance with either of Sections 8(a) or (b) above, Alpha Lyracom shall
promptly refund to Customer any portion of the Service Fee applicable to any
period during which Customer has not received Service. Upon termination of this
Agreement in accordance with Section 8(c), in addition to all of Alpha
<PAGE> 13
A-4
Lyracom's other remedies at law or in equity, Alpha Lyracom shall be entitled
to declare immediately due and payable the Service Fee for each month that
would have remained in the Service Term on and after the date of such
termination, and to use the Service, and Customer shall not be entitled to any
equitable relief with respect to such use or any refund of amounts paid to
Alpha Lyracom hereunder. Customer acknowledges that the foregoing rights of
Alpha Lyracom are reasonable under all of the circumstances existing as of the
date hereof; constitute liquidated damages for the loss of a bargain; and do
not constitute a penalty. The termination of this Agreement for any reason
shall extinguish all of Alpha Lyracom's obligations to provide, and Customer's
obligations to take, Service, but shall not relieve either party of any
obligation that may have arisen prior to such termination.
9. FORCE MAJEURE. Any failure or delay in the performance by Alpha
Lyracom of its obligation to commence to continue to provide Service shall
not be a breach of this Agreement and shall not constitute a failure for
purposes of determining whether a Confirmed Outage or a failure on a Confirmed
Basis has occurred, if such failure or delay results from any Act of God,
governmental action (whether in its sovereign or contractual capacity), or any
other circumstance reasonably beyond the control of Alpha Lyracom, including,
but not limited to, receive earth station sun outage, meteorological or
astronomical disturbances, earthquake,
<PAGE> 14
A-5
snowstorm, fire, flood, strikes, labor disputes, war, civil disorder, epidemics,
quarantines, embargoes, or acts or omissions of Customer or any third parties,
including, without limitation, any failure of Customer to provide, or the
failure of, any of the Customer-Provided Facilities.
10. CONFIDENTIALITY. Alpha Lyracom and Customer shall hold in
confidence the information contained in this Agreement. Notwithstanding the
foregoing, disclosure, on a confidential basis, by either party to its
principals, auditors, attorneys, investors, lenders, insurance agents, and
proposed and actual successors in interest is permitted.
11. LIMITATION OF LIABILITY. ANY AND ALL EXPRESS AND IMPLIED
WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PURPOSE OR USE, ARE EXPRESSLY EXCLUDED AND DISCLAIMED. IT IS
EXPRESSLY AGREED THAT ALPHA LYRACOM'S SOLE OBLIGATION AND CUSTOMER'S EXCLUSIVE
REMEDIES FOR ANY CAUSE WHATSOEVER ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY ARE LIMITED TO THOSE SET FORTH IN
SECTION 5 (OUTAGE CREDITS) AND SECTION 8 (TERMINATION OF AGREEMENT) HEREOF, AND
ALL OTHER REMEDIES OF ANY KIND ARE EXPRESSLY EXCLUDED. In no event shall Alpha
Lyracom be liable for any incidental or consequential damages or loss of
revenues, whether foreseeable or not, occasioned by any defect in the Alpha
Lyracom-
<PAGE> 15
A-6
Provided Facilities, or the provision of Service thereon, any delay in the
provision of Service to Customer any failure of Alpha Lyracom to provide
Service, or any other cause whatsoever. Alpha Lyracom makes no warranty, express
or implied, to any person or entity concerning the Alpha Lyracom-Provided
Facilities. Without limiting the generality of the foregoing, Customer,
acknowledges and agrees that it shall have no right of recovery for the
satisfaction of any cause whatsoever, arising out of or relating to this
Agreement and/or the transactions contemplated hereby, against any and all
members of the Alpha Lyracom Group, other than Alpha Lyracom itself.
12. INDEMNIFICATION. Customer shall defend and indemnify any and all
members of the Alpha Lyracom Group from any claims, liabilities, losses, costs,
or damages, including attorneys' fees and costs, arising out of the provision of
Service from, or Customer's use of, the Alpha Lyracom-Provided Facilities, that
(a) is caused by the fault or negligence of Customer, (b) arises under a
warranty, representation, or statement by Customer, to any third party in
connection with transmissions over the Alpha Lyracom-Provided Facilities, or (c)
arises out of libel, slander, infringement of copyright, infringement of
patents, breach in the privacy or security of transmissions, changes in
facilities, operations or procedures, or from the furnishing of facilities or
capacity hereunder.
13. ASSIGNMENT. Customer agrees that Alpha Lyracom may Assign all or
any part of Alpha Lyracom's right, title and interest in, the
<PAGE> 16
A-7
Alpha Lyracom-Provided Facilities or this Agreement and any or all sums due or
to become due pursuant to this Agreement to an Assignee for any reason. Customer
agrees that upon receipt of written notice from Alpha Lyracom of such
Assignment, Customer shall perform all of its obligations hereunder directly for
the benefit of the Assignee and shall pay all sums due or to become due
hereunder directly to the Assignee, if so directed. Upon receipt of notice of
such Assignment, Customer agrees to execute and deliver to Alpha Lyracom such
documentation as Assignee may reasonably require. Customer may not assign its
right to Service, or the rights and obligations set forth herein with respect
thereto, to any third party, without Alpha Lyracom's written consent, not to be
unreasonably withheld. Subject to all the provisions concerning Assignments,
above, this Agreement shall be binding on and shall inure to the benefit of any
successors and assigns of the parties, provided that no Assignment shall relieve
either party hereto of its obligations to the other party. Any purported
assignment by either party not in compliance with the provisions of this
Agreement shall be null and void.
14. LATE PAYMENT. Any payment due from Customer to Alpha Lyracom that
is not received by Alpha Lyracom on the date that it is due shall be subject to
a delinquency charge (liquidated damages) at the rate of 1.5 percent per month
(or the highest rate allowed by law, if such rate is less than the foregoing) on
such overdue amount from the due date until
<PAGE> 17
A-8
it is actually received by Alpha Lyracom. Customer acknowledges that such
delinquency charge is reasonable under all the circumstances existing as of the
date thereof. Acceptance by Alpha Lyracom of any late payment or delinquency
charge shall in no event constitute a waiver by Alpha Lyracom of Customer
default, nor shall such acceptance prevent Alpha Lyracom from exercising any or
all other rights or remedies that it may have.
15. APPLICABLE LAW AND ENTIRE AGREEMENT. The existence, validity,
construction, operation and effect of this Agreement shall be determined in
accordance with and be governed by the laws of the State of Connecticut, U.S.A.
Customer agrees that any action or proceeding arising out of this agreement
shall be brought and maintained in Connecticut, and hereby consents to the
jurisdiction of courts located in Connecticut. This Agreement constitutes the
entire Agreement between the parties, is intended as the complete and exclusive
statement of the terms of the agreement between the parties, and supersedes all
previous understandings, commitments or representations concerning its subject
matter. Each party acknowledges that the other party has not made any
representations other than those which are contained herein. This Agreement may
not be amended or modified in any way, and none of its provisions may be waived,
except by a writing signed by an authorized officer of the party against whom
the amendment, modification or waiver is sought to be enforced.
<PAGE> 18
A-9
16. SEVERABILITY. Nothing contained in this Agreement shall be
construed so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provision of this Agreement and any
statute, law, ordinance, order or regulation, such statute, law, ordinance,
order or regulation shall prevail; provided, however, that in such event the
provisions of this Agreement so affected shall be curtailed and limited only to
the extent necessary to permit compliance with the minimum legal requirement,
and no other provisions of this Agreement shall be affected thereby and all
other provisions shall continue in full force and effect.
17. TAXES AND OTHER CHARGES. Customer is solely responsible for any
taxes, charges, levies, or duties which may be asserted by any local, state,
national, public or quasi-public governmental entity in Argentina as a result of
the Service provided to Customer and/or Customer's use of said Service.
18. DOCUMENTS. Each party hereto agrees to execute, and, if necessary,
to file with the appropriate governmental entities and international
organizations, such documents as the other party hereto shall reasonably request
in order to carry out the purposes of this Agreement.
19. GENERAL NOTICES. All notices and other communications from either
party to the other, except as otherwise expressly provided shall be in
<PAGE> 19
A-10
writing and, shall be deemed received upon actual delivery or completed
facsimile addressed to the other party as follows:
To Alpha Lyracom at: One Pickwick Plaza
Greenwich, Connecticut 06830
Attention: Frederick Landman
Facsimile: 203/622-9163
copy to: Patricio Northland
Facsimile: 305/247/0365
To Customer at: Alferez Pareja 256
1107-Buenos Aires, Argentina
Attention: Ricardo Verdaguer
Chairman
Facsimile: 011-541-362-5030
copy to: Roberto Vivo
President
Each party will advise the other of any change in the address, designated
representative or telephone or facsimile number.
21. NO THIRD PARTY BENEFICIARY. The provisions of this Agreement are
for the benefit only of the parties hereto, and no third party, other than Pan
American Satellite, may seek to enforce or benefit from those provisions, except
that both parties acknowledge and agree that the Operational Requirements are
intended for the benefit of both Alpha Lyracom and all other Transponder owners,
lessees, customers or any of their respective assignees, and that the provisions
of Sections 11 and 12 ("limitation of Liability" and "Indemnification") hereof
are intended for the benefit of the Alpha Lyracom Group and any and all members
thereof.
<PAGE> 20
A-11
22. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute but one and the same instrument.
<PAGE> 21
FIGURE 1- LATIN BEAM, REFERENCE UPLINK GAIN CONTOUR
<PAGE> 22
FIGURE 2 - LATIN BEAM, REFERENCE DOWNLINK GAIN CONTOUR
<PAGE> 23
05/08/90
Appendix B
SERVICE SPECIFICATIONS AND OPERATIONAL REQUIREMENTS
APPLICABLE TO ALPHA LYRACOM'S C-BAND DIGITAL
TRANSMISSION SERVICE
(LATIN BEAM)
1.0 SERVICE SPECIFICATIONS
Alpha Lyracom's C-band digital transmission service will provide sufficient
satellite bandwidth and EIRP to yield a minimum clear sky Bit-Error-Rate (BER)
of 10-8, and a minimum service availability of 99.96% (relative to a threshold
BER of 10-3), when the users earth station facilities meet the requirements set
forth in this document.
2.0 CARRIER TRANSMISSION PARAMETERS
2.1 Reference Parameters
While the user of Alpha Lyracom's digital transmission service may, subject to
Alpha Lyracom's consent (see 2.2 below), select virtually any digital carrier
type which best meets its unique requirements, a set of reference transmission
parameters has been established for the purpose of specifying system
performance. Unless otherwise specified in the service agreement between Alpha
Lyracom and Alpha Lyracom's customer, the reference parameters set forth below
and in Table 1 for the applicable Kbps promised shall be controlling.
Table 1 lists the reference transmission parameters for a wide variety of
digital carrier types, ranging in size from 64 kbps to 8.48 Mbps. These
reference parameters are based on the following:
(1) QPSK modulation with Rate 1/2 FEC is assumed for all carrier
sizes;
(2) the transmission rate includes a nominal overhead of 6.5%;
(3) the occupied carrier bandwidth is assumed to be 0.6 times the
transmission rate;
<PAGE> 24
-B2-
(4) the allocated bandwidth is assumed to be 0.7 times the
transmission rate, rounded up to the nearest multiple of 25
kHz;
(5) the carrier spacing is a multiple of 25 kHz.
2.2 Transmission Alternatives
Carrier sizes other than those listed in Table 1 may be permitted, subject to
review and approval by Alpha Lyracom. The service charges for such carriers will
be determined on a case-by-case basis, taking into account the satellite
resources required (bandwidth and satellite EIRP), relative to the requirements
of the reference carriers.
In some circumstances, generally when very large earth stations are employed, an
increase in satellite transponder capacity can be achieved by the use of Rate
3/4 FEC rather than Rate 1/2. Under such circumstances, Rate 3/4 FEC may be
allowed, subject to Alpha Lyracom's consent, and an appropriate modification
made to the service charge.
BPSK modulation may also be employed, in conjunction with either Rate 3/4 or
Rate 1/2 FEC, subject to Alpha Lyracom approval. The service charges for such
carriers will be established on a case-by-case basis taking into account their
relative use of transponder bandwidth and EIRP.
3.0 SPACECRAFT PERFORMANCE CHARACTERISTICS
The PAS-1 satellite is positioned at 45 degrees West Longitude. Digital
transmission service is available at C-band in transponder number 13 which
operates, on the uplink, over the frequency range 6169-to-6241 MHz and, on the
downlink, over the range 3944-to-4016 MHz, using the Latin uplink beam shown in
Figure 1 and the Latin downlink beam shown in Figure 2.
C-band carriers transmitted to the satellite via the Latin Uplink beam must be
vertically polarized. Carriers received from the Latin Downlink beam are also
vertically polarized.
The satellite communications subsystem translates uplink frequencies in the 6
GHz band to downlink frequencies in the 4 GHz band by a net frequency
translation of 2225 MHz. The net frequency translation error of the satellite
<PAGE> 25
-B3-
transponder is expected to be less than +/-5 kHz over a one month period and no
more than +/- 10 kHz over the lifetime of the satellite.
Time delay variations of the received signal are caused by the normal diurnal
motion of the satellite and by longitudinal drift. The maximum transmission
delay variation due to satellite motion is expected to be 0.6 milliseconds
(peak-to-peak, uplink plus downlink).
4.0 EARTH STATION REQUIREMENTS
4.1 EIRP
The required earth station Equivalent Isotropic Radiated Power (EIRP) per
carrier is a function of the following:
(1) the satellite receiver sensitivity (G/T),
(2) the outage margin provided,
(3) the location of the transmit and receive earth stations
within the uplink and downlink beams, and,
(4) the loading of the transponder (i.e., the number, type and
frequency assignment of the various carriers within the
transponder).
Earth stations within the reference uplink gain contour shown in Figure 1 must
be capable of transmitting the maximum clear sky uplink EIRP levels given in
Table 2. The actual uplink EIRP for a given earth station and carrier type will
be established by Alpha Lyracom in consultation with the user. In general, the
actual operating EIRP for most earth station locations will be 2-to-4 dB lower
than the values listed in Table 2.
Unless otherwise agreed by Alpha Lyracom in customer's service agreement, earth
stations that lie outside of the reference uplink contour must be capable of
transmitting maximum carrier EIRPs greater than those shown in Table 2. The
required maximum carrier EIRPs for earth stations which lie outside of the
reference uplink contour will be determined by Alpha Lyracom on a case-by-case
basis.
In determining the HPA size for a given earth station, it is necessary not
only for the user's earth station to meet the maximum EIRP requirements for each
<PAGE> 26
-B4-
carrier transmitted but also to meet the emission constraints set forth in
Section 4.6. If a given earth station is to transmit more than one carrier the
HPA may have to operate at an output backoff of 3 to 10 dB in order to meet the
emission constraints and must be sized accordingly.
4.2 Minimum Earth Station G/T
Unless otherwise agreed by Alpha Lyracom in Customer's service agreement, earth
stations which lie within the downlink reference contour shown in Figure 2 must
have a minimum G/T of 20.0 dB/K in order for the service specifications given
in Section 1.0 to be achieved. [Note: This value of G/T can typically be
obtained with an antenna of 3.5m diameter that is equipped with a 65 degree K
LNA, but it is Alpha Lyracom's customer's responsibility to be sure that the
earth stations used meet the minimum G/T requirement regardless of the size of
earth station employed.]
Earth stations which lie outside of the downlink reference contour generally
must have a G/T higher than 20.0 dB/K. The required G/T for earth stations which
lie outside of the downlink reference contour will be determined by Alpha
Lyracom on a case-by-case basis.
4.3 Antenna Sidelobes
The transmit pattern of the antenna shall be such that the gain of 90 percent
of the sidelobe peaks does not exceed an envelope described by:
G less than or equal to 29 - 25 log(base 10)(theta) dBi, 1 degree less
than theta less than or equal to 7 degrees
G less than or equal to 8 dBi, 7 degrees less than theta less than or equal
to 9.2 degrees
G less than or equal to 32 - 25 log(base 10)(theta) dBi, 9.2 degrees less
than theta less than or equal to 48 degrees
G less than or equal to -10 dBi, theta greater than 48 degrees
where G is the gain of the sidelobe envelope, relative to an isotropic antenna,
in the direction of the geostationary orbit and theta is the angle in degrees
between the main beam axis and the direction considered.
While not mandatory, it is recommended that the receive sidelobes also conform
to the envelope described above for the transmit sidelobes. As a minimum,
however, the receive sidelobes must satisfy the envelope defined by:
G = 30 - 25 log(theta) dBi
where G and theta are as previously defined.
<PAGE> 27
-B5-
4.4 Transmit and Receive Polarization.
C-band earth stations used for Alpha Lyracom digital transmission service must
operate on the vertical polarization for both transmit and receive if they are
accessing Latin or South beam transponders.
The cross-pol isolation on the uplink must be 30 dB or greater. The cross-pol
isolation on the downlink must also be 30 dB or greater.
4.5 Modem Requirements
Achievement of the service specifications given in Section 1.0 is predicated on
the use of a modem that has the following performance characteristics:
(1) it operates at a BER of 10-8 or lower (in the presence of multiple,
adjacent, equal amplitude carriers), when the C/N in the occupied
carrier bandwidth is 6.8 dB or higher, and;
(2) it operates at a BER of 10-3 or lower (in the presence of multiple,
adjacent, equal amplitude carriers), when the C/N in the occupied
carrier bandwidth is 3.8 dB or higher.
Scrambling must also be provided by the modem to ensure that a uniform spectral
spreading is applied to the transmitted carrier at all times. A data scrambler
built in accordance with CCITT Rec. V.35, or a functionally equivalent unit with
similar spectrum spreading characteristics, must be employed.
4.6 Emission Constraints
The EIRP density of intermodulation, products resulting from multicarrier
operation of the earth station wideband RF equipment must not exceed 4 dBW/4 kHz
within the frequency range 5925 to 6425 GHz.
The EIRP outside of the bandwidth assigned to Alpha Lyracom's digital services
resulting from spurious tones, bands of noise, and all other unwanted signals
(with the exception of multicarrier intermodulation products) must not exceed 4
dBW in any 4 kHz band within frequency range 5925 to 6425 GHz.
<PAGE> 28
-B6-
Spurious products falling in any 4 kHz band within the transponders allocated to
Alpha Lyracom's digital service, must be at least 40 dB below the transmitted
carrier level for carriers whose information rate is less than or equal to 2.048
Mbits/sec, and 50 dB below the transmitted carrier level for carriers having
information rates greater than 2.048 Mbits/sec.
The EIRP density in the frequency range 0.35R to 0.5R Hz away from the nominal
carrier center frequency must be at least 16 dB below the peak EIRP density,
measured in a 4 kHz band, where R is the transmission rate into the QPSK
modulator (i.e., after FEC coding has been applied). The EIRP density outside of
the allocated bandwidth of the carrier which results from spectral regrowth due
to earth station non-linearities shall be at least 26 dB below the main carrier
spectral density measured in a 4 kHz band.
4.7 HPA Requirements
In determining the HPA size for a given earth station, it is necessary not only
to meet the maximum EIRP requirements for each carrier transmitted, as given in
Section 4.1, but also to satisfy the emission constraints set forth in Section
4.6. If a given earth station is to transmit more than one carrier the HPA may
have to operate at an output backoff of 3 to 10 dB in order to meet the emission
constraints and must be sized accordingly.
4.8 Group Delay Compensation
In general, the group delay characteristics of the PAS-1 satellite are such
that it will not be necessary to use equalizers in the earth station transmit
chain except, possibly, for carriers whose occupied bandwidth is greater than
2.5 MHz. Additional information is available upon request with regard to group
delay characteristics, channel gain flatness, and amplitude linearity.
4.9 Carrier Frequency Assignments
The initial assigned center frequency for each carrier will be determined by
Alpha Lyracom in consultation with the user. It may on occasion, however, be
necessary to change carrier frequency assignments in order to make efficient use
of transponders providing digital service. Accordingly, earth stations must be
designed in such a way that changes in transmit and receive frequency can be
made expeditiously, if required. In order to meet this requirement, it is
recommended that earth station modems be equipped with
<PAGE> 29
-B7-
frequency synthesizers that provide independent transmit and receive frequency
agility, in steps of 25 kHz, over a full 72 MHz.
4.10 General Design Considerations
When a given earth station is to transmit multiple digital carriers,
consideration should be given to the use of an antenna larger than 3.5 meters in
order to minimize the HPA power requirement. It may also be necessary to use a
larger than minimum size antenna in order to meet the G/T specification, if the
earth station is located outside of the downlink reference gain contour given in
Figure 2.
Although the design of the earth station is the sole responsibility of the user,
to avoid service problems, Alpha Lyracom's customers are encouraged to consult
with Alpha Lyracom, in advance of selecting equipment, to ensure that their
selection of the optimum antenna and HPA size are in compliance with the
requirements set forth herein.
5.0 TRANSMISSION REQUIREMENTS
In order to ensure that the transmissions of a given earth station do not
interfere with the transmissions of other earth stations utilizing the PAS-1
satellite, or adjacent satellites, it is necessary that certain operational
requirements be met. Specifically, users of Alpha Lyracom's digital transmission
services must observe the following:
(1) The EIRP in the direction of the satellite must be maintained to
within + /- 1.5 dB of the value specified by Alpha Lyracom, except
under adverse weather conditions. This EIRP tolerance limit includes
all earth station factors which affect EIRP variation, including HPA
output power level stability and antenna pointing errors.
(2) The center frequency of all transmitted carriers must be maintained to
within + /- 0.025 R Hz (up to a maximum of + /- 10 kHz) of the value
assigned by Alpha Lyracom. [Note - The transmission rate (R) is
defined as the bit rate entering the QPSK modulator, i.e., it is the
information rate plus overhead multiplied by the inverse of the FEC
code rate.]
<PAGE> 30
-B8-
(3) The frequency stability of the earth station receive chain must be
consistent with the frequency acquisition and tracking capabilities of
the demodulator. As a minimum it is recommended that the short term
(24 hour) receive chain stability be less than +/- 2 kHz and the long
term stability (7 day) be less than + /- 10 kHz.
(4) Any earth station transmitting to the PAS-1 satellite must be under
the active control of the user, specifically, the user must provide a
means for immediate cessation of transmission in the event that
notification is received from Alpha Lyracom that such a step is
necessary to avoid harmful interference to other users or other
satellite systems.
6.0 CARRIER LINE-UP AND IN-SERVICE MONITORING
Facilities must be provided by the user to measure the link parameters and
transmission characteristics during initial carrier line-up. In addition, in-
service monitoring by the user of the carrier EIRP and the received BER is
required.
In order to perform initial carrier line-up the user must provide a means to
measure and adjust the transmitted carrier level. This requirement can be
satisfied if a directional coupler of known coupling factor is placed between
the HPA output and the antenna feed input so as to permit accurate carrier power
measurements to be performed. Means must also be provided by the user to allow
the transmitted power level to be adjusted to an accuracy of + /- 0.5 dB, over
the range 0 to minus 15 dB of the maximum EIRP specified in Table 2.
During initial carrier line-up it is also necessary for the user to be able to
measure the Eb/No of the received carrier, either with a spectrum analyzer or
through a filter of known bandwidth, and to perform bit-error-rate measurements
using a pseudo-random test pattern.
During normal in-service operation, the user must monitor the carrier EIRP and
the BER. The latter requirement can be satisfied through the use of the BER
monitoring facility built into most digital modems.
<PAGE> 31
-B9-
7.0 NETWORK INTERFACE CONSIDERATIONS
If carriers transmitted via Alpha Lyracom's digital transmission service are to
be interfaced with a synchronous data network or other synchronous equipment, it
may be necessary for the user to equip the receive station with elastic buffer
storage facilities (or their equivalent) to allow for time delay variations
caused by satellite motion. The amount of storage necessary is a function of the
carrier transmission rate, the maximum diurnal satellite motion, and the
longitudinal drift rate. The maximum delay variation due to satellite motion is
given in Section 3.0.
Data encryption may be employed by the user, provided that the basic
transmission characteristics of the carrier are not affected (i.e., provided
that the emission constraints set forth in Section 4.6 are satisfied).
While users are free to utilize any digital modem that meets the basic
performance requirements outlined in this document, it is the users
responsibility to ensure that the modems used on both ends of a given link are
compatible, and that the network interface requirements for the users particular
application are satisfied.
8.0 ADDITIONAL CONTRACTUAL REQUIREMENTS WITH RESPECT TO THE UPLINK
8.1 Non-interference Restrictions
Customer's radio transmissions to and from the Satellite shall comply with all
applicable governmental laws, rules and regulations. Customer will follow
established practices and procedures for frequency coordination and will not
use the Service Transponder, or any portion thereof, in a manner which would or
might, under standard engineering practice, interfere with the use of any other
Transponder, the Satellite, or any other satellite or transponder on such
satellite, or cause physical harm to the Service Transponder, any other
Transponder, the Satellite, or any other in-orbit satellite or transponder on
such satellite.
8.2 Customer's Transmitting Stations
Customer will configure, equip and operate its transmit facilities so that the
interface of these facilities, in space, with the Satellite shall conform to the
characteristics and technical parameters of the Satellite. Customer will follow
Alpha Lyracom's procedures for initiating or terminating any transmission to
<PAGE> 32
-B10-
the Satellite. Customer will operate all transmit facilities in a manner that
allows for cessation of, and will cease transmission immediately upon receiving
telephone or telecopy notice from Alpha Lyracom. Customer will furnish
information on a continuing basis as required by Alpha Lyracom to prepare for,
initiate, provide, maintain and immediately discontinue the use of the Service
upon notice by Alpha Lyracom.
Alpha Lyracom shall have the right, but not the obligation, to inspect any
Customer transmit facilities, together with associated facilities and equipment.
Alpha Lyracom will use its reasonable best efforts to schedule such inspections
to minimize the disruption of the operation of such facilities, and Customer
shall make Such facilities available for inspection at all reasonable times.
Customer shall, upon Alpha Lyracom's request, provide a measured proof that any
Such Customer transmit facility meets or exceeds the sidelobe envelope described
in Section 4.3, above.
8.3 Interference and Preemption Notices
Customer shall maintain, at each Customer transmit facility, and shall provide
Alpha Lyracom with, a telephone number that is continuously staffed, at all
times (luring which Customer is transmitting or receiving signals to or from the
Satellite, and an automatic telecopy number that shall be maintained in
operation and capable of receiving messages from Alpha Lyracom, at all times.
Said telephone and telecopy ,;hall be maintained for the purpose of receiving
notices from Alpha Lyracom regarding interference or other problems arising out
of the provision of Service on, or Customer's or any Assignee's use of, the
Service Transponder, including, without limitation, any decision by Alpha
Lyracom to preempt or interrupt Service to Customer pursuant to the Agreement.
It is mandatory that the person who receives such messages has the technical
capability and absolute authority to immediately terminate or modify the
transmission if notified by Alpha Lyracom. pursuant to the foregoing. MI such
notices shall be effective upon the placement of a telephone call or
transmission of a telecopier message by Alpha Lyracom to Customer. If, for any
reason, Customer's telephone is not answered and its telecopier is incapable of
receiving transmission, Alpha Lyracom's notice shall be deemed to have occurred
at the time it attempts to place a telephone call or transmit a telecopier
message to Customer. Alpha Lyracom shall promptly confirm telephone notices in
writing.
<PAGE> 33
Table 2 - MAXIMUM EARTH STATION EIRP FOR ALPHA LYRACOM'S C-BAND
DIGITAL TRANSMISSION SERVICE CARRIERS
<TABLE>
<CAPTION>
Information
Rate EIRP
---- ----
(bits/sec) (dBW)
<S> <C> <C>
64 k 49.8
128 k 52.8
256 k 55.8
384 k 57.6
512 k 58.8
768 k 60.6
1.544 M 63.6
2.048 M 64.8
4.096 M 67.8
6.312 M 69.7
8.448 M 71.0
</TABLE>
<PAGE> 34
APPENDIX C
U.S. FEDERAL COMMUNICATIONS COMMISSION ("FCC")
SEPARATE SYSTEMS REQUIREMENT$'
Customer represents and warrants to, and agrees with, Alpha Lyracom that
with respect to any PAS-1 satellite communications between the United States and
ally other country (a 'U.S.-Connecting Country'):
1. No Interconnection with the Public-switched Network. Customer shall not,
and it shall not permit any of Its customers lo, Interconnect IDS to any public
switched message network within the United States or any U.S.-Connecting Country
(the "PSN Restriction"). Any violation of the PSN Restriction shall entitle
Alpha Lyracom Immediately to terminate IDS to Customer and any or all of Its
customers. In addition, any and all of Customer's tariffs, other published terms
and conditions of service, or agreements, written or oral, that It may have with
Rs customers, as applicable, under which It provides IDS to Its customers, shall
give Customer and/or Alpha Lyracom the right Immediately to terminate( service
to Customer's customers In the event of any violation of the PSN Restriction.
Alpha Lyracom shall be considered to be, and shall expressly be made, a
third-party beneficiary of such tariffs, terms and conditions, or agreements for
purposes of enforcing the provisions of the preceding sentence.
2. Carriers and Others . In the event Customer provides IDS to Rs customers
pursuant to a U.S. common carrier authorization, It acknowledges and agrees that
such authorizations shall be conditioned upon Rs compliance with the PSN
Restriction. In the event Customer provides IDS to Its customers pursuant to
enhanced service provider or shared use agreements, such agreements shall: (I)
be In writing; (11) contain explicit language requiring compliance with the PSN
Restriction; and (111) be filed by Customer with the FCC.
- ----------
(1) Alpha Lyracom Is required by the FCC to impose and enforce these
restrictions. Alpha Lyracom Is actively seeking the elimination of those
restrictions rind, to the extent that Alpha Lyracom Is successful In having
these restrictions eliminated or reduced, any applicable elimination or
reduction shall apply.
<PAGE> 35
C-2-
3. PBX Interconnection. Customer shall not, and it shall not permit any of
its customers to, Interconnect IDS to a PBX or similar telephone switch
equipment.(2)
4. Alpha Lyracom Right of Inspection. Alpha Lyracom shall have the right to
inspect Customer's facilities to insure compliance with the PSN Restrictions,
subject to national security requirements.
5. Minimum One-Year Term. Customer's tariffs, other published terms and
conditions of service, and/or agreements with its customers, governing their
receipt of IDS, shall have a minimum term of one year.
6. Customer Enforcement. Customer shall use its reasonable best efforts to
enforce all of the foregoing with respect to all of its customers. To the extent
that Alpha Lyracom may permit Customer to permit its customers to provide IDS to
their customers, Customer shall require its customers to impose all of the
foregoing requirements on their customers.
- ----------
(2) Under certain additional restrictions that prevent interconnection to
the public-switched message networks, PBX interconnection may be permitted. If
such PBX interconnection is desired, additional information should be requested
from Alpha Lyracom. No such PBX interconnection shall be permitted without Alpha
Lyracom's express written consent and applicable legal compliance.
<PAGE> 36
APPENDIX D
DEFINITIONS
As used in this Agreement, the following capitalized terms have the
following meanings:
"ALPHA LYRACOM GROUP" means any or all of the following: Alpha Lyracom, Pan
American Satellite, any and all suppliers of services or equipment thereto, and
all affiliates of such successors, and all officers, directors, employees and
agents of any of the foregoing entities;
"ALPHA LYRACOM-PROVIDED FACILITIES" means the Satellite, the Service
Transponder and any facilities to be provided by Alpha Lyracom for a terrestrial
extension of Service.
"ASSIGN" means to grant, sell, assign, encumber, otherwise convoy, license,
lease, sublease or permit the utilization of, directly or indirectly, in whole
or in part. An "ASSIGNEE," means the recipient of an "ASSIGNMENT," pursuant to
the foregoing sentence;
Failure of Service on a "Confirmed BASIS" means if, after the Service Date,
Alpha Lyracom fails to furnish Service meeting Service Specifications for a
cumulative period of twelve (12) hours during any consecutive 30-day period.
Any failure of Service shall be measured commencing from the later to occur of
(i) Customer's cessation of use of the Service and (ii) notice from Customer to
Alpha Lyracom of such failure. Any such failure shall be deemed to have ended
upon the earlier to occur of (i) Customer's resumption of the use of the Service
and (ii) notice from Alpha Lyracom to Customer that Service is capable of
meeting the Service Specifications;
"CONFIRMED OUTAGE" means a failure of Service to meet the Service
Specifications for a continuing and uninterrupted period of four hours or more.
Any such failure shall be measured commencing from the later to occur of (i)
Customer's cessation of use of the Service and (ii) notice from Customer to
Alpha Lyracom of such failure. Any such failure shall be deemed to have ended
upon the earlier to occur of (i) Customer's resumption of the use of the Service
and (ii) notice from Alpha Lyracom to Customer that Service is capable of
meeting the Service Specifications;
<PAGE> 37
D-2-
"CUSTOMER-PROVIDED FACILITIES" means all facilities necessary to the
provision, receipt, or use of the Service other than those facilities expressly
defined as Alpha Lyracom-Provided Facilities;
"DOMESTIC DATA SPACE SEGMENT SERVICE" means space segment satellite
reception and retransmission service supplied in outerspace by Alpha Lyracom for
two-way private line voice and data communications, primarily within Argentina.
"FCC" means the United States Federal Communications Commission and any
successor agency thereto;
"OPERATIONAL REQUIREMENTS" means the requirements set forth in Appendix B;
"PAN AMERICAN SATELLITE" means a sole proprietorship which owns the
Satellite (Alpha Lyracom is the exclusive managing agent for Pan American
Satellite with respect to services to be offered from the Satellite);
"SATELLITE" or "PAS-1" means that certain communications satellite of the
GE astro Space 3000 series type, owned by and licensed to Pan American Satellite
and launched on June 15, 1988;
"SEPARATE SYSTEMS REQUIREMENTS" means the requirements set forth in
Appendix C;
"SERVICE TRANSPONDER" means the Transponder, to be designated by Alpha
Lyracom, from which Service shall initially be provided to Customer. In order to
coordinate the provision of Service to Customer with the provision of Service to
other customers on the Satellite, the Service Transponder used to provide
Service may be changed, from time to time, on notice from Alpha Lyracom to
Customer;
"SPARE EQUIPMENT" means certain spare equipment capacity in the event of
failure of a Transponder. This Spare Equipment consists of the following;
1. For C-Band narrowband Transponders (Transponder Nos. 1 through 12):
one spare SSPA (solid-state-power-amplifier) backing up the six
vertically polarized SSPAs and one spare SSPA backing up the six
horizontally polarized SSPAs.
<PAGE> 38
D-3-
2. For C-Band wideband Transponders (Transponder Nos. 13 through 18): one
spare TWTA (traveling-wave-tube amplifier) backing up the three
vertically polarized TWTAs and one TWTA backing up the three
horizontally polarized TWTAs.
3. For Ku-Band Transponders ( transponder Nos. 19 through 24): one spare
TWTA backing up the six TWTAs.
"TRANSPONDER" means any transponder on the Satellite.
<PAGE> 39
FIRST AMENDMENT TO THE DOMESTIC
DATA SERVICE AGREEMENT
This, first Amendment (the "Amendment") is made and entered into as of
the 7th day of April, 1992, by and between Alpha Lyracom Space Communications,
Inc. hereinafter "Alpha Lyracom") a Delaware corporation, and Impsat, S.A.
organized and existing under the laws of Argentina, (hereinafter "Impsat").
WHEREAS, Alpha Lyracom and Impsat have entered into that certain
"Domestic Data Service Agreement," dated May 30, 1991 (the "Agreement");
WHEREAS, Alpha Lyracom and Impsat desire to amend certain terms and
conditions of the Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the promises
set forth below, and for other consideration, the receipt and adequacy of which
each party hereby acknowledges, Alpha Lyracom and Impsat hereby mutually agree
as follows:
I. The Agreement shall be amended to reflect the following terms and conditions.
All capitalized terms used in this Amendment, unless otherwise defined, have the
meanings set forth in the Agreement.
A. The capacity on the Latin Beam of the PAS-1 Satellite as set forth in
the Agreement shall be increased by the equivalent of an additional 40 full
duplex SCPC/QPSK 64 kbps channels (the "Additional Capacity"), for a total
capacity equivalent of 80 full duplex 64 kbps channels (the "Service"). The
provision of Additional Capacity and (the corresponding increases in the Total
Monthly Service Fee shall become effective as of the Additional Capacity Start
Dates set forth below. The Service shall be operated in accordance with the
revised transmission parameters attached hereto as Table 1.
Additional Capacity Total Capacity Total Monthly
Start Dates (64 kbps channels) Service Fee
- ------------------------ ------------------- --------------
On or before June 1, 1992 60 channels [ ]*
On or before November 1, 1992 80 channels [ ]*
The Service shall be supplied by Alpha Lyracom from Transponder 13 of the Latin
Beam. Alpha Lyracom may, at its sole discretion and as it deems necessary,
substitute equivalent capacity on other Latin Beam Transponders.
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 40
2
B. An additional deposit of [ ]* due and payable on or before
the execution of this Amendment, shall be applied to the first and last months
Service Fees for such Additional Capacity.
C. All Latin Beam space segment capacity provided pursuant to this
Amendment shall be used primarily for domestic communications within Argentina.
Notwithstanding the previous sentence:
(i) Impsat may utilize a portion of the Service for
international service from Argentina to the United States, on a simplex
basis only, subject to prior written approval of Alpha Lyracom. All such
simplex service to the United States using the Service provided pursuant
to this Agreement shall be operated in the United States through Alpha
Lyracom's facility. Such simplex circuits shall be matched against
similar capacity provided by Alpha Lyracom under separate agreement for
the establishment of full duplex circuits, and
(ii) Impsat may also utilize a portion of the Service for
international service between other countries (other than the United
States) in which Impsat is authorized to provide satellite
communications services or has entered into an operating agreement with
a carrier licensed to provide such services. Any additional
international service requirements may also be ordered by Impsat,
subject to availability, through separate agreement with Alpha Lyracom.
D. Section 8 of the Agreement shall be deleted and replaced with
the following:
Impsat shall demonstrate compliance of its earth stations with
the performance and operational requirements set forth in Appendix B of
the Agreement pursuant to standard Alpha Lyracom test procedures
attached hereto as Table 2. Such demonstration may be accomplished by
the testing of standard configurations of earth station hardware which
are duplicated at multiple locations. Alpha Lyracom and Impsat will
agree under these conditions to waive portions of the test procedures
contained in Table 2. In addition, Impsat shall provide Alpha Lyracom,
in writing, with specific earth station information for each circuit
including location, antenna size, G/T, transmit gain, transmit power,
threshold levels, and any other information Alpha Lyracom requires,
prior to activation of the circuit. Alpha Lyracom will provide Impsat
with an initial carrier transmission plan for the above capacity within
30 days of receiving the above information from
* CONFIDENTIAL TREATMENT REQUEST -- Confidential portion has been omitted and
filed separately with the Commission.
<PAGE> 41
3
Impsat. This initial transmission plan will accommodate the 80 full
duplex 64 kbps data links using the capacity specified in Table 1.
E. Section 13 of the Agreement shall be deleted and replaced with the
following:
Impsat may utilize carriers with speeds between 32 kbps and 512 kbps,
QPSK or BPSK modulation and may employ any FEC desired, other earth
station sizes, or operate from other locations within Argentina which
are situated outside the Reference Contour, as long as these changes can
be accommodated within the assigned capacity and power allocations set
forth in this Agreement and in compliance with the procedures
established by Alpha Lyracom. Alpha Lyracom shall work with Impsat to
simplify and expedite the above mentioned process.
II. All of the terms and conditions of the Agreement shall continue to apply
with the exception of those provisions of the Agreement that are directly in
conflict with the terms and conditions of this Amendment. At the request of
either party, the parties shall cooperate with each other to prepare and execute
a conformed copy of the Agreement to reflect the changes made herein.
IN WITNESS WHEREOF, each of the parties hereto has duly executed and
delivered this Amendment as of the day and year first written above.
ALPHA LYRACOM SPACE IMPSAT, S.A.
COMMUNICATIONS, INC.
By: /s/ FRED LANDMAN By: /s/ RICARDO VERDEGUER
------------------------- --------------------------
Name: Fred Landman Name: Ricardo Verdeguer
----------------------- ------------------------
Title: President Title: Chairman and President
----------------------- ------------------------
<PAGE> 42
[MAP]
- -------------------------------------------------------------------------------
FIGURE 1--LATIN DOWNLINK (-6dB)
- -------------------------------------------------------------------------------
<PAGE> 43
[MAP]
- -------------------------------------------------------------------------------
FIGURE 2--LATIN UPLINK (-3dB)
- -------------------------------------------------------------------------------
<PAGE> 44
Table 2
EARTH STATION QUALIFICATION PROCEDURE
PAN AMERICAN SATELLITE
PURPOSE
THIS DOCUMENT OUTLINES TEST, VERIFICATION PROCEDURES WHICH MUST BE
COMPLETED BY ALL EARTH STATIONS PRIOR TO RECEIVING AUTHORIZATION TO TRANSMIT RF
POWER (ILLUMINATE THE TRANSPONDERS) TO ALPHA LYRACOM SPACE COMMUNICATIONS
SATELLITES.
PROCEDURES FOR SERVICE MONITORING PROCEDURES ARE ALSO INTRODUCED. THESE
PROCEDURES MUST BE IMPLEMENTED BY ALL STATIONS ILLUMINATING ALPHA LYRACOM SPACE
COMMUNICATIONS TRANSPONDERS TO ASSURE THAT ALL COMMUNICATIONS OPERATIONS ARE
CARRIED OUT ON A NONINTERFERING BASIS WITH ALL OTHER COMMUNICATIONS ON THE
TARGET SATELLITE AND ALL ADJACENT SATELLITES.
THE AUTHORIZATION TO ILLUMINATE PAS-1 TRANSPONDERS MAY BE REVOKED AT ANY
TIME IF IT SHOWN THAT OPERATIONS BY ANY STATION VIOLATES THE PREMISE OF
NON-INTERFERING OPERATION BY ALL STATIONS.
SCOPE
THIS PROCEDURE IS APPLICABLE TO ALL STATIONS THAT ARE SEEKING AUTHORITY
TO ILLUMINATE ALPHA LYRACOM PAN AMERICAN SATELLITE (PAS-1) TRANSPONDERS AND
STATIONS THAT WISH TO MAINTAIN AUTHORITY TO ILLUMINATE PAS-1 0R OTHER ALPHA
LYRACOM SATELLITE TRANSPONDERS.
PROCEDURE
[A] VERIFICATION TEST PROCEDURES
(1) CROSS-POLARIZATION RATIO
(a) EACH STATION WILL BE REQUIRED TO SHOW THAT THE
STATION CAN ACHIEVE CO-POLAR TO CROSS-POLAR
SIGNAL RATIOS 33 dB OR BETTER FOR TRANSMITTED
CARRIERS IN THE TRANSPONDERS OF INTEREST.
(b) IF DESIRED AND BANDWIDTH IS AVAILABLE, HOMESTEAD
WILL RADIATE A CARRIER IN THE CROSS-POLARIZATION
TRANSPONDER TO ALLOW STATIONS TO VERIFY RECEIVE
CROSS-POLARIZATION AT THE SAME TIME THAT THEY
VERIFY TRANSMIT POLARIZATION PERFORMANCE.
(c) HOMESTEAD WILL MAKE SPECTRUM ANALYZER PLOTS OF
THE CROSS-POLARIZATION PERFORMANCE FOR STATION
RECORD PURPOSES, AND WILL FURNISH A COPY OF
THESE PLOTS TO THE TESTING STATION.
<PAGE> 45
page 2
(2) ANTENNA PATTERNS
(a) ALL STATIONS WILL PERFORM BOTH TRANSMIT AND RECEIVE ANTENNA
PATTERNS WITH THE PAN AMERICAN SATELLITE GATEWAY EARTH STATION
AT HOMESTEAD, FLORIDA TO ASSURE THAT THE STATION MEETS
INTERNATIONAL, AND WHERE APPLICABLE DOMESTIC, ANTENNA
PERFORMANCE REQUIREMENTS.
(b) EACH STATION WILL NOTIFY THE HOMESTEAD STATION OF THE DESIRE TO
TEST AND WILL PROVIDE THE EXACT LATITUDE AND LONGITUDE OF THE
STATION TO ALLOW GENERATION OF POINTING ANGLES TO PAS-1 AND
OTHER ADJACENT SATELLITES.
(c) HOMESTEAD WILL GENERATE POINTING ANGLES WHICH WILL DETERMINE THE
MINIMUM ANGULAR TRAVEL THAT WILL BE REQUIRED TO DETERMINE THE
ANTENNA'S SIDELOBE PERFORMANCE AND THE POSSIBLE INTERFERENCE
THAT COULD RESULT FROM SIDELOBE POWER INTO ADJACENT SATELLITES.
(d) AS A MINIMUM, STATIONS WILL BE REQUIRED TO MAKE THE FOLLOWING
ANTENNA TRANSMIT PATTERN CUTS:
(1) plus and minus 7 degree azimuth
(2) plus and minus 1 degree azimuth
(3) plus and minus 7 degree elevation
(4) plus and minus 1 degree elevation
(e) STATIONS SHOULD PERFORM RECEIVE CUTS AT THE SAME TIME THAT
TRANSMIT CUTS ARE BEING MADE. HOMESTEAD WILL RADIATE A CARRIER
FOR THIS PURPOSE.
(f) ADDITIONAL CUTS MAY BE REQUIRED TO DETERMINE THE INTERFERENCE
PATTERN THAT COULD OCCUR WITH OTHER SATELLITES ADJACENT TO
PAS-1.
(g) HOMESTEAD WILL PERFORM SIMULTANEOUS CO-POLARIZATION AND
CROSS-POLARIZATION PATTERNS ON EACH OF THE ABOVE CUTS.
(h) HOMESTEAD WILL MAKE A RECORDING OF ALL CUTS AND WILL PROVIDE
A COPY OF ALL TEST DATA TO THE TESTING STATION.
(3) RF FREQUENCY AND POWER STABILITY
(a) THE TESTING STATION WILL RADIATE A CARRIER AT A POWER LEVEL AND
FREQUENCY SELECTED BY THE HOMESTEAD STATION.
<PAGE> 46
page 3
(b) AFTER THE TEST CARRIER HAS BEEN SET, THE TESTING STATION MUST BE
PREPARED TO LEAVE THE CARRIER ON WITHOUT FURTHER ADJUSTMENT FOR A
MINIMUM OF 72 HOURS. THE ACTUAL TIME OF THE TEST WILL BE DICTATED BY THE
HOMESTEAD STATION FROM THE RESULTS OBTAINED DURING THE TEST PERIOD.
(c) HOMESTEAD WILL MAKE PERIODIC TESTS OF THE LEVEL AND FREQUENCY TO ASSURE
THAT THE CARRIER IS STABLE IN BOTH POWER AND FREQUENCY.
(d) ALL MEASUREMENTS DONE AT HOMESTEAD WILL BE DONE AT RF TO REMOVE THE
POSSIBILITY OF FREQUENCY ERROR BEING INTRODUCED BY TRANSLATION EQUIPMENT
AT HOMESTEAD.
(e) TO ASSURE POWER AND FREQUENCY OF THE TEST CARRIER, HOMESTEAD WILL
RADIATE A VERIFICATION CARRIER THAT IS GENERATED BY A VERY STABLE
FREQUENCY SYNTHESIZER ADJACENT TO THE TEST CARRIER.
(f) THE FREQUENCY OF THIS VERIFICATION CARRIER WILL BE MEASURED BY A
FREQUENCY COUNTER AND THE RADIATED POWER OF THE VERIFICATION CARRIER
WILL BE MEASURED AT THE TRANSMIT INPUT TO THE FEED OF THE ANTENNA TO
ASSURE THAT THE SATELLITE IS BEING ILLUMINATED WITH THE PROPER POWER AND
FREQUENCY FROM THE VERIFICATION STATION.
(g) THE VERIFICATION STATION WILL MEASURE THE FREQUENCY AND POWER
DIFFERENCES BETWEEN THE VERIFICATION CARRIER AND THE TEST CARRIER TO
DETERMINE THE STABILITY OF THE TEST CARRIER. (1) DURING THESE PERIODS OF
MEASUREMENT, WHICH WILL BE PERFORMED AT A MINIMUM OF 6 HOURS APART TO
ASSURE THAT DRIFT DUE TO SATELLITE DIURNAL VARIATIONS ARE ELIMINATED,
HOMESTEAD WILL ALSO PERFORM SHORT TERM STABILITY MEASUREMENTS FOR 15
MINUTE PERIODS. UP TO 4 SHORT TERM STABILITY MEASUREMENTS WILL BE MADE.
(h) AT TIMES WHEN THE ACTUAL VERIFICATION TEST IS NOT BEING PERFORMED,
HOMESTEAD WILL RECORD THE FREQUENCY AND POWER OF THE CARRIER ON A STRIP
CHART RECORDER TO ASSURE THAT NO GROSS CHANGES HAVE OCCURRED DURING THE
TEST PERIOD.
(I) HOMESTEAD WILL PROVIDE COPIES OF ALL TEST DATA TO THE TESTING STATION.
<PAGE> 47
page 4
(4) SPURIOUS FREQUENCY AND INTERMODULATION TEST
(a) THE TEST STATION WILL RADIATE A CARRIER AT MAXIMUM EIRP
TO FREE SPACE AT AN ELEVATION ANGLE OF AT LEAST 10
DEGREES ABOVE THAT REQUIRED FOR PAS-1 ACCESS.
(1) INITIALLY, A SINGLE, UNMODULATED CARRIER WILL BE
RADIATED.
(b) THE TEST STATION WILL SCAN THE TRANSMIT SPECTRUM AT THE
ANTENNA AND IN THE STATION TO VERIFY THAT NO SPURIOUS
SIGNALS ARE GENERATED WITHIN THE STATION AT THE MAXIMUM
POWER LEVEL.
(c) THE TEST STATION WILL NOTE THE MAXIMUM SINGLE CARRIER
EIRP AND THE SPURIOUS CARRIERS DISCOVERED DURING THE
TEST AND WILL REPORT THIS DATA TO HOMESTEAD FOR
INCLUSION IN THE FINAL TEST REPORT.
(d) THE TEST STATION WILL REMOVE ALL TRANSMIT CARRIERS AND
REACQUIRE THE SATELLITE.
(e) AT THE DIRECTION OF THE VERIFICATION STATION, THE TEST
STATION WILL RADIATE TWO CARRIERS AT RF POWER LEVELS AT
SPECIFIED POWER LEVELS SIMULTANEOUSLY AND WILL MONITOR
THE TRANSMIT SPECTRUM TO DETERMINE IF INTERMODULATION
PRODUCTS ARE BEING RADIATED WITH THE DESIRED CARRIERS.
(1) THE VERIFICATION STATION WILL MONITOR THE SATELLITE
SPECTRUM TO DETERMINE IF INTERMODULATION PRODUCTS ARE
SEEN ON THE SATELLITE.
(2) THE TEST STATION WILL NOTE THE EIRP LEVEL AT WHICH
INTERMODULATION CARRIERS ARE NOTED.
(f) THE VERIFICATION WILL RECORD ALL DATA FOR THE FINAL
VERIFICATION REPORT.
(B) DATA SERVICE INITIATION PROCEDURES
(1) CARRIER LEVEL SET AND VERIFICATION
(a) THE TEST STATION AND THE VERIFICATION STATION AND/OR THE
CORRESPONDING COMMUNICATION STATION WILL RADIATE DATA
CARRIERS AT FREQUENCIES AND POWER LEVELS SPECIFIED BY
THE VERIFICATION STATION.
(1) INITIALLY THE CARRIERS WILL BE UNMODULATED.
<PAGE> 48
page 5
(b) THE VERIFICATION STATION WILL MEASURE THE RECEIVED POWER LEVEL
OF EACH OF THE CARRIERS AND WILL NOTE THE EIRP LEVEL OF EACH
TRANSMIT STATION REQUIRED TO ACHIEVE THAT LEVEL.
(c) THE VERIFICATION STATION WILL NOTE THE SATELLITE SPECTRUM AND
VERIFY THAT NO SPURIOUS CARRIERS OR INTERMODULATION PRODUCTS ARE
PRESENT AS A RESULT OF THESE CARRIERS.
(d) THE STATIONS WILL MODULATE THE CARRIERS AND WILL NOTE WHETHER OR
NOT MODEM LOCK IS ACHIEVED AT EACH STATION OPERATING IN
SATELLITE LOOP-BACK MODE.
(1) AS THE CARRIERS ARE MODULATED, THE STATIONS WILL NOTE THAT
THE EIRP DOES NOT CHANGE FROM THE UNMODULATED CARRIER EIRP. THIS
IS COMMON FOR SOME MODULATORS AND MUST BE CHECKED CLOSELY.
(2) BIT ERROR RATE PERFORMANCE TEST
(a) THE STATIONS WILL SEND A BIT ERROR RATE SIGNAL THROUGH EACH OF
THE MODEMS AND WILL NOTE THE PERFORMANCE OF THE MODEM IN
SATELLITE LOOP-BACK FOR 15 MINUTES.
(1) IF ERRORS ARE ACCUMULATED DURING THIS PERIOD, THE STATION
WILL INVESTIGATE INTERNALLY TO DETERMINE THE SOURCE OF THE
ERRORS.
(b) AFTER ALL STATIONS HAVE VERIFIED THAT THEY OPERATE IN THE
SATELLITE LOOP-BACK MODE, THEY WILL CHANGE THE SERVICE TO
END-TO-END OPERATION.
(c) THE STATIONS WILL CONDUCT END-TO-END BIT ERROR RATE TESTS FOR UP
TO 24 HOURS OR AS REQUIRED TO RESOLVE PROBLEMS.
(1) DURING THIS PERIOD OF TESTING, THE TESTING STATION WILL
MEASURE AND RECORD THE CARRIER FREQUENCY AND EIRP EVERY TWO
HOURS TO ASSURE THAT THERE IS NO DRIFT IN THESE PARAMETERS.
(d) IF THE STATIONS PASS THE END-TO-END TEST, THEY WILL, AT THE
DIRECTION OF THE VERIFICATION STATION, LOWER THE EIRP IN ONE dB
STEPS AND PERFORM 30 MINUTE BIT ERROR RATE TESTS TO DETERMINE
THE OPERATION AT LEVELS BELOW THE ASSIGNED LEVEL AND TO
DETERMINE THE OPERATING MARGIN OF THE CARRIERS.
<PAGE> 49
page 6
(3) SERVICE CUTOVER
(a) AT THIS POINT IN THE SYSTEM TESTING, STATIONS WILL TEST BIT ERROR
RATE AND CLOCK STABILITY WITH THE CUSTOMER.
{1} THE CUSTOMER WILL BE ALLOWED TO TEST END-TO-END TO ASSURE
TOTAL LINK OPERATIONAL CAPABILITY.
(b) THE TESTING STATION WILL PROVIDE HOMESTEAD WITH CONTACT NAMES AND
TELEPHONE NUMBERS FOR THEIR CUSTOMER AT THE DISTANT POINT AND
CIRCUIT ROUTING AND OTHER INFORMATION THAT WILL BE HELPFUL IN
TROUBLESHOOTING THE CIRCUIT IN THE EVENT THAT TROUBLES DEVELOP
LATER.
(c) HOMESTEAD WILL MAINTAIN A FILE ON ALL CIRCUITS INCLUDING A
HISTORY OF ALL TROUBLES THAT WILL BE MADE AVAILABLE TO ANY PARTY
DESIGNATED BY THE CUSTOMER'S REPRESENTATIVE,
(d) THE CUSTOMER WILL BE GIVEN 24 HOURS TO TEST THE CIRCUIT AND 48
HOURS OF END-TO-END SERVICE TO ASSURE THAT NO SERVICE ANOMALIES
PRIOR TO FINAL ACCEPTANCE OF THE SERVICE.
(e) AT THE END OF THE PRESCRIBED TIME, THE CUSTOMER WILL ACCEPT THE
CIRCUIT OR WILL REQUEST FURTHER TEST TIME.
{l} IF FURTHER TEST TIME IS REQUIRED, THE CUSTOMER WILL FULLY
EXPLAIN THE REASON FOR THIS REQUIREMENT.
{2} FURTHER TEST TIME CAN BE GRANTED AT THE DISCRETION OF ALPHA
LYRACOM PAN AMERICAN SATELLITE PERSONNEL ONLY.
{3} FURTHER TEST TIME WILL NOT BE GRANTED IF THE CUSTOMER IS NOT
READY FOR THE CIRCUIT.
(f) AT THE END OF THE TEST PERIOD, THE CUSTOMER WILL SIGN THE CIRCUIT
ACCEPTANCE FORM SIGNIFYING THAT THE CIRCUIT, OPERATIONAL CONTACT
INFORMATION AND OPERATIONAL AND TROUBLE RESOLUTION PROCEDURES ARE
ACCEPTABLE.
<PAGE> 50
page 7
(C) VIDEO SERVICE INITIATION PR0CEDURE
(1) VIDEO CARRIER LINE-UP
(a) ALPHA LYRACOM WILL FURNISH THE CUSTOMER WITH LINK CALCULATIONS
FOR THE VIDEO SERVICE, AND RF CARRIERS FROM THE TRANSMITTING
STATION WILL BE SET ACCORDING TO THESE LINK CALCULATIONS.
(b) THE TRANSMIT CARRIER WILL BE SET TO THE PROPER TRANSPONDER POWER
BY THE HOMESTEAD GATEWAY STATION, AND CROSS-POLARIZATION
ISOLATION MEASUREMENTS WILL BE MADE ON THE CARRIER, IF
APPLICABLE. IT IS EXPECTED THAT C-BAND CARRIERS WILL ACHIEVE AN
ISOLATION RATIO OF 33 dB OR GREATER.
(c) A CARRIER-TO-NOISE RATIO TEST WILL BE PERFORMED AT THE TIME THE
CARRIER IS ESTABLISHED.
(d) THE HOMESTEAD GATEWAY STATION WILL ALSO PERFORM A CARRIER POWER
AND FREQUENCY STABILITY TEST TO ASSURE STABILITY OF THESE
PARAMETERS.
{1} IF A LONG TERM TEST IS PERFORMED, THE TEST WILL BE CONDUCTED
AT 13 dB BELOW THE OPERATIONAL POWER.
(e) THE STATION ORIGINATING THE VIDEO CARRIER WILL TEST MODULATE THE
VIDEO CARRIER AT THE PRESCRIBED POWER WITHOUT RADIATING THIS
CARRIER TO THE SATELLITE AND WILL ASSURE THAT WITHIN THE
TRANSMITTING STATION THAT NO SPURIOUS SIGNALS OR INTERMODULATION
PRODUCTS ARE PRESENT PRIOR TO RADIATING THE CARRIER TO THE
SATELLITE.
(f) THE ORIGINATING STATION WILL RADIATE THE CARRIER AT THE EIRP USED
FOR THE POWER AND FREQUENCY STABILITY TEST WITH A STANDARD TEST
PATTERN, NOT COLOR BARS, MODULATING THE CARRIER AT THE SPECIFIED
VIDEO DEVIATION.
(g) AT THE DIRECTION OF THE HOMESTEAD GATEWAY STATION, THE
ORIGINATING STATION WILL RAISE THE EIRP IN PRESCRIBED STEPS WHILE
THE HOMESTEAD GATEWAY STATION SCANS OTHER SATELLITE OPERATIONAL
RESOURCES TO ASSURE THAT THE CARRIER DOES NOT CAUSE INTERFERENCE
WITH OTHER TRANSPONDER OPERATIONS.
(h) AT THE PRESCRIBED EIRP, THE HOMESTEAD GATEWAY EARTH STATION WILL
MAKE VIDEO MEASUREMENTS AND WILL RECORD THIS DATA FOR FUTURE
REFERENCE.
<PAGE> 51
page 8
(2) VIDEO CARRIER END-TO-END LINE-UP AND ACCEPTANCE
(a) AT THE COMPLETION OF THE ABOVE PROCEDURE, THE HOMESTEAD GATEWAY
STATION WILL TURN THE SERVICE OVER TO THE CUSTOMER FOR END-TO-END
TESTING, VERIFICATION AND ACCEPTANCE.
(b) IT IS EXPECTED THAT THE CUSTOMER WILL ACCEPT THE SERVICE WITHIN
24 HOURS OR REJECT THE SERVICE PROVIDING SUFFICIENT TECHNICAL
INFORMATION REGARDING THE SERVICE DEFICIENCIES WHICH PROMPTED THE
REJECTI0N.
(c) IF THE SERVICE IS REJECTED, ALPHA LYRACOM PAN AMERICAN SATELLITE
WILL TAKE ANY CORRECTIVE ACTION POSSIBLE TO PROVIDE THE SERVICE.
(d) IF THE SERVICE IS ACCEPTED, THE CUSTOMER WILL SIGN THE SERVICE
AGREEMENT SIGNIFYING THAT THE SERVICE, OPERATIONAL PROCEDURES AND
TROUBLE REPORTING AND RESTORATION PROCEDURES ARE SUFFICIENT AND
ACCEPTABLE.
(D) SERVICE MONITORING PROCEDURES
(1) SERVICE QUALITY VERIFICATION AND REPORTING
(a) IT IS THE DESIRE OF ALPHA LYRACOM PAN AMERICAN SATELLITE THAT ALL
SATELLITE SERVICES BE PROVIDED WITH THE UTMOST QUALITY AND
WITHOUT CAUSING INTERFERENCE TO OTHER SERVICES USING THE
SATELLITE RESOURCES OR RECEIVING INTERFERENCE FROM THESE OTHER
SERVICES.
(b) IN THIS REGARD, IT IS OUR PROCEDURE THAT EACH CUSTOMER WILL
MONITOR HIS OWN TRAFFIC TO ASSURE THAT THAT TRAFFIC IS NOT BEING
INTERFERED WITH BY OTHER TRAFFIC AND, MORE IMPORTANTLY, THAT HIS
TRAFFIC IS NOT INTERFERING WITH OTHER SERVICES.
(c) SUCH INTERFERENCE, EVEN SELF-GENERATED INTERFERENCE, MUST BE
REPORTED TO THE HOMESTEAD GATEWAY EARTH STATION IMMEDIATELY.
(2) INTERFERENCE AND TROUBLE RESOLUTI0N
(a) SELF-GENERATED INTERFERENCE MUST BE CORRECTED IMMEDIATELY EVEN IF
THAT REQUIRES REMOVING THE INTERFERING CARRIER FROM SERVICE.
<PAGE> 52
page 9
(b) FAILURE TO CORRECT AN INTERFERENCE PROBLEM, ESPECIALLY WHEN
DIRECTED TO CORRECT THE PROBLEM BY THE HOMESTEAD GATEWAY EARTH
STATION CAN RESULT IN LOSS OF PRIVILEGES TO USE THE SATELLITE AND
TERMINATION OF THE CONTRACT.
(c) IF THE HOMESTEAD GATEWAY EARTH STATION CONTACTS A STATION TO TEST
FOR POSSIBLE INTERFERENCE WITH OTHER STATIONS, THE PARTY CALLED
MUST COOPERATE WITH THE HOMESTEAD GATEWAY TO ASSURE THAT THE
INTERFERING CARRIER(s) IS FOUND AND THE PROBLEM CORRECTED
IMMEDIATELY.
(d) IF THE HOMESTEAD GATEWAY REPORTS A TROUBLE THAT IS
NON-INTERFERING, BUT POTENTIALLY SERVICE DEGRADING SUCH AS
OVER-DEVIATION AND/OR SHOULDERS ON A DIGITAL MODULATOR, THE
ASSIGNED STATION WILL WORK TO CORRECT THESE PROBLEMS IMMEDIATELY.
{1} AFTER CORRECTION OF THE PROBLEM, THE STATION WILL REPORT THE
CORRECTION TO THE HOMESTEAD GATEWAY WHO WILL OBSERVE AND TEST THE
CORRECTION TO ASSURE THAT THE PROBLEM HAS BEEN FULLY CORRECTED.
(3) TROUBLE REPORTING
(a) THE HOMESTEAD GATEWAY EARTH STATION WILL SERVE AS THE NETWORK
OPERATIONS CONTROL (NOC) CENTER FOR ALPHA LYRACOM PAN AMERICAN
SATELLITE SPACE COMMUNICATIONS, AND ALL TROUBLES RELATED TO
SATELLITE SERVICE WILL BE REPORTED TO THIS CENTER.
(b) THE HOMESTEAD GATEWAY EARTH STATION WILL BE MANNED 24 HOURS PER
DAY, SEVEN DAYS PER WEEK STARTING IN MAY, 1989.
(c) EACH TROUBLE REPORTED BY ANY STATION WILL BE ASSIGNED A TROUBLE
NUMBER AND A TROUBLE HISTORY OR TROUBLE TICKET WILL BE OPENED ON
THAT TROUBLE.
(d) ALL REPORTED TROUBLES WILL BE ANALYZED BY THE TECHNICAL STAFF OF
THE NOC AND THE TROUBLE REPORT WILL BE ANNOTATED WITH THE RESULTS
OF THAT ANALYSIS.
(e) TROUBLES THAT ARE FOUND NOT TO BE SATELLITE RELATED, SUCH AS
TERRESTRIAL LINK PROBLEMS EFFECTING SATELLITE SERVICES WILL BE
REFERRED TO THE PROPER STATION AND THE TROUBLE REPORT WILL BE
CLOSED.
<PAGE> 53
page 10
(f) AS NOTED ABOVE, WHEN THE NOC NOTIFIES A STATION THAT SERVICES
BEING PERFORMED FROM THAT STATION ARE INTERFERING OR POTENTIALLY
INTERFERING WITH OTHER SATELLITE SERVICES, THAT STATION MUST
ASSIST THE NOC IN DETECTION OF THE SOURCE AND QUICK RESOLUTION OF
THAT PROBLEM.
(g) THE NOC WILL SEND RECORDS OF ANY OUTAGE OR TROUBLE RELATED TO A
STATION TO THE DESIGNATED REPRESENTATIVE OF THAT ENTITY FOR
REVIEW AND/OR PERMANENT RECORDS OF SERVICE ONLY WHEN DESIGNATED
BY THE CONTRACTUALLY DESIGNATED REPRESENTATIVE OF THAT STATION.
APPROVED:
--------------------------------------------------------
FRED LANDMAN, PRESIDENT
ALPHA LYRACOM
PAN AMERICAN SATELLITE
SPACE COMMUNICATIONS
<PAGE> 54
APPENDIX C
U.S. FEDERAL COMMUNICATIONS COMMISSION ("FCC")
SEPARATE SYSTEMS REQUIREMENTS(1)
Customer represents and warrants to, and agrees with, Alpha
Lyracom that with respect to any PAS-1 satellite communications
between the United States and any other country (a "U.S.-Connecting
Country"):
1. No Interconnection with the Public-switched Network. Customer
shall not, and it shall not permit any of its customers to,
interconnect IDS to any public switched message network within the
United States or any U.S.-Connecting Country (the "PSN Restriction").
Any violation of the PSN Restriction shall entitle Alpha Lyracom
immediately to terminate IDS to Customer and any or all of its
customers. In addition, any and all of Customer's tariffs, other
published terms and conditions of service, or agreements, written or
oral, that it may have with its customers, as applicable, under which
it provides IDS to its customers, shall give Customer and/or Alpha
Lyracom the right immediately to terminate service to Customer's
customers in the event of any violation of the PSN Restriction. Alpha
Lyracom shall be considered to be, and shall expressly be made, a
third-party beneficiary of such tariffs, terms and conditions, or
agreements for purposes of enforcing the provisions of the preceding
sentence.
2. Compliance by Carriers and Others. In the event Customer
provides IDS to its customers pursuant to a U.S. common carrier
authorization, it acknowledges and agrees that such authorizations
shall be conditioned upon its compliance with the PSN Restriction. In
the event Customer provides IDS to its customers pursuant to enhanced
service provider or shared use agreements, such agreements shall: (i)
be in writing; (ii) contain explicit language requiring compliance
with the PSN Restriction; and (iii) be filed by Customer with the FCC.
- ----------
(1) Alpha Lyracom is required by the FCC to impose and enforce these
restrictions. Alpha Lyracom is actively seeking the elimination of these
restrictions and, to the extent that Alpha Lyracom is successful in having these
restrictions eliminated or reduced, any applicable elimination or reduction
shall apply.
<PAGE> 55
3. PBX Interconnection. Customer shall not, and it shall not
permit any of its customers to, interconnect IDS to a PBX or similar
telephone equipment.(2)
4. Alpha Lyracom Right of Inspection. Alpha Lyracom shall have
the right to inspect Customer's facilities to insure compliance with
the PSN Restrictions, subject to national security requirements.
5. Minimum One-Year Term. Customer's tariffs, other published
terms and conditions of service, and/or agreements with its customers,
governing their receipt of IDS, shall have a minimum term of one year.
6. Customer Enforcement. Customer shall use its reasonable best
efforts to enforce all of the foregoing with respect to all of its
customers. To the extent that Alpha Lyracom may permit Customer to
permit its customers to provide IDS to their customers, Customer shall
require its customers to impose all of the foregoing requirements on
their customers.
- ----------
(2) Under certain additional restrictions that prevent interconnections to
the public-switched message networks, PBX interconnection may be permitted. If
such PBX interconnection is desired, additional information should be requested
from Alpha Lyracom. No such PBX interconnection shall be permitted without Alpha
Lyracom's express written consent and applicable legal compliance.
<PAGE> 56
APPENDIX D
DEFINITIONS
As used in this Agreement, the following capitalized terms have the
following meanings:
"Alpha Lyracom Group" means any or all of the following: Alpha Lyracom,
Pan American Satellite, any and all suppliers of services or equipment thereto,
and all affiliates of such successors, and all officers, directors, employees
and agents of any of the foregoing entities;
"Alpha Lyracom-Provided Facilities" means the Satellite, the Service
Transponder and any facilities to be provided by Alpha Lyracom for a
terrestrial extension of Service.
"Assign" means to grant, sell, assign, encumber, otherwise convey,
license, lease, sublease or permit the utilization of, directly or indirectly,
in whole or in part. An "Assignee," means the recipient of an "Assignment,"
pursuant to the foregoing sentence;
Failure of Service on a "Confirmed Basis" means if, after the Service
Date, Alpha Lyracom fails to furnish Service meeting Service Specifications for
a cumulative period of twelve (12) hours during any consecutive 30 day period.
Any failure of Service shall be measured commencing from the later to occur of
(i) Customer's cessation of use of the Service and (ii) notice from Customer to
Alpha Lyracom of such failure. Any such failure shall be deemed to have ended
upon the earlier to occur of (i) Customer's resumption of the use of the
Service and (ii) notice from Alpha Lyracom to Customer that Service is capable
of meeting the Service Specifications;
"Confirmed Outage" means a failure of Service to meet the Service
Specifications for a continuing and uninterrupted period of four hours or more.
Any such failure shall be measured commencing from the later to occur of (i)
Customer's cessation of use of the Service and (ii) notice from Customer to
Alpha Lyracom of such failure. Any such failure shall be deemed to have ended
upon the earlier to occur of (i) Customer's resumption of the use of the
Service and (ii) notice from Alpha Lyracom to Customer that Service is capable
of meeting the Service Specifications;
<PAGE> 57
D-2-
"Customer-Provided Facilities" means all facilities necessary to the
provision, receipt, or use of the Service other than those facilities expressly
delivered as Alpha Lyracom-Provided Facilities;
"Domestic Data Space Segment Service" means space segment satellite
reception and retransmission service supplied in outerspace by Alpha Lyracom for
two-way private line voice and data communications, primarily within Argentina.
"FCC" means the United States Federal Communications Commission and any
successor agency thereto;
"Operational Requirements" means the requirements set forth in Appendix
B;
"Pan American Satellite" means a sole proprietorship which owns the
Satellite (Alpha Lyracom is the exclusive managing agent for Pan American
Satellite with respect to services to be offered from the Satellite);
"Satellite" or "Pas-1" means that certain communications satellite of
the GE astro Space 3000 series type, owned by and licensed to Pan American
Satellite and launched on June 15, 1988;
"Separate Systems Requirements" means the requirements set forth in
Appendix C;
"Service Transponder" means the Transponder, to be designated by Alpha
Lyracom, from which Service shall initially be provided to Customer. In order
to coordinate the provision of Service to Customer with the provision of
Service to other customers on the Satellite, the Service Transponder used to
provide Service may be changed, from time to time, on notice from Alpha
Lyracom to Customer;
"Spare Equipment" means certain spare equipment capacity in the event
of failure of a Transponder. This Spare Equipment consists of the following:
1. For C-Band narrowband Transponder (Transponder Nos. 1
through 12): one spare SSPA (solid-state-power-amplifier)
backing up the six vertically polarized SSPAs and one
spare SSPA backing up the six horizontally polarized SSPAs.
<PAGE> 58
D-3-
2. For C-Band wideband Transponders (Transponder Nos. 13 through
18): one spare TWTA (traveling-wave-tube amplifier) backing up
the three vertically polarized TWTAs and one TWTA backing up
the three horizontally polarized TWTAs.
3. For Ku-Band Transponders (Transponder Nos. 19 through 24):
one spare TWTA backing up the six TWTAs.
"Transponder" means any transponder on the Satellite.
<PAGE> 1
EXHIBIT 10.4
This is a fair and accurate English translation of a Spanish language document
as required by Rule 306(a) Regulation S-T.
/s/ JOSE TORRES
--------------------------
Jose R. Torres
Vice President, Administration
and Chief Accounting Officer
IMPSAT Corporation
October 24, 1996
[75418 430]
CONTRACT
WITH
NAHUEL C1
<PAGE> 2
[75418 431]
SATELLITE FACILITY RENTAL CONTRACT
BETWEEN:
AEROSPATIALE S.N.I., ALCATEL ESPACE S.A., ALENIA SPAZIO S.P.A.,
DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE TELECOMUNICACOES S.A. - TRANSITORY
UNION OF COMPANIES - (hereinafter the "UTE"), on the one hand, represented at
this act by its legal representative Mr. Eckart Schober, and IMPSAT S.A.
(hereinafter the "CLIENT"), on the other hand, represented at this act by Mr.
Ricardo Anibal Verdaguer in his capacity as President of said company.
PREAMBLE
a) The UTE has been declared by the National Executive Branch
of the Argentine Republic as "Awardee", through Decree
No. 153/93 in the National and International Public Tender
for the supply, start-up and operation of a Satellite System.
The UTE will automatically assign its rights and obligations
to the corporation that is organized under Argentine law.
b) The communication satellite system will be implemented
in two phases: the first through an Interim System
using the NAHUEL C-1 and C-2 Satellites , belonging to and
operated by PARACOMSAT S.A. in accordance with an agreement
signed with the UTE, which satellites will provide their
facilities until the traffic of the NAHUEL C-1 and C-2
satellites are transferred to the NAHUEL satellite, expected
to take place by December 31, 1996; and the second through the
Definite System using the NAHUEL Satellite.
c) Since the CLIENT wishes to make use of the communication
satellite system facilities and the UTE wishes to rent
a given Satellite Facility through transponders of the NAHUEL
C1 satellite, the Parties agree according to the following
Satellite Facility Rental Contract (hereinafter the
"Contract"), a copy of which is submitted to PARACOMSAT S.A.
FOR THOSE PURPOSES, THE PARTIES AGREE TO THE FOLLOWING:
ARTICLE 1
1.1 ATTACHMENTS
The Attachments to the Contract, which are identified below, are an integral
part of same.
a) Attachment A is made up of the Access Form that, on a
quarterly basis, the CLIENT must submit and the SUPPLIER must
accept. Also, on a quarterly basis, the CLIENT shall submit
the transmission and frequency plan to proceed to transmit the
signal(s) with access at the Assigned Capacity.
1
<PAGE> 3
[75418 432]
b) Attachment A1 is made up of the affidavit on the signal(s) to
be transmitted and on the equipment of the transmitter earth
station(s) proposed by the CLIENT that, on a quarterly basis,
the CLIENT shall submit and the SUPPLIER shall accept before
proceeding to transmit the signal(s) with access at the
Assigned Capacity.
c) Attachment A2 establishes the operating characteristics,
technical specifications and obligations of each transmitter
earth station proposed by the CLIENT.
d) Attachment A3 establishes the technical characteristics and
minimum operating parameters of the NAHUEL C1 Satellite.
e) Attachment A4 describes procedures for access to the Assigned
Capacity in order to initiate and reinitiate transmission
operations.
f) Attachment B1 includes the rental rates for Assigned Capacity
at the NAHUEL C1.
1.2 DEFINITIONS
a) The name of "SUPPLIER" shall be given to the UTE or its
assignee in accordance with point a) of the Preamble and
article 10 of this Contract.
b) "Satellite Facility" is the total bandwidth and power of the
Space Segment.
c) "Assigned Capacity" is the part of the Satellite Facility
rented by the CLIENT in accordance with this Contract.
d) "Assigned Satellite" means the NAHUEL C-1 Satellite described
in Attachment A3.
e) "NAHUEL C-1 Satellite" is the NAHUEL C-1 Satellite in orbit.
f) "NAHUEL Satellite" is the satellite that will be placed in
orbit by the SUPPLIER for the purpose of replacing, in due
course, the NAHUEL C-1 and C-2 Satellites.
g) "Space Segment" is the NAHUEL C-1, NAHUEL C-2 and NAHUEL
Satellites.
h) "Operating Period" is the period during which the CLIENT will
have the right to use the Assigned Capacity, as set out in
article 5.
i) "Unavailable", with respect to the Assigned Capacity, means
that said capacity has been declared as Unavailable, in
accordance with the stipulations of article 4.3 and in
Attachment A3.
2
<PAGE> 4
[75418 433]
j) "Assigned Transponder" is the transponder of the Assigned
Satellite that has the Assigned Capacity.
k) "Available Power" is the maximum power of the progressive wave
tube amplifier that will be allowed to be transmitted on the
Assigned Transponder.
l) "Available Bandwidth" of the Assigned Transponder is the
bandwidth of the Assigned Transponder.
ARTICLE 2
The purpose of the Contract is the rental of the Assigned Capacity provided by
the SUPPLIER to the CLIENT, subject to the rights and obligations set out in
the Contract.
The purpose of the Contract does not include the supply of the earth stations
or the earth segment, nor the supply of earth transmission facilities or
services. Ownership, operation, design and adaptation of the earth segment to
the Space Segment is for the account and sole responsibility of the CLIENT.
ARTICLE 3
3.1 The Capacity Assigned to the CLIENT consists of six (6) Mega-Hertz
(hereinafter "MHz") in a transponder of the NAHUEL C1 Satellite in
geostationary orbit of the vertical polarization starting on October
1, 1993 until December 31, 1996 in accordance with the rates described
in Attachment B1.
3.2 The Available Bandwidth of the Assigned Transponder is fifty (50) MHz.
3.3 The percentage of the Available Bandwidth corresponding to the
Assigned Capacity is twelve percent (12%).
3.4 The Available Power of the Assigned Transponder corresponds to an
output back-off of 4.5 decibels (hereinafter "db") of the applicable
progressive wave tube amplifier.
3.5 The maximum percentage of the Available Power of the Assigned
Transponder which the CLIENT will have the right to use is twelve
percent (12%). This percentage corresponds to a total input back-off
of all carriers at the Assigned Capacity of 13.7 (thirteen point
seven) db of the applicable progressive wave tube amplifier.
3.5.1 If the CLIENT wishes to use a percentage of the Available
Power of the Assigned Transponder that is higher than that
established in article 3.5, it shall so request it of the
SUPPLIER, in writing, and the latter will establish if it is
possible and will determine the increase in rate that the
CLIENT must pay.
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3.6 The SUPPLIER shall supply, in exclusive manner and on a full-time
basis, the Capacity Assigned to the CLIENT for its use, all in
agreement with the technical and operation characteristics and
conditions set out in the Attachments of this Contract.
3.7 To make use of the Assigned Capacity, the CLIENT shall:
(a) be holder of the pertinent license, authorization or permit
for use of the Assigned Capacity granted by the pertinent
authority of the Argentine Republic; and
(b) fill out and sign as affidavits Attachments A and A1 on a
quarterly basis in order to access the Assigned Capacity.
3.7.1 If the pertinent license, authorization or permit of
which the CLIENT is holder in accordance with article 3.7
should be rendered null and void or should be extinguished for
any reason, the CLIENT shall immediately cease transmission of
the signal(s) the license, authorization or permit for which
was rendered null and void or extinguished. if the CLIENT
should fail to comply with said obligation, the SUPPLIER may
notify him so that it proceeds to comply with same in a period
of 72 hours. Once this period lapses, the SUPPLIER will have
the right to terminate the contract, and this rescission shall
not generate the right to any indemnity whatsoever in favor of
any of the parties. In the case stipulated in this article,
the CLIENT will have the right to rescind the contract at any
time, and this shall not generate an indemnity whatsoever in
favor of either of the parties.
ARTICLE 4
4.1 So long as the Space Segment is operative, the SUPPLIER shall perform
the traffic monitoring that it deems necessary to determine if there
is any interference that affects the Space Segment. The SUPPLIER may
perform the necessary tests to verify the condition of the Space
Segment.
4.2 To fulfill the stipulations of article 4.1, the SUPPLIER will
have the right to periodically inspect the transponder(s) of the Space
Segment. In such case, the SUPPLIER shall coordinate such inspections
and tests, which may include disruptions to the CLIENT's traffic so
that they are performed at a time of the day and on a day in the week
that minimizes the impact on the CLIENT's traffic, and it shall
coordinate the tests and inspections in question with the CLIENT at
least 30 (Thirty) days beforehand, except in the case of urgency,
where this period of time may be reduced.
The disruptions to the CLIENT's traffic referred to in this
article may not exceed 3.5 hours in a period of one calendar year. If
the 3.5 hours in question are exceeded, the CLIENT shall be exempt
from paying the monthly rental price of the Assigned Capacity
proportionately to the time that the excess disruption lasted.
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4.3 In case the Assigned Capacity becomes Unavailable, as set out in
Attachment A3, the SUPPLIER shall have 48 hours from receipt of the
CLIENT's notification in which to confirm such unavailability. The
SUPPLIER agrees to exert its maximum efforts, if the CLIENT should so
request it, to replace the Unavailable Assigned Capacity with another
Satellite Facility available on the Assigned Satellite or, absent
that, on the Space Segment. It is expressly agreed that the SUPPLIER
shall in no case be liable if it cannot replace the assigned Capacity
that becomes unavailable. In the event that the Assigned Capacity that
becomes Unavailable is not replaced by the SUPPLIER, the contract will
be rescinded for both parties as of the date on which the SUPPLIER
notifies the CLIENT that the replacement will not go forward, and the
parties will have no right to make claims against each other for any
reason.
4.4 If the Assigned Capacity is replaced in accordance with clause 4.3,
the Parties will sign a supplementary agreement to include in the
Contract the necessary amendments as to the terms and conditions of
the rental for the replacement Assigned Capacity. The amendments to
the Contract shall not produce variations with respect to the tariffs
agreed upon in the Contract provided the replacement satellite
facility has operating parameters equivalent to the Assigned Capacity.
4.5 If the replacement Assigned Capacity does not have at least the
technical characteristics and the minimum operating parameters of the
NAHUEL C1 Satellite set out in Attachment A3 of the Contract, the
CLIENT may declare the contract rescinded starting on the ate on which
the CLIENT so notifies the SUPPLIER, and the parties will have no
right make claims against each other for any reason.
4.6 During the time that the Assigned Capacity is Unavailable, in
accordance with article 4.3, the CLIENT shall be exempt from paying
the price of the Assigned Capacity starting on when the CLIENT has
notified such unavailability and as long as it remains Unavailable.
ARTICLE 5
The Operating Period will begin on the date established in article 3.1, the
moment when the Assigned Capacity was made available to the CLIENT, and it will
end on December 31, 1996.
ARTICLE 6
The price that the CLIENT shall pay for rental of the Assigned Capacity is
established in Attachment B1 of this Contract
ARTICLE 7
5
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7.1 The CLIENT shall formalize a Contract guarantee deposit for an amount
equal to the price of one month of rent of the Assigned Capacity. The
SUPPLIER shall deduct from the deposit the amounts owed by the CLIENT
at the time the Contract ends. The client may not apply such deposit
to the payments that it owes the SUPPLIER during the life of the
Contract, nor may it apply it to payment of the price of the rent.
Said deposit will be returned once the Contract is ended, if there is
no debt whatsoever, within 48 (Forty-eight) Hours of the date of end
of the Operating Period. The sum given in deposit will accrue annual
interest established by the LIBOR rate.
7.2 The price of rental of the Assigned Capacity shall be paid by the
CLIENT to the SUPPLIER in advance, from the 1st (first) to the 5th
(fifth) of each month, in accordance with the amounts established in
Attachment B1, in monthly and consecutive payments. Default in payment
will operate automatically, without the need for any notification or
summons whatsoever.
7.2.1 The price established in Attachment B1 does not
included the Value Added Tax (VAT). The SUPPLIER is seeking
before the National Executive Branch recognition that its
activity is not subject to taxes, in accordance with article X
of the Award Contract approved by the National Executive
Branch. The CLIENT agrees to pay the Value Added Tax if
ultimately the enforcement authority should rule that the
rental for the Assigned Capacity is subject to such tax. Any
new tax, levy or contribution imposed on the rental of the
Assigned Capacity shall be for the account of the CLIENT.
7.2.2 Failure by the CLIENT to pay the total of the
price of 3 (three) monthly rentals, in addition to the
pertinent punitive interest, will have the SUPPLIER the right
to terminate the Contract after a demand to the CLIENT that it
pay the totality of the sums owed in a period of 5 (five)
working days. If the CLIENT does not comply with the demand,
the termination will go into effect starting on the date on
which the SUPPLIER communicates, in authentic manner,
termination of the Contract. Once the termination takes place
as a matter of law, the SUPPLIER shall have the full right to
avail itself of the Assigned Capacity.
7.3 All the sums that the CLIENT must pay for any reason by virtue of this
Contract with respect to the Assigned Capacity provided through the
NAHUEL C1 Satellite shall be paid to PARACOMSAT S.A. at the express
indication of the SUPPLIER. PARACOMSAT S.A. will notify the CLIENT in
writing of the bank account, in the Argentine Republic or in the
United States of America, where it must deposit the respective
payments. Payment invoices will be issued by PARACOMSAT S.A. with
authorization from the SUPPLIER. Payment receipts for the NAHUEL C1
Satellite will be issued by PARACOMSAT S.A. with authorization from
the SUPPLIER, and they will be sufficient to credit payments made by
the CLIENT.
6
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7.4 All payments established in the Contract shall be made in U.S.
dollars. In the event that U.S. dollars cannot be acquired on the
Argentine market, the CLIENT shall pay in the amount of Pesos (or
Argentine legal tender) using for its conversion the exchange rate
resulting from the acquisition in Montevideo, Eastern Republic of
Uruguay or in New York, United States of America, the amount of
dollars agreed upon with pesos or Bonex of the Argentine National
Government, at the SUPPLIER's option. All expenses, commissions,
levies and taxes shall be for the CLIENT's account. The CLIENT waives
the right to invoke the "Theory of Lack of Foresight" (art. 1198 of
the Civil Code) to exempt itself from any payment obligation agreed
upon in the Contract.
7.5 Once the payment periods agreed upon in the Contract lapse, the
amounts owed shall accrue compensatory and punitive interest at the
rate of one and one half percent (1.5%) monthly until the time of
actual payment.
7.6 The CLIENT shall comply with the technical and operating
characteristics specified in Attachments A to A4 and those established
by the National Telecommunications Commission (CNT).
7.6.1 If the client should cause adverse effects or
interference to the Space Segment, to other satellites or to
other radio communications stations or services:
7.6.1.1 it shall immediately cease the adverse effect or
interference and immediately lower the respective
signal(s), performing and facilitating, in turn, all
necessary actions for the immediate solution of the
adverse effects or interference.
7.6.1.2 it shall liable for all consequences arising from the
adverse effect or interference and shall indemnify
the SUPPLIER for all damage caused by the adverse
effect or interference and any claim made against in
connection with same by the pertinent authority or
any third party, and the provisions of article 8.3
shall be applied, the professionals indicated by the
CLIENT being named at the latter's expense.
7.6.2 In the case stipulated in article 7.6.1, without prejudice to
the steps taken by the CLIENT, the SUPPLIER will have the
right to perform any action aimed at eliminating the adverse
effect or interference to which said article refers, including
suspension or interruption of the signal(s) in question, after
a communication. In order to take these measures, the SUPPLIER
shall have proven beforehand the interference with graphical
or photographic records made using calibrated instruments of a
recognized brand.
7
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[75418 438]
7.6.3 The suspension or disruption to which article 7.6.2 refers
will persist until the SUPPLIER verifies that the CLIENT is
not causing the adverse effects or interference in question
and has adapted to the applicable technical and operating
characteristics during the period that suspension or
disruption lasts, the CLIENT shall continue paying the price
of the rental of the Assigned Capacity in full and complete
manner without any discount.
7.6.4 If the CLIENT does not comply with the obligation specified in
article 7.6.1.1, the SUPPLIER shall demand that the CLIENT
complies with its obligation in the period of time that must
be set according to the circumstances of the case and proper
protection of other clients of the Space Segment, other
satellites or other stations or services of radio
communications under warning of what is stipulated in article
7.6.5, at the SUPPLIER's option.
7.6.5 In the event of the CLIENT's failure to comply with the
stipulations of article 7.6.1.1 the SUPPLIER may opt to:
7.6.5.1 terminate the access included in Attachment A
and A1 corresponding to the signal(s) causing
the adverse effects or interference, or
7.6.5.2 terminate this Contract as a matter of law.
7.6.6 Exercise of the option stipulated in article 7.6.5.1 does not
prevent exercise of the option stipulated in article 7.6.5.2.
7.6.7 In the case specified in article 7.6.5.1, the CLIENT shall
continue paying the price of the rental for the Assigned
Capacity fully and completely, without any discount
whatsoever. The CLIENT shall comply with article 3.7 in order
to once more access the Assigned Capacity.
7.6.8 In the case specified in article 7.6.5.2 the termination will
go into effect starting on the date when the SUPPLIER notifies
the CLIENT of termination of the Contract. Once the
termination takes place as a matter of law, the SUPPLIER shall
have the full right to avail itself of the Assigned Capacity.
The CLIENT shall lose its rights under the Contract and shall
pay to the SUPPLIER in one lump-sum - in accordance with
article 7.3 - under the penalty clause and without prejudice
to the damages that might be applicable in accordance with the
stipulations of article 7.6.1.2 fifteen percent (15%) of the
amount corresponding to the remaining balance of the price of
the rentals stipulated in the contract counted from the date
on which the termination became effective, which amount may
not be less than the amount equal to five (5) months of rent
for the service under contract, all this according to the
amounts established in Attachment B1.
8
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[75418 439]
7.7 If this Contract is terminated for the reason set out in article
7.2.2, the CLIENT shall lose its rights under the Contract and shall
pay to the SUPPLIER in one lump-sum - in accordance with article 7.3 -
under the penalty clause and without prejudice to the damages that
might be applicable in accordance with the stipulations of article
7.6.1.2, the totality of the price of the remaining rental of the
price of the rents stipulated in the Contract as of the date on which
the termination went into effect, according to the amounts established
in Attachment B1, but in no case less than the price of six (6) months
of rent.
7.8 The CLIENT may rescind this Contract through an advance notice
notified in authentic manner to the SUPPLIER at least three (3) months
before the effective date of rescission. In that case the CLIENT shall
pay to the SUPPLIER - in accordance with article 7.3 - as indemnity,
in one lump sum, a sum equal to fifteen percent (15%) of the amount
corresponding to the remaining balance of the Contract counted from
the effective date of termination, which sum may not be less than the
amount equal to two (2) months of rent for the service under contract,
all this according to the amounts established in Attachment B1.
ARTICLE 8
8.1 The SUPPLIER and/or PARACOMSAT S.A. shall not be liable for any loss
or damage suffered by the CLIENT, including, but not limited to the
loss of use, income or profits, damage caused by inability or
impossibility of the SUPPLIER to grant the Assigned Capacity, by
conclusion, interruption and/or suspension of the availability of said
Assigned Capacity or degradation of the technical characteristics of
the Assigned Capacity,
8.2 The CLIENT shall liable, shall hold harmless and/or indemnify the
SUPPLIER and/or PARACOMSAT S.A. from any loss, damage, claim liability
or expense resulting from:
8.2.1 Any slander, defamation, abusive interference in the private
life or violation or copyright arising from use of the
Assigned Capacity.
8.2.2 Any violation of patents resulting from (a) use of devices and
systems of the CLIENT, its users, clients, contractors,
lessors, representatives or assignees, in combination or with
respect to the Assigned Capacity, or (b) from use of the
assigned capacity in any manner not envisaged by the SUPPLIER
or PARACOMSAT S.A. and over which the latter do not exercise
any control.
8.2.3 All acts or omissions of IMPSAT, its users, clients,
contractors, lessors, representatives, agents or employees and
assignees with respect to use of the Assigned Capacity.
9
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[75418 440]
8.2.4 All claims from third parties that in some way are related to
quality, the manner or contents of any program, show or
information transmitted by the CLIENT or any of its users of
the services permitted and authorized by same; or due to any
failure, regardless of the cause, in complying with an
obligation toward another person for the transmission of
information, a program or show.
8.3 The SUPPLIER shall immediately notify the CLIENT of any demand and/or
administrative claim for indemnity arising under paragraph 8.2, and it
shall not accept nor shall it settle, without the CLIENT's consent and
at its expense, any claim that should be made. Furthermore, the
SUPPLIER agrees to cooperate reasonably with the CLIENT in such
procedures. The CLIENT may propose professional defenses, means or
evidence or any other act or judicial step that it deems convenient.
ARTICLE 9
The CLIENT may not sub-rent or assign this Contract or the rights and
obligations arising from same. The CLIENT may only use the Assigned Capacity in
accordance with the purpose of the license, authorization or permit to which
article 3.7 of the Contract refers. The SUPPLIER is not liable for the use that
the CLIENT makes of the Assigned Capacity.
ARTICLE 10
The Parties agree that all the rights and obligations arising under this
Contract with respect to the UTE as SUPPLIER shall be assigned automatically by
the UTE to the corporation organized by the SUPPLIER and shall be in effect
with respect to the UTE's assignee in accordance with point a) of the Preamble
to this Contract. The CLIENT is aware of said circumstance and lends its
agreement at this act to the assignment in question.
ARTICLE 11
The Parties to this Contract shall not be liable for default of its obligations
for reasons of Force Majeure.
The following phenomena shall be considered reasons of Force Majeure, without
being limited to them: catastrophe, explosion, fire, flooding, earthquakes, war
(declared or undeclared), government acts, labor strikes, or other cases not
foreseen within the reasonable control of the Parties.
10
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[75418 441]
ARTICLE 12
Each one of the Parties that receives from the other information of a private
nature or expressed declared as such agrees to protect and keep such
information confidential.
ARTICLE 13
13.1 This Contract shall be governed and interpreted in accordance with
laws in effect in the Argentine Republic.
13.2 If any provision of this Contract is considered invalid or otherwise
unenforceable or undemandable, it shall not affect the validity,
enforcement and demandability of the rest of the provisions of the
Contract.
13.3 Any conflict that should arise or result from interpretation of this
Contract and that cannot be settled amicable between the Parties shall
be submitted to arbitration by the American Association of
Arbitration, New York, United States of America, in accordance with
its arbitration and settlement rules. Arbitration shall take place in
Buenos Aries, and its decision shall be final and binding to the
Parties.
ARTICLE 14
Either of the Parties may terminate this Contract if under the regulations of
the International Telecommunications Union (ITU), restrictions should be
imposed on use of the Assigned Capacity such that it significantly obstructs
the scope of the uses described in the Attachments to the Contract or if the
necessary government authorizations are not granted to the SUPPLIER or if they
are granted and are revoked by the Argentine Government or ends the government
authorization granted to the SUPPLIER. In such cases, as in the cases of clause
8.1 of the Contract, the CLIENT may not claim from the SUPPLIER or from
PARACOMSAT S.A., directly or indirectly, any sum whatsoever for direct or
indirect liability, indemnity, damages or for any other reason.
ARTICLE 15
The parties agree not to disclose to any third party and to keep as
confidential the terms and conditions of this Contract. The commitment assumed
herein shall be respected by any client and/or employee of the parties under
the sole responsibility of each one of them.
11
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[75418 442]
ARTICLE 16
This Contract shall go into effect after the signing by both Parties and shall
end as stipulated in Article 3.1 or upon the end of any extension period
stipulated in accordance with Article 5.
The parties establish a special domicile for all purposes of this Contract
where notifications sent shall e valid:
THE SUPPLIER at Belgrano 615, 6th floor, city of Buenos Aires, Argentina, and
THE CLIENT at Alferez Pareja 256, city of Buenos Aires, Argentina.
As evidence of agreement, the parties sign three copies with the same contents
and for one sole purpose in the city of Buenos Aires on the 5th day of the
month of November 1993.
[signature] [signature]
- ----------- -----------
UTE CLIENT
12
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[75418 443]
ADDITIONAL CLAUSE I; PARACOMSAT S.A., with domicile at 25 de Mayo 516, 6th
floor, Buenos Aires, represented by Dr. Bartolome Luis Mitre, in his capacity
as President, with full knowledge of the terms of this Contract becomes
straightforward cosurety and main obligor (article 2005 of the Civil Code),
waiving the benefits of discussion and division, of the obligations for which
the SUPPLIER is responsible arising under the Contract. This guarantee will be
valid only as long as the Contract includes exclusively the Assigned Capacity
in NAHUEL C1 Satellite.
[signature] [signature]
- ----------- -----------
UTE CLIENT
[signature]
- -----------
PARACOMSAT S.A.
13
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[75418 444]
EXPANSION OF CONTRACT
BETWEEN:
AEROSPATIALE Societe Nationale Industrielle, ALENIA SPAZIO Societa per
Azioni and DEUTSCHE AEROSPACE Aktiengesselschaft - TRANSITORY UNION OF
COMPANIES (hereinafter the "UTE"), on the one hand, represented at this act by
its legal representative Mr. Eckart Schober, and
IMPSAT S.A. (hereinafter the "CLIENT") on the other hand, represented
at this act by the Accountant Mr. Jose Ramon Torres and Licenciado Mr. Roberto
Abel Vivo Chaneton, in their capacity as attorneys-in-fact, hereinafter jointly
called the "Parties" and WHEREAS:
The CLIENT wishes to expand the Assigned Capacity rented under the Satellite
Facility Rental Contract signed by the Parties on November 5, 1993 (hereinafter
the "Contract") beginning on February 1, 1994, by nine (9) additional Mega
Hertz (hereinafter "MHz"); and WHEREAS,
In order to formalize the expansion in question, it is necessary to replace
certain articles of the Contract; and WHEREAS,
Except for the amendments that are expressly stipulated in this Expansion, what
is agreed upon in the Contract and its Attachments shall remain in effect in
all its terms.
Therefore, the Parties AGREE:
1.- That the Assigned Capacity, beginning on February 1, 1994, shall be
expanded to a total of fifteen (15) MHz.
2.- Given the new capacity that the CLIENT will have available beginning
on February 1, 1994, Attachment B1 to the Contract will be replaced
with a new Attachment called B1-I- that describes the rates applicable
to the new Assigned Capacity beginning on February 1, 1994.
3.- To replace, effective on the date mentioned in article 1, articles
3.1, 3.2, 3.3, 3.4 and 3.5 of the Contract with the following,
identifiable with the same numbering:
[three illegible signatures] Lic. ROBERTO VIVO CHANETON
VICE PRESIDENT
1
<PAGE> 16
[75418 445]
"3.1 The Capacity Assigned to the CLIENT consists of fifteen (15)
Mega-Hertz (hereinafter "MHz") in a transponder of the NAHUEL C1
Satellite in "geostationary orbit of the vertical polarization
starting on October 1, 1993 until December 31, 1996 in accordance with
the rates described in Attachment B1-II.
"3.2 The Available Bandwidth of the Assigned Transponder is fifty (50) MHz.
3.3 The percentage of the Available Bandwidth corresponding to the
Assigned Capacity is thirty-eight percent (38%).
3.4 The Available Power of the Assigned Transponder corresponds to an
output back-off of 4.5 decibels (hereinafter "db") of the applicable
progressive wave tube amplifier.
3.5 The maximum percentage of the Available Power of the Assigned
Transponder which the CLIENT will have the right to use is
thirty-eight percent (38%). This percentage corresponds to a total
input back-off of all carriers at the Assigned Capacity of eight point
seven (8.7) db of the applicable progressive wave tube amplifier."
4.- In view of such Expansion, the CLIENT pays at this act the sum of
nineteen five hundred Pesos ($19,500) as an increase in the deposit in
guarantee set out in article 7.1 of the Contract, which hereinafter
will be for a total of one hundred one thousand five hundred Pesos
($101,500). It is expressly agreed that article 7.1 retains its entire
validity unless as herein stipulated.
5.- Except for what is expressly amended by the Expansion dated 2-8-1994
and by this expansion, the Contract shall remain in effect in its
original text, including the Attachments that are part of same.
The parties ratify the special domiciles established:
THE SUPPLIER at Belgrano 615, 6th floor, city of Buenos Aires, Argentina, and
THE CLIENT at Alferez Pareja 256, city of Buenos Aires, Argentina.
As evidence of agreement, the parties sign two (2) copies with the same
contents and for one sole purpose in the city of Buenos Aires on the 8th day of
the month of February 1994.
/s/ /s/
ECKART SCHOBER Lic. ROBERTO VIVO CHANETON
LEGAL REPRESENTATIVE VICE PRESIDENT
- 2 -
<PAGE> 17
[75418 446]
ATTACHMENT B1-I
PARACOMSAT S.A. - NAHUEL C-1 Satellite
The price that the CLIENT shall pay for rental of the Assigned Capacity at the
NAHUEL C-1 Satellite is the following:
- - Between October 1, 1993 to December 31, 1993: US$ 108,000 payable in
three (3) monthly, equal and consecutive installments of US$ 36,000.
- - Between January 1, 1994 to January 31, 1994: US$ 36,000 payable in one
single installment.
- - Between February 1, 1994 to December 31, 1994: US$ 902,000 payable in
eleven (11) monthly, equal and consecutive installments of US$ 82,000.
- - Between January 1, 1995 to December 31, 1995: US$ 984,000 payable in
twelve (12) monthly, equal and consecutive installments of US$ 82,000.
- - Between January 1, 1996 to December 31, 1996: US$ 984,000 payable in
twelve (12) monthly, equal and consecutive installments of US$ 82,000.
/s/ /s/
ECKART SCHOBER Lic. ROBERTO VIVO CHANETON
LEGAL REPRESENTATIVE VICE PRESIDENT
- 3 -
<PAGE> 18
[75418 447]
EXPANSION OF CONTRACT
BETWEEN:
AEROSPATIALE Societe Nationale Industrielle, ALENIA SPAZIO Societa per
Azioni and DEUTSCHE AEROSPACE Aktiengesselschaft - TRANSITORY UNION OF
COMPANIES (hereinafter the "UTE"), on the one hand, represented at this act by
its legal representative Mr. Eckart Schober, and
IMPSAT S.A. (hereinafter the "CLIENT") on the other hand, represented
at this act by the Accountant Mr. Jose Ramon Torres and Licenciado Mr. Roberto
Abel Vivo Chaneton, in their capacity as attorneys-in-fact of said company,
hereinafter jointly called the "Parties" and WHEREAS:
The CLIENT wishes to expand the satellite facility rented according to the
Satellite Facility Rental Contract signed on November 5, 1993 between the
CLIENT and AEROSPATIALE S.N.I., ALCATEL ESPACE S.A., ALENIA SPAZIO S.P.A.,
DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE TELECOMUNICACOES S.A. - TRANSITORY
UNION OF COMPANIES - (hereinafter the "Contract") and the expansion to same
signed between the Parties on February 8, 1994 (hereinafter the "Expansion
dated 2-8-1994"); and WHEREAS,
The CLIENT wishes to expand the satellite facility rented by four (4)
additional Mega-Hertz (hereinafter the "MHz); and WHEREAS,
In order to formalize the expansion in question, it is necessary to replace
certain articles of the Contract, duly amended by the Expansion dated 2-8-1994.
Therefore, the Parties AGREE:
1.- That the satellite facility that the CLIENT is renting will be
expanded to a total of nineteen (19) MHz (hereinafter the "Assigned
Capacity") beginning on April 1, 1994.
2.- Given the Assigned Capacity that will be available to the CLIENT, to
replace Attachment B1-I- of the Contract, in accordance with the
Expansion dated 2-8-1994, with a new Attachment called B1-II- that
describes the rates applicable to said Assigned Capacity beginning on
April 1, 1994.
- 1 -
<PAGE> 19
[75418 448]
ATTACHMENT B1-II
PARACOMSAT S.A. - NAHUEL C-1 Satellite
The price that the CLIENT shall pay for rental of the Assigned Capacity at the
NAHUEL C-1 Satellite is the following:
- - Between October 1, 1993 to December 31, 1993: US$ 108,000 payable in
three (3) monthly, equal and consecutive installments of US$ 36,000.
- - Between January 1, 1994 to January 31, 1994: US$ 36,000 payable in one
single installment.
- - Between February 1, 1994 to March 31, 1994: US$ 164,000 payable in two
(2) monthly, equal and consecutive installments of US$ 82,000.
- - Between April 1, 1994 to December 31, 1994: US$ 913,500 payable in
nine (9) monthly, equal and consecutive installments of US$ 101,500.
- - Between January 1, 1995 to December 31, 1995: US$ 1,218,000 payable in
twelve (12) monthly, equal and consecutive installments of US$
101,500.
- - Between January 1, 1996 to December 31, 1996: US$ 1,218,000 payable in
twelve (12) monthly, equal and consecutive installments of US$
101,500.
- 2 -
<PAGE> 20
[75418 449]
[repeat of 75418 448]
- 3 -
<PAGE> 21
[75418 450]
[repeat of 75418 447]
- 4 -
<PAGE> 22
[75418 451]
3.- To replace, effective on the date mentioned in article 1, articles
3.1, 3.2, 3.3, 3.4 and 3.5 of the Contract, amended by the Expansion
dated 2-8-1994, with the following, identifiable with the same
numbering:
"3.1 The Capacity Assigned to the CLIENT consists of nineteen (19) MHz in a
transponder of the NAHUEL C1 Satellite in geostationary orbit of the
vertical polarization starting on April 1, 1994 until December 31,
1996 in accordance with the rates described in Attachment B1-II.
"3.2 The Available Bandwidth of the Assigned Transponder is fifty (50) MHz.
3.3 The percentage of the Available Bandwidth corresponding to the
Assigned Capacity is thirty-eight percent (38%).
3.4 The Available Power of the Assigned Transponder corresponds to an
output back-off of 4.5 decibels (hereinafter "db") of the applicable
progressive wave tube amplifier.
3.5 The maximum percentage of the Available Power of the Assigned
Transponder which the CLIENT will have the right to use is
thirty-eight percent (38%). This percentage corresponds to a total
input back-off of all carriers at the Assigned Capacity of eight point
seven (8.7) db of the applicable progressive wave tube amplifier."
4.- In view of such Expansion, the CLIENT pays at this act the sum of
nineteen five hundred Pesos ($19,500) as an increase in the deposit in
guarantee set out in article 7.1 of the Contract, which hereinafter
will be for a total of one hundred one thousand five hundred Pesos
($101,500). It is expressly agreed that article 7.1 retains its entire
validity unless as herein stipulated.
5.- Except for what is expressly amended by the Expansion dated 2-8-1994
and by this expansion, the Contract shall remain in effect in its
original text, including the Attachments that are part of same.
The UTE establishes a new domicile for purposes of the Contract and its
respective expansions at Lavalle 472, 3rd floor, city of Buenos Aires,
Argentina, and
- 5 -
<PAGE> 23
[75418 452]
The CLIENT ratifies that duly established at Alferez Pareja 245, city of Buenos
Aires, Argentina.
As evidence of agreement, the parties sign two (2) copies with the same
contents and for one sole purpose in the city of Buenos Aires on the 7th day of
the month of April 1994.
/s/ /s/ Roberto Vivo
ECKART SCHOBER
LEGAL REPRESENTATIVE
- 6 -
<PAGE> 24
[75418 453]
EXPANSION OF CONTRACT
BETWEEN:
AEROSPATIALE Societe Nationale Industrielle, ALENIA SPAZIO Societa per
Azioni and DEUTSCHE AEROSPACE Aktiengesselschaft - TRANSITORY UNION OF
COMPANIES (hereinafter the "UTE"), on the one hand, represented at this act by
its legal representative Mr. Eckart Schober, and
IMPSAT S.A. (hereinafter the "CLIENT") on the other hand, represented
at this act by the Accountant Mr. Jose Ramon Torres and Licenciado Mr. Daniel
Vicente Hourquescos in their capacity as attorneys-in-fact of said company,
hereinafter jointly called the "Parties" and WHEREAS:
The CLIENT signed, on November 5, 1993, a Satellite Facility Rental Contract
(hereinafter the "Contract") with "AEROSPATIALE S.N.I., ALCATEL ESPACE S.A.,
ALENIA SPAZIO S.P.A., DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE
TELECOMUNICACOES S.A. - TRANSITORY UNION OF COMPANIES"; and WHEREAS,
The transitory union of companies called "AEROSPATIALE S.N.I., ALCATEL ESPACE
S.A., ALENIA SPAZIO S.P.A., DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE
TELECOMUNICACOES S.A. - TRANSITORY UNION OF COMPANIES" was replaced by the UTE;
and WHEREAS,
The Parties signed a first and a second expansion of the Contract dated
February 8, 1994 (hereinafter the "Expansion dated 2-8-1994") and dated April
7, 1994 (hereinafter the "Expansion dated 4-7-1994"), respectively; and
WHEREAS,
The CLIENT wishes to expand by six (6) additional Mega-Hertz (hereinafter
"MHz") the satellite facility rented according to the Contract and its
expansions; and WHEREAS,
Given the amount of satellite facility that the CLIENT wishes to rent, same
will be distributed in one or two transponders of NAHUEL C-1 Satellite; and
WHEREAS,
In order to formalize the new expansion, it is necessary to replace article
THREE and amend article SEVEN of the Contract, duly agreed upon, with the
Expansion dated 2-8-1994 and the Expansion dated 4-7-1994. It is also necessary
to replace Attachment B1-II-with a new Attachment.
- 1 -
<PAGE> 25
[75418 454]
Hence, the parties AGREE:
1.- That the satellite facility that the CLIENT is renting shall be
expanded to a total of twenty-five (25) MHz (hereinafter the "Assigned
Capacity") beginning on July 1, 1994.
2.- Given the Assigned Capacity assigned to the CLIENT, to replace
Attachment B1-II- to the Contract, in accordance with the Expansion
dated 4-7-1994, with a new Attachment called B1-III- that describes
the rates applicable to such Assigned Capacity beginning on July 1,
1994.
3.- To replace, effective July 1, 1994, article THREE (3) of the Contract,
agreed upon in the Expansion dated 4-7-1994, with the following:
3.1 The Capacity Assigned to the CLIENT consists of twenty-five (25) MHz
distributed in one or more transponders of the NAHUEL C1 Satellite
starting on July 1, 1994 until December 31, 1996 in accordance with
the rates described in Attachment B1-III.
"3.2 The Available Power of each Assigned Transponder corresponds to an
output backup of four point five (4.5) decibels (hereinafter "db") of
the applicable progressive wave tube amplifier.
3.3 The CLIENT has the right to use a fraction of the Available Power at
each Assigned Transponder in proportion to the fraction of its
Assigned Capacity in the Assigned Transponder(s). The maximum total
fraction of the Available Power at the Assigned Transponder(s)
corresponds to a total output back-off of all the carriers for the
Assigned Capacity of seven point five (7.5) db."
4.- In view of this expansion, the CLIENT pays at this act the sum of
twenty-eight thousand one hundred thirty-six Pesos ($28,136) as an
increase in the deposit in guarantee set out in article 7.1 of the
Contract, which hereinafter will be for a total of one hundred
twenty-nine thousand six hundred thirty-six Pesos ($129,636). It is
expressly agreed that article 7.1 retains its entire validity unless
as herein stipulated.
5.- Except for what is expressly amended by this expansion, the Contract
shall remain in effect in its original text, including the Attachments
that are part of same.
- 2 -
<PAGE> 26
[75418 455]
The UTE ratifies its domicile established for the purposes of the Contract and
of its respective expansions at Lavalle 472, 3rd floor, city of Buenos Aires,
Argentina, and
The CLIENT ratifies that duly established at Alferez Pareja 245, city of Buenos
Aires, Argentina.
As evidence of agreement, the parties sign two (2) copies with the same
contents and for one sole purpose in the city of Buenos Aires on the [14TH?]
day of the month of July 1994.
/s/ [illegible signature]
ECKART SCHOBER
LEGAL REPRESENTATIVE
- 3 -
<PAGE> 27
[75418 456]
ATTACHMENT B1-III
PARACOMSAT S.A. - NAHUEL C-1 Satellite
The price that the CLIENT shall pay for rental of the Assigned Capacity at the
NAHUEL C-1 Satellite is the following:
- - Between October 1, 1993 to December 31, 1993: US$ 108,000 payable in
three (3) monthly, equal and consecutive installments of US$ 36,000.
- - Between January 1, 1994 to January 31, 1994: US$ 36,000 payable in one
single installment.
- - Between February 1, 1994 to March 31, 1994: US$ 164,000 payable in two
(2) monthly, equal and consecutive installments of US$ 82,000.
- - Between April 1, 1994 to June 30, 1994: US$ 304,500 payable in three
(3) monthly, equal and consecutive installments of US$ 101,500.
- - Between July 1, 1994 to December 31, 1994: US$ 777,816 payable in six
(6) monthly, equal and consecutive installments of US$ 129,636.
- - Between January 1, 1995 to December 31, 1995: US$ 1,555,632 payable in
twelve (12) monthly, equal and consecutive installments of US$
129,636.
- - Between January 1, 1996 to December 31, 1996: US$ 1,555,632 payable in
twelve (12) monthly, equal and consecutive installments of US$
129,636.
/s/
ECKART SCHOBER
LEGAL REPRESENTATIVE
- 4 -
<PAGE> 28
[75418 457]
EXPANSION OF CONTRACT
BETWEEN:
AEROSPATIALE Societe Nationale Industrielle, ALENIA SPAZIO Societa per
Azioni and DEUTSCHE AEROSPACE Aktiengesselschaft - TRANSITORY UNION OF
COMPANIES (hereinafter the "UTE"), on the one hand, represented at this act by
its legal representative Mr. Eckart Schober, and
IMPSAT S.A. (hereinafter the "CLIENT") on the other hand, represented
at this act by the Accountant Mr. Jose Ramon Torres and Licenciado Mr. Daniel
Vicente Hourquescos in their capacity as attorneys-in-fact of said company,
hereinafter jointly called the "Parties" and WHEREAS:
The CLIENT signed, on November 5, 1993, a Satellite Facility Rental Contract
(hereinafter the "Contract") with "AEROSPATIALE S.N.I., ALCATEL ESPACE S.A.,
ALENIA SPAZIO S.P.A., DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE
TELECOMUNICACOES S.A. - TRANSITORY UNION OF COMPANIES"; and WHEREAS,
The transitory union of companies called "AEROSPATIALE S.N.I., ALCATEL ESPACE
S.A., ALENIA SPAZIO S.P.A., DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE
TELECOMUNICACOES S.A. - TRANSITORY UNION OF COMPANIES" was replaced by the
SUPPLIER; and WHEREAS,
The Parties signed three expansions of the Contract, the first one dated
February 8, 1994 (hereinafter the "Expansion dated 2-8-1994"), the second one
dated April 7, 1994 (hereinafter the "Expansion dated 4-7-1994"), and the last
one dated July 14, 1994 (hereinafter the "Expansion dated 7-14-1994"),
respectively; and WHEREAS,
The CLIENT wishes to expand by five (5) additional Mega-Hertz (hereinafter
"MHz") the satellite facility rented according to the Contract and its
expansions; and WHEREAS,
Given the amount of satellite facility that the CLIENT wishes to rent, same
will be distributed in one or two transponders of NAHUEL C-1 Satellite; and
WHEREAS,
In order to formalize the new expansion, it is necessary to replace article
THREE and amend article SEVEN of the Contract, duly agreed upon, with the
- 1 -
<PAGE> 29
[75418 458]
Expansion dated 2-8-1994, the Expansion dated 4-7-1994 and the Expansion dated
7-14-1994. It is also necessary to replace Attachment B1-III- with a new
Attachment.
Hence, the parties AGREE:
1.- That the satellite facility that the CLIENT is renting shall be
expanded to a total of thirty (30) MHz (hereinafter the "Assigned
Capacity") beginning on October 1, 1994.
2.- Given the Assigned Capacity assigned to the CLIENT, to replace
Attachment B1-III- to the Contract, in accordance with the Expansion
dated 7-14-1994 with a new Attachment called B1-IV- that describes the
rates applicable to such Assigned Capacity beginning on October 1,
1994.
3.- To replace, effective October 1, 1994, article THREE (3) of the
Contract, agreed upon in the Expansion dated 7-14-1994 with the
following:
3.1 The Capacity Assigned to the CLIENT consists of thirty (30) MHz
distributed in one or more transponders of the NAHUEL C1 Satellite
starting on October 1, 1994 until December 31, 1996 in accordance with
the rates described in Attachment B1-IV.
"3.2 The Available Power of each Assigned Transponder corresponds to an
output backup of four point five (4.5) decibels (hereinafter "db") of
the applicable progressive wave tube amplifier.
3.3 The CLIENT has the right to use a fraction of the Available Power at
each Assigned Transponder in proportion to the fraction of its
Assigned Capacity in the Assigned Transponder(s). The maximum total
fraction of the Available Power at the Assigned Transponder(s)
corresponds to a total output back-off of all the carriers for the
Assigned Capacity of six point seven (6.7) db."
4.- In view of this expansion, the CLIENT pays at this act the sum of
twenty-two thousand eight hundred sixty ($22,860) Pesos as an increase
in the deposit in guarantee set out in article 7.1 of the Contract,
which hereinafter will be for a total of one hundred fifty-two
thousand five hundred Pesos ($152,500). It is expressly agreed that
article 7.1 retains its entire validity unless as herein stipulated.
- 2 -
<PAGE> 30
[75418 459]
5.- Except for what is expressly amended by this expansion, the Contract
shall remain in effect in its original text, including the Attachments
that are part of same.
The SUPPLIER ratifies its domicile established for the purposes of the Contract
and of its respective expansions at Lavalle 472, 3rd floor, city of Buenos
Aires, Argentina, and
The CLIENT ratifies that duly established at Alferez Pareja 245, city of Buenos
Aires, Argentina.
As evidence of agreement, the parties sign two (2) copies with the same
contents and for one sole purpose, their pages written only on the obverse, in
the city of Buenos Aires on the 30th day of the month of September 1994.
/s/
ECKART SCHOBER
LEGAL REPRESENTATIVE
- 3 -
<PAGE> 31
[75418 460]
ATTACHMENT B1-IV
Rates - NAHUEL C-1 Satellite
The price that the CLIENT shall pay for rental of the Assigned Capacity at the
NAHUEL C-1 Satellite is the following:
- - Between October 1, 1993 to December 31, 1993: US$ 108,000 payable in
three (3) monthly, equal and consecutive installments of US$ 36,000.
- - Between January 1, 1994 to January 31, 1994: US$ 36,000 payable in one
single installment.
- - Between February 1, 1994 to March 31, 1994: US$ 164,000 payable in two
(2) monthly, equal and consecutive installments of US$ 82,000.
- - Between April 1, 1994 to June 30, 1994: US$ 304,500 payable in three
(3) monthly, equal and consecutive installments of US$ 101,500.
- - Between July 1, 1994 to September 30, 1994: US$ 388,908 payable in
three (3) monthly, equal and consecutive installments of US$ 129,636.
- - Between October 1, 1994 to December 31, 1994: US$ 457,500 payable in
three (3) monthly, equal and consecutive installments of US$ 152,500.
- - Between January 1, 1995 to December 31, 1995: US$ 1,830,000 payable in
twelve (12) monthly, equal and consecutive installments of US$
152,500.
- - Between January 1, 1996 to December 31, 1996: US$ 1,830,000 payable in
twelve (12) monthly, equal and consecutive installments of US$
152,500.
/s/
NAHUELSAT S.A. ECKART SCHOBER
LEGAL REPRESENTATIVE
VICE PRESIDENT
- 4 -
<PAGE> 32
[75418 461]
EXPANSION OF CONTRACT
BETWEEN:
AEROSPATIALE Societe Nationale Industrielle, ALENIA SPAZIO Societa per
Azioni and DEUTSCHE AEROSPACE Aktiengesselschaft - TRANSITORY UNION OF
COMPANIES (hereinafter the "UTE"), on the one hand, represented at this act by
its legal representative Mr. Eckart Schober, and
IMPSAT S.A. (hereinafter the "CLIENT") on the other hand, represented
at this act by the Accountant Mr. Jose Ramon Torres and Licenciado Mr. Daniel
Vicente Hourquescos in their capacity as attorneys-in-fact of said company,
hereinafter jointly called the "Parties" and WHEREAS:
The CLIENT signed, on November 5, 1993, a Satellite Facility Rental Contract
(hereinafter the "Contract") with "AEROSPATIALE S.N.I., ALCATEL ESPACE S.A.,
ALENIA SPAZIO S.P.A., DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE
TELECOMUNICACOES S.A. - TRANSITORY UNION OF COMPANIES"; and WHEREAS,
The transitory union of companies called "AEROSPATIALE S.N.I., ALCATEL ESPACE
S.A., ALENIA SPAZIO S.P.A., DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE
TELECOMUNICACOES S.A. - TRANSITORY UNION OF COMPANIES" was replaced by the
SUPPLIER; and WHEREAS,
The Parties signed four expansions of the Contract, the first one dated
February 8, 1994 (hereinafter the "Expansion dated 2-8-1994"), the second one
dated April 7, 1994 (hereinafter the "Expansion dated 4-7-1994"), the third one
dated July 14, 1994 (hereinafter the "Expansion dated 7-14-1994"), and the last
one dated September 30, 1994 (hereinafter the "Expansion dated 9-30-1994"),
respectively; and WHEREAS,
The CLIENT wishes to expand by five (5) additional Mega-Hertz (hereinafter
"MHz") the satellite facility rented according to the Contract and its
expansions; and WHEREAS,
Given the amount of satellite facility that the CLIENT wishes to rent, same
will be distributed in one or two transponders of NAHUEL C-1 Satellite; and
WHEREAS,
- 1 -
<PAGE> 33
[75418 462]
In order to formalize the new expansion, it is necessary to replace article
THREE and amend article SEVEN of the Contract, duly agreed upon, with the
Expansion dated 2-8-1994, the Expansion dated 4-7-1994, the Expansion dated
7-14-1994 and Expansion dated 9-30-1994. It is also necessary to replace
Attachment B1-IV- with a new Attachment.
Hence, the parties AGREE:
1.- That the satellite facility that the CLIENT is renting shall be
expanded to a total of thirty-five (35) MHz (hereinafter the "Assigned
Capacity") beginning on February 1, 1995.
2.- Given the Assigned Capacity assigned to the CLIENT, to replace
Attachment B1-IV- to the Contract, in accordance with the Expansion
dated 9-30-1994 with a new Attachment called B1-V- that describes the
rates applicable to such Assigned Capacity beginning on February 1,
1995.
3.- To replace, effective February 1, 1995, article THREE (3) of the
Contract, agreed upon in Expansion dated 9-30-1994 with the following:
3.1 The Capacity Assigned to the CLIENT consists of thirty-five (35) MHz
distributed in one or more transponders of the NAHUEL C1 Satellite
starting on February 1, 1995 until December 31, 1996 in accordance
with the rates described in Attachment B1-V.
"3.2 The Available Power of each Assigned Transponder corresponds to an
output backup of four point five (4.5) decibels (hereinafter "db") of
the applicable progressive wave tube amplifier.
3.3 The CLIENT has the right to use a fraction of the Available Power at
each Assigned Transponder in proportion to the fraction of its
Assigned Capacity in the Assigned Transponder(s). The maximum total
fraction of the Available Power at the Assigned Transponder(s)
corresponds to a total output back-off of all the carriers for the
Assigned Capacity of six point five (6.5) db."
4.- In view of this expansion, the CLIENT pays at this act the sum of
twenty-two thousand five hundred Pesos ($22,500) as an increase in the
deposit in guarantee set out in article 7.1 of the Contract, which
hereinafter will be for a total of one hundred seventy-five thousand
- 2 -
<PAGE> 34
[75418 463]
Pesos ($175,000). It is expressly agreed that article 7.1 retains its
entire validity unless as herein stipulated.
5.- Except for what is expressly amended by this expansion, the Contract
shall remain in effect in its original text, including the Attachments
that are part of same.
The SUPPLIER ratifies its domicile established for the purposes of the Contract
and of its respective expansions at Lavalle 472, 3rd floor, city of Buenos
Aires, Argentina, and
The CLIENT ratifies that duly established at Alferez Pareja 245, city of Buenos
Aires, Argentina.
As evidence of agreement, the parties sign two (2) copies with the same
contents and for one sole purpose, their pages written only on the obverse, in
the city of Buenos Aires on the 12th day of the month of December 1994.
- 3 -
<PAGE> 35
[75418 464]
ATTACHMENT B1-V
Rates - NAHUEL C-1 Satellite
The price that the CLIENT shall pay for rental of the Assigned Capacity at the
NAHUEL C-1 Satellite is the following:
- - Between October 1, 1993 to December 31, 1993: US$ 108,000 payable in
three (3) monthly, equal and consecutive installments of US$ 36,000.
- - Between January 1, 1994 to January 31, 1994: US$ 36,000 payable in one
single installment.
- - Between February 1, 1994 to March 31, 1994: US$ 164,000 payable in two
(2) monthly, equal and consecutive installments of US$ 82,000.
- - Between April 1, 1994 to June 30, 1994: US$ 304,500 payable in three
(3) monthly, equal and consecutive installments of US$ 101,500.
- - Between July 1, 1994 to September 30, 1994: US$ 388,908 payable in
three (3) monthly, equal and consecutive installments of US$ 129,636.
- - Between October 1, 1994 to December 31, 1994: US$ 457,500 payable in
three (3) monthly, equal and consecutive installments of US$ 152,500.
- - Between January 1, 1995 to January 31, 1995: US$ 152,500 payable in
one single installment.
- - Between February 1, 1995 to December 31, 1995: US$ 1,925,000 payable
in twelve (11) monthly, equal and consecutive installments of US$
175,000.
- - Between January 1, 1996 to December 31, 1996: US$ 2,100,000 payable in
twelve (12) monthly, equal and consecutive installments of US$
175,000.
- 4 -
<PAGE> 36
[75418 465 - repeat of 75418 461]
- 5 -
<PAGE> 37
[75418 466 - repeat of 75418 462]
- 6 -
<PAGE> 38
[75418 467 - repeat of 75418 463]
- 7 -
<PAGE> 39
[75418 468 - repeat of 75418 464]
- 8 -
<PAGE> 40
[75418 469 - FIRST PAGE OF NEW EXPANSION APPARENTLY MISSING. THIS IS SECOND
PAGE]
In order to formalize the new expansion, it is necessary to replace article
THREE and amend article SEVEN of the Contract, duly agreed upon, with the
Expansion dated 12-12-1994. It is also necessary to replace Attachment B1-V-
with a new Attachment.
Hence, the parties AGREE:
1.- That the satellite facility that the CLIENT is renting shall be
expanded to a total of thirty-nine (39) MHz (hereinafter the "Assigned
Capacity") beginning on February 1, 1995.
2.- Given the Assigned Capacity assigned to the CLIENT, to replace
Attachment B1-V- to the Contract, in accordance with the Expansion
dated 12-12-1994 with a new Attachment called B1-VI- that describes
the rates applicable to such Assigned Capacity beginning on February
1, 1995.
3.- To replace, effective February 1, 1995, article THREE (3) of the
Contract, agreed upon in Expansion dated 12-12-1994 with the
following:
3.1 The Capacity Assigned to the CLIENT consists of thirty-nine (39) MHz
distributed in one or more transponders of the NAHUEL C1 Satellite
starting on February 1, 1995 until December 31, 1996 in accordance
with the rates described in Attachment B1-VI.
"3.2 The Available Power of each Assigned Transponder corresponds to an
output backup of four point five (4.5) decibels (hereinafter "db") of
the applicable progressive wave tube amplifier.
3.3 The CLIENT has the right to use a fraction of the Available Power at
each Assigned Transponder in proportion to the fraction of its
Assigned Capacity in the Assigned Transponder(s). The maximum total
fraction of the Available Power at the Assigned Transponder(s)
corresponds to a total output back-off of all the carriers for the
Assigned Capacity of five point five eight (5.58) db."
4.- In view of this expansion, the CLIENT pays at this act the sum of
twenty-two thousand five hundred Pesos ($17,000) as an increase in the
deposit in guarantee set out in article 7.1 of the Contract, which
- 9 -
<PAGE> 41
[75418 470]
hereinafter will be for a total of one hundred ninety-two thousand
Pesos ($192,000). It is expressly agreed that article 7.1 retains its
entire validity unless as herein stipulated.
5.- Except for what is expressly amended by this expansion, the Contract
shall remain in effect in its original text, including the Attachments
that are part of same.
The SUPPLIER ratifies its domicile established for the purposes of the Contract
and of its respective expansions at Lavalle 472, 3rd floor, city of Buenos
Aires, Argentina, and
The CLIENT ratifies that duly established at Alferez Pareja 245, city of Buenos
Aires, Argentina.
As evidence of agreement, the parties sign two (2) copies with the same
contents and for one sole purpose, their pages written only on the obverse, in
the city of Buenos Aires on the 24th day of the month of January 1995.
/s/
ECKART SCHOBER
LEGAL REPRESENTATIVE
- 10 -
<PAGE> 42
[75418 471]
ATTACHMENT B1-VI
Rates - NAHUEL C-1 Satellite
The price that the CLIENT shall pay for rental of the Assigned Capacity at the
NAHUEL C-1 Satellite is the following:
- - Between October 1, 1993 to December 31, 1993: US$ 108,000 payable in
three (3) monthly, equal and consecutive installments of US$ 36,000.
- - Between January 1, 1994 to January 31, 1994: US$ 36,000 payable in one
single installment.
- - Between February 1, 1994 to March 31, 1994: US$ 164,000 payable in two
(2) monthly, equal and consecutive installments of US$ 82,000.
- - Between April 1, 1994 to June 30, 1994: US$ 304,500 payable in three
(3) monthly, equal and consecutive installments of US$ 101,500.
- - Between July 1, 1994 to September 30, 1994: US$ 388,908 payable in
three (3) monthly, equal and consecutive installments of US$ 129,636.
- - Between October 1, 1994 to December 31, 1994: US$ 457,500 payable in
three (3) monthly, equal and consecutive installments of US$ 152,500.
- - Between January 1, 1995 to January 31, 1995: US$ 152,500 payable in
one single installment.
- - Between February 1, 1995 to December 31, 1995: US$ 2,112,000 payable
in twelve (11) monthly, equal and consecutive installments of
US$ 192,000.
- - Between January 1, 1996 to December 31, 1996: US$ 2,304,000 payable in
twelve (12) monthly, equal and consecutive installments of
US$ 192,000.
- 11 -
<PAGE> 43
[75418 472 - see 469. THIS IS MISSING FIRST PAGE.]
EXPANSION OF CONTRACT
BETWEEN:
AEROSPATIALE Societe Nationale Industrielle, ALENIA SPAZIO Societa per
Azioni and DEUTSCHE AEROSPACE Aktiengesselschaft - TRANSITORY UNION OF
COMPANIES (hereinafter the "UTE"), on the one hand, represented at this act by
its legal representative Mr. Eckart Schober, and
IMPSAT S.A. (hereinafter the "CLIENT") on the other hand, represented
at this act by the Accountant Mr. Jose Ramon Torres and Licenciado Mr. Daniel
Vicente Hourquescos in their capacity as attorneys-in-fact of said company,
hereinafter jointly called the "Parties" and WHEREAS:
The CLIENT signed, on November 5, 1993, a Satellite Facility Rental Contract
(hereinafter the "Contract") with "AEROSPATIALE S.N.I., ALCATEL ESPACE S.A.,
ALENIA SPAZIO S.P.A., DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE
TELECOMUNICACOES S.A. - TRANSITORY UNION OF COMPANIES"; and WHEREAS,
The transitory union of companies called "AEROSPATIALE S.N.I., ALCATEL ESPACE
S.A., ALENIA SPAZIO S.P.A., DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE
TELECOMUNICACOES S.A. - TRANSITORY UNION OF COMPANIES" was replaced by the
SUPPLIER; and WHEREAS,
The Parties signed five expansions of the Contract, the first one dated
February 8, 1994 (hereinafter the "Expansion dated 2-8-1994"), the second one
dated April 7, 1994 (hereinafter the "Expansion dated 4-7-1994"), the third one
dated July 14, 1994 (hereinafter the "Expansion dated 7-14-1994"), the fourth
one dated September 30, 1994 (hereinafter the "Expansion dated 9-30-1994") and
the last one dated December 12, 1994 (hereinafter the "Expansion dated
12-12-1994"), respectively; and WHEREAS,
The CLIENT wishes to expand by four (4) additional Mega-Hertz (hereinafter
"MHz") the satellite facility rented according to the Contract and its
expansions; and WHEREAS,
Given the amount of satellite facility that the CLIENT wishes to rent, same
will be distributed in one or two transponders of NAHUEL C-1 Satellite; and
WHEREAS,
- 1 -
<PAGE> 44
[75418 473 - blank page]
- 2 -
<PAGE> 45
[75418 474]
CONTRACT
WITH
INTELSAT
705/706
- 3 -
<PAGE> 46
[75418 475]
Between the NATIONAL TELECOMMUNICATIONS COMMISSION, hereinafter "THE CNT",
represented at this act by its President, Dr. Oscar Felix Gonzalez, with legal
domicile in Perc 103, Federal Capital, on the one hand, and IMPSAT S.A.,
hereinafter "THE COMPANY", represented by Daniel Vicente Hourquescos, in his
capacity of representative and Edgardo Aurelio Nesossi, in his capacity as
attorney-in fact, with legal domicile at Alferez Pareja 256, Federal Capital,
they agree to enter into this Contract, subject to the following clauses and
conditions:
ONE: THE CNT agrees to provide to THE COMPANY the satellite segment capacity
described in ATTACHMENT A of this contract, hereinafter "THE CAPACITY". For
such purpose THE CNT shall request from the INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION "INTELSAT" on behalf and for the account of THE COMPANY,
the Guaranteed Reserve of THE CAPACITY.
As for THE COMPANY, it agrees to take THE CAPACITY provided by THE CNT
and use it to provide the services for which it has been duly licensed or
authorized in due course. THE COMPANY shall assume the responsibility for all
obligations to INTELSAT arising rom use of THE CAPACITY.
TWO: 2.1. THE CNT shall make THE CAPACITY that is assigned available to THE
COMPANY TWENTY-FOUR (24) hours a day, SEVEN (7) days a week, during the
assignment period stipulated in the following subsection:
2.2 The period of duration of the contract is five years counted from April 1,
1995, the planned date for commissioning of THE CAPACITY. In the event that
INTELSAT does not accept the Guaranteed Reserve nor makes available THE
CAPACITY to THE CNT, this contract shall, as a matter of law and automatically,
be null and void and shall be deprived of all value to both parties.
2.3 At the request of THE COMPANY, at least ONE HUNDRED FIFTY (150) continuous
days counted from the date of lapse of the term of this contract, THE CNT may
decide in a new Attachment the terms applicable to the continuity of same
before INTELSAT.
THREE: As consideration THE COMPANY shall pay to THE CNT the sum of US$
8,673,000 (EIGHT MILLION SIX HUNDRED SEVENTY-THREE THOUSAND U.S. DOLLARS) as
rent for THE CAPACITY during a period of FIVE (5) years in accordance with
INTELSAT rates in effect on the date of consolidation of the respective
Guaranteed Reserve plus US$ 867,300 (EIGHT HUNDRED SIXTY-SEVEN THOUSAND THREE
HUNDRED U.S. DOLLARS) in favor of THE CNT as a commission of TEN PERCENT (10%).
The first year a total amount of US$ 1,752,300 (ONE MILLION SEVEN HUNDRED
FIFTY-TWO THOUSAND THREE HUNDRED U.S. DOLLARS) shall be paid, and in each of
the four subsequent years US$ 1,947,000 (ONE MILLION NINE HUNDRED FORTY-SEVEN
THOUSAND U.S. DOLLARS). The respective amounts will be invoiced on a quarterly
basis by THE CNT once it receives authentic accounting documentation from
INTELSAT, and they shall be paid by THE COMPANY at THE CNT's domicile within
the period of time established by THE CNT on each invoicing.
FOUR: The sums that are stated in U.S. dollars in this Contract are understood
to be convertible in the terms of law 23,928.
- 4 -
<PAGE> 47
[75418 476]
FIVE: THE COMPANY is conclusively prohibited from total or partial assignment
of this contract without prior and express authorization from THE CNT.
SIX: Failure by THE COMPANY to comply promptly with any of the payments
stipulated in clause THREE shall have the effect of automatically placing it in
default, without the need for any notification whatsoever by THE CNT. During
the time that the default lasts, the sums that are owed shall accrue
compensatory and punitive interest of FORTY-EIGHT PERCENT (48%) annually for
both reasons.
If within a period of SIXTY (60) days counted from the date that any of the
payments stipulated in clause THREE is due, the sums that are owed and their
respective interest are not paid, THE CNT may opt to: a) demand compliance with
this contract plus applicable damages or b) rescind this contract. In this case
THE COMPANY shall pay the amount owed for the payments of clause THREE, and in
default, as applicable, with the respective interest, as well as any other
amount that is claimed by INTELSAT as damages that might be applicable. THE
COMPANY shall pay the amounts that are demanded of it in a period of TEN (10)
days after the rescission is notified. Once the rescission is notified, THE CNT
may freely dispose of THE CAPACITY that is the subject of this contract.
SEVEN: 7.1 THE COMPANY shall not have the right to any claim, compensation or
credit in case of interruptions of less than one hour in the availability of
THE CAPACITY.
7.2 In case of an interruption of the availability of THE CAPACITY that lasts
one hour or more and that, as determined by INTELSAT, is attributable to
INTELSAT's space segment (as defined in the INTELSAT Agreement), THE COMPANY
shall be credited with a sum equal to the proportional parte of the quarterly
charge.
7.3 THE COMPANY shall not have the right to any claim, compensation or credit
in case of non-initiation of the service on the planned date or in case of
interruption caused directly or indirectly by any action or omission of THE
COMPANY, its customers, contractors, lessors, representatives and/or employees.
EIGHT: 8.1 With the exception of the compensation agreed upon for interruptions
specified in clause SEVEN, THE CNT shall not be liable for damages caused due
to an interruption in the availability of THE CAPACITY, regardless of the cause
of such interruption.
8.2 THE COMPANY shall indemnify and exempt THE CNT and shall hold it harmless
from any loss, damage, liability or expense resulting from:
a) Any slander, defamation, abusive interference in the private life or
violation or copyright arising from use of THE CAPACITY.
b) Any violation of patents resulting from (i) use of devices and systems
of THE COMPANY, its users, clients, contractors, lessors, representatives or
assignees, with respect to THE CAPACITY, or (ii) from use of THE CAPACITY in
any manner not envisaged by INTELSAT and/or THE CNT and over which the latter
does not exercise any control.
c) All acts or omissions of THE COMPANY, its users, clients, contractors,
lessors, representatives, agents or employees and assignees with respect to use
of THE CAPACITY.
- 5 -
<PAGE> 48
[75418 477]
NINE: THE COMPANY agrees to abide strictly by this contract and the provisions
of national and international laws, decrees and regulations, as well as
INTELSAT's specifications and procedures on the matter. This contract is
entered into within the existing regulatory framework, and breach of it exempts
THE CNT from all liability, THE COMPANY being the only one liable for penalties
caused by its conduct.
TEN: THE CNT shall not be liable under any circumstance for any additional cost
or damage to THE COMPANY, including modifications of the earth segment, that
result from application of the procedures set down by the INTERNATIONAL
TELECOMMUNICATIONS UNION for coordination with earth systems, with other
satellites or due to changes in the operating conditions of the satellite
transponder that should be necessary as a consequence of such coordinations.
ELEVEN: THE COMPANY hereby agrees to obligate itself to accept the agreements
entered into by THE CNT on matters of coordination to which the preceding
clause refers. In the event that the application of any agreement entered into
for the purpose of protecting the system results in considerable degradation of
the services channeled by the transponder, THE CNT and THE COMPANY shall
immediately engage in consultations to reach a satisfactory agreement in order
to mitigate the repercussions that such agreements have for THE COMPANY.
TWELVE: THE CNT may suspend before or after the start of use of THE CAPACITY,
or it may interrupt totally or partially, in provisional manner, the
availability of THE CAPACITY or decide on a transitory decrease in the times of
same or proceed to make any change or restriction of THE CAPACITY caused by the
presence of technical or operating faults in the satellite, in its common
equipment or in the transponder in use if INTELSAT, for emergency reasons,
decides to take the transponder, to continue or restore international services
or any other technical or operating or contractual circumstance arising from
agreements signed by THE CNT and INTELSAT. In such case, the parties agree:
a) For purposes of this regulation of interests, such cases shall be treated as
"acts of God" or "force majeure". In the case of total loss or impossibility of
use of THE CAPACITY, the fulfillment of obligations of both parties shall be
concluded, and they shall not have the right to make claims from each other for
this matter.
b) THE CNT shall notify THE COMPANY with as much advance notice as possible of
any decision that it makes in the event of the cases mentioned.
c) THE CNT shall in no case be liable to THE COMPANY or its customers,
contractors, agents or third parties in general for any of the situations
provided for in this clause for the damages that might be understood to be
generated by the occurrence of same as long as they are not attributable to it.
d) THE CNT agrees to take all steps of a technical, operating and
administrative nature within this contractual framework and that of the
CNT-INTELSAT contract that might arise as a consequence of this contract aimed
at overcoming or ameliorating the consequences of the above circumstances
and/or to propose alternatives to THE COMPANY for the same purpose.
THIRTEEN: THE COMPANY agrees to make use of THE CAPACITY in accordance with
- 6 -
<PAGE> 49
[75418 478]
the stipulations of existing regulations subject to applicable authorizations
and/or commitments from THE CNT.
FOURTEEN: With respect to cases of force majeure and acts of God the parties
agree to abide by the provisions of the Civil Code, article 514 and related.
FIFTEEN: THE COMPANY shall submit to THE CNT the transmission plan required by
INTELSAT for use of THE CAPACITY. The transmission plan and the operating
parameters shall be submitted by THE COMPANY to THE CNT for its review and
subsequent approval by THE CNT and by INTELSAT before the commissioning of THE
CAPACITY.
If necessary, possible subsequent modifications may be introduced after
analysis and authorization from THE CNT and INTELSAT.
Interference caused in transponders of the satellite itself or of other
satellites duly registered with the INTERNATIONAL TELECOMMUNICATIONS UNION
shall be kept within the limits specified by the INTERNATIONAL
TELECOMMUNICATIONS UNION, THE CNT and INTELSAT.
Interference in other satellite systems with which THE CNT and/or INTELSAT have
reached coordination agreements shall be kept within the operating parameters
set forth in such agreements. For such purpose, all earth stations installed by
the Company shall:
i) Have the installation authorization issued by THE CNT. This authorization
shall be before any step or procedure that THE COMPANY, its users, its
customers, agents, assignees or employees make with such station.
ii) Have successfully concluded, before the commissioning, compliance with all
the tests required by INTELSAT aimed at verifying the operating
characteristics.
iii) Be operated and maintained in accordance with the Satellite System
Operating Guides (SSOG) and related procedures set forth by INTELSAT.
b) THE CNT shall have the right to inspect, supervise and control all
authorized satellite systems in order to ensure compliance with the authorized
operating conditions.
SIXTEEN: The operating characteristics of all installations or services
provided by THE COMPANY, its clients, contractors, lessors or assignees with
respect to use of THE CAPACITY shall be such that their connection to the
INTELSAT space segment or joint use with same or with any of the related
installations does not interfere with the efficient operation of the INTELSAT
space segment and its components.
THE COMPANY agrees to abide by the directives issued by THE CNT related to
operating and management aspects of the INTELSAT space segment and especially
to that assigned herein.
SEVENTEEN: It is established that for purposes of the installation and use of
the earth stations by THE COMPANY, its customers, contractors, agents or third
parties in general for the provision of the services for which it is
responsible, THE COMPANY shall request the respective authorizations granted by
THE CNT to its customers, contractors, agents or third parties in general. For
purposes of application of this clause, THE COMPANY shall have available for
THE CNT a file with genuine evidence of such authorizations, licenses and/or
permits.
- 7 -
<PAGE> 50
[75418 479]
EIGHTEEN: For purposes of guaranteeing performance of its obligations THE
COMPANY shall establish, as a condition of validity of this contract, a
guarantee that covers at all times ONE HUNDRED PERCENT (100%) of the amount
owed plus TWENTY PERCENT (20%) of such amount. In order to determine the value
of the amount owed, from the total amount that results from adding the value of
the rent for THE CAPACITY US$ 8,673,000 (EIGHT MILLION SIX HUNDRED
SEVENTY-THREE THOUSAND U.S. DOLLARS) plus the value of the TEN PERCENT (10%)
commission to be received by THE CNT US$ 867,300 (EIGHT HUNDRED SIXTY-SEVEN
THOUSAND THREE HUNDRED U.S. DOLLARS), that is from the US$ 9,540,300 (NINE
MILLION FIVE HUNDRED FORTY THOUSAND THREE HUNDRED U.S. DOLLARS) will be
deducted the value of the successive quarterly payments made by THE COMPANY to
THE CNT in the performance of this contract.
NINETEEN: The parties subject themselves to the jurisdiction of the Federal
Courts for Civil and Commercial Matters of the Federal Capital with express
waiver of any other jurisdiction, and the notifications that the parties
address to each other shall be valid only at the legal domiciles set forth in
the heading.
AS A SIGN OF AGREEMENT, in the city of Buenos Aires, on the 27th day of March
of 1995 2 (TWO) copies with the same contents and for one sole purpose are
signed.
- 8 -
<PAGE> 51
[75418 480]
ATTACHMENT A
THE CNT agrees to seek before INTELSAT, for the account and order of IMPSAT, a
Guaranteed Reserve (GR) for the satellite segment and conditions described as
follows:
SATELLITE : INTELSAT 706
ORBITAL POSITION : 307 degree E
BAND : Ku
TYPE OF BEAM : S3/S3
TRANSPONDERS : 111/211
BANDWIDTH : THIRTY-SIX (36) MHz
TYPE OF DUTY : Uninterruptible
DURATION OF CONTRACT : 5 years
PLANNED COMMISSIONING
DATE : APRIL 1, 1995
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<PAGE> 52
[75418 481]
COMPLEMENTARY AGREEMENT TO THE C.N.T. - SATELNET S.A. CONTRACT
Between the NATIONAL TELECOMMUNICATIONS COMMISSION, hereinafter "THE C.N.T",
represented at this act by its INTERVENER, Dr. Jose Luis PALAZZO, with legal
domicile at Sarmiento 151 - 4th floor, of the city of Buenos Aires, on the one
hand and SATELNET S.A., represented by Dr. Victor Taiarol and Dr. Alberto V.
Lisdero, in their capacities as President and Vice President of same, with
legal domicile at Florida 537, 5th Floor, on the other hand, it is agreed to
enter into, subject to the following clauses and conditions, this complementary
agreement, which partially amends the contract signed by the same parties and
approved by NATIONAL EXECUTIVE BRANCH Decree No. 2709 of December 20, 1991.
ONE: For operating reasons, assignment of the satellite capacity mentioned in
clauses ONE AND TEN and in the ATTACHMENT of the afore-mentioned contract has
been carried out during the period between February 1 and July 14, 1992, with a
capacity of 18 MHz at the 94/94 transponders of INTELSAT satellite 605,
longitude 335.5 degree E and transferred starting on July 15, 1992 to the 95/95
transponder of INTELSAT satellite 603, longitude 325.5 degree E with a capacity
of 36 MHz, all with coverage of the Southwest zonal beams.
TWO: The parties agree that said satellite capacity shall have the nature of
"uninterruptible", and the terms and conditions of the original contract and
this amendment are subject to agreement with the special mode of the capacity
in question depending on how same is defined in the INTELSAT Agreement.
THREE: For purposes of computing the period set forth in point b) of clause TWO
of the contract, the parties agree that same started to be counted beginning on
February 1, 1992.
FOURTH: As consideration SATELNET S.A. shall pay the sum of SIX MILLION EIGHT
HUNDRED NINETEEN THOUSAND EIGHT HUNDRED FORTY U.S. DOLLARS (US$ 6,819,840.00)
for the rent of the capacity described in clause ONE during a period of five
years plus a commission of 10% equivalent to SIX HUNDRED EIGHTY-ONE THOUSAND
NINE HUNDRED EIGHTY-FOUR U.S. DOLLARS (US$ 681,984.00) in favor of the C.N.T.
The first year a total amount of US$ ONE MILLION ONE HUNDRED SIXTY-FIVE
THOUSAND EIGHT HUNDRED TWENTY-FOUR U.S. DOLLARS (US$ 1,165,824.00) shall be
paid, and in each of the four subsequent years ONE MILLION FIVE HUNDRED
EIGHTY-FOUR THOUSAND U.S. DOLLARS (US$ 1,584,000.00). The respective amounts
will be invoiced by the C.N.T. once it receives authentic accounting
documentation from INTELSAT, and they shall be paid by SATELNET S.A. within ten
(10) days of receipt of the invoice at the domicile established by the C.N.T.
in this contract.
- 10 -
<PAGE> 53
[75418 482]
FIVE: For purposes of guaranteeing performance of the obligations of SATELNET
S.A., the latter shall submit a guarantee that covers at all time ONE HUNDRED
PERCENT (100%) of the amount to be paid by the C.N.T. to INTELSAT in case of
breach of this contract by SATELNET S.A.. For purposes of calculation of this
amount both parties state that they accept the formula of indemnity for
cancellation established by INTELSAT that is in effect at the time of same. The
current formula is that established in document BG-94-52 of INTELSAT,
Attachment No. 1, Section J (Cancellation Policy).
For purposes of submission of the guarantee for this contract, the initial
above-mentioned amount totals to date TWO MILLION SEVEN HUNDRED SEVENTY-TWO
THOUSAND U.S. DOLLARS (US$ 2,772,000.00).
Said guarantee may be established through guarantee insurance or bank
guarantees with first-rate companies. The C.N.T. shall, in a period of
FORTY-EIGHT (48) working hours, accept or reject, with justified cause, the
guarantee that is submitted. In the latter case SATELNET S.A. shall submit a
new guarantee. This contract shall not go into effect until the C.N.T. has
accepted the guarantee in question.
SIX: SATELNET S.A. may opt to adhere to any new national or international
system that may be applicable to the Contract provided the conditions to access
such system are complied with and no harm whatsoever is caused to the National
State.
For such purposes SATELNET S.A. shall notify the C.N.T. in genuine manner of
the exercise of the option in question and the amended rule that it wishes to
incorporate to the Contract.
This option shall also be valid for those INTELSAT provisions that are not
obligatory.
SEVEN: The rest of the clauses and conditions of the contract approved by
NATIONAL EXECUTIVE BRANCH Decree No. 2709 of December 20, 1991 remain without
amendment.
As a sign of agreement 3 (three) copies with the same contents and for one sole
purpose are signed in Buenos Aires on eh 3rd day of the month of March of 1993.
- 11 -
<PAGE> 54
[75418 483]
Between the NATIONAL TELECOMMUNICATIONS COMMISSION, hereinafter "THE CNT",
represented at this act by its President, Dr. Rinaldo Antonio Colome, with
legal domicile in Perc 103, Federal Capital, on the one hand, and SATELNET
S.A., hereinafter "THE COMPANY", represented by Jose Ramon Torres and Eduardo
Jose Mignacco, in their capacity of representatives with legal domicile at
Florida 537, 5th floor, they agree to enter into this Contract, subject to the
following clauses and conditions:
ONE: THE CNT agrees to provide to THE COMPANY the satellite segment capacity
described in ATTACHMENT A of this contract, hereinafter "THE CAPACITY". For
such purpose THE CNT shall request from the INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION "INTELSAT" on behalf and for the account of THE COMPANY,
the Guaranteed Reserve of THE CAPACITY.
As for THE COMPANY, it agrees to take THE CAPACITY provided by THE CNT and use
it to provide the services for which it has been duly licensed or authorized in
due course. THE COMPANY shall assume the responsibility for all obligations to
INTELSAT arising rom use of THE CAPACITY.
TWO: 2.1. THE CNT shall make THE CAPACITY that is assigned available to THE
COMPANY TWENTY-FOUR (24) hours a day, SEVEN (7) days a week, during the
assignment period stipulated in the following subsection:
2.2 The period of duration of the contract is five years counted from April 1,
1995, the planned date for commissioning of THE CAPACITY. In the event that
INTELSAT does not accept the Guaranteed Reserve nor makes available THE
CAPACITY to THE CNT, this contract shall, as a matter of law and automatically,
be null and void and shall be deprived of all value to both parties.
2.3 At the request of THE COMPANY, at least ONE HUNDRED FIFTY (150) continuous
days counted from the date of lapse of the term of this contract, THE CNT may
decide in a new Attachment the terms applicable to the continuity of same
before INTELSAT.
THREE: As consideration THE COMPANY shall pay to THE CNT the sum of US$
1,470,000 (ONE MILLION FOUR HUNDRED SEVENTY THOUSAND U.S. DOLLARS) as rent for
THE CAPACITY during a period of FIVE (5) years in accordance with INTELSAT
rates in effect on the date of consolidation of the respective Guaranteed
Reserve plus US$ 147,000 (ONE HUNDRED FORTY-SEVEN THOUSAND U.S. DOLLARS) in
favor of THE CNT as a commission of TEN PERCENT (10%). The first year a total
amount of US$ 297,000 (TWO HUNDRED NINETY-SEVEN THOUSAND U.S. DOLLARS) shall
be paid, and in each of the four subsequent years US$ 330,000 (THREE HUNDRED
THIRTY THOUSAND U.S. DOLLARS). The respective amounts will be invoiced on a
quarterly basis by THE CNT once it receives authentic accounting documentation
from INTELSAT, and they shall be paid by THE COMPANY at THE CNT's domicile
within the period of time established by THE CNT on each invoicing.
FOUR: The sums that are stated in U.S. dollars in this Contract are understood
to be convertible in the terms of law 23,928.
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<PAGE> 55
[75418 484]
FIVE: THE COMPANY is conclusively prohibited from total or partial assignment
of this contract without prior and express authorization from THE CNT.
SIX: Failure by THE COMPANY to comply promptly with any of the payments
stipulated in clause THREE shall have the effect of automatically placing it in
default, without the need for any notification whatsoever by THE CNT. During
the time that the default lasts, the sums that are owed shall accrue
compensatory and punitive interest of FORTY-EIGHT PERCENT (48%) annually for
both reasons.
If within a period of SIXTY (60) days counted from the date that any of the
payments stipulated in clause THREE is due, the sums that are owed and their
respective interest are not paid, THE CNT may opt to: a) demand compliance with
this contract plus applicable damages or b) rescind this contract. In this case
THE COMPANY shall pay the amount owed for the payments of clause THREE, and in
default, as applicable, with the respective interest, as well as any other
amount that is claimed by INTELSAT as damages that might be applicable. THE
COMPANY shall pay the amounts that are demanded of it in a period of TEN (10)
days after the rescission is notified. Once the rescission is notified, THE CNT
may freely dispose of THE CAPACITY that is the subject of this contract.
SEVEN: 7.1 THE COMPANY shall not have the right to any claim, compensation or
credit in case of interruptions of less than one hour in the availability of
THE CAPACITY.
7.2 In case of an interruption of the availability of THE CAPACITY that lasts
one hour or more and that, as determined by INTELSAT, is attributable to
INTELSAT's space segment (as defined in the INTELSAT Agreement), THE COMPANY
shall be credited with a sum equal to the proportional parte of the quarterly
charge.
7.3 THE COMPANY shall not have the right to any claim, compensation or credit
in case of non-initiation of the service on the planned date or in case of
interruption caused directly or indirectly by any action or omission of THE
COMPANY, its customers, contractors, lessors, representatives and/or employees.
EIGHT: 8.1 With the exception of the compensation agreed upon for interruptions
specified in clause SEVEN, THE CNT shall not be liable for damages caused due
to an interruption in the availability of THE CAPACITY, regardless of the cause
of such interruption.
8.2 THE COMPANY shall indemnify and exempt THE CNT and shall hold it harmless
from any loss, damage, liability or expense resulting from:
a) Any slander, defamation, abusive interference in the private life or
violation or copyright arising from use of THE CAPACITY.
b) Any violation of patents resulting from (i) use of devices and systems
of THE COMPANY, its users, clients, contractors, lessors, representatives or
assignees, with respect to THE CAPACITY, or (ii) from use of THE CAPACITY in
any manner not envisaged by INTELSAT and/or THE CNT and over which the latter
does not exercise any control.
c) All acts or omissions of THE COMPANY, its users, clients, contractors,
lessors, representatives, agents or employees and assignees with respect to use
of THE CAPACITY.
- 13 -
<PAGE> 56
[75418 485]
NINE: THE COMPANY agrees to abide strictly by this contract and the provisions
of national and international laws, decrees and regulations, as well as
INTELSAT's specifications and procedures on the matter. This contract is
entered into within the existing regulatory framework, and breach of it exempts
THE CNT from all liability, THE COMPANY being the only one liable for penalties
caused by its conduct.
TEN: THE CNT shall not be liable under any circumstance for any additional cost
or damage to THE COMPANY, including modifications of the earth segment, that
result from application of the procedures set down by the INTERNATIONAL
TELECOMMUNICATIONS UNION for coordination with earth systems, with other
satellites or due to changes in the operating conditions of the satellite
transponder that should be necessary as a consequence of such coordinations.
ELEVEN: THE COMPANY hereby agrees to obligate itself to accept the agreements
entered into by THE CNT on matters of coordination to which the preceding
clause refers. In the event that the application of any agreement entered into
for the purpose of protecting the system results in considerable degradation of
the services channeled by the transponder, THE CNT and THE COMPANY shall
immediately engage in consultations to reach a satisfactory agreement in order
to mitigate the repercussions that such agreements have for THE COMPANY.
TWELVE: THE CNT may suspend before or after the start of use of THE CAPACITY,
or it may interrupt totally or partially, in provisional manner, the
availability of THE CAPACITY or decide on a transitory decrease in the times of
same or proceed to make any change or restriction of THE CAPACITY caused by the
presence of technical or operating faults in the satellite, in its common
equipment or in the transponder in use if INTELSAT, for emergency reasons,
decides to take the transponder, to continue or restore international services
or any other technical or operating or contractual circumstance arising from
agreements signed by THE CNT and INTELSAT. In such case, the parties agree:
a) For purposes of this regulation of interests, such cases shall be treated as
"acts of God" or "force majeure". In the case of total loss or impossibility of
use of THE CAPACITY, the fulfillment of obligations of both parties shall be
concluded, and they shall not have the right to make claims from each other for
this matter.
b) THE CNT shall notify THE COMPANY with as much advance notice as possible of
any decision that it makes in the event of the cases mentioned.
c) THE CNT shall in no case be liable to THE COMPANY or its customers,
contractors, agents or third parties in general for any of the situations
provided for in this clause for the damages that might be understood to be
generated by the occurrence of same as long as they are not attributable to it.
d) THE CNT agrees to take all steps of a technical, operating and
administrative nature within this contractual framework and that of the
CNT-INTELSAT contract that might arise as a consequence of this contract aimed
at overcoming or ameliorating the consequences of the above circumstances
and/or to propose alternatives to THE COMPANY for the same purpose.
- 14 -
<PAGE> 57
[75418 486]
THIRTEEN: THE COMPANY agrees to make use of THE CAPACITY in accordance with
the stipulations of existing regulations subject to applicable authorizations
and/or commitments from THE CNT.
FOURTEEN: With respect to cases of force majeure and acts of God the parties
agree to abide by the provisions of the Civil Code, article 514 and related.
FIFTEEN: THE COMPANY shall submit to THE CNT the transmission plan required by
INTELSAT for use of THE CAPACITY. The transmission plan and the operating
parameters shall be submitted by THE COMPANY to THE CNT for its review and
subsequent approval by THE CNT and by INTELSAT before the commissioning of THE
CAPACITY.
If necessary, possible subsequent modifications may be introduced after
analysis and authorization from THE CNT and INTELSAT.
Interference caused in transponders of the satellite itself or of other
satellites duly registered with the INTERNATIONAL TELECOMMUNICATIONS UNION
shall be kept within the limits specified by the INTERNATIONAL
TELECOMMUNICATIONS UNION, THE CNT and INTELSAT.
Interference in other satellite systems with which THE CNT and/or INTELSAT have
reached coordination agreements shall be kept within the operating parameters
set forth in such agreements. For such purpose, all earth stations installed by
the Company shall:
i) Have the installation authorization issued by THE CNT. This authorization
shall be before any step or procedure that THE COMPANY, its users, its
customers, agents, assignees or employees make with such station.
ii) Have successfully concluded, before the commissioning, compliance with all
the tests required by INTELSAT aimed at verifying the operating
characteristics.
iii) Be operated and maintained in accordance with the Satellite System
Operating Guides (SSOG) and related procedures set forth by INTELSAT.
b) THE CNT shall have the right to inspect, supervise and control all
authorized satellite systems in order to ensure compliance with the authorized
operating conditions.
SIXTEEN: The operating characteristics of all installations or services
provided by THE COMPANY, its clients, contractors, lessors or assignees with
respect to use of THE CAPACITY shall be such that their connection to the
INTELSAT space segment or joint use with same or with any of the related
installations does not interfere with the efficient operation of the INTELSAT
space segment and its components.
THE COMPANY agrees to abide by the directives issued by THE CNT related to
operating and management aspects of the INTELSAT space segment and especially
to that assigned herein.
SEVENTEEN: It is established that for purposes of the installation and use of
the earth stations by THE COMPANY, its customers, contractors, agents or third
parties in general for the provision of the services for which it is
responsible, THE COMPANY shall request the respective authorizations granted by
THE CNT to its customers, contractors, agents or third parties in general.
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<PAGE> 58
[75418 487]
For purposes of application of this clause, THE COMPANY shall have available
for THE CNT a file with genuine evidence of such authorizations, licenses
and/or permits.
EIGHTEEN: For purposes of guaranteeing performance of its obligations THE
COMPANY shall establish, as a condition of validity of this contract, a
guarantee that covers at all times ONE HUNDRED PERCENT (100%) of the amount
owed plus TWENTY PERCENT (20%) of such amount. In order to determine the value
of the amount owed, from the total amount that results from adding the value of
the rent for THE CAPACITY US$ 1,470,000 (ONE MILLION FOUR HUNDRED SEVENTY
THOUSAND U.S. DOLLARS) plus the value of the TEN PERCENT (10%) commission to be
received by THE CNT US$ 147,000 (ONE HUNDRED FORTY-SEVEN THOUSAND U.S.
DOLLARS), that is from the US$ 1,617,000 (ONE MILLION SIX HUNDRED SEVENTEEN
THOUSAND U.S. DOLLARS) will be deducted the value of the successive quarterly
payments made by THE COMPANY to THE CNT in the performance of this contract.
NINETEEN: The parties subject themselves to the jurisdiction of the Federal
Courts for Civil and Commercial Matters of the Federal Capital with express
waiver of any other jurisdiction, and the notifications that the parties
address to each other shall be valid only at the legal domiciles set forth in
the heading.
AS A SIGN OF AGREEMENT, in the city of Buenos Aires, on the 23rd day of March
of 1994 2 (TWO) copies with the same contents and for one sole purpose are
signed.
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<PAGE> 59
[75418 494]
ATTACHMENT A
THE CNT agrees to seek before INTELSAT, for the account and order of SATELNET
S.A., a Guaranteed Reserve (GR) for the satellite segment and conditions
described as follows:
SATELLITE : INTELSAT 706
ORBITAL POSITION : 307 degree E
BAND : C
TYPE OF BEAM : SPOT/SPOT
TRANSPONDERS : 186/186
BANDWIDTH : FIVE (5) MHz
TYPE OF DUTY : UNINTERRUPTIBLE
DURATION OF CONTRACT : FIVE (5) YEARS
PLANNED COMMISSIONING
DATE : APRIL 1, 1995
- 17 -
<PAGE> 60
[75418 489]
Between the NATIONAL TELECOMMUNICATIONS COMMISSION, hereinafter "THE CNT",
represented at this act by its President, Dr. Rinaldo Antonio Colome, with
legal domicile in Perc 103, Federal Capital, on the one hand, and IMPSAT S.A.,
hereinafter "THE COMPANY", represented by Daniel Vicente Hourquescos and Jose
Ramon Torres, in their capacity of representatives with legal domicile at
Alferez Pareja 256, Federal Capital, they agree to enter into this Contract,
subject to the following clauses and conditions:
ONE: THE CNT agrees to provide to THE COMPANY the satellite segment capacity
described in ATTACHMENT A of this contract, hereinafter "THE CAPACITY". For
such purpose THE CNT shall request from the INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION "INTELSAT" on behalf and for the account of THE COMPANY,
the Guaranteed Reserve of THE CAPACITY.
As for THE COMPANY, it agrees to take THE CAPACITY provided by THE CNT and use
it to provide the services for which it has been duly licensed or authorized in
due course. THE COMPANY shall assume the responsibility for all obligations to
INTELSAT arising rom use of THE CAPACITY.
TWO: 2.1. THE CNT shall make THE CAPACITY that is assigned available to THE
COMPANY TWENTY-FOUR (24) hours a day, SEVEN (7) days a week, during the
assignment period stipulated in the following subsection:
2.2 The period of duration of the contract is five years counted from April 1,
1995, the planned date for commissioning of THE CAPACITY. In the event that
INTELSAT does not accept the Guaranteed Reserve nor makes available THE
CAPACITY to THE CNT, this contract shall, as a matter of law and automatically,
be null and void and shall be deprived of all value to both parties.
2.3 At the request of THE COMPANY, at least ONE HUNDRED FIFTY (150) continuous
days counted from the date of lapse of the term of this contract, THE CNT may
decide in a new Attachment the terms applicable to the continuity of same
before INTELSAT.
THREE: As consideration THE COMPANY shall pay to THE CNT the sum of US$
2,646,000 (TWO MILLION SIX HUNDRED FORTY-SIX THOUSAND U.S. DOLLARS) as rent
for THE CAPACITY during a period of FIVE (5) years in accordance with INTELSAT
rates in effect on the date of consolidation of the respective Guaranteed
Reserve plus US$ 264,600 (TWO HUNDRED SIXTY-FOUR THOUSAND SIX HUNDRED U.S.
DOLLARS) in favor of THE CNT as a commission of TEN PERCENT (10%). The first
year a total amount of US$ 534,600 (FIVE HUNDRED THIRTY-FOUR THOUSAND SIX
HUNDRED U.S. DOLLARS) shall be paid, and in each of the four subsequent years
US$ 594,000 (FIVE HUNDRED NINETY-FOUR THOUSAND U.S. DOLLARS). The respective
amounts will be invoiced on a quarterly basis by THE CNT once it receives
authentic accounting documentation from INTELSAT, and they shall be paid by THE
COMPANY at THE CNT's domicile within the period of time established by THE CNT
on each invoicing.
FOUR: The sums that are stated in U.S. dollars in this Contract are understood
to be convertible in the terms of law 23,928.
FIVE: THE COMPANY is conclusively prohibited from total or partial assignment
of this contract without prior and express authorization from THE CNT.
- 18 -
<PAGE> 61
[75418 490]
SIX: Failure by THE COMPANY to comply promptly with any of the payments
stipulated in clause THREE shall have the effect of automatically placing it in
default, without the need for any notification whatsoever by THE CNT. During
the time that the default lasts, the sums that are owed shall accrue
compensatory and punitive interest of FORTY-EIGHT PERCENT (48%) annually for
both reasons.
If within a period of SIXTY (60) days counted from the date that any of the
payments stipulated in clause THREE is due, the sums that are owed and their
respective interest are not paid, THE CNT may opt to: a) demand compliance with
this contract plus applicable damages or b) rescind this contract. In this case
THE COMPANY shall pay the amount owed for the payments of clause THREE, and in
default, as applicable, with the respective interest, as well as any other
amount that is claimed by INTELSAT as damages that might be applicable. THE
COMPANY shall pay the amounts that are demanded of it in a period of TEN (10)
days after the rescission is notified. Once the rescission is notified, THE CNT
may freely dispose of THE CAPACITY that is the subject of this contract.
SEVEN: 7.1 THE COMPANY shall not have the right to any claim, compensation or
credit in case of interruptions of less than one hour in the availability of
THE CAPACITY.
7.2 In case of an interruption of the availability of THE CAPACITY that lasts
one hour or more and that, as determined by INTELSAT, is attributable to
INTELSAT's space segment (as defined in the INTELSAT Agreement), THE COMPANY
shall be credited with a sum equal to the proportional parte of the quarterly
charge.
7.3 THE COMPANY shall not have the right to any claim, compensation or credit
in case of non-initiation of the service on the planned date or in case of
interruption caused directly or indirectly by any action or omission of THE
COMPANY, its customers, contractors, lessors, representatives and/or employees.
EIGHT: 8.1 With the exception of the compensation agreed upon for interruptions
specified in clause SEVEN, THE CNT shall not be liable for damages caused due
to an interruption in the availability of THE CAPACITY, regardless of the cause
of such interruption.
8.2 THE COMPANY shall indemnify and exempt THE CNT and shall hold it harmless
from any loss, damage, liability or expense resulting from:
a) Any slander, defamation, abusive interference in the private life or
violation or copyright arising from use of THE CAPACITY.
b) Any violation of patents resulting from (i) use of devices and systems
of THE COMPANY, its users, clients, contractors, lessors, representatives or
assignees, with respect to THE CAPACITY, or (ii) from use of THE CAPACITY in
any manner not envisaged by INTELSAT and/or THE CNT and over which the latter
does not exercise any control.
c) All acts or omissions of THE COMPANY, its users, clients, contractors,
lessors, representatives, agents or employees and assignees with respect to use
of THE CAPACITY.
NINE: THE COMPANY agrees to abide strictly by this contract and the provisions
of national and international laws, decrees and regulations, as well as
INTELSAT's specifications and procedures on the matter. This contract is
- 19 -
<PAGE> 62
[75418 491]
entered into within the existing regulatory framework, and breach of it exempts
THE CNT from all liability, THE COMPANY being the only one liable for penalties
caused by its conduct.
TEN: THE CNT shall not be liable under any circumstance for any additional cost
or damage to THE COMPANY, including modifications of the earth segment, that
result from application of the procedures set down by the INTERNATIONAL
TELECOMMUNICATIONS UNION for coordination with earth systems, with other
satellites or due to changes in the operating conditions of the satellite
transponder that should be necessary as a consequence of such coordinations.
ELEVEN: THE COMPANY hereby agrees to obligate itself to accept the agreements
entered into by THE CNT on matters of coordination to which the preceding
clause refers. In the event that the application of any agreement entered into
for the purpose of protecting the system results in considerable degradation of
the services channeled by the transponder, THE CNT and THE COMPANY shall
immediately engage in consultations to reach a satisfactory agreement in order
to mitigate the repercussions that such agreements have for THE COMPANY.
TWELVE: THE CNT may suspend before or after the start of use of THE CAPACITY,
or it may interrupt totally or partially, in provisional manner, the
availability of THE CAPACITY or decide on a transitory decrease in the times of
same or proceed to make any change or restriction of THE CAPACITY caused by the
presence of technical or operating faults in the satellite, in its common
equipment or in the transponder in use if INTELSAT, for emergency reasons,
decides to take the transponder, to continue or restore international services
or any other technical or operating or contractual circumstance arising from
agreements signed by THE CNT and INTELSAT. In such case, the parties agree:
a) For purposes of this regulation of interests, such cases shall be treated as
"acts of God" or "force majeure". In the case of total loss or impossibility of
use of THE CAPACITY, the fulfillment of obligations of both parties shall be
concluded, and they shall not have the right to make claims from each other for
this matter.
b) THE CNT shall notify THE COMPANY with as much advance notice as possible of
any decision that it makes in the event of the cases mentioned.
c) THE CNT shall in no case be liable to THE COMPANY or its customers,
contractors, agents or third parties in general for any of the situations
provided for in this clause for the damages that might be understood to be
generated by the occurrence of same as long as they are not attributable to it.
d) THE CNT agrees to take all steps of a technical, operating and
administrative nature within this contractual framework and that of the
CNT-INTELSAT contract that might arise as a consequence of this contract aimed
at overcoming or ameliorating the consequences of the above circumstances
and/or to propose alternatives to THE COMPANY for the same purpose.
THIRTEEN: THE COMPANY agrees to make use of THE CAPACITY in accordance with the
stipulations of existing regulations subject to applicable authorizations
and/or commitments from THE CNT.
- 20 -
<PAGE> 63
[75418 492]
FOURTEEN: With respect to cases of force majeure and acts of God the parties
agree to abide by the provisions of the Civil Code, article 514 and related.
FIFTEEN: THE COMPANY shall submit to THE CNT the transmission plan required by
INTELSAT for use of THE CAPACITY. The transmission plan and the operating
parameters shall be submitted by THE COMPANY to THE CNT for its review and
subsequent approval by THE CNT and by INTELSAT before the commissioning of THE
CAPACITY.
If necessary, possible subsequent modifications may be introduced after
analysis and authorization from THE CNT and INTELSAT.
Interference caused in transponders of the satellite itself or of other
satellites duly registered with the INTERNATIONAL TELECOMMUNICATIONS UNION
shall be kept within the limits specified by the INTERNATIONAL
TELECOMMUNICATIONS UNION, THE CNT and INTELSAT.
Interference in other satellite systems with which THE CNT and/or INTELSAT have
reached coordination agreements shall be kept within the operating parameters
set forth in such agreements. For such purpose, all earth stations installed by
the Company shall:
i) Have the installation authorization issued by THE CNT. This authorization
shall be before any step or procedure that THE COMPANY, its users, its
customers, agents, assignees or employees make with such station.
ii) Have successfully concluded, before the commissioning, compliance with all
the tests required by INTELSAT aimed at verifying the operating
characteristics.
iii) Be operated and maintained in accordance with the Satellite System
Operating Guides (SSOG) and related procedures set forth by INTELSAT.
b) THE CNT shall have the right to inspect, supervise and control all
authorized satellite systems in order to ensure compliance with the authorized
operating conditions.
SIXTEEN: The operating characteristics of all installations or services
provided by THE COMPANY, its clients, contractors, lessors or assignees with
respect to use of THE CAPACITY shall be such that their connection to the
INTELSAT space segment or joint use with same or with any of the related
installations does not interfere with the efficient operation of the INTELSAT
space segment and its components.
THE COMPANY agrees to abide by the directives issued by THE CNT related to
operating and management aspects of the INTELSAT space segment and especially
to that assigned herein.
SEVENTEEN: It is established that for purposes of the installation and use of
the earth stations by THE COMPANY, its customers, contractors, agents or third
parties in general for the provision of the services for which it is
responsible, THE COMPANY shall request the respective authorizations granted by
THE CNT to its customers, contractors, agents or third parties in general. For
purposes of application of this clause, THE COMPANY shall have available for
THE CNT a file with genuine evidence of such authorizations, licenses and/or
permits.
EIGHTEEN: For purposes of guaranteeing performance of its obligations THE
COMPANY shall establish, as a condition of validity of this contract, a
- 21 -
<PAGE> 64
[75418 493]
guarantee that covers at all times ONE HUNDRED PERCENT (100%) of the amount
owed plus TWENTY PERCENT (20%) of such amount. In order to determine the value
of the amount owed, from the total amount that results from adding the value of
the rent for THE CAPACITY US$ 2,646,600 (TWO MILLION SIX HUNDRED FORTY-SIX
THOUSAND SIX HUNDRED U.S. DOLLARS) plus the value of the TEN PERCENT (10%)
commission to be received by THE CNT US$ 264,600 (TWO HUNDRED SIXTY-FOUR
THOUSAND SIX HUNDRED U.S. DOLLARS), that is from the US$ 2,910,600 (TWO MILLION
NINE HUNDRED TEN THOUSAND SIX HUNDRED U.S. DOLLARS) will be deducted the value
of the successive quarterly payments made by THE COMPANY to THE CNT in the
performance of this contract.
NINETEEN: The parties subject themselves to the jurisdiction of the Federal
Courts for Civil and Commercial Matters of the Federal CapITAL with express
waiver of any other jurisdiction, and the notifications that the parties
address to each other shall be valid only at the legal domiciles set forth in
the heading.
AS A SIGN OF AGREEMENT, in the city of Buenos Aires, on the 23rd day of May of
1994 2 (TWO) copies with the same contents and for one sole purpose are signed.
- 22 -
<PAGE> 65
[75418 494]
ATTACHMENT A
THE CNT agrees to seek before INTELSAT, for the account and order of SATELNET
S.A., a Guaranteed Reserve (GR) for the satellite segment and conditions
described as follows:
SATELLITE : INTELSAT 706
ORBITAL POSITION : 307 degree E
BAND : C
TYPE OF BEAM : SPOT/SPOT
TRANSPONDERS : 186/186
BANDWIDTH : NINE (9) MHz
TYPE OF DUTY : UNINTERRUPTIBLE
DURATION OF CONTRACT : FIVE (5) YEARS
PLANNED COMMISSIONING
DATE : APRIL 1, 1995
- 17 -
<PAGE> 66
[75418 495]
SERVICE CONTRACT
This contract is entered into between the International Telecommunications
Satellite Organization (hereinafter "INTELSAT"), an international organization
established through the Agreement relative to the International
Telecommunications Satellite Organization "INTELSAT" (hereinafter the "INTELSAT
Agreement") and the Operating Agreement relative to same (hereinafter the
"INTELSAT Operating Agreement" signed in Washington, D.C. on August 20, 1971,
headquartered in Washington, D.C., U.S.A and "IMPSAT S.A." (hereinafter the
"client"), Alferez Pareja 256, Buenos Aires, organized and existing under the
laws of the Argentine Republic and authorized by one or more Signatories of
INTELSAT to have direct access to the INTELSAT space segment.
WHEREAS INTELSAT and the client wish to enter into an agreement that
sets down the basic terms and conditions for direct access by the client to the
INTELSAT space segment and its use of same;
THEREFORE, INTELSAT and the client agree to the following:
1. Definition
"Party" means a State for which the INTELSAT Agreement has gone into
effect.
"Signatory" means a Party or the telecommunications entity designated
by a Party that has signed the INTELSAT Operating Agreement.
2. Basic contract for orders
This contract serves as the basic contract for orders. Subject to the
terms and conditions of this contract, INTELSAT agrees to do whatever is
possible to make available to the client the capacity of the INTELSAT space
segment that the latter requests periodically. The client shall submit capacity
requests in the specific forms to request and amend services that
- 24 -
<PAGE> 67
[75418 496]
appear in the SSOG-104, "Forms for orders, amendments and reports on services".
The requests for service and assignment of capacity, once approved by INTELSAT,
shall be governed by this contract. The client understands and agrees that this
contract is not a commitment or a promise, express or implicit, by INTELSAT in
the sense that the client will be assigned capacity of the INTELSAT space
segment.
3. General terms and conditions
On the date of this contract, the client agrees to comply with the
terms and conditions set out by INTELSAT for the services furnished through
assignments of capacity of the INTELSAT space segment in accordance with this
contract. Such terms and conditions include those listed in the INTELSAT Earth
Stations Guides (IESS), the Satellite System Operating Guide (SSOG) and the
INTELSAT Rates Manual, which are incorporated to this contract by reference, to
the extent that such terms and conditions correspond to the specific types of
services requested by the client and assigned under this contract by INTELSAT,
such terms being capable of being amended from time to time. The terms and
conditions of each capacity assignment shall be those that are in effect at the
time the assignment is mae, and they shall not change during the original
assignment period. The client also agrees to abide by all conditions of
regulation and granting of licenses promulgated by the pertinent national
authority and to comply with same.
4. Investment in INTELSAT
If the client invests in INTELSAT, it agrees to comply with the terms
and conditions set forth in the contract with the investment company that the
client signs with INTELSAT.
5. Conditions to receive capacity from INTELSAT
a. A request for reservation or supply of capacity of the INTELSAT space
segment submitted by a client may be turned down unless INTELSAT's management
has decided that such client is solvent. The client agrees to furnish the
information requested by INTELSAT on its financial and credit history. The
- 25 -
<PAGE> 68
[75418 997]
give INTELSAT the necessary authority so that it can verify such information
with various financing and banking institutions and/or with the client's
creditors.
b. Orders for capacity of the INTELSAT space segment shall not be
accepted from the client in case such client owes, on the date of the order for
capacity, a use invoice that is overdue thirty (30) days or more.
c. As a condition to reserve or supply services, INTELSAT may ask the
client to furnish other guarantees of its capacity to comply with its financial
obligations to INTELSAT when these are due, in the form of a letter of credit,
a guarantee deposit or other form of guarantee of performance that INTELSAT
should require.
6. Penalties for late payment
a. In addition to the penalty indicated in paragraph 5.b above, any
payment not paid on its due date shall accrue interest at an annual rate of
sixteen percent (16%), calculated from the due date until the payment date, and
the Board of Governors may amend such rate from time to time.
b. INTELSAT may suspend or cancel all services in effect and on the
waiting list of the client if any payment owed to INTELSAT for use of the space
segment has not been paid 150 or more days after its due date or within another
period that the INTELSAT Board of Governors sets from time to time.
7. Operation of earth stations
With respect to any earth station with authorization from access to
its space segment, the client agrees to operate such station at all times in
accordance with the terms of the authorization and the INTELSAT Earth Station
Standards (IESS) and accepts responsibility for such operation including, among
others, financial responsibility.
8. Transfer
This contract, the subsequent assignment of capacity of the space
segment, the rights, duties and obligations of the client, may not be
- 26 -
<PAGE> 69
[75418 498]
transferred or delegated without INTELSAT's prior written consent. Any transfer
or delegation that is attempted without such consent will be null and void and
shall have no effect. This clause shall not prevent the client from using its
assigned capacity to provide services to third parties.
9. Rescission
In addition to the provisions relative to cancellation that are listed
in the Rates Manual, INTELSAT reserves the right with an advance written
notification of at least thirty (30) days to rescind this contract with a
client if the latter does not comply with same. The rescission advance
notification shall indicate the date the rescission goes into effect and the
circumstances that caused it. At its discretion, INTELSAT may retain the
deposits or other sums paid by the client and use them to offset damage caused
to it by such failure to comply. This retention of funds of the client shall
not prevent INTELSAT from submitting other claims for compensation or from
claiming other payments for damages corresponding to it by law or equity. Such
right of rescission shall not be in order if, within said period of thirty
days, the client should settle its infraction to INTELSAT's satisfaction.
10. Confidential nature
INTELSAT and the client agree to take the necessary precautions to
keep the confidential nature of all information that the parties furnish
confidentially and that is designated in writing or marked with a seal or
appropriate legend as confidential, of private property or of limited
distribution. Neither of the parties shall disclose information that the other
has designated as confidential, of private property or of limited distribution
except to its employees or agents to the extent required by the sole objective
of complying with the responsibilities set forth in this contract or of
establishing and providing services through the assignments granted under this
contract.
11. Notifications
Notifications, reports, payments or other communications related to
this contract shall be sent to the following addresses:
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<PAGE> 70
[75418 499]
For the client For INTELSAT
IMPSAT S.A. International Telecommunications Satellite
Alferez Pareja 256 Organization (INTELSAT)
Buenos Aires (1107) 3400 International Drive, N.W.
Argentina Washington, D.C. 20008-3098
United States
Attention: Attention:
Eduardo Mignacco Len Dooley
Operations Manager Director, Sales and Marketing
Tel: 54 1 362 4240 Tel. + 1 202 944 7011
Fax: 54 1 362 5041/5030 Fax + 1 202 944 7173
It shall be considered that such notifications, reports,
communications or payments have been duly delivered when they are delivered by
hand, through certified or registered letter, telex, fax transmission or, in
the case of payments, by sending cash, checks from the client's commercial
account, certified cashier's checks, or by wire draft. All payments between the
client and INTELSAT required by this contract shall be made in U.S. dollars or
in a currency that is freely converted into U.S. dollars. All the parties agree
to keep this information up to date and to notify each other mutually and
promptly of any change to the information pertinent to invoicing, use of the
assigned capacity and communications in general.
12. Settlement of disputes
The parties agree to settle all disputes or claims that arising with
respect to this contract or with respect to the services provided under same
within sixty (60) days or within a longer period mutually agreed upon beginning
on the date when one of the parties notifies the other in writing of the
existence of such dispute or claim. If the parties cannot reach an agreement
within such period of time, either of them may submit the dispute or claim for
its settlement through arbitration under the UNCITRAL arbitration rules in
effect on the date of the contract. According to such rules, the
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<PAGE> 71
[75418 500]
American Arbitration Association will have the authority to designate
arbitrators; and the arbitration shall take place in Washington, D.C., U.S.A
13. Laws that govern the contract
This contract, except for the provisions related to conflicts between
different laws, shall be governed by the laws of the District of Columbia,
U.S.A. The rights and recourse granted by virtue of this contract and other
rights and recourse shall be cumulative and may be exercised individually or
concurrently. If either of the parties does not assert its rights by virtue of
this contract or other rights, this shall not mean that it waves the right to
assert such rights or other rights in the future. In case the nullity of any
provision of this contract is determined, this shall not affect the other
provisions of same, and the provision that is null and void shall be replaced
with another acceptable provision that is line with the original intention of
the parties.
Each party acknowledges having read and understood the provisions of
this contract and agrees to subject itself to such provisions.
IN WITNESS WHEREOF, the parties have instructed their duly empowered
representatives to sign this contract.
International Telecommunications IMPSAT S.A.
Satellite Organization EDUARDO JOSE MIGNACCO
/s/ /s/
DOLORES MARTOS MANAGER OF OPERATIONS
- -------------- May 8, 1995
GROUP DIRECTOR - LATIN AMERICA
- ------------------------------
- 29 -
<PAGE> 72
[75418 501]
CERTIFICATE
I, RAFAEL CARCHAK CANES, GENERAL MANAGER OF IMPSAT S.A., do hereby
certify that EDUARDO JOSE MIGNACCO, who signed the above instrument, holds the
position of MANAGER OF OPERATIONS and is duly empowered to sign the above
contract on behalf of IMPSAT S.A.
In witness where of, I sign this certificate on May 8, 1995.
/s/
Rafael Carchak Canes
General Manager
IMPSAT S.A.
- 30 -
<PAGE> 73
AGREEMENT TO PARTIALLY RESCIND CONTRACT
BETWEEN:
NAHUELSAT S.A. (hereinafter the "SUPPLIER"), on the one hand,
represented at this act by its Vice Chairman and acting Chairman, Dr. Eckart
Schober, and
IMPSAT S.A. (hereinafter the "CLIENT", on the other hand, represented
at this act by Accountant [TRANSLATOR'S NOTE: NAME(S) BLOTTED OUT] in their
capacity as attorneys-in-fact of said company, hereinafter jointly referred to
as the "Parties" and WHEREAS:
A) THE CLIENT and "AEROSPATIALE S.N.I., ALCATEL ESPACE S.A., ALENIA
SPAZIO S.P.A., DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE TELECOMUNICACOES
S.A. - TRANSITORY UNION OF COMPANIES - (hereinafter the "Awardee TUC") signed a
Satellite Facility Lease Contract (hereinafter the "Contract") on November 5,
1993; and whereas,
B) The transitory union of companies called AEROSPATIALE S.N.I., ALCATEL
ESPACE S.A., ALENIA SPAZIO S.P.A., DEUTSCHE AEROSPACE AG, EMPRESA BRASILEIRA DE
TELECOMUNICACOES S.A. - TRANSITORY UNION OF COMPANIES was replaced by
"AEROSPATIALE Societe Nationale Industrielle, ALENIA SPAZIO Societa per Azioni
and DEUTSCHE AEROSPACE Atktiangesellschaft - TRANSITORY UNION OF COMPANIES -
(hereinafter also the "Awardee TUC"); and whereas,
C) THE CLIENT and the Awardee TUC signed six (6) expansions of the
Contract, the first one dated February 8, 1994, the second one dated April 7,
1994, the third one dated July 14, 1994, the fourth one dated September 30,
1994, the fifth one dated December 12, 1994 and the last one dated January 24,
1995 (hereinafter called the "Expansions"); and whereas,
D) NAHUELSAT S.A. is the automatic assignee of the Awardee TUC, all in
accordance with article 10 of the Contract; and whereas,
E) Under the Contract and the Expansions, the CLIENT has to date been
assigned the quantity of 39 Mega-Hertz distributed in one or two NAHUEL C-1
Satellite transponders; and whereas,
<PAGE> 74
F) The CLIENT wishes to partially rescind its Assigned Capacity in
accordance with the Contract and the Expansions, having available to it
twenty-three (2) Mega-Hertz on NAHUEL C1 Satellite. In order to formalize said
partial rescission, it is necessary to amend certain articles of the Contract
in accordance with what is set forth below. Also, it is necessary to replace
Attachment B1-VI with a new Attachment called B1-VII.
Hence, the Parties AGREE:
1.- To partially rescind the Assigned Capacity on NAHUEL C-1 Satellite
effective May 1, 1996.
2.- To replace, effective May 1, 1996, Attachment B1-V1 of the Contract
with Attachment B1-VII, which describes the rate that is applicable to
the new Assigned Capacity on NAHUEL C-1 Satellite. Every time
Attachment B1 is referred to in the Contract, it will be understood to
refer to Attachment B1-V11.
3. To replace, effective May 1, 1996, points 3.1, 3.2, 3.3, 3.4 and 3.5
of Article THREE of the Contract with the following:
"3.1 The Capacity Assigned to the CLIENT consists of twenty-three (23)
Mega-Hertz (hereinafter "MHz") in one or two transponders of the
NAHUEL C1 Satellite in vertical polarization geostationary orbit
beginning on May 1, 1996 until December 31, 1996 in accordance with
the rates described in Attachment B1-VII of the Contract."
"3.2 The Available Bandwidth of the Assigned Transponder(s) is fifty (50)
MHz."
"3.2 The percentage of the Available Bandwidth that corresponds to the
Assigned Capacity is forty-six percent (46%)."
"3.3 The Available Power of the Assigned Transponder(s) corresponds to an
output back-off of four point five (4.5) decibels (hereinafter dB") of
the applicable progressive wave tube amplifier."
"3.5 The maximum percentage of the Available Power of the Assigned
Transponder(s) which the CLIENT will have the right to use is
forty-six percent (46%). This percentage corresponds to a
<PAGE> 75
total input back-off of all the Assigned Capacity carriers of seven
point nine (7.9) dB of the applicable progressive wave tube
amplifier."
4. Except as stipulated in the preceding paragraphs, the Contract will
remain in effect in its original text, including the attachments that
are part of same.
5.- The Parties agree that by virtue of the stipulations of article 7.8 of
the Contract, as the sole indemnity, the CLIENT shall pay to PARACOM
SATELITES S.A. the sum of one hundred fifty-seven thousand five
hundred thirty-eight U.S. dollars (US$ 157,538). Said payment shall be
made on May 1, 1996 at the domicile of PARACOM SATELITES S.A. located
at 516 25 de Mayo, 6th Floor, Federal Capital from 10:00 to 13:00
hours and from 14:00 to 18:00 hours. As guarantee of said payment the
CLIENT issues at this act a promissory note for the sum of one
fifty-seven thousand five hundred thirty-eight U.S. dollars (US$
157,538) with an expiration of May 1, 1996.
6.- The parties ratify the domiciles established for purposes of the
Contract and herein:
THE SUPPLIER at Lavalle 472, 3rd floor, city of Buenos Aires, Argentina.
The CLIENT at Alferez Pareja 256, city of Buenos Aires, Argentina.
As evidence of agreement, the parties sign two (2) copies with the same
contents and for one sole purpose, their pages written only on the obverse, in
the city of Buenos Aires on the 1st day of the month of February 1996.
<PAGE> 1
EXHIBIT 10.5
This is a fair and accurate English translation of a Spanish language document
as required by Rule 306(a) Regulation S-T.
/s/ JOSE TORRES
------------------------
Jose R. Torres
Vice President, Administration
and Chief Accounting Officer
IMPSAT Corporation
October 24, 1996
[75418 474]
CONTRACT
WITH
INTELSAT
705/706
<PAGE> 2
[75418 475]
Between the NATIONAL TELECOMMUNICATIONS COMMISSION, hereinafter "THE CNT",
represented at this act by its President, Dr. Oscar Felix Gonzalez, with legal
domicile in Perc 103, Federal Capital, on the one hand, and IMPSAT S.A.,
hereinafter "THE COMPANY", represented by Daniel Vicente Hourquescos, in his
capacity of representative and Edgardo Aurelio Nesossi, in his capacity as
attorney-in fact, with legal domicile at Alferez Pareja 256, Federal Capital,
they agree to enter into this Contract, subject to the following clauses and
conditions:
ONE: THE CNT agrees to provide to THE COMPANY the satellite segment capacity
described in ATTACHMENT A of this contract, hereinafter "THE CAPACITY". For
such purpose THE CNT shall request from the INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION "INTELSAT" on behalf and for the account of THE COMPANY,
the Guaranteed Reserve of THE CAPACITY.
As for THE COMPANY, it agrees to take THE CAPACITY provided by THE CNT and use
it to provide the services for which it has been duly licensed or authorized in
due course. THE COMPANY shall assume the responsibility for all obligations to
INTELSAT arising rom use of THE CAPACITY.
TWO: 2.1. THE CNT shall make THE CAPACITY that is assigned available to THE
COMPANY TWENTY-FOUR (24) hours a day, SEVEN (7) days a week, during the
assignment period stipulated in the following subsection:
2.2 The period of duration of the contract is five years counted from April 1,
1995, the planned date for commissioning of THE CAPACITY. In the event that
INTELSAT does not accept the Guaranteed Reserve nor makes available THE
CAPACITY to THE CNT, this contract shall, as a matter of law and automatically,
be null and void and shall be deprived of all value to both parties.
2.3 At the request of THE COMPANY, at least ONE HUNDRED FIFTY (150) continuous
days counted from the date of lapse of the term of this contract, THE CNT may
decide in a new Attachment the terms applicable to the continuity of same
before INTELSAT.
THREE: As consideration THE COMPANY shall pay to THE CNT the sum of US$
8,673,000 (EIGHT MILLION SIX HUNDRED SEVENTY-THREE THOUSAND U.S. DOLLARS) as
rent for THE CAPACITY during a period of FIVE (5) years in accordance with
INTELSAT rates in effect on the date of consolidation of the respective
Guaranteed Reserve plus US$ 867,300 (EIGHT HUNDRED SIXTY-SEVEN THOUSAND THREE
HUNDRED U.S. DOLLARS) in favor of THE CNT as a commission of TEN PERCENT (10%).
The first year a total amount of US$ 1,752,300 (ONE MILLION SEVEN HUNDRED
FIFTY-TWO THOUSAND THREE HUNDRED U.S. DOLLARS) shall be paid, and in each of
the four subsequent years US$ 1,947,000 (ONE MILLION NINE HUNDRED FORTY-SEVEN
THOUSAND U.S. DOLLARS). The respective amounts will be invoiced on a quarterly
basis by THE CNT once it receives authentic accounting documentation from
INTELSAT, and they shall be paid by THE COMPANY at THE CNT's domicile within
the period of time established by THE CNT on each invoicing.
FOUR: The sums that are stated in U.S. dollars in this Contract are understood
to be convertible in the terms of law 23,928.
<PAGE> 3
[75418 476]
FIVE: THE COMPANY is conclusively prohibited from total or partial assignment
of this contract without prior and express authorization from THE CNT.
SIX: Failure by THE COMPANY to comply promptly with any of the payments
stipulated in clause THREE shall have the effect of automatically placing it in
default, without the need for any notification whatsoever by THE CNT. During
the time that the default lasts, the sums that are owed shall accrue
compensatory and punitive interest of FORTY-EIGHT PERCENT (48%) annually for
both reasons.
If within a period of SIXTY (60) days counted from the date that any of the
payments stipulated in clause THREE is due, the sums that are owed and their
respective interest are not paid, THE CNT may opt to: a) demand compliance with
this contract plus applicable damages or b) rescind this contract. In this case
THE COMPANY shall pay the amount owed for the payments of clause THREE, and in
default, as applicable, with the respective interest, as well as any other
amount that is claimed by INTELSAT as damages that might be applicable. THE
COMPANY shall pay the amounts that are demanded of it in a period of TEN (10)
days after the rescission is notified. Once the rescission is notified, THE CNT
may freely dispose of THE CAPACITY that is the subject of this contract.
SEVEN: 7.1 THE COMPANY shall not have the right to any claim, compensation or
credit in case of interruptions of less than one hour in the availability of
THE CAPACITY.
7.2 In case of an interruption of the availability of THE CAPACITY that lasts
one hour or more and that, as determined by INTELSAT, is attributable to
INTELSAT's space segment (as defined in the INTELSAT Agreement), THE COMPANY
shall be credited with a sum equal to the proportional parte of the quarterly
charge.
7.3 THE COMPANY shall not have the right to any claim, compensation or credit
in case of non-initiation of the service on the planned date or in case of
interruption caused directly or indirectly by any action or omission of THE
COMPANY, its customers, contractors, lessors, representatives and/or employees.
EIGHT: 8.1 With the exception of the compensation agreed upon for interruptions
specified in clause SEVEN, THE CNT shall not be liable for damages caused due
to an interruption in the availability of THE CAPACITY, regardless of the cause
of such interruption.
8.2 THE COMPANY shall indemnify and exempt THE CNT and shall hold it harmless
from any loss, damage, liability or expense resulting from:
a) Any slander, defamation, abusive interference in the private
life or violation or copyright arising from use of THE CAPACITY.
b) Any violation of patents resulting from (i) use of devices and
systems of THE COMPANY, its users, clients, contractors, lessors,
representatives or assignees, with respect to THE CAPACITY, or (ii) from use of
THE CAPACITY in any manner not envisaged by INTELSAT and/or THE CNT and over
which the latter does not exercise any control.
c) All acts or omissions of THE COMPANY, its users, clients,
contractors, lessors, representatives, agents or employees and assignees with
respect to use of THE CAPACITY.
<PAGE> 4
[75418 477]
NINE: THE COMPANY agrees to abide strictly by this contract and the provisions
of national and international laws, decrees and regulations, as well as
INTELSAT's specifications and procedures on the matter. This contract is
entered into within the existing regulatory framework, and breach of it exempts
THE CNT from all liability, THE COMPANY being the only one liable for penalties
caused by its conduct.
TEN: THE CNT shall not be liable under any circumstance for any additional cost
or damage to THE COMPANY, including modifications of the earth segment, that
result from application of the procedures set down by the INTERNATIONAL
TELECOMMUNICATIONS UNION for coordination with earth systems, with other
satellites or due to changes in the operating conditions of the satellite
transponder that should be necessary as a consequence of such coordinations.
ELEVEN: THE COMPANY hereby agrees to obligate itself to accept the agreements
entered into by THE CNT on matters of coordination to which the preceding
clause refers. In the event that the application of any agreement entered into
for the purpose of protecting the system results in considerable degradation of
the services channeled by the transponder, THE CNT and THE COMPANY shall
immediately engage in consultations to reach a satisfactory agreement in order
to mitigate the repercussions that such agreements have for THE COMPANY.
TWELVE: THE CNT may suspend before or after the start of use of THE CAPACITY,
or it may interrupt totally or partially, in provisional manner, the
availability of THE CAPACITY or decide on a transitory decrease in the times of
same or proceed to make any change or restriction of THE CAPACITY caused by the
presence of technical or operating faults in the satellite, in its common
equipment or in the transponder in use if INTELSAT, for emergency reasons,
decides to take the transponder, to continue or restore international services
or any other technical or operating or contractual circumstance arising from
agreements signed by THE CNT and INTELSAT. In such case, the parties agree:
a) For purposes of this regulation of interests, such cases shall be treated as
"acts of God" or "force majeure". In the case of total loss or impossibility of
use of THE CAPACITY, the fulfillment of obligations of both parties shall be
concluded, and they shall not have the right to make claims from each other for
this matter.
b) THE CNT shall notify THE COMPANY with as much advance notice as possible of
any decision that it makes in the event of the cases mentioned.
c) THE CNT shall in no case be liable to THE COMPANY or its customers,
contractors, agents or third parties in general for any of the situations
provided for in this clause for the damages that might be understood to be
generated by the occurrence of same as long as they are not attributable to it.
d) THE CNT agrees to take all steps of a technical, operating and
administrative nature within this contractual framework and that of the
CNT-INTELSAT contract that might arise as a consequence of this contract aimed
at overcoming or ameliorating the consequences of the above circumstances
and/or to propose alternatives to THE COMPANY for the same purpose.
THIRTEEN: THE COMPANY agrees to make use of THE CAPACITY in accordance with
<PAGE> 5
[75418 478]
the stipulations of existing regulations subject to applicable authorizations
and/or commitments from THE CNT.
FOURTEEN: With respect to cases of force majeure and acts of God the parties
agree to abide by the provisions of the Civil Code, article 514 and related.
FIFTEEN: THE COMPANY shall submit to THE CNT the transmission plan required by
INTELSAT for use of THE CAPACITY. The transmission plan and the operating
parameters shall be submitted by THE COMPANY to THE CNT for its review and
subsequent approval by THE CNT and by INTELSAT before the commissioning of THE
CAPACITY.
If necessary, possible subsequent modifications may be introduced after
analysis and authorization from THE CNT and INTELSAT.
Interference caused in transponders of the satellite itself or of other
satellites duly registered with the INTERNATIONAL TELECOMMUNICATIONS UNION
shall be kept within the limits specified by the INTERNATIONAL
TELECOMMUNICATIONS UNION, THE CNT and INTELSAT.
Interference in other satellite systems with which THE CNT and/or INTELSAT have
reached coordination agreements shall be kept within the operating parameters
set forth in such agreements. For such purpose, all earth stations installed by
the Company shall:
i) Have the installation authorization issued by THE CNT. This authorization
shall be before any step or procedure that THE COMPANY, its users, its
customers, agents, assignees or employees make with such station.
ii) Have successfully concluded, before the commissioning, compliance with all
the tests required by INTELSAT aimed at verifying the operating
characteristics.
iii) Be operated and maintained in accordance with the Satellite System
Operating Guides (SSOG) and related procedures set forth by INTELSAT.
b) THE CNT shall have the right to inspect, supervise and control all
authorized satellite systems in order to ensure compliance with the authorized
operating conditions.
SIXTEEN: The operating characteristics of all installations or services
provided by THE COMPANY, its clients, contractors, lessors or assignees with
respect to use of THE CAPACITY shall be such that their connection to the
INTELSAT space segment or joint use with same or with any of the related
installations does not interfere with the efficient operation of the INTELSAT
space segment and its components.
THE COMPANY agrees to abide by the directives issued by THE CNT related to
operating and management aspects of the INTELSAT space segment and especially
to that assigned herein.
SEVENTEEN: It is established that for purposes of the installation and use of
the earth stations by THE COMPANY, its customers, contractors, agents or third
parties in general for the provision of the services for which it is
responsible, THE COMPANY shall request the respective authorizations granted by
THE CNT to its customers, contractors, agents or third parties in general.
For purposes of application of this clause, THE COMPANY shall have available
for THE CNT a file with genuine evidence of such authorizations, licenses
and/or permits.
<PAGE> 6
[75418 479]
EIGHTEEN: For purposes of guaranteeing performance of its obligations THE
COMPANY shall establish, as a condition of validity of this contract, a
guarantee that covers at all times ONE HUNDRED PERCENT (100%) of the amount
owed plus TWENTY PERCENT (20%) of such amount. In order to determine the value
of the amount owed, from the total amount that results from adding the value of
the rent for THE CAPACITY US$ 8,673,000 (EIGHT MILLION SIX HUNDRED
SEVENTY-THREE THOUSAND U.S. DOLLARS) plus the value of the TEN PERCENT (10%)
commission to be received by THE CNT US$ 867,300 (EIGHT HUNDRED SIXTY-SEVEN
THOUSAND THREE HUNDRED U.S. DOLLARS), that is from the US$ 9,540,300 (NINE
MILLION FIVE HUNDRED FORTY THOUSAND THREE HUNDRED U.S. DOLLARS) will be
deducted the value of the successive quarterly payments made by THE COMPANY to
THE CNT in the performance of this contract.
NINETEEN: The parties subject themselves to the jurisdiction of the Federal
Courts for Civil and Commercial Matters of the Federal Capital with express
waiver of any other jurisdiction, and the notifications that the parties
address to each other shall be valid only at the legal domiciles set forth in
the heading.
AS A SIGN OF AGREEMENT, in the city of Buenos Aires, on the 27th day of March
of 1995 2 (TWO) copies with the same contents and for one sole purpose are
signed.
<PAGE> 7
[75418 480]
ATTACHMENT A
THE CNT agrees to seek before INTELSAT, for the account and order of IMPSAT, a
Guaranteed Reserve (GR) for the satellite segment and conditions described as
follows:
SATELLITE : INTELSAT 706
ORBITAL POSITION : 307 degree E
BAND : Ku
TYPE OF BEAM : S3/S3
TRANSPONDERS : 111/211
BANDWIDTH : THIRTY-SIX (36) MHz
TYPE OF DUTY : Uninterruptible
DURATION OF CONTRACT : 5 years
PLANNED COMMISSIONING
DATE : APRIL 1, 1995
<PAGE> 8
[75418 481]
COMPLEMENTARY AGREEMENT TO THE C.N.T. - SATELNET S.A. CONTRACT
Between the NATIONAL TELECOMMUNICATIONS COMMISSION, hereinafter "THE C.N.T",
represented at this act by its INTERVENER, Dr. Jose Luis PALAZZO, with legal
domicile at Sarmiento 151 - 4th floor, of the city of Buenos Aires, on the one
hand and SATELNET S.A., represented by Dr. Victor Taiarol and Dr. Alberto V.
Lisdero, in their capacities as President and Vice President of same, with
legal domicile at Florida 537, 5th Floor, on the other hand, it is agreed to
enter into, subject to the following clauses and conditions, this complementary
agreement, which partially amends the contract signed by the same parties and
approved by NATIONAL EXECUTIVE BRANCH Decree No. 2709 of December 20, 1991.
ONE: For operating reasons, assignment of the satellite capacity mentioned in
clauses ONE AND TEN and in the ATTACHMENT of the afore-mentioned contract has
been carried out during the period between February 1 and July 14, 1992, with a
capacity of 18 MHz at the 94/94 transponders of INTELSAT satellite 605,
longitude 335.5 degree E and transferred starting on July 15, 1992 to the 95/95
transponder of INTELSAT satellite 603, longitude 325.5degree E with a capacity
of 36 MHz, all with coverage of the Southwest zonal beams.
TWO: The parties agree that said satellite capacity shall have the nature of
"uninterruptible", and the terms and conditions of the original contract and
this amendment are subject to agreement with the special mode of the capacity
in question depending on how same is defined in the INTELSAT Agreement.
THREE: For purposes of computing the period set forth in point b) of clause TWO
of the contract, the parties agree that same started to be counted beginning on
February 1, 1992.
FOURTH: As consideration SATELNET S.A. shall pay the sum of SIX MILLION EIGHT
HUNDRED NINETEEN THOUSAND EIGHT HUNDRED FORTY U.S. DOLLARS (US$ 6,819,840.00)
for the rent of the capacity described in clause ONE during a period of five
years plus a commission of 10% equivalent to SIX HUNDRED EIGHTY-ONE THOUSAND
NINE HUNDRED EIGHTY-FOUR U.S. DOLLARS (US$ 681,984.00) in favor of the C.N.T.
The first year a total amount of US$ ONE MILLION ONE HUNDRED SIXTY-FIVE
THOUSAND EIGHT HUNDRED TWENTY-FOUR U.S. DOLLARS (US$ 1,165,824.00) shall be
paid, and in each of the four subsequent years ONE MILLION FIVE HUNDRED
EIGHTY-FOUR THOUSAND U.S. DOLLARS (US$ 1,584,000.00). The respective amounts
will be invoiced by the C.N.T. once it receives authentic accounting
documentation from INTELSAT, and they shall be paid by SATELNET S.A. within ten
(10) days of receipt of the invoice at the domicile established by the C.N.T.
in this contract.
<PAGE> 9
[75418 482]
FIVE: For purposes of guaranteeing performance of the obligations of SATELNET
S.A., the latter shall submit a guarantee that covers at all time ONE HUNDRED
PERCENT (100%) of the amount to be paid by the C.N.T. to INTELSAT in case of
breach of this contract by SATELNET S.A.. For purposes of calculation of this
amount both parties state that they accept the formula of indemnity for
cancellation established by INTELSAT that is in effect at the time of same. The
current formula is that established in document BG-94-52 of INTELSAT,
Attachment No. 1, Section J (Cancellation Policy).
For purposes of submission of the guarantee for this contract, the initial
above-mentioned amount totals to date TWO MILLION SEVEN HUNDRED SEVENTY-TWO
THOUSAND U.S. DOLLARS (US$ 2,772,000.00).
Said guarantee may be established through guarantee insurance or bank
guarantees with first-rate companies. The C.N.T. shall, in a period of
FORTY-EIGHT (48) working hours, accept or reject, with justified cause, the
guarantee that is submitted. In the latter case SATELNET S.A. shall submit a
new guarantee. This contract shall not go into effect until the C.N.T. has
accepted the guarantee in question.
SIX: SATELNET S.A. may opt to adhere to any new national or international
system that may be applicable to the Contract provided the conditions to access
such system are complied with and no harm whatsoever is caused to the National
State.
For such purposes SATELNET S.A. shall notify the C.N.T. in genuine manner of
the exercise of the option in question and the amended rule that it wishes to
incorporate to the Contract.
This option shall also be valid for those INTELSAT provisions that are not
obligatory.
SEVEN: The rest of the clauses and conditions of the contract approved by
NATIONAL EXECUTIVE BRANCH Decree No. 2709 of December 20, 1991 remain without
amendment.
As a sign of agreement 3 (three) copies with the same contents and for one sole
purpose are signed in Buenos Aires on eh 3rd day of the month of March of 1993.
<PAGE> 10
[75418 483]
Between the NATIONAL TELECOMMUNICATIONS COMMISSION, hereinafter "THE CNT",
represented at this act by its President, Dr. Rinaldo Antonio Colome, with
legal domicile in Perc 103, Federal Capital, on the one hand, and SATELNET
S.A., hereinafter "THE COMPANY", represented by Jose Ramon Torres and Eduardo
Jose Mignacco, in their capacity of representatives with legal domicile at
Florida 537, 5th floor, they agree to enter into this Contract, subject to the
following clauses and conditions:
ONE: THE CNT agrees to provide to THE COMPANY the satellite segment capacity
described in ATTACHMENT A of this contract, hereinafter "THE CAPACITY". For
such purpose THE CNT shall request from the INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION "INTELSAT" on behalf and for the account of THE COMPANY,
the Guaranteed Reserve of THE CAPACITY.
As for THE COMPANY, it agrees to take THE CAPACITY provided by THE CNT and use
it to provide the services for which it has been duly licensed or authorized in
due course. THE COMPANY shall assume the responsibility for all obligations to
INTELSAT arising rom use of THE CAPACITY.
TWO: 2.1. THE CNT shall make THE CAPACITY that is assigned available to THE
COMPANY TWENTY-FOUR (24) hours a day, SEVEN (7) days a week, during the
assignment period stipulated in the following subsection:
2.2 The period of duration of the contract is five years counted from April 1,
1995, the planned date for commissioning of THE CAPACITY. In the event that
INTELSAT does not accept the Guaranteed Reserve nor makes available THE
CAPACITY to THE CNT, this contract shall, as a matter of law and automatically,
be null and void and shall be deprived of all value to both parties.
2.3 At the request of THE COMPANY, at least ONE HUNDRED FIFTY (150) continuous
days counted from the date of lapse of the term of this contract, THE CNT may
decide in a new Attachment the terms applicable to the continuity of same
before INTELSAT.
THREE: As consideration THE COMPANY shall pay to THE CNT the sum of US$
1,470,000 (ONE MILLION FOUR HUNDRED SEVENTY THOUSAND U.S. DOLLARS) as rent for
THE CAPACITY during a period of FIVE (5) years in accordance with INTELSAT
rates in effect on the date of consolidation of the respective Guaranteed
Reserve plus US$ 147,000 (ONE HUNDRED FORTY-SEVEN THOUSAND U.S. DOLLARS) in
favor of THE CNT as a commission of TEN PERCENT (10%). The first year a total
amount of US$ 297,000 (TWO HUNDRED NINETY-SEVEN THOUSAND U.S. DOLLARS) shall
be paid, and in each of the four subsequent years US$ 330,000 (THREE HUNDRED
THIRTY THOUSAND U.S. DOLLARS). The respective amounts will be invoiced on a
quarterly basis by THE CNT once it receives authentic accounting documentation
from INTELSAT, and they shall be paid by THE COMPANY at THE CNT's domicile
within the period of time established by THE CNT on each invoicing.
FOUR: The sums that are stated in U.S. dollars in this Contract are understood
to be convertible in the terms of law 23,928.
<PAGE> 11
[75418 484]
FIVE: THE COMPANY is conclusively prohibited from total or partial assignment
of this contract without prior and express authorization from THE CNT.
SIX: Failure by THE COMPANY to comply promptly with any of the payments
stipulated in clause THREE shall have the effect of automatically placing it in
default, without the need for any notification whatsoever by THE CNT. During
the time that the default lasts, the sums that are owed shall accrue
compensatory and punitive interest of FORTY-EIGHT PERCENT (48%) annually for
both reasons.
If within a period of SIXTY (60) days counted from the date that any of the
payments stipulated in clause THREE is due, the sums that are owed and their
respective interest are not paid, THE CNT may opt to: a) demand compliance with
this contract plus applicable damages or b) rescind this contract. In this case
THE COMPANY shall pay the amount owed for the payments of clause THREE, and in
default, as applicable, with the respective interest, as well as any other
amount that is claimed by INTELSAT as damages that might be applicable. THE
COMPANY shall pay the amounts that are demanded of it in a period of TEN (10)
days after the rescission is notified. Once the rescission is notified, THE CNT
may freely dispose of THE CAPACITY that is the subject of this contract.
SEVEN: 7.1 THE COMPANY shall not have the right to any claim, compensation or
credit in case of interruptions of less than one hour in the availability of
THE CAPACITY.
7.2 In case of an interruption of the availability of THE CAPACITY that lasts
one hour or more and that, as determined by INTELSAT, is attributable to
INTELSAT's space segment (as defined in the INTELSAT Agreement), THE COMPANY
shall be credited with a sum equal to the proportional parte of the quarterly
charge.
7.3 THE COMPANY shall not have the right to any claim, compensation or credit
in case of non-initiation of the service on the planned date or in case of
interruption caused directly or indirectly by any action or omission of THE
COMPANY, its customers, contractors, lessors, representatives and/or employees.
EIGHT: 8.1 With the exception of the compensation agreed upon for interruptions
specified in clause SEVEN, THE CNT shall not be liable for damages caused due
to an interruption in the availability of THE CAPACITY, regardless of the cause
of such interruption.
8.2 THE COMPANY shall indemnify and exempt THE CNT and shall hold it harmless
from any loss, damage, liability or expense resulting from:
a) Any slander, defamation, abusive interference in the private
life or violation or copyright arising from use of THE CAPACITY.
b) Any violation of patents resulting from (i) use of devices and
systems of THE COMPANY, its users, clients, contractors, lessors,
representatives or assignees, with respect to THE CAPACITY, or (ii) from use of
THE CAPACITY in any manner not envisaged by INTELSAT and/or THE CNT and over
which the latter does not exercise any control.
c) All acts or omissions of THE COMPANY, its users, clients,
contractors, lessors, representatives, agents or employees and assignees with
respect to use of THE CAPACITY.
<PAGE> 12
[75418 485]
NINE: THE COMPANY agrees to abide strictly by this contract and the provisions
of national and international laws, decrees and regulations, as well as
INTELSAT's specifications and procedures on the matter. This contract is
entered into within the existing regulatory framework, and breach of it exempts
THE CNT from all liability, THE COMPANY being the only one liable for penalties
caused by its conduct.
TEN: THE CNT shall not be liable under any circumstance for any additional cost
or damage to THE COMPANY, including modifications of the earth segment, that
result from application of the procedures set down by the INTERNATIONAL
TELECOMMUNICATIONS UNION for coordination with earth systems, with other
satellites or due to changes in the operating conditions of the satellite
transponder that should be necessary as a consequence of such coordinations.
ELEVEN: THE COMPANY hereby agrees to obligate itself to accept the agreements
entered into by THE CNT on matters of coordination to which the preceding
clause refers. In the event that the application of any agreement entered into
for the purpose of protecting the system results in considerable degradation of
the services channeled by the transponder, THE CNT and THE COMPANY shall
immediately engage in consultations to reach a satisfactory agreement in order
to mitigate the repercussions that such agreements have for THE COMPANY.
TWELVE: THE CNT may suspend before or after the start of use of THE CAPACITY,
or it may interrupt totally or partially, in provisional manner, the
availability of THE CAPACITY or decide on a transitory decrease in the times of
same or proceed to make any change or restriction of THE CAPACITY caused by the
presence of technical or operating faults in the satellite, in its common
equipment or in the transponder in use if INTELSAT, for emergency reasons,
decides to take the transponder, to continue or restore international services
or any other technical or operating or contractual circumstance arising from
agreements signed by THE CNT and INTELSAT. In such case, the parties agree:
a) For purposes of this regulation of interests, such cases shall be treated as
"acts of God" or "force majeure". In the case of total loss or impossibility of
use of THE CAPACITY, the fulfillment of obligations of both parties shall be
concluded, and they shall not have the right to make claims from each other for
this matter.
b) THE CNT shall notify THE COMPANY with as much advance notice as possible of
any decision that it makes in the event of the cases mentioned.
c) THE CNT shall in no case be liable to THE COMPANY or its customers,
contractors, agents or third parties in general for any of the situations
provided for in this clause for the damages that might be understood to be
generated by the occurrence of same as long as they are not attributable to it.
d) THE CNT agrees to take all steps of a technical, operating and
administrative nature within this contractual framework and that of the
CNT-INTELSAT contract that might arise as a consequence of this contract aimed
at overcoming or ameliorating the consequences of the above circumstances
and/or to propose alternatives to THE COMPANY for the same purpose.
<PAGE> 13
[75418 486]
THIRTEEN: THE COMPANY agrees to make use of THE CAPACITY in accordance with
the stipulations of existing regulations subject to applicable authorizations
and/or commitments from THE CNT.
FOURTEEN: With respect to cases of force majeure and acts of God the parties
agree to abide by the provisions of the Civil Code, article 514 and related.
FIFTEEN: THE COMPANY shall submit to THE CNT the transmission plan required by
INTELSAT for use of THE CAPACITY. The transmission plan and the operating
parameters shall be submitted by THE COMPANY to THE CNT for its review and
subsequent approval by THE CNT and by INTELSAT before the commissioning of THE
CAPACITY.
If necessary, possible subsequent modifications may be introduced after
analysis and authorization from THE CNT and INTELSAT.
Interference caused in transponders of the satellite itself or of other
satellites duly registered with the INTERNATIONAL TELECOMMUNICATIONS UNION
shall be kept within the limits specified by the INTERNATIONAL
TELECOMMUNICATIONS UNION, THE CNT and INTELSAT.
Interference in other satellite systems with which THE CNT and/or INTELSAT have
reached coordination agreements shall be kept within the operating parameters
set forth in such agreements. For such purpose, all earth stations installed by
the Company shall:
i) Have the installation authorization issued by THE CNT. This authorization
shall be before any step or procedure that THE COMPANY, its users, its
customers, agents, assignees or employees make with such station.
ii) Have successfully concluded, before the commissioning, compliance with all
the tests required by INTELSAT aimed at verifying the operating
characteristics.
iii) Be operated and maintained in accordance with the Satellite System
Operating Guides (SSOG) and related procedures set forth by INTELSAT.
b) THE CNT shall have the right to inspect, supervise and control all
authorized satellite systems in order to ensure compliance with the authorized
operating conditions.
SIXTEEN: The operating characteristics of all installations or services
provided by THE COMPANY, its clients, contractors, lessors or assignees with
respect to use of THE CAPACITY shall be such that their connection to the
INTELSAT space segment or joint use with same or with any of the related
installations does not interfere with the efficient operation of the INTELSAT
space segment and its components.
THE COMPANY agrees to abide by the directives issued by THE CNT related to
operating and management aspects of the INTELSAT space segment and especially
to that assigned herein.
SEVENTEEN: It is established that for purposes of the installation and use of
the earth stations by THE COMPANY, its customers, contractors, agents or third
parties in general for the provision of the services for which it is
responsible, THE COMPANY shall request the respective authorizations granted by
THE CNT to its customers, contractors, agents or third parties in general.
<PAGE> 14
[75418 487]
For purposes of application of this clause, THE COMPANY shall have available
for THE CNT a file with genuine evidence of such authorizations, licenses
and/or permits.
EIGHTEEN: For purposes of guaranteeing performance of its obligations THE
COMPANY shall establish, as a condition of validity of this contract, a
guarantee that covers at all times ONE HUNDRED PERCENT (100%) of the amount
owed plus TWENTY PERCENT (20%) of such amount. In order to determine the value
of the amount owed, from the total amount that results from adding the value of
the rent for THE CAPACITY US$ 1,470,000 (ONE MILLION FOUR HUNDRED SEVENTY
THOUSAND U.S. DOLLARS) plus the value of the TEN PERCENT (10%) commission to be
received by THE CNT US$ 147,000 (ONE HUNDRED FORTY-SEVEN THOUSAND U.S.
DOLLARS), that is from the US$ 1,617,000 (ONE MILLION SIX HUNDRED SEVENTEEN
THOUSAND U.S. DOLLARS) will be deducted the value of the successive quarterly
payments made by THE COMPANY to THE CNT in the performance of this contract.
NINETEEN: The parties subject themselves to the jurisdiction of the Federal
Courts for Civil and Commercial Matters of the Federal Capital with express
waiver of any other jurisdiction, and the notifications that the parties
address to each other shall be valid only at the legal domiciles set forth in
the heading.
AS A SIGN OF AGREEMENT, in the city of Buenos Aires, on the 23rd day of March
of 1994 2 (TWO) copies with the same contents and for one sole purpose are
signed.
<PAGE> 15
[75418 488]
ATTACHMENT A
THE CNT agrees to seek before INTELSAT, for the account and order of SATELNET
S.A., a Guaranteed Reserve (GR) for the satellite segment and conditions
described as follows:
SATELLITE : INTELSAT 706
ORBITAL POSITION : 307 degree E
BAND : C
TYPE OF BEAM : SPOT/SPOT
TRANSPONDERS : 186/186
BANDWIDTH : FIVE (5) MHz
TYPE OF DUTY : UNINTERRUPTIBLE
DURATION OF CONTRACT : FIVE (5) YEARS
PLANNED COMMISSIONING
DATE : APRIL 1, 1995
<PAGE> 16
[75418 489]
Between the NATIONAL TELECOMMUNICATIONS COMMISSION, hereinafter "THE CNT",
represented at this act by its President, Dr. Rinaldo Antonio Colome, with
legal domicile in Perc 103, Federal Capital, on the one hand, and IMPSAT S.A.,
hereinafter "THE COMPANY", represented by Daniel Vicente Hourquescos and Jose
Ramon Torres, in their capacity of representatives with legal domicile at
Alferez Pareja 256, Federal Capital, they agree to enter into this Contract,
subject to the following clauses and conditions:
ONE: THE CNT agrees to provide to THE COMPANY the satellite segment capacity
described in ATTACHMENT A of this contract, hereinafter "THE CAPACITY". For
such purpose THE CNT shall request from the INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION "INTELSAT" on behalf and for the account of THE COMPANY,
the Guaranteed Reserve of THE CAPACITY.
As for THE COMPANY, it agrees to take THE CAPACITY provided by THE CNT and use
it to provide the services for which it has been duly licensed or authorized in
due course. THE COMPANY shall assume the responsibility for all obligations to
INTELSAT arising rom use of THE CAPACITY.
TWO: 2.1. THE CNT shall make THE CAPACITY that is assigned available to THE
COMPANY TWENTY-FOUR (24) hours a day, SEVEN (7) days a week, during the
assignment period stipulated in the following subsection:
2.2 The period of duration of the contract is five years counted from April 1,
1995, the planned date for commissioning of THE CAPACITY. In the event that
INTELSAT does not accept the Guaranteed Reserve nor makes available THE
CAPACITY to THE CNT, this contract shall, as a matter of law and automatically,
be null and void and shall be deprived of all value to both parties.
2.3 At the request of THE COMPANY, at least ONE HUNDRED FIFTY (150) continuous
days counted from the date of lapse of the term of this contract, THE CNT may
decide in a new Attachment the terms applicable to the continuity of same
before INTELSAT.
THREE: As consideration THE COMPANY shall pay to THE CNT the sum of US$
2,646,000 (TWO MILLION SIX HUNDRED FORTY-SIX THOUSAND U.S. DOLLARS) as rent
for THE CAPACITY during a period of FIVE (5) years in accordance with INTELSAT
rates in effect on the date of consolidation of the respective Guaranteed
Reserve plus US$ 264,600 (TWO HUNDRED SIXTY-FOUR THOUSAND SIX HUNDRED U.S.
DOLLARS) in favor of THE CNT as a commission of TEN PERCENT (10%). The first
year a total amount of US$ 534,600 (FIVE HUNDRED THIRTY-FOUR THOUSAND SIX
HUNDRED U.S. DOLLARS) shall be paid, and in each of the four subsequent years
US$ 594,000 (FIVE HUNDRED NINETY-FOUR THOUSAND U.S. DOLLARS). The respective
amounts will be invoiced on a quarterly basis by THE CNT once it receives
authentic accounting documentation from INTELSAT, and they shall be paid by THE
COMPANY at THE CNT's domicile within the period of time established by THE CNT
on each invoicing.
FOUR: The sums that are stated in U.S. dollars in this Contract are understood
to be convertible in the terms of law 23,928.
FIVE: THE COMPANY is conclusively prohibited from total or partial assignment
of this contract without prior and express authorization from THE CNT.
<PAGE> 17
[75418 490]
SIX: Failure by THE COMPANY to comply promptly with any of the payments
stipulated in clause THREE shall have the effect of automatically placing it in
default, without the need for any notification whatsoever by THE CNT. During
the time that the default lasts, the sums that are owed shall accrue
compensatory and punitive interest of FORTY-EIGHT PERCENT (48%) annually for
both reasons.
If within a period of SIXTY (60) days counted from the date that any of the
payments stipulated in clause THREE is due, the sums that are owed and their
respective interest are not paid, THE CNT may opt to: a) demand compliance with
this contract plus applicable damages or b) rescind this contract. In this case
THE COMPANY shall pay the amount owed for the payments of clause THREE, and in
default, as applicable, with the respective interest, as well as any other
amount that is claimed by INTELSAT as damages that might be applicable. THE
COMPANY shall pay the amounts that are demanded of it in a period of TEN (10)
days after the rescission is notified. Once the rescission is notified, THE CNT
may freely dispose of THE CAPACITY that is the subject of this contract.
SEVEN: 7.1 THE COMPANY shall not have the right to any claim, compensation or
credit in case of interruptions of less than one hour in the availability of
THE CAPACITY.
7.2 In case of an interruption of the availability of THE CAPACITY that lasts
one hour or more and that, as determined by INTELSAT, is attributable to
INTELSAT's space segment (as defined in the INTELSAT Agreement), THE COMPANY
shall be credited with a sum equal to the proportional parte of the quarterly
charge.
7.3 THE COMPANY shall not have the right to any claim, compensation or credit
in case of non-initiation of the service on the planned date or in case of
interruption caused directly or indirectly by any action or omission of THE
COMPANY, its customers, contractors, lessors, representatives and/or employees.
EIGHT: 8.1 With the exception of the compensation agreed upon for interruptions
specified in clause SEVEN, THE CNT shall not be liable for damages caused due
to an interruption in the availability of THE CAPACITY, regardless of the cause
of such interruption.
8.2 THE COMPANY shall indemnify and exempt THE CNT and shall hold it harmless
from any loss, damage, liability or expense resulting from:
a) Any slander, defamation, abusive interference in the private
life or violation or copyright arising from use of THE CAPACITY.
b) Any violation of patents resulting from (i) use of devices and
systems of THE COMPANY, its users, clients, contractors, lessors,
representatives or assignees, with respect to THE CAPACITY, or (ii) from use of
THE CAPACITY in any manner not envisaged by INTELSAT and/or THE CNT and over
which the latter does not exercise any control.
c) All acts or omissions of THE COMPANY, its users, clients,
contractors, lessors, representatives, agents or employees and assignees with
respect to use of THE CAPACITY.
NINE: THE COMPANY agrees to abide strictly by this contract and the provisions
of national and international laws, decrees and regulations, as well as
INTELSAT's specifications and procedures on the matter. This contract is
<PAGE> 18
[75418 491]
entered into within the existing regulatory framework, and breach of it exempts
THE CNT from all liability, THE COMPANY being the only one liable for penalties
caused by its conduct.
TEN: THE CNT shall not be liable under any circumstance for any additional cost
or damage to THE COMPANY, including modifications of the earth segment, that
result from application of the procedures set down by the INTERNATIONAL
TELECOMMUNICATIONS UNION for coordination with earth systems, with other
satellites or due to changes in the operating conditions of the satellite
transponder that should be necessary as a consequence of such coordinations.
ELEVEN: THE COMPANY hereby agrees to obligate itself to accept the agreements
entered into by THE CNT on matters of coordination to which the preceding
clause refers. In the event that the application of any agreement entered into
for the purpose of protecting the system results in considerable degradation of
the services channeled by the transponder, THE CNT and THE COMPANY shall
immediately engage in consultations to reach a satisfactory agreement in order
to mitigate the repercussions that such agreements have for THE COMPANY.
TWELVE: THE CNT may suspend before or after the start of use of THE CAPACITY,
or it may interrupt totally or partially, in provisional manner, the
availability of THE CAPACITY or decide on a transitory decrease in the times of
same or proceed to make any change or restriction of THE CAPACITY caused by the
presence of technical or operating faults in the satellite, in its common
equipment or in the transponder in use if INTELSAT, for emergency reasons,
decides to take the transponder, to continue or restore international services
or any other technical or operating or contractual circumstance arising from
agreements signed by THE CNT and INTELSAT. In such case, the parties agree:
a) For purposes of this regulation of interests, such cases shall be treated as
"acts of God" or "force majeure". In the case of total loss or impossibility of
use of THE CAPACITY, the fulfillment of obligations of both parties shall be
concluded, and they shall not have the right to make claims from each other for
this matter.
b) THE CNT shall notify THE COMPANY with as much advance notice as possible of
any decision that it makes in the event of the cases mentioned.
c) THE CNT shall in no case be liable to THE COMPANY or its customers,
contractors, agents or third parties in general for any of the situations
provided for in this clause for the damages that might be understood to be
generated by the occurrence of same as long as they are not attributable to it.
d) THE CNT agrees to take all steps of a technical, operating and
administrative nature within this contractual framework and that of the
CNT-INTELSAT contract that might arise as a consequence of this contract aimed
at overcoming or ameliorating the consequences of the above circumstances
and/or to propose alternatives to THE COMPANY for the same purpose.
THIRTEEN: THE COMPANY agrees to make use of THE CAPACITY in accordance with
the stipulations of existing regulations subject to applicable authorizations
and/or commitments from THE CNT.
<PAGE> 19
[75418 492]
FOURTEEN: With respect to cases of force majeure and acts of God the parties
agree to abide by the provisions of the Civil Code, article 514 and related.
FIFTEEN: THE COMPANY shall submit to THE CNT the transmission plan required by
INTELSAT for use of THE CAPACITY. The transmission plan and the operating
parameters shall be submitted by THE COMPANY to THE CNT for its review and
subsequent approval by THE CNT and by INTELSAT before the commissioning of THE
CAPACITY.
If necessary, possible subsequent modifications may be introduced after
analysis and authorization from THE CNT and INTELSAT.
Interference caused in transponders of the satellite itself or of other
satellites duly registered with the INTERNATIONAL TELECOMMUNICATIONS UNION
shall be kept within the limits specified by the INTERNATIONAL
TELECOMMUNICATIONS UNION, THE CNT and INTELSAT.
Interference in other satellite systems with which THE CNT and/or INTELSAT have
reached coordination agreements shall be kept within the operating parameters
set forth in such agreements. For such purpose, all earth stations installed by
the Company shall:
i) Have the installation authorization issued by THE CNT. This authorization
shall be before any step or procedure that THE COMPANY, its users, its
customers, agents, assignees or employees make with such station.
ii) Have successfully concluded, before the commissioning, compliance with all
the tests required by INTELSAT aimed at verifying the operating
characteristics.
iii) Be operated and maintained in accordance with the Satellite System
Operating Guides (SSOG) and related procedures set forth by INTELSAT.
b) THE CNT shall have the right to inspect, supervise and control all
authorized satellite systems in order to ensure compliance with the authorized
operating conditions.
SIXTEEN: The operating characteristics of all installations or services
provided by THE COMPANY, its clients, contractors, lessors or assignees with
respect to use of THE CAPACITY shall be such that their connection to the
INTELSAT space segment or joint use with same or with any of the related
installations does not interfere with the efficient operation of the INTELSAT
space segment and its components.
THE COMPANY agrees to abide by the directives issued by THE CNT related to
operating and management aspects of the INTELSAT space segment and especially
to that assigned herein.
SEVENTEEN: It is established that for purposes of the installation and use of
the earth stations by THE COMPANY, its customers, contractors, agents or third
parties in general for the provision of the services for which it is
responsible, THE COMPANY shall request the respective authorizations granted by
THE CNT to its customers, contractors, agents or third parties in general.
For purposes of application of this clause, THE COMPANY shall have available
for THE CNT a file with genuine evidence of such authorizations, licenses
and/or permits.
EIGHTEEN: For purposes of guaranteeing performance of its obligations THE
COMPANY shall establish, as a condition of validity of this contract, a
<PAGE> 20
[75418 493]
guarantee that covers at all times ONE HUNDRED PERCENT (100%) of the amount
owed plus TWENTY PERCENT (20%) of such amount. In order to determine the value
of the amount owed, from the total amount that results from adding the value of
the rent for THE CAPACITY US$ 2,646,600 (TWO MILLION SIX HUNDRED FORTY-SIX
THOUSAND SIX HUNDRED U.S. DOLLARS) plus the value of the TEN PERCENT (10%)
commission to be received by THE CNT US$ 264,600 (TWO HUNDRED SIXTY-FOUR
THOUSAND SIX HUNDRED U.S. DOLLARS), that is from the US$ 2,910,600 (TWO MILLION
NINE HUNDRED TEN THOUSAND SIX HUNDRED U.S. DOLLARS) will be deducted the value
of the successive quarterly payments made by THE COMPANY to THE CNT in the
performance of this contract.
NINETEEN: The parties subject themselves to the jurisdiction of the Federal
Courts for Civil and Commercial Matters of the Federal CapITAL with express
waiver of any other jurisdiction, and the notifications that the parties
address to each other shall be valid only at the legal domiciles set forth in
the heading.
AS A SIGN OF AGREEMENT, in the city of Buenos Aires, on the 23rd day of May of
1994 2 (TWO) copies with the same contents and for one sole purpose are signed.
<PAGE> 21
[75418 494]
ATTACHMENT A
THE CNT agrees to seek before INTELSAT, for the account and order of SATELNET
S.A., a Guaranteed Reserve (GR) for the satellite segment and conditions
described as follows:
SATELLITE : INTELSAT 706
ORBITAL POSITION : 307 degree E
BAND : C
TYPE OF BEAM : SPOT/SPOT
TRANSPONDERS : 186/186
BANDWIDTH : NINE (9) MHz
TYPE OF DUTY : UNINTERRUPTIBLE
DURATION OF CONTRACT : FIVE (5) YEARS
PLANNED COMMISSIONING
DATE : APRIL 1, 1995
<PAGE> 22
[75418 495]
SERVICE CONTRACT
This contract is entered into on May 8, 1995 between the International
Telecommunications Satellite Organization (hereinafter "INTELSAT"), an
international organization established through the Agreement relative to the
International Telecommunications Satellite Organization "INTELSAT" (hereinafter
the "INTELSAT Agreement") and the Operating Agreement relative to same
(hereinafter the "INTELSAT Operating Agreement" signed in Washington, D.C. on
August 20, 1971, headquartered in Washington, D.C., U.S.A and "IMPSAT S.A."
(hereinafter the "client"), Alferez Pareja 256, Buenos Aires, organized and
existing under the laws of the Argentine Republic and authorized by one or more
Signatories of INTELSAT to have direct access to the INTELSAT space segment.
WHEREAS INTELSAT and the client wish to enter into an
agreement that sets down the basic terms and conditions for direct access by
the client to the INTELSAT space segment and its use of same;
THEREFORE, INTELSAT and the client agree to the following:
1. Definition
"Party" means a State for which the INTELSAT Agreement has
gone into effect.
"Signatory" means a Party or the telecommunications entity
designated by a Party that has signed the INTELSAT Operating Agreement.
2. Basic contract for orders
This contract serves as the basic contract for orders. Subject
to the terms and conditions of this contract, INTELSAT agrees to do whatever is
possible to make available to the client the capacity of the INTELSAT space
segment that the latter requests periodically. The client shall submit capacity
requests in the specific forms to request and amend services that
<PAGE> 23
[75418 496]
appear in the SSOG-104, "Forms for orders, amendments and reports on services".
The requests for service and assignment of capacity, once approved by INTELSAT,
shall be governed by this contract. The client understands and agrees that this
contract is not a commitment or a promise, express or implicit, by INTELSAT in
the sense that the client will be assigned capacity of the INTELSAT space
segment.
3. General terms and conditions
On the date of this contract, the client agrees to comply with
the terms and conditions set out by INTELSAT for the services furnished through
assignments of capacity of the INTELSAT space segment in accordance with this
contract. Such terms and conditions include those listed in the INTELSAT Earth
Stations Guides (IESS), the Satellite System Operating Guide (SSOG) and the
INTELSAT Rates Manual, which are incorporated to this contract by reference, to
the extent that such terms and conditions correspond to the specific types of
services requested by the client and assigned under this contract by INTELSAT,
such terms being capable of being amended from time to time. The terms and
conditions of each capacity assignment shall be those that are in effect at the
time the assignment is mae, and they shall not change during the original
assignment period. The client also agrees to abide by all conditions of
regulation and granting of licenses promulgated by the pertinent national
authority and to comply with same.
4. Investment in INTELSAT
If the client invests in INTELSAT, it agrees to comply with
the terms and conditions set forth in the contract with the investment company
that the client signs with INTELSAT.
5. Conditions to receive capacity from INTELSAT
a. A request for reservation or supply of capacity of the
INTELSAT space segment submitted by a client may be turned down unless
INTELSAT's management has decided that such client is solvent. The client
agrees to furnish the information requested by INTELSAT on its financial and
credit history. The
<PAGE> 24
[75418 997]
give INTELSAT the necessary authority so that it can verify such information
with various financing and banking institutions and/or with the client's
creditors.
b. Orders for capacity of the INTELSAT space segment shall not be
accepted from the client in case such client owes, on the date of the order for
capacity, a use invoice that is overdue thirty (30) days or more.
c. As a condition to reserve or supply services, INTELSAT may ask
the client to furnish other guarantees of its capacity to comply with its
financial obligations to INTELSAT when these are due, in the form of a letter
of credit, a guarantee deposit or other form of guarantee of performance that
INTELSAT should require.
6. Penalties for late payment
a. In addition to the penalty indicated in paragraph 5.b above,
any payment not paid on its due date shall accrue interest at an annual rate of
sixteen percent (16%), calculated from the due date until the payment date, and
the Board of Governors may amend such rate from time to time.
b. INTELSAT may suspend or cancel all services in effect and on
the waiting list of the client if any payment owed to INTELSAT for use of the
space segment has not been paid 150 or more days after its due date or within
another period that the INTELSAT Board of Governors sets from time to time.
7. Operation of earth stations
With respect to any earth station with authorization from
access to its space segment, the client agrees to operate such station at all
times in accordance with the terms of the authorization and the INTELSAT Earth
Station Standards (IESS) and accepts responsibility for such operation
including, among others, financial responsibility.
8. Transfer
This contract, the subsequent assignment of capacity of the
space segment, the rights, duties and obligations of the client, may not be
<PAGE> 25
[75418 498]
transferred or delegated without INTELSAT's prior written consent. Any transfer
or delegation that is attempted without such consent will be null and void and
shall have no effect. This clause shall not prevent the client from using its
assigned capacity to provide services to third parties.
9. Rescission
In addition to the provisions relative to cancellation that
are listed in the Rates Manual, INTELSAT reserves the right with an advance
written notification of at least thirty (30) days to rescind this contract with
a client if the latter does not comply with same. The rescission advance
notification shall indicate the date the rescission goes into effect and the
circumstances that caused it. At its discretion, INTELSAT may retain the
deposits or other sums paid by the client and use them to offset damage caused
to it by such failure to comply. This retention of funds of the client shall
not prevent INTELSAT from submitting other claims for compensation or from
claiming other payments for damages corresponding to it by law or equity. Such
right of rescission shall not be in order if, within said period of thirty
days, the client should settle its infraction to INTELSAT's satisfaction.
10. Confidential nature
INTELSAT and the client agree to take the necessary
precautions to keep the confidential nature of all information that the parties
furnish confidentially and that is designated in writing or marked with a seal
or appropriate legend as confidential, of private property or of limited
distribution. Neither of the parties shall disclose information that the other
has designated as confidential, of private property or of limited distribution
except to its employees or agents to the extent required by the sole objective
of complying with the responsibilities set forth in this contract or of
establishing and providing services through the assignments granted under this
contract.
11. Notifications
Notifications, reports, payments or other communications
related to this contract shall be sent to the following addresses:
<PAGE> 26
[75418 499]
For the client For INTELSAT
IMPSAT S.A. International Telecommunications Satellite
Alferez Pareja 256 Organization (INTELSAT)
Buenos Aires (1107) 3400 International Drive, N.W.
Argentina Washington, D.C. 20008-3098
United States
Attention: Attention:
Eduardo Mignacco Len Dooley
Operations Manager Director, Sales and Marketing
Tel: 54 1 362 4240 Tel. + 1 202 944 7011
Fax: 54 1 362 5041/5030 Fax + 1 202 944 7173
It shall be considered that such notifications, reports,
communications or payments have been duly delivered when they are delivered by
hand, through certified or registered letter, telex, fax transmission or, in
the case of payments, by sending cash, checks from the client's commercial
account, certified cashier's checks, or by wire draft. All payments between the
client and INTELSAT required by this contract shall be made in U.S. dollars or
in a currency that is freely converted into U.S. dollars. All the parties agree
to keep this information up to date and to notify each other mutually and
promptly of any change to the information pertinent to invoicing, use of the
assigned capacity and communications in general.
12. Settlement of disputes
The parties agree to settle all disputes or claims that
arising with respect to this contract or with respect to the services provided
under same within sixty (60) days or within a longer period mutually agreed
upon beginning on the date when one of the parties notifies the other in
writing of the existence of such dispute or claim. If the parties cannot reach
an agreement within such period of time, either of them may submit the dispute
or claim for its settlement through arbitration under the UNCITRAL arbitration
rules in effect on the date of the contract. According to such rules, the
<PAGE> 27
[75418 500]
American Arbitration Association will have the authority to designate
arbitrators; and the arbitration shall take place in Washington, D.C., U.S.A
13. Laws that govern the contract
This contract, except for the provisions related to conflicts
between different laws, shall be governed by the laws of the District of
Columbia, U.S.A. The rights and recourse granted by virtue of this contract and
other rights and recourse shall be cumulative and may be exercised individually
or concurrently. If either of the parties does not assert its rights by virtue
of this contract or other rights, this shall not mean that it waves the right
to assert such rights or other rights in the future. In case the nullity of any
provision of this contract is determined, this shall not affect the other
provisions of same, and the provision that is null and void shall be replaced
with another acceptable provision that is line with the original intention of
the parties.
Each party acknowledges having read and understood the
provisions of this contract and agrees to subject itself to such provisions.
IN WITNESS WHEREOF, the parties have instructed their duly
empowered representatives to sign this contract.
International Telecommunications IMPSAT S.A.
Satellite Organization EDUARDO JOSE MIGNACCO
/s/ /s/
DOLORES MARTOS MANAGER OF OPERATIONS
GROUP DIRECTOR - LATIN AMERICA May 8, 1995
<PAGE> 28
[75418 501]
CERTIFICATE
I, RAFAEL CARCHAK CANES, GENERAL MANAGER OF IMPSAT S.A., do
hereby certify that EDUARDO JOSE MIGNACCO, who signed the above instrument,
holds the position of MANAGER OF OPERATIONS and is duly empowered to sign the
above contract on behalf of IMPSAT S.A.
In witness where of, I sign this certificate on May 8, 1995.
/s/
Rafael Carchak Canes
General Manager
IMPSAT S.A.
<PAGE> 1
EXHIBIT 10.6
<PAGE> 2
This is a fair and accurate English translation of a Spanish language document
as required by Rule 306(a) Regulation S-T.
/s/ JOSE TORRES
----------------------
Joes R. Torres
Vice President, Administration
and Chief Accounting Officer
IMPSAT Corporation
October 24, 1996
IMPSAT Corporation
[Fax data in English]
Dear Estevao
We are writing in response to your Fax message of April 21, 1995, Ref.:
LA950194/EG. As we have discussed, and in reference to the "Lease
SVO-L6068-Early activation on IS-705":
1. We thank you for your sensitivity regarding the problem of interference that
we have discussed, that was impeding the start-up of the IS-702 operations.
Engineer Elias Benveniste is sending a summary of said problems.
2. We accept your proposal to begin activities starting from the IS-705
operations start-up date, planned for May 8, 1995, with a capacity of 7 Mhz.
3. We want to let you know that we will be activating 20 Mhz in December of
1995.
4. Total activation at 36 Mhz in March 1996.
5. We would appreciate your setting the contract term in accordance with the
Intelsat lease reservations policy.
We greatly appreciate your assistance.
Regards,
Osvaldo Tujsnaider
75418 503
<PAGE> 3
Impsat
Facsimile Cover Sheet
[Fax data in English]
Dear Estevao:
We hereby convert the previously referenced FRR to a Guaranteed Reservation
(GR) starting March 1, 1996, with an Early Activation of 7 Mhz, starting May 8,
1995.
Sincerely,
Elias Benveniste
Head of Satellite Engineering
75418 504
<PAGE> 4
[page already in English]
75418 505
<PAGE> 5
Service Contract
This contract is hereby entered into on May 8, 1995 by and between the
International Organization of Satellite Telecommunications (hereinafter
referred to as "Intelsat"), an international organization established by the
Agreement regarding the International Organization of Satellite
Telecommunications "Intelsat" (hereinafter referred to as "Intelsat Agreement")
and the Operative Agreement regarding same (hereinafter referred to as
"Intelsat Operating Agreement"), signed in Washington, D.C. on August 20, 1971,
with headquarters in Washington, D.C., United States of America, and "Impsat
S.A." (hereinafter referred to as "the client"), Alferez Pareja 256, Buenos
Aires, incorporated and existing in accordance with the laws of the Republic of
Argentina, and authorized by one or more of the signatories of Intelsat to have
direct access to the space segment of Intelsat.
Whereas Intelsat and the client wish to enter into an agreement that sets forth
the basic terms and conditions for the direct access by the client to the space
segment of Intelsat, and his use of same;
Therefore, Intelsat and the client hereby agree to the following:
1. Definitions
"Party" means a State for which the Intelsat Agreement has entered
into effect.
"Signatory" means a Party, or the telecommunications entity designated
by a Party, that has signed the Intelsat Operating Agreement.
2. Basic Contract for Requests
This contract shall serve as a basic contract for requests. Subject to
the terms and conditions contained herein, Intelsat agrees to do all that is
possible to put at the disposition of the client the capacity of the Intelsat
space segment that the latter may periodically request. The client shall submit
requests for capacity in the formats specified for requesting and modifying
75418 506
<PAGE> 6
services, as shown in SSOG-104, "Formats for service requests, modifications,
and reports".
The service requests and allotment of capacity, once they are approved by
Intelsat, shall be governed by this contract. The client understands and
accepts that this contract does not constitute either a commitment or a
promise, whether express or implicit, on behalf of Intelsat in the sense that
the client will be assigned capacity in the Intelsat space segment.
3. General Terms and Conditions
As of the date of this contract, the client agrees to abide by the
terms and conditions set forth by Intelsat for the services provided through
capacity allotment in the Intelsat space segment, in accordance with this
contract. Said terms and conditions include those listed in the Standards for
Intelsat Ground Stations (IESS), the Guide to the Operations of the Satellite
System (SSOG) and the Intelsat Rates Manual, that are incorporated by reference
into this contract, to the extent that said terms and conditions correspond to
the specific types of services requested by the client, and allotment by
Intelsat in accordance with this contract, said terms being subject to periodic
modifications. The terms and conditions of each capacity allotment shall be
those that are in effect at the moment that said allotment is made, and shall
not change during the original period of the allotment. The client also agrees
to comply with all conditions regarding regulation and issuing of licenses by
the corresponding national authority, and to abide by same.
4. Investment in Intelsat
If the client invests in Intelsat, he agrees to abide by the terms and
conditions contained in the contract with the investment entity that the client
enters into with Intelsat.
5. Conditions for Receiving Intelsat Capacity
a. A request for the reservation or supply of capacity in the Intelsat space
segment submitted by a client may be rejected, unless the Intelsat
Administration has determined that said client is financially solvent. The
client agrees to provide all information requested by Intelsat regarding his
financial and credit history. In addition, the client agrees to give to
75418 507
<PAGE> 7
Intelsat the authorization necessary so that it can verify said information
with various financial and banking institutions, and/or with the creditors of
the client.
b. Client requests for Intelsat space segment capacity shall not be accepted if
the client owes, as of the date of the capacity request, a usage charge that is
thirty (30) or more days overdue.
c. As a condition for reserving or providing services, Intelsat may request
that the client submit other guarantees of his capacity to fulfill his
financial obligations to Intelsat once they are due. Such guarantees may be in
the form of a letter of credit, a surety deposit, or another form of guarantee
of fulfillment as required by Intelsat.
6. Penalties for Late Payment
a. In addition to the penalty indicated in the foregoing paragraph 5.b, any
payment not paid on its due date shall accumulate interest at the rate of
sixteen per cent (16%) annually, calculated from the due date until the payment
date, said rate being subject to periodic modification by the Board of
Governors.
b. Intelsat may suspend or cancel all services to the client, whether current
or on the waiting list, if any payment owed to Intelsat for the utilization of
the space segment has not been paid 150 days or more after the due date, or
within another period that the Intelsat Board of Governors may periodically
establish.
7. Operation of Ground Stations
As regards all ground stations with Intelsat authorization to have
direct access to its space segment, the client agrees to operate said station
at all times in agreement with the authorization terms and with the Intelsat
Ground Station Standards (IESS), and accepts responsibility for such operation,
including, among others, financial responsibility.
8. Transfer
This contract, the subsequent allotment of space segment capacity, the
rights, responsibilities and duties of the client may not be transferred
75418 508
<PAGE> 8
or assigned to another without prior written authorization by Intelsat. Any
transfer or assignment attempted without said authorization shall be considered
null and void and without effect. This clause shall not prevent the client from
utilizing the allotted capacity to provide services to third parties.
9. Rescission
In addition to the provisions regarding cancellation included in the
Rates Manual, Intelsat reserves the right, with prior written notice of at
least thirty (30) days, to rescind this contract with a client if the latter
does not comply with same. The prior notice of rescission shall include the
date said rescission goes into effect and the circumstances under which it was
warranted. Intelsat may, at its discretion, withhold the deposits or other
amounts paid by the client, and use them to compensate the damages that may
have been caused by said failure to comply. This withholding of the funds of
the client shall not prevent Intelsat from submitting other claims for
compensation, or from claiming other payments for damages and losses to which
it has a right by law or equity. Said right of rescission shall not apply if,
within said thirty day period, the client were to resolve his non-compliance to
the satisfaction of Intelsat.
10. Confidential Nature
Intelsat and the client agree to take all necessary precautions to
maintain the confidential nature of all the information submitted by the
parties under the heading "confidential" and that is marked, either in writing
or with the appropriate stamp or seal, as confidential, private, or of limited
distribution, unless said information is necessary for their employees or
agents to the extent that it may be required for the exclusive purpose of
fulfilling the obligations assumed in this contract or establishing and
providing services through the allocations given by virtue of this contract.
11. Notification
All notification, reports, payment, or other communication regarding
this contract shall be sent to the following addresses:
75418 509
<PAGE> 9
For the client: For Intelsat:
Impsat S.A. International Organization of
Alferez Pareja 256 Satellite Telecommunications
Buenos Aires (1107) (INTELSAT)
Argentina 3400 Internacional Drive, N.W.
Washington, D.C. 20008-3098 United
States of America
Attention: Attention:
Eduardo Mignacco Len Dooley
Operations Manager Director, Sales and Marketing
Tel.: 54 1 362 4240 Tel. + 1 202 944 7011
Fax: 54 1 362 5041/5030 Fax + 1 202 944 7173
Such notification, reports, communications, or payments shall be
considered to have been duly delivered when they have been delivered by hand,
by certified or registered letter, telex, fax transmission, or, in the case of
payments, sent in cash, checks from the client's business account, certified
cashier's checks, or by wire. All payments between the client and Intelsat
required under this contract shall be made in dollars of the United States of
America or in a currency freely convertible to United States dollars. All
parties agree to keep all this information updated, and to notify each other in
a timely fashion of any change in the relevant information pertaining to
invoicing, usage of the allotted capacity, and communications in general.
12. Resolution of Disputes
The parties agree to resolve all disputes or complaints that arise
regarding this contract, or regarding the services provided by virtue of same,
within sixty (60) days, or within a longer period that has been mutually agreed
to, starting from the date on which one of the parties has notified the other
in writing of the existence of such dispute or complaint. If the parties do not
arrive at an agreement within said period, either of them may submit the
dispute or complaint for resolution by arbitration in accordance with the
UNCITRAL arbitration rules in effect as of the date of the contract. In
accordance with said rules, the American Arbitration Association
75418 5[?]0
<PAGE> 10
shall have the authority to appoint arbiters; and the arbitration shall take
place in Washington, D.C., United States.
13. Laws Governing the Contract
This contract, with the exception of the provisions related to the
conflicts between different laws, shall be governed by the laws of the District
of Columbia, United States. The rights conferred by virtue of this contract or
other rights shall be cumulative and may be exercised individually or jointly.
If either of the parties were not to take advantage of their rights by virtue
of this contract or other rights, this would not mean that said party waives
the right to exercise such rights or other rights in the future. In the event
that any provision of this contract were to be annulled, this would not affect
the other provisions of same, and the null provision shall be replaced with an
acceptable provision in keeping with the original intentions of the parties.
Each party affirms that they have read and understood the provisions
of this contract, and hereby agree to abide by said provisions.
In witness whereof, the parties have instructed their duly empowered
representatives to sign this contract.
International Organization of Impsat S.A.
Satellite Telecommunications
/s/
Dolores Martos /s/ Eduardo Jose Mignacco
Group Director-Latin America Operations Manager
May 8, 1995
75418 5[?]1
<PAGE> 11
Certification
I, Rafael Carchak Canes, General Manager of Impsat, S.A., hereby
certify that Eduardo Jose Mignacco, who signed the foregoing instrument, holds
the position of Operations Manager and is duly empowered to sign the preceding
contract on behalf of Impsat S.A.
In witness thereof, I hereby sign this document on May 8, 1995.
/s/
Rafael Carchak Canes
General Manager
Impsat S.A.
75418 512
<PAGE> 1
EXHIBIT 10.7
<PAGE> 2
EXHIBIT 10.7
This is a fair and accurate English translation of a Spanish language document
as required by Rule 306(a) Regulation S-T.
/s/ JOSE TORRES
----------------------------
Jose R. Torres
Vice President, Administration
and Chief Accounting Officer
IMPSAT Corporation
October 24, 1996
CONTRACT N degree C-0057-95
TITLE: AGREEMENT FOR THE SUBSCRIPTION TO SATELLITE SERVICES FOR
THE PROVISION OF SERVICES WITH ADDED VALUE.
Between us, JULIO MOLANS GONZALEZ, adult, resident of Santa Fe de Bogota,
identified by certificate of citizenship No1/-195.804 issued in Bogota, acting
on behalf and as representative of the EMPRESA NACIONAL DE TELECOMUNICACIONES,
party which henceforth will be called TELECOM, and JAIME ALBERTO PELAEZ
ESPINOZA, adult, resident of Santa Fe de Bogota D.C., and identified by
certificate of citizenship No71.595.742 issued in the City of Medellin, who is
acting as the legal representative of IMPSAT S.A., which henceforth shall be
named THE SUBSCRIBER, considering that: (a) TELECOM is the operator of
telecommunications services; (b) TELECOM...[illegible]...operative of the
INTERNATIONAL ORGANIZATION OF SATELLITE COMMUNICATIONS "INTELSAT", and as such,
it is responsible operationally and financially before the organization of
telecommunications by satellite for services rendered from the National
Territory; (c) it is the [illegible] of TELECOM to render basic service of
leasing air space, in agreement with the terms of the treaty from the
INTERNATIONAL ORGANIZATION OF SATELLITE COMMUNICATIONS "INTELSAT", Law 54 from
1973; (d) "IMPSAT", by means of Resolution No3183 dated September 9,
[illegible], issued by the Ministry of Communications, was granted this license
for the provision of services with added value for national coverage and in
connection with overseas, entitled Corporate Telecommunications Services and
authorizes in principle, the use of ascending and descending ramps of the
satellite segments whose services are coordinated by Colombia; (e) the parties
declared that they count on the power and authority to celebrate this
Agreement; (f) considering the aforementioned, the parties have agreed to
[illegible] the Agreement contained in the following stipulations: FIRST:
OBJECTIVE.- By virtue of this agreement, TELECOM will lease to THE SUBSCRIBER,
telecommunications services designated as basic satellite services, support for
the provision of services with added value. The service will be provided by
the use of Satellites 705, located at position 310 degrees East; [illegible]
41/41 (Technical Appendix 1) and 603, position 328.5 degree E (Technical
Appendix 2) from the SATELLITE ORGANIZATION INTELSAT. The satellite services
provided by virtue of this agreement are point to point or point multipoint for
the exclusive use determined by the Law Decree 1900 from 1990 and Resolution
N degree 3183 dated September 9, 1991, issued by the Ministry of Communications.
SECOND: SERVICES ACROSS TERRESTRIAL STATIONS PROPERTY OF THE SUBSCRIBER.-
TELECOM, but [illegible] for the provision of basic satellite services
[illegible] the First Clause authorizes the SUBSCRIBER to route its
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 3
2
traffic directly using the satellite capability assigned through the
International Organization INTELSAT, to the station which has previously
defined and informed TELECOM in order to [illegible] the service, which are
duly identified in the Technical Annexes 1 and 2, an integral part
of...[illegible]...THIRD: IDENTIFICATION CODE.- For the purposes of this
agreement, TELECOM has assigned to the SUBSCRIBER the Service Account
Identification Code N degree.......... FOURTH: TECHNICAL AND OPERATIONAL
CONDITIONS OF SERVICE.-THE SUBSCRIBER shall fulfill the operational and
technical conditions established by the satellite services provided by TELECOM
on behalf of INTELSAT and indicated in the general and specific rules contained
in this Agreement, furthermore their responsibility extends to the instructions
which were established about these aspects subsequent to the signing of this
Agreement. TELECOM does not assume responsibility on behalf of THE SUBSCRIBER
for interruptions of the spatial segment, except the same ones that INTELSAT
has with TELECOM in reference to such an eventuality. FIFTH: APPENDICES.-
Constitute an integral of this agreement...[illegible]...TECHNICAL APPENDICES 1
AND 2 and their international connector selected by the SUBSCRIBER, and the
License for the Provision of Services for Added Value granted by the Ministry
of Communications to IMPSAT S.A. SIXTH: OBLIGATIONS TO THE PARTIES.- A)
OBLIGATIONS TO THE SUBSCRIBER. In addition to the obligations that THE
SUBSCRIBER acquires by virtue of the other clauses from the current Agreement
there are also obligations to its commission: 1).- To guarantee the normal
operation of the stations installed and their additional equipment by
implementing the corresponding maintenance, under its exclusive responsibility,
in addition to fulfilling the requirements and technical specifications
demanded in this Agreement; 2).- To pay timely attention to the INTELSAT
requirements requested through TELCOM in reference to adaptations,
modifications or replacement of equipment or integral station parts. To this
effect TELECOM will inform THE SUBSCRIBER of such requirements with due advance
notice; 3).- To correct all that is indicated by TELECOM in matters which have
given reason for observations on behalf of the TELECOM supervision; 4).- To
pay on its own account and charge all the costs, damages, imposed fines by
competent authority which may be caused by the wrongful use or utilization of
the system and the equipment delivered. The wrongful usage of the system will
consist, among others, in the provision of different telecommunications
services from those for which are authorized and the unfulfillment of the other
specific stipulations previously mentioned in the current Agreement; 5).- To
give notice to TELECOM within a period no later than 24 hours about
interferences caused by terrestrial microwave networks which property of
TELECOM or not with the purpose of adopting corrective measures available to
TELECOM;
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 4
<PAGE> 5
3
6). - To facilitate access to its facilities for the purpose of inspection,
supervision, maintenance, and necessary modifications of the personnel
designated by TELECOM, when on its own judgement, it is required by the
capacity provided according to the Technical Appendices. In reference to the
access to the IMPSAT S.A. facilities, the TELECOM personnel will present a
memorandum wherein shall be listed the names and identification of
functionaries designated for this purpose, who shall fulfill the general
security conditions established by IMPSAT S.A. for such access; 7).- It is
accepted by THE SUBSCRIBER that TELECOM may suspend the service when the
requirements which were established are not fulfilled by the correct
utilization of the service, without damage to the liability at the expense of
THE SUBSCRIBER; 8).- Whenever the provision of service require corresponding
resources from the local telephone system, THE SUBSCRIBER shall assume the
attainment and the inherent costs that these will entail. Such resources will
be delivered by TELECOM for its acceptance in agreement to the service
rendered. B) TELECOM OBLIGATIONS.- In addition to the obligations foreseen
in other clauses, TELECOM is obligated to: 1) Give notice to the Ministry of
Communications when it is known that there are different terrestrial microwaves
from those of TELECOM for the purpose of adopting the necessary corrective
measures. 2) Pay attention to the requirements of THE SUBSCRIBER in order to
maintain the normal function of service. C) TELECOM OBLIGATIONS WITH RESPECT
TO THE SERVICE.- In relation to the service for which this Clause is written,
TELECOM offers the following parameters about the quality of the same: Mean
Time Between Failures (MTBF) two (2) months and Mean Time To Restore (MTTR)
three (3) hours. TELECOM will not respond when failures originating from the
INTELSAT system are presented, or by factors which effect the availability of
circuits derived from nature, such as: sun spots, storms, hailstorms, heavy
rains, and other natural phenomena which affect such availability. Neither
will they respond to the failures presented in the equipment of property and/or
systems operated by THE SUBSCRIBER, failures of energy shutoff in the
facilities of THE SUBSCRIBER, nor to the interruptions presented annually in
one week for a period of three (3) minutes due to solar radiation. TELECOM
will not respond to the rate failures presented in the equipment at the
launching of the system, nor to the failures occurring in the system managed by
the connecting satellite in another country which hinders the normal operation
of the service. SEVENTH: TARIF FOR SERVICES.- For the liquidation of the
services provided by TELECOM, by virtue of this agreement, THE SUBSCRIBER
accepts and states to know the current tariffs in effect (Financial Appendices
1 and 2) adopted by the Resolution of the TELECOM Board of Directors, by virtue
of the authorization of the supervised freedom granted by the National Board of
Tariffs
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 6
4
through Resolution N degree JD 0056 dated February 27, 1992 and No 00010000-5567
dated June 26, 1992, which are appended to the current agreement and form an
integral part of the same. In the event of tariff modification, THE SUBSCRIBER
shall cancel the service at the tariff rate in effect on the date when the
service was provided, and the new Resolution will be incorporated to this
Agreement within the Financial Appendices 1 and 2. FIRST PARAGRAPH.- The
tariff to be paid for services has been determined as a function of the term in
the current Agreement. SECOND PARAGRAPH.- When the Connecting Satellite
varies their tariffs for the use of Spatial Segment, TELECOM shall adjust the
tariffs charged to the SUBSCRIBER according to the authorizations of the
TELECOM Board of Directors or whoever is authorized. THIRD PARAGRAPH.- The
tariffs are understood to be accepted by THE SUBSCRIBER, if the contents are
not disputed in writing during the term indicated in the payment invoice. In
the event that the corresponding invoice were disputed, and TELECOM partially
agrees or not, the charge shall be advanced for the outstanding amount which is
definitely determined at the expense of THE SUBSCRIBER upon resolution of the
claim, in addition to the delay. TENTH: TERM OF THE AGREEMENT.- This agreement
shall have a duration of 10 months and 16 days counting from the date of
activation of the service, and from the 1st day of August, 1996 it shall have a
term of one (1) year with automatic extensions up to ten (10) years according
to the indicated in the Technical 1 and Financial 1 Appendix, for the leasing
done over of Satellite 705; for the leasing of carriers by means of Satellite
603, the term shall be for one (1) year with automatic extensions up to three
(3) years; counting from the day of activation of the service, as it is
indicated in the Technical 2 and Financial 2 Appendices. However, it could be
completed before the term mentioned when unforeseeable circumstances of force
majeure or fortuitous nature occur, which prevent the provision of service, in
which case TELECOM shall not assume any liability on behalf of THE SUBSCRIBER.
In the same manner, it could terminate in advance due to immutable causes for
THE SUBSCRIBER, in which case the outstanding balance should be cancelled until
the normal termination of the Agreement or in its absence, it may be taken by
TELECOM from the guarantee. E).- The current agreement may also be terminated
when the Ministry of Communications issues the Regulation for the use of the
Spatial Segment in Colombia and the client assumes the commitments acquired
with INTELSAT. ELEVENTH: SPECIAL CONDITIONS FOR THE PROVISIONS OF SERVICES.-
a) THE SUBSCRIBER is able to render only those communications services allowed
by the Resolution 3183 dated September 9, 1991, issued by the Ministry of
Communications; the relations with users and subscribers are its own exclusive
responsibility. b) THE SUBSCRIBER shall not, under any
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 7
5
circumstances, render basic services such as those defined by the Law Decree
1900, from 1990, by means of the facilities provided by TELECOM, or its own
facilities, or using the transmission mode that TELECOM provides for satellite
services. c) THE SUBSCRIBER is the only one authorized to use the spatial
segment for the provision of services with added value, subject to the
Resolution which granted the license. d) The serviced provided to THE
SUBSCRIBER could be suspended without liability to TELECOM, in the following
cases: By force majeure or fortuitous case, reasons of social or public order,
request from INTELSAT or the International Connector, unfulfillment of payment,
through interference from other communications networks duly authorized in the
country, for technical reasons given by TELECOM, by order of the competent
authority. e) THE SUBSCRIBER shall adjust the equipment on his property
according to the technical specifications determined by TELECOM or INTELSAT.
It shall be liable for the radiation or interference of its system. 4) It is
the direct responsibility of THE SUBSCRIBER [to regulate] the utilization,
employmment, applications given to the adjudicated services, to its access
points or to any other means of support. g) It is the responsibility of THE
SUBSCRIBER to control access to its equipment and information management
designated in U.S. Dollars, which shall be converted into legal Colombian
currency at the representative market rate or to the rate which is currently in
effect, according to the anticipated by competent authorities, on the day of
invoicing. FOURTH PARAGRAPH.- The liquidation of the services to which this
clause refers shall be made by accrued monthly periods, invoicing shall be sent
out by TELECOM to the place(s) indicated in the Financial Appendices 1 and 2,
by means of Invoices Receivables. The failure to receive Billing Invoices does
not exempt THE SUBSCRIBER from payment for services. FIFTH PARAGRAPH.- In the
event that an establishing act of a force majeure presents itself, which
interrupts the provision of services, TELECOM shall not invoice for the time
when there was no service due to a force majeure, as long as the interruption
be longer than (1) one hour. SIXTH PARAGRAPH.- The tariffs established by
TELECOM to THE SUBSCRIBER of the basic satellite services for the provision of
services with value added are independent from those that THE SUBSCRIBER
establishes for the final users of these last services. EIGHTH: VALUE.- The
value of the present agreement is stipulated in the Financial Appendices 1 and
2, in U.S. Dollars, to be paid by monthly accruals, according to the procedure
designated in the following clause. NINTH: FORM OF PAYMENT.- THE SUBSCRIBER
compromises to pay satellite services, the object of the current Agreement,
within the due date indicated on the invoice, according to the stipulted on the
Financial Appendices 1 and 2, including the corresponding payments to the
period of early activation of the
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 8
service, prior to the signing of the present contract. TELECOM shall send the
Invoice to THE SUBSCRIBER within the first five business days from the
expiration month wherein the corresponding services were provided. FIRST
PARAGRAPH: The payment for the value of the services shall be made through the
Banks, Savings and Loan Corporations, or at the Financial Institutions that
TELECOM designates for such purpose. SECOND PARAGRAPH: When THE SUBSCRIBER
does not make payment within the due date... [illegible]... the surcharge for
delay shall be equal to the value of the past due invoice. The surcharge for
delayed payment shall be the maximum established by the legal standards in
effect. If THE SUBSCRIBER does not make the payment on the due date for the
second invoice, TELECOM shall suspend the service to THE SUBSCRIBER and report
such occurrence to INTELSAT so that the transmission of signals be suspended.
The suspension of services shall be effective for a period of sixty (60) days
counting from the date of the suspension order to THE SUBSCRIBER, [for] expired
days, if the value of the Receivables Account has not been cancelled yet.
TELECOM shall definitely cancel the service and shall make the established
guarantee effective in order to protect the fulfillment of the agreement; if
the amount of the guarantee were not sufficient to cover the outstanding
balance and the accrued interests, TELECOM shall proceed for payment by legal
means. THIRD PARAGRAPH: In the event of executive collection of the invoices
before a competent judge...[illegible] for the service and the remaining
expenses to be recorded in such document. The amount invoiced is received and
transmitted; consequently, TELECOM does not assume responsibility for third
party access to the equipment and information systems of the SUBSCRIBER, for
wrongful or fraudulent acts which could allow such access, nor for "virus" or
alterations to programs and applications of the same, or for violation to the
right of privacy. h) THE SUBSCRIBER of the services provided by TELECOM, is
the one directly responsible for the legality of the titles under which their
equipment is used and for the information transmitted. i) THE SUBSCRIBER
will be able to interconnect its network of added value to the public networks
when it is necesary for the provision of the service of added value for which
the license was granted by the Ministry of Communications. THE SUBSCRIBER
shall not sublease capacity of spatial segment, which is for the EXCLUSIVE USE
OF THE SUBSCRIBER. THE SUBSCRIBER shall not sublease to third parties the
provision of services with added value, this means that the clients of THE
SUBSCRIBER cannot render services with added value by means of the same
satellite resource assigned to THE SUBSCRIBER for the provision of services
which are the objective of this Agreement. j) THE SUBSCRIBER shall re-sell
capacity of the spatial segment which is considered to be for the exclusive use
of THE SUBSCRIBER.
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 9
TECHNICAL APPENDIX 1
SUBSCRIBER: IMPSAT S.A.
ACCOUNT FOR SERVICES:
OBJECTIVE: Provision of basic satellite
services support for the
provision of services with
added value
CITY AND DATE: Santafe de Bogota
SEGMENT USED
IN INTELSAT SATELLITE 705
POSITION 310oE - NOT SUBJECT TO INTERRUPTION
<TABLE>
<CAPTION>
=======================================================================================
ACTIVATION TOTAL BANDWIDTH LEASED TO BANDWIDTH FOR IMPSAT COLOMBIA
PERIOD INTELSAT
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Sept-15-95 13 9
- ---------------------------------------------------------------------------------------
Oct-01-95 16 10
- ---------------------------------------------------------------------------------------
Nov-01-95 17 11
- ---------------------------------------------------------------------------------------
Dec-01-95 20 12
- ---------------------------------------------------------------------------------------
Jan-01-96 22 13
- ---------------------------------------------------------------------------------------
Feb-01-96 36 24
- ---------------------------------------------------------------------------------------
Mar-01-96 36 24
- ---------------------------------------------------------------------------------------
Apr-01-96 36 24
- ---------------------------------------------------------------------------------------
May-01-96 36 24
- ---------------------------------------------------------------------------------------
June-01-96 36 24
- ---------------------------------------------------------------------------------------
July-01-96 36 24
- ---------------------------------------------------------------------------------------
From August 1, 43 31
1996 to July
31, 2006
=======================================================================================
</TABLE>
FOR TELECOM FOR IMPSAT
/s/
JULIO MOLANO GONZALEZ JAIME ALBERTO PELAEZ ESPINOZA
President Legal Representative
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 10
8
k) TELECOM does not assume any responsibility on behalf of the THE SUBSCRIBER
for interruptions of the spatial segment, except for the same that INTELSAT has
for TELECOM, in reference to such an eventuality. l) Modifications or change
of equipment of its property and other technical specifications which affect
the system must be reported to TELECOM for approval. m) If in the opinion of
the Ministry of Communications, the subscriber provides non-authorized
services, these shall be cause for termination of the subscription by immutable
cause of THE SUBSCRIBER, without liability to TELECOM. FIRST PARAGRAPH:
COMPENSATIONS IN SE OF INTERRUPTION.- In the event of interruption of the
availability of the assigned capacity which lasts more than one hour and which
was caused attributed to the spatial segment, as determined by INTELSAT,
TELECOM shall credit THE SUBSCRIBER an amount equal in proportion to the amount
credited by INTELSAT to TELECOM, for this interruption. During a ceased
interruption for the assigned availability lasting more than one hour, and
which was caused by failures not originating from a force majeure in the
TELECOM equipment, as determined by TELECOM, the latter will credit THE
SUBSCRIBER an amount proportional to the invoiced charges, calculated in
multiples of one hour or fractions thereof. TELECOM shall not allow any
discount in the event of interruption of the service caused directly or
indirectly by the action or omission of THE SUBSCRIBER or any of its clients or
employees. Neither shall it grant any discount for interruptions of one hour
or less than one hour for the assigned capacity, given that will not credit
TELECOM any amount to TELECOM for interruptions for this length of time.
SECOND PARAGRAPH: For whatever type of interruption in the availability of the
capacity assigned that, according what is determined by INTELSAT is chargeable
to spatial segment, TELECOM shall coordinate with INTELSAT the necessary
actions, leading to the re-instatement of service in the least time posible.
However, when interruption of service occurs by means of interruption of the
assigned capacity to TELECOM that: as determined by INTELSAT, is chargeable to
the spatial segment (according to the definition in the agreement of INTELSAT)
and exceeding thirty (30) days, without being able to re-instate service using
a SUBSTITUTE SATELLITE, TELECOM and THE SUBSCRIBER may terminate this agreement
without any charge to the parties. With the exception of the agreed
compensations by the interruption cases and described previously, TELECOM shall
not be responsible for losses or damages occurring as a result of of
interruption in the availability of the assigned capacity, whatever may be the
cause, in agreement to the determinations by INTELSAT. TWELFTH: INSPECTION
AND SUPERVISION.- TELECOM will reserve the right to inspect the installations
of THE SUBSCRIBER directly, at any moment in order to verify that it is
fulfilling the dispositions of this Agreement, as well as to
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 11
9
determine the correct functioning of the equipment. In the same manner,
TELECOM may implement the supervision of the system, monitoring the signals in
radio frequency, intermediate frequencies, and in [illegible] band or other
adequate techniques for this. FIRST PARAGRAPH: TELECOM guarantees the
confidentiality of the information in reference to the supervision of labor, in
as far as the latter does not allow to identify the content of the same.
SECOND PARAGRAPH: If based upon the supervision of labor an abnormal operation
of the equipment used by THE SUBSCRIBER is detected which would affect
adversely the operation of the TELECOM public service or other administrations,
or a violation of some established restriction in the current Contract is
detected, TELECOM Vice-Presidency for Long-Distance, will order the correction
of the existing failure during the period indicated to be in effect; or if not
corrected during that period, will order the immediate suspension of the
service, until the service be corrected. If the non-compliance persists,
TELECOM will cancel the Agreement, shall make efective the outstanding amount
until the termination of the same, which will be taken from the Compliance
Policy and shall implement payments for damages caused by THE SUBSCRIBER.
THIRTEENTH: FORCE MAJEURE.- None of the parties shall be liable to the other
for the loss or damage of the good delivered, neither by delay, nor
non-compliance of the obligations stipulated herewith, whenever this loss or
non-compliance be caused by unforeseen events beyond their control, including
but not limited to: war or threat thereof, blockade, revolution, invasion,
insurrection, demonstration, civil unrest, riots, terrorist activity, sabotage,
embargo, boycott, strikes affecting third parties, abnormal climate, closures,
floods, fires, earthquakes, spread of disease, medical inspection, damage due
to malice, or use of military power. In the event that a force majeure delays
or temporarily suspends the provision of services on behalf of TELECOM, the
terms established in the Agreement, according to the case, shall be adjusted in
accordance, by means of a mutual agreement of the parties. FOURTEENTH:
RESPONSIBILITY.- In the event that civil liability is attributed, due to
non-compliance, delayed or unsatisfactory compliance of any of the aplications
derived from this Agreement, the same shall be understood to be limited in a
precise manner, to the amount of emerging damage demonstrated effectively by
the claimant. FIFTEENTH: GUARANTEE.-- In order to guarantee the fulfillment
of the obligations in which THE SUBSCRIBER engages, in virtue of the current
Agreement, and/or with the purpose of covering the penal clause, THE SUBSCRIBER
agrees withing the following 5 days to sign the current document, a Policy in
favor of TELECOM, which is obligated to be maintained in force until the
liquidation of the SUBSCRIPTION and the extension of its effects. The initial
term shall be of one (1)
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 12
10
year, but should be renewed for equal periods of (3) three months before its
expiration; in order to cover the entire validity of this SUBSCRIPTION. The
Policy shall be issued by an Insurance Company and Banking Entity legally
authorized to function in Colombia, whose amount will be equivalent to twenty
(20%) for [illegible] the value of the SUBSCRIPTION on that year, cost value to
be estimated in the Financial Appendix. If the contractor postpones the
guarantee, sanctions shall be applied which due to the non-compliance of the
obligations fulfills this SUBSCRIPTION. PARAGRAPH. For the establishment of
this guarantee, the secured amount shall be determined in Colombian Pesos at
the rate of exchange in effect on the date of its constitution. SIXTEENTH:
PENAL CLAUSE.- In the event of non-compliance of the obligations which, in
virtue of the current agrement, THE SUBSCRIBER acquires, the former will charge
a penalty to TELECOM for an amount equivalent to (illegible) the value of the
Agreement. The value of the Penal Clause shall be taken directly from the
settlements which TELECOM could [illegible] THE SUBSCRIBER [illegible]for the
Guarantee Policy for Compliance. If this were not possible, it will be made
effective by legal means. SEVENTEENTH: GENERAL ASSIGNMENT IN FAVOR OF THE
CONTRACT.-THE SUBSCRIBER shall not transfer the rights and obligations of this
Agreement wihout prior expressed written authorization from TELECOM.
EIGHTEENTH: VALIDITY.- The current Agreement is undestood to be in effect as
of the date it is signed, on the...........day of ............in the year 1993
and for the term established on the TENTH CLAUSE, about the DURATION of the
Agreement. NINETEENTH: PUBLICATION AND REVENUE STAMP.- For the legalization
of the present agreement, it is required that it be published in the Official
Journal of Public Contracts according to the established in Article 60 of the
Law 190/95, the cost is at the expense of THE SUBSCRIBER. And of the Revenue
Stamp payment, at the expense of THE SUBSCRIBER who [illegible] to cancel
within ten (10) days following the signing of the current Agreement. For the
record, it is signed in Santa Fe de Bogota, D.C., on the.............day in the
month of............. in the year 1995. [STAMPED] DECEMBER 26, 1995
FOR TELECOM FOR THE SUBSCRIBER
/s/ JULIO MOLANO GONZALEZ /s/ JAIME ALBERTO PELAEZ ESPINOZA
President Legal Representative
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 13
11
FINANCIAL APPENDIX 1
SUBSCRIBER: IMPSAT S.A.
ACCOUNT FOR SERVICES:
OBJECTIVE: Provision of basic satellite
services support for the
provision of services with
added value
CITY AND DATE: Santafe de Bogota
SITE OF BILLING: Diagonal 128 No. 67-19 Santafe
de Bogota
SEGMENT USED
IN INTELSAT SATELLITE 705
POSITION 310oE - NOT SUBJECT TO INTERRUPTION
<TABLE>
<CAPTION>
=================================================================
ACTIVATION TOTAL BANDWIDTH BANDWIDTH FOR
PERIOD LEASED TO IMPSAT COLOMBIA
INTELSAT
- -----------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------
Sept-15-95 13 9 $ 15,912
- -----------------------------------------------------------------
Oct-01-95 15 10 $ 33,146
- -----------------------------------------------------------------
Nov-01-95 17 11 $ 36,461
- -----------------------------------------------------------------
Dec-01-95 20 12 $ 38,020
- -----------------------------------------------------------------
Jan-01-96 22 13 $ 41,189
- -----------------------------------------------------------------
Feb-01-96 36 24 $ 70,200
- -----------------------------------------------------------------
Mar-01-96 36 24 $ 70,200
- -----------------------------------------------------------------
Apr-01-96 36 24 $ 70,200
- -----------------------------------------------------------------
May-01-96 36 24 $ 70,200
- -----------------------------------------------------------------
June-01-96 36 24 $ 70,200
- -----------------------------------------------------------------
July-01-96 36 24 $ 70,200
- -----------------------------------------------------------------
From August 1, 43 31 $ 90,675
1996 to July
31, 1997
- -----------------------------------------------------------------
From August 97 43 31 $100,758
to Feb 15 of
2005
=================================================================
</TABLE>
[STAMP] IMPSAT, S.A.
JAIME ALBERTO PELAEZ E.
VICE-PRESIDENT FOR FINANCES AND
ADMINISTRATION
<PAGE> 14
12
NOTE : THESE TARIFFS DO NOT INCLUDE THE VALUE ADDED TAX.
FOR TELECOM FOR IMPSAT
/s/ JAIME ALBERTO PELAEZ ESPINOZA
---------------------------------
JULIO MOLANO GONZALEZ JAIME ALBERTO PELAEZ ESPINOZA
President Legal Representative
DUE TO THE RESERVE GUARANTEED BY IMSAT OF COLOMBIA INSTITUTED AS OF SEPTEMBER
15 OF 1995, THE CLIENT WILL SETTLE WITH TELECOM THE CORRESPONDING VALUE OF THE
RENTAL AS OF THAT DATE.
FOR THE PERIOD INCLUDED BETWEEN SEPTEMBER 15, 1995 UP TO JULY 31, 1997 THE
CLIENT HAS A TEN (10) PERCENT DISCOUNT, WHICH IS ALREADY INCLUDED IN THE TARIFF
INDICATED BY THE PERIOD IN THE FINANCIAL APPENDIX 1.
AS OF AUGUST 1, 1996, THE RENTAL IS AGREED FOR A 10-YEAR TERM ACCORDING TO THE
BANDWIDTHS INDICATED ON THE TABLE FOR THE TECHNICAL 1 AND FINANCIAL 1
APPENDICES.
The provision of service in the form indicated on the previous table will
depend on the availability of the satellite.
The client will pay once the sum of US$500 for the coordination of the tests
for the terrestial transmiting stations which require total testing and there
will not be charges for the transmiting stations which have been approved by
type at INTELSAT.
FOR TELECOM FOR IMPSAT S.A.
JULIO MOLANO GONZALEZ /s/ JAIME ALBERTO PELAEZ ESPINOZA
President Legal Representative
Page 1
<PAGE> 15
13
TECHNICAL APPENDIX 2
SUBSCRIBER : IMPSAT S.A.
ACCOUNT FOR SERVICES :
OBJECT : Provision of basic satellite services
support for the provision of added value
services.
CITY AND DATE : Santafe de Bogota
CARRIER 1 CARRIER 2
SATELLITE CONNECTOR: INTELSAT INTELSAT
SATELLITE : 332.5 332.5
BAND : C C
TERRESTRIAL STATION IN COLOMBIA : BOG18F1 CAL104F1
TERRESTRIAL REMOTE STATION : SCANZANO 1A
CITY AND COUNTRY OVERSEAS : ROME-ITALY SANTIAGO-CHILE
VELOCITY OF THE CARRIER : 128 KBPS + 192
KBPS 128 KBPS
FEC USED : 1/2 1/2
TYPE OF MODULATION : QPSK QPSK
FOR TELECOM FOR IMPSAT S.A.
/s/ /s/
JULIO MOLANO GONZALEZ JAIME ALBERTO PELAEZ ESPINOZA
President Legal representative
<PAGE> 16
14
FINANCIAL INDEX 2
SUBSCRIBER : IMPSAT S.A.
ACCOUNT FOR SERVICES :
OBJECT : Provision of basic satellite services
support for the provision of added value
services.
TERMS OF THE RENTAL : 3 Years.
CITY AND DATE : Santafe de Bogota
SITE OF BILLING : Diagonal 126 No 67-19 Santafe de Bogota
The subscriber must pay the following charges to TELECOM.
CONNECTION FEE : US $ 500 for each terrestrial station transmiting not
approved by type and having no charges for transmiting
stations approved by type, nor for reception stations.
MONTHLY FEE : INTELSAT satellite connection, service with uninterrupted
capabilities, Band C, full duplex, full-time.
FOR THE CARRIER OF 182 KBPS IN THE TRAJECTORY OF BOGOTA-ROME : Half orbit
Colombia side.
IT IS : TWO THOUSAND THREE HUNDRED AND THIRTY FOUR DOLLARS AND 15/100
US$ 2334.15
FOR A CARRIER OF 128 KBPS IN THE TRAJECTORY OF BOGOTA-ROME:Half orbit
on Colombia side.
IT IS : ONE THOUSAND FIVE HUNDRED FIFTY SIX DOLLARS AND 10/100
US$ 1556.10
FOR A CARRIER OF 128 KBPS IN THE TRAJECTORY OF BOGOTA-SANTIAGO: Half orbit
on Colombia side.
IT IS : ONE THOUSAND FIVE HUNDRED AND FIFTY-SIX DOLLARS AND 10/100
US$ 1556.10
TOTAL MONTHLY FIXED CHARGES : FIVE THOUSAND FOUR HUNDRED AND FORTY-SIX DOLLARS
US$ 5446.00
NOTE 1 : THE CARRIER OF THE 128 KBPS WILL BE CANCELLED AT THE REQUEST OF THE
CLIENT ONCE THE 192 KBPS CARRIER IS ACTIVATED.
NOTE 2 : THESE FEES DO NOT INCLUDE THE VALUE ADDED TAX.
FOR TELECOM FOR IMPSAT S.A.
/s/ /s/
JULIO MOLANO GONZALEZ JAIME ALBERTO PELEAZ ESPINOZA
President Legal Representative
<PAGE> 1
EXHIBIT 10.8
<PAGE> 2
EXHIBIT 10.8
This is a fair and accurate English translation of a Spanish language document
as required by Rule 306(a) Regulation S-T.
/s/ JOSE TORRES
------------------------------
Jose R. Torres
Vice President, Administration
and Chief Accounting Officer
IMPSAT Corporation
October 24, 1996
SERVICE CONTRACT
The current contract takes place on August 11, 1994 between the International
Satellite Telecommunications Organization (from now on "INTELSAT"), an
international organization established by the relative Agreement to the
international Satellite Telecommunications Organization "INTELSAT" (from now
on, the "INTELSAT" Agreement). subscribed in Washington, DC, on August 21, 1971
with headquarters in Washington, DC USA, and "Telecomunicaciones IMPSAT, S.A.
(from now on "THE CLIENT") with headquarters in Caracas, established and
existing in accordance with the laws in Venezuela, exactly as the second
Mercantile Registry of the Judicial Circumscription of the Federal District and
State of Miranda, under No. 4-A-Pro,
CONSIDERING that INTELSAT and the client with to come to an agreement that
establishes the basic terms and conditions for the direct access by the client
to the special segment of INTELSAT and its own use:
THEREFORE, INTELSAT and the client agree to the following:
1. Definitions
"Part " means a State in which the INTELSAT Agreement has entered into
effect.
"Signatory" means a Part, or a telecommunications entity designated by
a Part, that has signed the Operations Agreement with INTELSAT.
II. Basic contract for orders
This contract serves as a basic contract for orders. Subject to the
terms and conditions of this contract, INTELSAT agrees to make possible to make
available to the client the capability of special segment of INTELSAT that this
one might request periodically. The client should provide capacity requests in
the specific formats for requesting and ammend services, which appear in the
SSOG-104, "Format for requests, ammendments and reports for services". The
service requests and capacity assignments, once approved by INTELSAT, will be
governed by the present contract. The client understands and accepts that the
present contract does not constitute a commitment nor a promise, expressed or
implied, from INTELSAT in the sense that the client will be assigned capacity
in the spacial segment of INTELSAT.
<PAGE> 3
III. Terms and general conditions
On the date of the present contract, the client agrees to abide by the
terms and conditions established by INTELSAT for the services provided by means
of capacity assignments of the space segment of INTELSAT, in agreement with the
present contract. Such terms and conditions include those that figure in the
Norms for the Land Stations of INTELSAT (IESS), the Explotation Guide of the
Satellite Systems (SSOG) and the Rates Manual of INTELSAT, which are
incorporated into the present contract by reference, to the extent that such
terms and conditions correspond to the specific types of services requested by
the client and assigned according to the present by INTELSAT, and allowing for
periodic modifications of such terms. The client also agrees to adapt to all
conditions regulating the granting of licenses promoted by the pertinent
national authority, and to comply with same.
IV. Investment in INTELSAT
If a client invests in INTELSAT, he agrees to abide by the terms and
conditions consigned in the contract with the investment entity subscribed by
the client with INTELSAT.
V. Conditions for receiving INTELSAT capacity
a. A request for capacity supply or reseve of the space segment of
INTELSAT presented by a client, may not be accepted unless the Management of
INTELSAT has determined that said client is solvent. The client agrees to
provide the information that INTELSAT may require regarding his financial and
credit history. In addition, the client agrees to provide INTELSAT with the
necessary authority that would allow for the verification of said information
through varied financial and banking institutions, and/or with the client's
creditors.
b. Requests for capacity from the space segment of INTELSAT will not be
accepted from clients whose utilization account at the date of the capacity
request, is due in excess of 30 days.
c. As a condition to reserve or supply services, INTELSAT could ask the
client to provide other guarantees of ability to meet his financial obligations
with INTELSAT when due, by means of a letter of credit, a guarantee deposit or
some other form of guarantee compliance that INTELSAT may require.
<PAGE> 4
VI. Late payment penalties
a. In addition to the penalty indicated on paragraph 5.b above, any
payment not made by the due date will be charged interest at a rate of sixteen
per cent (16%) annually, calculated from the due date until payment date, and
this rate can be revised by the Governing Body periodically.
b. INTELSAT can suspend or cancel all services in force and on waiting
list of the client if any payment due to INTELSAT for the usage of a special
segment has not been paid 150 day or more after the due date, or within any
other period established by the Governing Body periodically.
VII. Ground station operation
In reference to any ground station with authorization from INTELSAT to
have access to its special segment, the client is committed to operate said
station at all times in agreement with the terms of the authorization and with
INTELSAT'S Norms for Ground Stations ("IESS"), and accepts responsibility for
such operation.
VIII. Transfer
This contract, the subsequent assignment of capability of special
segment, the rights, responsibilities and obligations of the client cannot be
transferred or delegated without previous consent in writing of INTELSAT. Any
transfer or delegation that is attempted without said consent will be null and
will not have any force. This clause does not prevent the client from using its
assigned capabilities to supply services to a third party.
IX. Rescission
In addition to the requirements related to the cancellation that
appear in the Rates Manual, INTELSAT reserves the right, with a written warning
of no less than thirty (30) days, to rescind the present contract with a client
who does not comply with same. The cancellation forwarning should indicate the
effective date of cancellation and the circumstances that brought it about.
INTELSAT could, at its discretion, withhold the deposits and other sums paid by
the client, and utilize them as compensation for damages caused by the
non-compliance. This withholding of funds from the client will not preclude
INTELSAT from filing additional comensatory claims, or to claim additional
damage compensation to which they are legally entitled.
X. Confidential clause
INTELSAT and the client agree to make everything possible to maintain
confidentiality on all information that the parts present under confidential
and that is made in writing, or marked with a seal or appropriate legend, as
confidential, private property or limited distribution. None of the parts will
reveal information that the other has designed as confidential, private
property or limited distribution, except to its employees or agents in the
manner in which is required by the exclusive objective of fulfilling the
responsibilities assigned in the present contract or establish and supply
services through the granted assignments in virtue of the present contract.
XI. Notifications
<PAGE> 5
Notifications, reports, payments or any other correspondences related
with the present contract, should be sent to the following addresses:
For the client: For INTELSAT:
Telecomunicaciones IMPSAT International
Organization for
Satellite
Av. ---- de Miranda, Torre La Primera Telecommunications
(INTELSAT)
Piso 14, Ofic. A. Campo Alegre 3400 International Drive
NW
Caracas, Venezuela Washington, DC 20008-
3098
USA
Atencion: Laura Ferraris
Vice Presidente Electivo Attention: Len Dooley
Tel
It will be considered that such notifications, informs, communications or
payments have been appropriately delivered when they are hand-delivered, sent
by certified mail or registered mail, telex, fax or, in the case of payments,
by sending it by cash, checks sent to the commercial account of the client,
certified checks, or directly deposited to the client's account. All the
payments between the client and INTELSAT required by the current contract shall
be done in American dollars or in a currency that is easily and freely
converted into American dollars. All the parties agree to maintain this
information current to the present day, and to mutually notify each other
promptly in case of a change, giving the appropriate information related to the
billing, utilization of the assigned capacity, and communications in general.
<PAGE> 6
XII. Problem Solving
The parts agree to solve all controversies or claims that arise with
respect to the present contract, or in relation with the services provided in
virtue of the same within sixty (60) days, or longer if mutually agreed upon,
from the date that one of the parts notified the other in writing of such
controversy or claim. If the parts do not reach an agreement during said
period, either one of them can submit the controversy or claim for its
resolution by arbitration in accordance with the rules of "UNCITRAL"
arbitration viable on the date of the contract. In agreement with said rules,
the American Arbitration Association will have authority to appoint
arbitrators, and the arbitration will take place in Washington, DC, USA.
XIII. Laws that rule the contract
The present contract will be ruled by the laws of the District of
Columbia, USA, except with respect of dispositions related with the conflicts
between different laws. The rights and resources awarded in virtue of the
present or other rights and resources will be cumulative will be able to be
practiced individually or concurrently. If any of the parts would not enforce
its rights in virtue of the present or other rights, that does not mean that it
forfeits the right to enforce said rights or any other rights in the future. In
the case that nullification would be determined of any disposition of the
present contract, that will not affect other dispositions of the same, and the
nullified disposition should be replaced with an acceptable disposition in
accordance with the original intentions of the parts.
Each part acknowledges to have read and understood the dispositions of
the present contract, and agrees to submit to said dispositions.
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF the parts have International Organization of
("Client")
Satellite Telecommunications
("INTELSAT") instructed its representatives duly authorized to sign the present
contract.
By: By:
------------------------ -----------------------
/s/ Luis Perillan /s/ Susana Gregori
- ----------------- ------------------
Title: Group Director Latin America Title: President
---------------------------- ----------
Date: 26 September 94 Date: 11 August 1994
--------------- --------------
CERTIFICATE
I hereby, RICARDO VERDAGUER PRINCIPAL DIRECTOR
of IMPSAT TELECOMMUNICATIONS, S.A., certify that SUSANA GREGORI, who executed
the previous instrument is in charge of PRESIDENT and is duly authorized to
execute the above mentioned contract in name of IMPSAT TELECOMMUNICATIONS, S.A.
In witness whereof, I sign the present on AUGUST 11, 1994
----------------------------
(Signature)
<PAGE> 7
<PAGE> 8
TABLE 1
MATCHING AND DISTRIBUTION ORDER
FOR VENEZUELA #4, SVO-L6064 ON INTELSAT 705 AT LOCATION 310 DEGREE E
<TABLE>
<CAPTION>
==============================================================================================================
ACTIVATION TOTAL BAND BAND BAND INVOICING INVESTMENT
AMPLITUDE AMPLITUDE AMPLITUDE DISTRIBUTION PORTION DISTRIBUTION
FOR FOR FOR IN PERCENTAGE IN PERCENTAGE
EARLY TELECO IMPSAT - (%) (%)
LEASE MCOLOMBIA VENEZUELA =====================-------------------------------
ACTIVATION (MHz) (MHz) TELECO M CANTV TELECO M CANTV
(A+B) (A) (B)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mar 95 1 1 0 100 0 100 0
- --------------------------------------------------------------------------------------------------------------
Apr 95 1 1 0 100 0 100 0
- --------------------------------------------------------------------------------------------------------------
May 95 1 1 0 100 0 100 0
- --------------------------------------------------------------------------------------------------------------
Jun 95 3 3 0 100 0 100 0
- --------------------------------------------------------------------------------------------------------------
Jul 95 8 5 3 62.5 37.5 62.5 37.5
- --------------------------------------------------------------------------------------------------------------
Aug 95 10 6 4 60 40 60 40
- --------------------------------------------------------------------------------------------------------------
Sep 95 13 9 4 69.23 30.77 69.23 30.77
- --------------------------------------------------------------------------------------------------------------
Oct 95 15 10 5 66.67 33.33 66.67 33.33
- --------------------------------------------------------------------------------------------------------------
Nov 95 17 11 6 64.7 35.3 64.7 35.3
- --------------------------------------------------------------------------------------------------------------
Dec 95 20 12 8 60 40 60 40
- --------------------------------------------------------------------------------------------------------------
Jan 96 22 13 9 59.1 40.9 59.1 40.9
- --------------------------------------------------------------------------------------------------------------
Feb 96 36 24 12 66.67 33.33 66.67 33.33
- --------------------------------------------------------------------------------------------------------------
Mar 96 36 24 12 66.67 33.33 66.67 33.33
- --------------------------------------------------------------------------------------------------------------
Apr 96 36 24 12 66.67 33.33 66.67 33.33
- --------------------------------------------------------------------------------------------------------------
May 96 36 24 12 66.67 33.33 66.67 33.33
- --------------------------------------------------------------------------------------------------------------
Jun 96 36 24 12 66.67 33.33 66.67 33.33
- --------------------------------------------------------------------------------------------------------------
Jul 96 36 24 12 66.67 33.33 66.67 33.33
- --------------------------------------------------------------------------------------------------------------
Aug 96 43 31 12 72.09 27.01 72.09 27.01
==============================================================================================================
</TABLE>
<PAGE> 9
TO: Carmen Gonzalez-Sanfeliu
Regional Director for Latin America
Fax: 202-944-7252
FROM: Engineer Ariel Lukin
IMPSAT de Venezuela
Dr. Margarita de Beltran Villegas
TELECOM - Colombia
Engineer Miguel Reyes
CANTV - Venezuela
SUBJECT: GR and request for matching for Lease #4
Venezuela SVO-L6064 on I-705 and 310-E
- ------------------------------------------------------------------------
Date: (date)
Dear Carmen:
With respect to our GR of 64 MHz on T41 of the IS-705 for 5 years and 4 months
(Venezuela #4 SVO-L6064) and with commencement date of February 15, 1996,
please note the following modification:
1. The GR will be changed to not be subject to the right of priority for
10 years and effective February 15, 1996 with an early activation itinerary as
described in Table 1.
2. Effective in March 1995, the Colombian Signatory will join the lease
in question as a committed participant. CANTV, Venezuela's Signatory, agrees
with the placement of TELECOM, Colombia's Signatory, as participant in the
gradual space training segment on satellite 705 at 310-E, as shown in the
attached Table 1. The portion of the investment and the invoicing will be
divided as indicated in the table. This division is in proportion to the
frequency used in Colombia throught TELECOM with respect to the total frequency
leased by IMPSAT in Venezuela.
AGREEMENT: ---------------------------
Ariel Lukin
IMPSAT de Venezuela
---------------------------
Margarita Beltran
TELECOM Colombia
---------------------------
Miguel Reyes
CANTV Venezuela
<PAGE> 10
[duplicate of previous page]
<PAGE> 11
[letter in English]
[fecha de Envio]
Date Sent: August 15, 1995
[Enviada por]
Sent by: Christina Llamas Rey
[3 paginas incluyendo esta cubierta]
3 pages including this cover
To: Engineer Ariel Lukin
IMPSAT de Venezuela
Fax: (841) 574-1468
Engineer Miguel Reyes
CANTV - Venezuela
Fax: (58) (2) 500-3327
Dr. Margarita de Beltran Villagas
TELCOME - Columbia
Fax: 571) (1) 281-0697
From: NAME: Carman Gonzalez-Sanfeliu
DEPARTMENT: Regional Director for Latin America
REFERENCE: LAGRP\Venezuela\IMPAST\la95_431
SUBJECT: Lease SVO-L-6064 in satellite I-705 at 310-E
[balance of letter is in English]
<PAGE> 12
3400 International Drive, N.W.
Washington, D.C. 20008-3088
Telephone: (202) 944-6992
Telex: (WUI) 64280
FAX: (202) 944-7252
INTELSAT
Date Sent: August 15, 1995
Sent By: Cristina Llamas Rey
URGENT
3 pages including this cover
- --------------------------------------------------------------------------------
Para: Ing. Ariel Lukin
IMPSAT de Venezuela
Fax: (841) 574-1468
Ing. Miguel Reyes
CANTV - Venezuela
Fax: (58)(2) 500-3327
Dra. Margarita de Beltran Villegas
TELECOM - Colombia
Fax: (571)(1) 281-0697
- --------------------------------------------------------------------------------
From: NAME: Carmen Gonzalez Sanfelic
DEPARTMENT: Regional Director for Latin America
REFERENCE: LAGRP\Venezuela\IMPSAT\la95_431
SUBJECT: Lease SVO-L6064 in satellite I-705 at 310-E
- --------------------------------------------------------------------------------
Ariel/Margarita/Miguel
Due to changes in the activation growth of lease Venezuela #4, SVO-L6064, we
are sending you the agreed parameters of the Guaranteed Reservation and the
correct format for the matching order between Venezuela and Colombia.
If you agree that all the format data for the matching order and Table 1 are
correct, all that is necessary is the signature of each participant in the
agreement (IMPSAT, Telecom and CANTV) and for it to be returned to me at
INTELSAT, as soon as possible.
We take this opportunity to inform IMPSAT of Venezuela that the maximum
capacity of this activation is 43 MHz, and if they wish, they could opt for a
FRR to add 9 MHz of capacity.
Greetings,
<PAGE> 13
SQUARE 1 (IV)
VENEZUELA
Transmission Parameters
for necessary Capacity for channels of 64 Kbps,
in PAS-1 North Orientation
<TABLE>
<S> <C> <C> <C> <C>
Transponder Number 7A
Transponder Central Frequency MHz 5.965 3.740
(Ascending/Descending Link)
Assigned Inferior Frequency MHz 5.977 3.752
(Ascending/Descending Link)
Assigned Superior Frequency MHz 5.983 3.758
(Ascending/Descending Link)
</TABLE>
<TABLE>
<CAPTION>
Link Polarization HORIZONTAL HORIZONTAL
(Ascending/Descending)
<S> <C> <C>
Transponder Total Bandwidth MHz 36
Maximum Bandwidth Available (Note 1) MHz 6
</TABLE>
<TABLE>
<CAPTION>
Caracas Contour
Reference
-3dB
<S> <C> <C> <C>
Satellite G/T dB/K -0.1 -3.1
Total Operative Flow Density dBw/K -104.68 -107.68
Maximo disponible EIRP (Nota 2) dB/w 27.12 24.12
Intermodulation Nominal Density dBw/Hz -56.00 -59.00
Minimum Co-Canal C/1 dB 27.0 27.00
</TABLE>
Notes:
1)A minimum band guard must be supplied at each end of the
distributed bandwidth which is equal to 5% of the adjacent
carrier bandwidth at the end of the band.
2)The potencies shown are added among all the carriers
assigned to IMPSAT. The added EIRP should not be exceeded and the
entry levels will be adjusted accordingly.
3)The average intermodulation noise density is estimated over
the assigned bandwidth. The peak density may surpass the average
by 6 dB. The transponder is operated with a nominal exit backoff
of 4.0 dB.
4)Thecapacity is based in simplex circuits 1/2 QP8K of 64
KBP8 and simplex circuits R3/4 QP8K of 64 KBP8.
Page 1
<PAGE> 14
SQUARE 2 (IV)
VENEZUELA
Transmission Parameters
for necessary Capacity for channels of 64 Kbps,
in PAS-1 Haz Latino
Transmission Parameters
<TABLE>
<S> <C> <C> <C> <C>
Transponder Number 13
Transponder Central Frequency MHz 6.184 3.959
(Ascending/Descending Link)
Assigned Inferior Frequency MHz 6.203.70 3.978.70
(Ascending/Descending Link)
Assigned Superior Frequency MHz 6.204.35 3.979.35
(Ascending/Descending Link)
</TABLE>
<TABLE>
<CAPTION>
Link Polarization VERTICAL VERTICAL
(Ascending/Descending)
<S> <C> <C>
Transponder Total Bandwidth MHz 72
Maximum Bandwidth Available (Note 1) MHz 0.65
</TABLE>
<TABLE>
<CAPTION>
Caracas Contour
Reference
-3dB
<S> <C> <C> <C>
Satellite G/T dB/K -1 -2.5
Total Operative Flow Density dBw/K -115.35 -110.67
Maximo disponible EIRP (Nota 2) dB/w 15.02 13.52
Intermodulation Nominal Density dBw/Hz -59.9 -61.40
Minimum Co-Canal C/1 dB 22 22
</TABLE>
Notes:
1)A minimum band guard must be supplied at each end of the
distributed bandwidth which is equal to 5% of the adjacent
carrier bandwidth at the end of the band.
2)The potencies shown are added among all the carriers
assigned to IMPSAT. The added EIRP should not be exceeded
and the entry levels will be adjusted accordingly.
3)The average intermodulation noise density is estimated over
the assigned bandwidth. The peak density may surpass the
average by 6 dB. The transponder is operated with a nominal
exit backoff of 4.0 dB.
4)The capacity is based in simplex circuits 1/2 QP8K of 64
KBP8 and simplex circuits R3/4 QP8K of 64 KBP8.
Page 1
<PAGE> 1
EXHIBIT 10.9
<PAGE> 2
EXHIBIT 10.9
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
THIS CONTRACT is made as of this __ day of __, 1988 by and between
Hughes Network Systems, Inc., 11717 Exploration Lane, Germantown, MD 20874, a
Delaware Corporation ("Seller") and IMPSAT, S.A., Viamonte 1526 - 9 degrees
Piso, 1055 - Buenos Aires, Argentina, an Argentinian Corporation ("Buyer"), for
the sale of equipment and related services and the licensing of related
software for the purpose of establishing Buyer as an OEM supplier of Integrated
Satellite Business Networks(TM) ("ISBNs(TM)").
In consideration of the mutual covenants contained herein, the parties
agree as follows:
I. SCOPE
A. Initial Order
In accordance with the terms and conditions set forth herein, the
Statement of Work attached hereto as Exhibit A ("SOW") and the Technical
Specification attached hereto as Exhibit F (which three documents will govern
in the order of precedence just recited), Seller will provide to Buyer the
equipment, software, and services set forth in Section 2, Deliverables of
Exhibit A hereto ("Initial Order").
B. Additional Purchases
Seller agrees to sell to Buyer and Buyer will have the right to
purchase from Seller during the term of this Contract, additional equipment,
software and services listed in Section 2. ISBN(TM) System Equipment Options,
of Exhibit C ("Additional Purchase(s)"). Orders for Additional Purchases will
refer to and be governed by the terms and conditions of this Contract, unless
otherwise explicitly agreed in writing.
C. OEM Relationship
Buyer will add value to equipment purchased under this Contract and
will resell them under its own label. Exhibit D includes the manufacturing
license and technical assistance draft agreement.
II. TERM OF CONTRACT
Notwithstanding execution of this Contract, this Contract will not be
Effective until Buyer receipt of EXIM bank financing and Seller receipt of a
related letter of credit, INTELSAT authorizes operation of the proposed VSATs
over the selected INTELSAT transponder, and Buyer pays Seller the five (5)
percent initial
Notwithstanding execution of this Contract, this Contract will
not be Effective until Buyer pays Seller the five (5) percent
down payment as required by Exhibit C."
The term of this Contract will extend from the Effective Date for a
period of 5 years, and will continue thereafter until terminated by either
party by sixty (60) days prior written notice or as otherwise provided herein.
III. CONTRACT PRICES
A. Prices for the initial Order
Buyer will pay to Seller for the Initial Order the prices set forth in
Section 1 of Exhibit C.
Use of contract data is subject to restriction on title page.
1
<PAGE> 3
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
B. Prices For Additional Purchases
1) Buyer will pay to Seller, for Additional Purchases, the prices
set forth in Exhibit C subject to adjustments as set forth in this Contract.
2) Prices for Additional Purchases will remain fixed until
January 1, 1990. At any time thereafter during the term of this Contract.
Seller may increase prices with ten (10) days prior notice to Buyer, not more
than once each calendar quarter, at a rate not to exceed seven and one-half
percent (7 1/2%) per year cumulative from the Effective Date.
3) Price increases provided for in Paragraph B.2 above will apply
to orders placed after the effective date of the price increase and to portions
of orders for which Buyer has requested delivery six (6) months or more after
the effective date of such price increase.
C. Additional Charges
In addition to the prices set forth in Exhibit C for the Initial Order
and for Additional Purchases. Buyer will pay to Seller any customs, duties or
taxes imposed by a jurisdiction outside the United States. If Seller arranges
shipping beyond U.S. port of embarkation, shipping costs for the Initial Order
or Additional Purchases, if any, incurred by Seller will be billed to Buyer at
Seller's cost plus a ten percent (10%) handling charge, except that shipping
charges for PES(TM) remote terminals will be as set forth in Exhibit C. Other
charges which Seller may be required to pay or collect upon with respect to the
Initial Order or Additional Purchases or any part thereof, will be billed to
Buyer at Seller's cost.
IV. PAYMENT TERMS
Buyer will make each payment under this Contract in accordance with
the payment terms stated in Exhibit C. A late payment charge, at an annual rate
of the lesser of (i) the current prime rate (or equivalent), as last quoted by
The Wall Street Journal prior to the due date of the payment, plus two percent
(2%), or (ii) the maximum rate allowed by applicable law, will be applied to
any payment not received by the due date thereof.
V. DELIVERY, TITLE AND RISK OF LOSS
A. Delivery
1) Delivery of Initial Order equipment shall be F.O.B. U.S. port
of embarkation, cleared for export according to the scheduling requirements set
forth in the SOW. Seller will arrange for shipment of Initial Order equipment
to a location designated by Buyer in accordance with the provisions of Exhibit
C.
2) Seller will deliver Additional Purchases equipment F.O.B. U.S.
port of embarkation cleared for export on schedules to be mutually agreed upon.
Seller will arrange for shipments of Additional Purchases equipment to a
location designated by Buyer in accordance with the provisions of Exhibit C.
3) In the event that any equipment is ready for delivery in
accordance with the delivery schedule and Seller delays shipments thereof
pursuant to Buyer's request or because Buyer is not prepared to accept such
scheduled delivery. Seller will notify Buyer that such equipment is available
for shipment, and will store
Use of contract data is subject to restriction on title page.
2
<PAGE> 4
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
the equipment. Buyer will reimburse Seller for all reasonable and actual
storage or other expenses that Seller incurs by reasons of such delay and
storage. If redelivery has not occurred within fifteen (15) days, (but sixty
(60) days if Buyer needs the time to secure import clearance) Seller will
invoice Buyer, and Buyer will pay Seller for the equipment.
B. Title and Risk of Loss
Risk of loss thereof or damage to all or a portion of the equipment
will pass to Buyer at the time of shipment except that risk of loss or damage
for equipment to be installed by Seller will pass to Buyer upon installation.
Title to all or a portion of the equipment will pass to Buyer upon shipment.
VI. ACCEPTANCE
A. Acceptance
Buyer will accept the Initial Order and Additional Purchases or
portions thereof, as of the date of successful competition of the applicable
Acceptance Test described in the SOW. Promptly upon completion of the
Acceptance Test. Buyer will give its Acceptance or will notify Seller in
writing of the particulars in which the equipment or software does not conform
with the requirements of Exhibit F. Failure of Buyer to give such notice within
ten (10) business days after conduct of the applicable Acceptance Test will
constitute Acceptance by Buyer. Seller will promptly correct any
nonconformities of which it has written notice from Buyer and will notify Buyer
that the corrections are ready for retest and Acceptance. Upon successful
completion of such retest, Buyer will give its Acceptance.
B. Qualified Acceptance
Qualified acceptance by Buyer ("Qualified Acceptance") will occur upon
determination by Buyer, and written notification to Seller thereof, that
equipment or software, although not yet accepted, is suitable for beneficial
use. Buyer will have the right of free access to and use of any equipment
of software with respect to which Qualified Acceptance has occurred.
Qualified Acceptance will be deemed to constitute Acceptance for purposes of
(i) the payment schedules set forth in Exhibit C and Buyer agrees to pay Seller
in accordance with such schedule to the extent that Qualified Acceptance has
occurred, (ii) passage of title under Section V(B) hereof, and (iii) start of
warranty. However, Qualified Acceptance will not relieve Seller from any of its
responsibilities under this Contract, including correction of deficiencies.
C. Liquidated Damages
If HNS is late in completion of Qualified Acceptance for the Hub and
initial PES(TM) units, then Buyer as its sole and exclusive remedy shall be
paid by HNS the following liquidated damages:
- 0.1% per work day on the value of Hub equipment for
the first month of delay
- 1% per week at the start of second month of delay
- Total damages will not exceed 10% of the value of
the Hub equipment.
- In the event such total damages reach 10% of the
value of the Hub equipment, Buyer may, at its option,
terminate this Agreement on 30 days notice, and
opportunity to cure.
D. Premium Payments
Use of contract data is subject to restriction on title page.
3
<PAGE> 5
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
If HNS completes Qualified Acceptance for the Hub and Initial PES(TM)
units ahead of schedule, then Buyer will pay to HNS the following premiums:
- 0.05% per work day of the value of the Hub equipment for up to
one month advance completion
- 0.5% per week for more than one month advance completion
- Total premium will not exceed 5% of the value of the Hub
equipment.
VII. LICENSE OF SOFTWARE
A. Buyer acknowledges that any software supplied by Seller to
Buyer hereunder is subject to the proprietary rights of Seller and/or Seller's
vendor(s) (the "Licensor(s)"). Seller or its Licensor(s), as the case may be,
will retain title to all of the Software.
B. Subject to performance by Buyer of the terms and conditions of
this Contract, Seller hereby grants to Buyer and Buyer hereby accepts from
Seller a limited, nontransferable (except to Buyer's and user customers in
Argentina) nonexclusive license for sublicense, as applicable) to use the
Software solely in the operation of Seller equipment or equipment manufactured
by or for Buyer under the Manufacturing License and Technical assistance
Agreement between the Parties entered into or even date herewith, to commence on
delivery of the Software to Buyer and payment thereof by Buyer and to last for
the life of the Seller equipment.
C. Except as permitted by this Paragraph, Buyer will not (i) copy
or duplicate, or permit anyone else to copy or duplicate, any part of the
Software, or (ii) create or attempt to create, or permit others to create or
attempt to create, by reverse engineering or otherwise, the source programs or
any part thereof from the object programs or from other information made
available under this Contract. Buyer may at its own expense) make one copy of
the Software (except for the source program) for archive purposes.
D. Buyer will not, directly or indirectly, sell, transfer, offer,
disclose, lease (as lessor), or license the Software to any third party,
except that subject to the terms of this Contract. Buyer may sublicense to a
third party purchaser, leasee or user of the equipment the right solely to use
the software in the operation of the equipment.
E. If Seller produces any new features or functional changes in
the software after delivery of the software hereunder, which it makes generally
available to its customers. Buyer shall have the right to obtain such new
features or functional changes at the prices then in effect including Seller's
standard purchase price and recurring maintenance charges. If Buyer elects to
purchase the software containing such new features or functional changes, such
software is also covered by this license.
VIII. LIMITED WARRANTIES, DISCLAIMERS, PROCEDURES
A. Seller will deliver good title to all or any part of the
Initial Order or Additional Purchases that is to become the property of Buyer
pursuant to this Contract, free from any and all liens, claims, or
encumbrances.
B. Subject to the terms and conditions hereof, Seller warrants
for a period of one year, commencing upon the date(s) of Buyer's Acceptance
thereof ("Warranty Period"), modules or assembled units tested by Seller and
provided to Buyer pursuant to this Contract against defects in material and
workmanship that
Use of contract data is subject to restriction on title page.
4
<PAGE> 6
IMPSAT, S.A. OEM Contract
E-5349 (9/88P)
cause a failure to perform in accordance with the specifications set forth in
this Contract ("Defects"). Seller shall, as its sole liability for breach of
Warranty and at its option and expense in accordance with Paragraph D below,
promptly repair or replace, or cause to be repaired or replace or cause to be
repaired or replaced, any Seller equipment that proves to have a Defect during
such Warranty Period.
C. Subject to the terms and conditions hereof, Seller warrants
that the Software developed by Seller and provided Buyer pursuant to this
Contract ("Seller's Software") will, when property installed on the equipment
on which it is designated by Seller for use, perform in accordance with the
specifications in this Contract. As its sole liability hereunder for Seller's
Software, upon Acceptance. Seller will commence software maintenance in
accordance with the Statement of Work, provided for in the ISBN(TM) System
Maintenance Services Agreement between the parties.
D. The limited warranties set forth in this Article, except for
the warranty of title, are contingent upon Buyer's notifying Seller or an
alleged Seller equipment defect during the warranty periods defined herein.
Repair, replacement, amendment, or alteration will be performed in accordance
with Seller's standard practices with respect to such equipment. Buyer shall be
responsible for the return of equipment to Seller's designed repair location,
freight prepaid and packed to assure safe arrival. Seller shall return
repaired, replaced, amended or altered equipment, freight prepaid and packed to
assure safe arrival to Buyer's designated location in Argentina.
E. The limited warranties set forth in this Article will not
apply with respect to (i) Seller equipment that has been subject to unauthorized
alteration, modification, or repair, or (ii) defects or failures resulting from
improper handling, storage, operation, interconnection, or installation;
failure to continually provide a suitable installation and operational
environmental or any other cause beyond the range of normal usage for the
equipment (except, in all of the foregoing cases, when caused by Seller).
F. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, SELLER NEITHER MAKES,
NOR ASSUMES ANY LIABILITY UNDER, ANY WARRANTIES (WHETHER EXPRESS, IMPLIED, OR
STATUTORY) ON OR WITH RESPECT TO THE INITIAL ORDER AND/OR ADDITIONAL PURCHASES
OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED CONDITIONS
OR WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Service
of Seller equipment, in the manner and for the period of time provided above,
and Seller's satisfaction of its obligations under the SOW will constitute
fulfillment of all liabilities of Seller to Buyer, whether based on contract,
negligence, or otherwise with respect to the equipment or the software
delivered to Buyer hereunder.
G. Any software and any equipment designed with an asterisk is
provided by Seller "as is," provided that Seller will make available to Buyer
the benefits of any vendor or licensor original warranty. SELLER NEITHER MAKES
NOR ASSUMES ANY LIABILITY UNDER ANY WARRANTIES (WHETHER EXPRESS, IMPLIED, OR
STATUTORY) ON OR WITH RESPECT TO ANY SUCH EQUIPMENT OR SOFTWARE, INCLUDING ANY
IMPLIED CONDITIONS OR WARRANTIES OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
IX. MAINTENANCE AND SPARE PARTS SUPPORT
Seller will make available spare parts and maintenance services for
all equipment sold under this Contract for a period of not less than seven
(7) years from the Effective Date. In the event Seller is unable to supply such
spare parts because of bankruptcy or being otherwise out of business. Seller
will provide Buyer
Use of contract data is subject to restriction on title page.
5
<PAGE> 7
IMPSAT, S.A. OEM Contract
E-5349 (9/88P)
with all necessary drawings and engineering detail as necessary to allow Buyer
to maintain ISBN(TM) equipment.
The standard ISBN(TM) maintenance service agreement is included in
Exhibit E and will be executed by IMPSAT, S.A. and HNS.
X. PROPRIETARY INFORMATION
A. Seller and Buyer, to the extent of their contractual and
lawful right to do so, will exchange proprietary or confidential information as
reasonably necessary for each to perform its obligations under this Contract.
All information relating to this Contract provided by either party to the
other, whether oral or written, and when identified as confidential in writing,
and all Software will be and is hereby deemed to be confidential and
("Proprietary Information").
B. Except as set forth in Paragraph C below, a party receiving
Proprietary Information pursuant hereto (the "Receiving Party"), will not,
without the prior written consent of the party disclosing such information the
"Disclosing Party"), (i) use any portion of the Proprietary information for any
purpose other than the purpose of this Contract, or (ii) disclose any portion
of the Proprietary information to any persons or entities other than the
employees, manufacturing subcontractors, and consultants of the Receiving Party
and Seller's subcontractors) who reasonably need to have access to the
Proprietary information in connection with the purposes of this Contract and
who have agreed to protect Proprietary information as though they were a party
to this Contract.
C. A Receiving Party will not be liable for disclosure of
Proprietary information, or part thereof, if the Receiving Party can
demonstrate that such Proprietary information (i) is in the public domain at
the time it is disclosed or subsequently entered the public domain through no
fault of the Receiving Party; (ii) is known to or in the possession of the
Receiving Party at the time of receipt; (iii) became known to the Receiving
Party from a source other than the Disclosing Party without breach of this
Section by the Receiving Party; or (iv) is disclosed more than five (5) years,
except fifteen (15) years for Software, after the date of receipt of the
Proprietary Information by the Receiving Party. In the event of any legal
action or proceeding or asserted legal requirement for disclosure of
Proprietary Information furnished hereunder, the Receiving Party will promptly
notify the Disclosing Party and, upon the request and at the expense of the
Disclosing Party, will cooperate with the Disclosing Party in lawfully
contesting such disclosure. Except in connection with any failure to discharge
its responsibilities under the preceding sentence, the Receiving Party will not
be liable for any disclosure pursuant to court order.
D. Proprietary information will remain the property of the
Disclosing Party and will, at the Disclosing Party's request and after it is no
longer needed for the purposes of this Contract, promptly be returned thereto
or be destroyed, together with all copies made by the Receiving Party and by
anyone to whom such Proprietary Information has been made available by the
Receiving Party in accordance with the provisions of this Section.
XI. LIMITATION OF LIABILITY.
Seller will be liable for any direct and proximate damages that Buyer
may suffer as a consequence of material breach by the Seller of its duties
according to the Contract. Notwithstanding any other provision of this
Contract, the remedies of Buyer set forth herein are exclusive and the
liability of Seller with respect to
Use of contract data is subject to restriction on title page.
6
<PAGE> 8
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
the Initial Order or Additional Purchases, will not exceed return of monies paid
for goods not accepted (in the case of the hub, after System Acceptance Test)
plus ten percent (10%) of the lesser of price of the Initial Order or
Additional Purchases or part thereof on which such liability is based. IN NO
EVENT WILL SELLER BE LIABLE TO BUYER OR ANYONE ELSE FOR SPECIAL, COLLATERAL,
EXEMPLARY, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT
LIMITATION, LOSS OF GOODWILL, LOSS OF PROFITS OR REVENUES, LOSS OF SAVINGS, LOSS
OF USE, INTERRUPTIONS OF BUSINESS, AND CLAIMS OF CUSTOMERS) WHETHER SUCH
DAMAGES OCCUR PRIOR TO SUBSEQUENT TO, OR ARE ALLEGED AS A RESULT OF, TORTIOUS
CONDUCT OR BREACH OF ANY OF THE PROVISIONS OF THIS CONTRACT, EVEN IF SELLER HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
XII. PATENT AND COPYRIGHT INDEMNITY
A. Seller agrees to resist or defend at its own expense any
request for royalty payments or any claim for equitable relief or damages
against Buyer based on an allegation that the manufacture of any Seller
equipment or the use, lease, or sale thereof or that any documentation
infringes any United States or Argentinian patent or copyright, and to pay any
royalties and other costs related to the settlement of such request and to pay
the costs and damages, including attorney's fees, finally awarded as the result
of any suit based on such claim, provided that Seller is given prompt written
notice of such request or claim by Buyer and given authority and such
reasonable assistance and information as Seller requests in writing and as it
is available to Buyer for resisting such request or for the defense of such
claim.
B. In the event that, as a result of any such suit (i) prior to
delivery, the manufacture of any item supplied by Seller hereunder is enjoined,
or if after delivery, the use, lease or sale thereof is enjoined. Seller will,
at its option and expense, either (a) negotiate a license or other agreement
with plaintiff so that such item is no longer infringing, (b) modify such item
suitably or substitute a suitable item therefore, which modified or substituted
item is not subject to such injunction, and to extend the provisions of this
Article thereto, or, if (a) or (b) cannot be effected by Seller's reasonable
and diligent efforts, (c) repurchase enjoined items at their then current value
on Buyer's books, and (d) compensate Buyer for the direct and proximate damages
suffered by it as a consequence of that injunction.
C. Notwithstanding the above, Seller will not be liable for any
damages or costs resulting from claims (i) that Seller's compliance with
Buyer's designs, specifications, or instructions, (ii) that use of any item
provided by Seller in combination with products not supplied by Seller, or
(iii) that a manufacturing or other process carried out by or through Buyer and
utilizing any item provided by Seller constitutes either direct or contributory
infringement of any United States patent (such claims being collectively
referred to herein as "Other Claims"). Buyer will indemnify Seller from any and
all damages and costs (including settlement costs) finally awarded or agreed
upon for infringement of any United States patent or copyright in any suit
resulting from Other Claims, and from reasonable expenses incurred by Seller in
defense of such suit if Buyer does not undertake the defense thereof.
D. In no event will Seller or Buyer be liable for damages
hereunder in excess of the contract price or for consequential damages or
costs. This indemnity is in lieu of any other indemnity or warranty, express or
implied, with respect to patents and copyrights.
Use of contract data is subject to restriction on title page.
7
<PAGE> 9
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
XIII. RESPONSIBILITIES OF BUYER
Buyer will, at is own expense, preform its responsibilities, in
accordance within the requirements and schedule(s) set forth in the SOW.
XIV. FORCE MAJEURE
Seller will not be liable for nondelivery, delay in delivery or
installation, or any other impairment of performance hereunder in whole or in
part caused by the occurrence of force majeure, including but not limited to
war (whether an actual declaration thereof is made or not), sabotage,
insurrection, rebellion, riot or other act of civil disobedience, act of a
public enemy, failure or delay in transportation, failure of or delay in
performance of Buyer's obligations under this Contract, act of any government
or any agency or subdivision thereof, judicial action, labor dispute, fire,
accident, explosion, epidemic, quarantine, restrictions, storm, flood,
earthquake or other Act of God, or shortage of labor, fuel, raw material, or
machinery, where Seller has exercised ordinary care in the prevention thereof.
If any such contingency occurs. Seller and Buyer will agree on a new schedule
and the delivery requirements of this Contract will be amended accordingly.
XV. GENERAL
A. Export Control/Regulations
It is expressly agreed that the execution of this Contract and the
subsequent delivery of the Initial Order and Additional Purchases under this
Contract will be subject to all applicable export controls imposed or
administered by the U.S. Department of Commerce as well as by any other U.S.
Government Agency that may impose any such controls, including but not limited
to the export of technical data, equipment, software and know-how.
B. Assignment
This Contract is not assignable by either party without the prior
written consent of the other party hereto, except that Seller may assign this
Contract to any affiliate or surviving corporation without the prior written
consent of Buyer.
C. Governing Law and Arbitration
1) This Contract, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, will be governed by and
construed in accordance with the laws of Switzerland.
2) All disputes arising out of or in connection with the Contract
which cannot be amicably solved shall be settled in accordance with the Rules
of Conciliation and Arbitration of the International Chamber of Commerce, by
three (3) arbitrators appointed in accordance with said rules. The arbitrator's
award shall be final and binding upon the parties hereto and may be entered as
a judgement into any court having jurisdiction. The seat of arbitration shall
be Geneva. Switzerland and arbitration will be conducted in English.
Use of contract data is subject to restriction on title page.
8
<PAGE> 10
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
D. Notices
All notices, demands, requests, or other communications that may be or
are required to be given, served, or sent by either party to the other party
pursuant to this Contract will be in writing and will be mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
transmitted by hand delivery, telegram, or telex, addressed as follows:
If to Seller:
Hughes Network Systems, Inc.
11717 Exploration Lane
Germantown, MD 20874
U.S.A.
Attention: Director, VSAT Contracts Administration
If to Buyer:
IMPSAT, S.A.
Viamonte 1526-9 degrees Piso
1055 - Buenos Aires
Argentina
Either party may designate by written notice a new address to which
any notice, demand, request, or communication will be delivered as provided
above.
E. Program Manager
Each party will promptly appoint a Program Manager who will be
authorized to represent the appointing parties in all the matters within the
scope of, but not amending or interpreting this Contract.
F. Changes
Buyer shall have the right, by written notice to Seller, to request
changes to this Contract. If any such requested change would result in a change
in the cost to Seller, in the time for Seller performance, or would otherwise
effect any term of this Contract, Seller shall so notify Buyer within thirty
(30) business days of its receipt of the request, and will then advise Buyer of
any proposed adjustment in the price, time for performance, or other affected
term. Upon reaching mutual agreement, both parties shall execute a Contract
amendment and this Contract shall be deemed modified accordingly as of the date
both parties have affixed their signatures.
Seller shall have the right to make product changes that do not affect
form, fit, or function without prior notice.
G. Entire Understanding
This Contract supersedes and replaces any and all prior agreements,
understandings or arrangements, whether oral or written, heretofore made
between the parties and relating to the subject
Use of contract data is subject to restriction on title page.
9
<PAGE> 11
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
matter hereof, and together with the Exhibits attached hereto constitutes the
entire understanding of the parties with respect to the subject matter of this
contract. This Contract, may not be altered or amended except by an express
written agreement signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Contract or
have caused this Contract to be duly executed on their behalf effective as of
the date first written above.
Hughes Network Systems, Inc. IMPSAT S.A.
- ------------------------------ ------------------------------
By: By:
- ------------------------------ ------------------------------
Name Name
- ------------------------------ ------------------------------
Title Title
Industries Metalurgicas Pescarmona S.A.I.C.F. guarantees the
performance by IMPSAT, S.A. of its obligations under this Contract and the
related Manufacturing License and Technical Assistance Agreement and System
Maintenance Services Agreement.
-----------------
For IMPSA
Use of contract data is subject to restriction on title page.
10
<PAGE> 12
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
EXHIBIT C
DRAFT
PAYMENT AND PRICE SCHEDULE
September 16, 1988
All information contained in or disclosed by this document is
confidential and proprietary to Hughes Network Systems, Inc. By accepting this
material the recipient agrees that this material and the information contained
therein will be held in confidence and will not be reproduced in whole or in
part except for purposes of this contract. It is understood that no right is
conveyed to reproduce or have reproduced any item herein contained without
express written permission from Hughes Network Systems, Inc.
<PAGE> 13
<PAGE> 14
EQUIHNS.XLS
<TABLE>
<CAPTION>
UNIT.PRICES INITIAL TOT. PRICES TOT. PRICES
DESCRICION DE EQUIPOS WO/DISC. ORDER WO/DISC. W/ 10% DISC.
USS C/U USS USS
<S> <C> <C> <C> <C>
NETWORK STARTUP EQUIPMENT 338,900 1 338,900 305,010
BASEBAND EXPANSION RACK 38,900 1 38,900 35,010
IF EXPANSION RACK 88,900 0 0 0
BCD 22,000 10 220,000 198,000
DPC 15,500 6 93,000 83,700
LIM RS-232 6,335 22 139,370 125,433
LIM V.35 6,335 0 0 0
SINCRONOUS BIT TRANSPARENT 8,880 2 17,760 15,984
DPC REDUNTANTE 47,800 2 95,600 86,040
VOICE STARTUP EQUIPMENT 16,600 0 0 0
VPC 13,350 0 0 0
SYSTEM IF DISTRIBUTION EQUIPMENT 15,000 0 0 0
SUBTOTAL 1 943,530 849,177
SYSTEM CONTROL CENTER 178,850 1 178,850 160,965
SYSTEM ENGINEERING 275,000 1 275,000 247,500
SOFTWARE 33,000 1 33,000 29,700
OUTROUTE MODEM 17,780 1 17,780 16,002
BCD (4 TARJETAS) 22,000 1 22,000 19,800
PROCESSOR MODULE 5,000 3 15,000 13,500
LIM 4,500 3 13,500 12,150
LIM I/0 RS 232 2,200 1 2,200 1,980
LIM I/0 V.35 2,200 0 0 0
LIM I/0 RS 449 2,600 1 2,600 2,340
TX/RX CONTROLLER (3 TARJETAS) 22,500 1 22,500 20,250
POWER SUPPLY 2,200 3 6,600 5,940
VIM Y VIM I/O 13,350 0 0 0
BCD BUS REPETER MODULE 2,100 1 2,100 1,890
BUS REPEATER MODUL 2,000 0 0 0
MMB JUMPER 300 1 300 270
MMB TERMINATOR 200 1 200 180
BCD BRM TERMINATOR 1,500 1 1,500 1,350
BLOWER 400 0 0 0
IF AMPLIFIER FOR NET DIST CHASSIS 700 0 0 0
SCC - SOC INTERFACE CARD 8,890 1 8,890 8,001
SCC - SIC INTERFACE CARD 9,750 1 9,750 8,775
IF AMPLIFIER FOR SYSTEM DIST CHAS 400 1 400 360
IF DISTRIBUTION POWER SUPPLY 400 0 0 0
SUBTOTAL 2 125,320 112,788
PACKING AND SHIPPING TO PORT 5,990 1 5,990 5,990
GENERAL TOTAL 1,561,690 1,406,120
</TABLE>
<PAGE> 15
EQUIHNS.XLS
<TABLE>
<CAPTION>
UNIT.PRICES INITIAL TOT. PRICES TOT. PRICES
DESCRICION DE EQUIPOS WO/DISC. ORDER WO/DISC. W/ 10% DISC.
USS C/U USS USS
<S> <C> <C> <C> <C>
NETWORK STARTUP EQUIPMENT 338,900 1 338,900 305,010
BASEBAND EXPANSION RACK 38,900 1 38,900 35,010
IF EXPANSION RACK 88,900 0 0 0
BCD 22,000 10 220,000 198,000
DPC 15,500 6 0 0
LIM RS-232 6,335 22 139,370 125,433
LIM V.35 6,335 0 0 0
SINCRONOUS BIT TRANSPARENT 8,880 2 17,760 15,984
DPC REDUNTANTE 47,800 2 95,600 86,040
VOICE STARTUP EQUIPMENT 16,600 0 0 0
VPC 13,350 0 0 0
SYSTEM IF DISTRIBUTION EQUIPMENT 15,000 0 0 0
SUBTOTAL 1 850,530 765,477
SYSTEM CONTROL CENTER 178,850 1 178,850 160,965
SYSTEM ENGINEERING 275,000 1 275,000 247,500
SOFTWARE 33,000 1 33,000 29,700
OUTROUTE MODEM 17,780 1 17,780 16,002
BCD (4 TARJETAS) 22,000 1 22,000 19,800
PROCESSOR MODULE 5,000 3 15,000 13,500
LIM 4,500 3 13,500 12,150
LIM I/0 RS 232 2,200 1 2,200 1,980
LIM I/0 V.35 2,200 0 0 0
LIM I/0 RS 449 2,600 1 2,600 2,340
TX/RX CONTROLLER (3 TARJETAS) 22,500 1 22,500 20,250
POWER SUPPLY 2,200 3 6,600 5,940
VIM Y VIM I/O 13,350 0 0 0
BCD BUS REPETER MODULE 2,100 1 2,100 1,890
BUS REPEATER MODUL 2,000 0 0 0
MMB JUMPER 300 1 300 270
MMB TERMINATOR 200 1 200 180
BCD BRM TERMINATOR 1,500 1 1,500 1,350
BLOWER 400 0 0 0
IF AMPLIFIER FOR NET DIST CHASSIS 700 0 0 0
SCC - SOC INTERFACE CARD 8,890 1 8,890 8,001
SCC - SIC INTERFACE CARD 9,750 1 9,750 8,775
IF AMPLIFIER FOR SYSTEM DIST CHAS 400 1 400 360
IF DISTRIBUTION POWER SUPPLY 400 0 0 0
SUBTOTAL 2 125,320 112,788
PACKING AND SHIPPING TO PORT 5,990 1 5,990 5,990
GENERAL TOTAL 1,468,690 1,322,420
</TABLE>
Page 1
<PAGE> 16
[IMPSAT LOGO]
IMPSAT S.A.
PURCHASE ORDER
GENERAL OFFICES HUGHES N.S. Date: 29 October 91
Alferez Pareja 256 11717 Exploration Lane
1107 - Buenos Aires Germantown ORDER: 20025
REPUBLICA ARGENTINA U.S.A. Amendment #1
TELEPHONE: # - (541)-362-4240 TELEPHONE: 1-(301)-428-5541
TELEFAX: # - (541)-362-5030 TELEFAX: 1-(301)-428-2804
Attn: Alejandro Suarez del Cerro Attn: Joel Goldstein
Lila Schejter
Horacio Gurzi
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
================================================================================
ITEM QTY DESCRIPTION U.PRICE T.PRICE
================================================================================
<S> <C> <C> <C> <C>
1 12 LIM / LIM I/O 6,300 75,600
- --------------------------------------------------------------------------------
2 1 LIM / VIM I/O 12,210 12,210
- --------------------------------------------------------------------------------
3 3 DPC 13,000 39,000
- --------------------------------------------------------------------------------
4 1 BB Expansion Rack 29,900 29,900
- --------------------------------------------------------------------------------
5 55 RDPC 1,350 74,250
- --------------------------------------------------------------------------------
6 40 MPC 1,600 64,000
- --------------------------------------------------------------------------------
7 27 VDP 900 24,300
- --------------------------------------------------------------------------------
8 27 VP TEL 1,350 36,450
- --------------------------------------------------------------------------------
9 12 VP PABX 1,350 16,200
- --------------------------------------------------------------------------------
10 24 Power Supply DIU 420 10.080
- --------------------------------------------------------------------------------
11 2 Power Supply EDIU 1,302 2,604
- --------------------------------------------------------------------------------
12 24 FANS 35 840
- --------------------------------------------------------------------------------
13 24 CABLES 150 3,600
- --------------------------------------------------------------------------------
14 24 Daughter Board 250 6,000
- --------------------------------------------------------------------------------
16 12 Jumper Cable 30 360
- --------------------------------------------------------------------------------
17 4 Juntion Box 150 600
- --------------------------------------------------------------------------------
18 10 Crimp Tool 85 850
================================================================================
TOTAL 396,844
================================================================================
</TABLE>
NOTES:
1. All prices are in U.S. Dollars net to Hughes Network Systems
2. Total amount is F.O.B. Miami
COMMERCIAL TERMS
<PAGE> 17
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
SECTION 1.0
PURCHASED SYSTEM PRICING
1.1 HUB BASEBAND EQUIPMENT PRICING
Listed below is the pricing for a basic hub. Baseband Equipment, System
Control Center, and hub Spares described in Exhibit A. Section 2.0. Prices are
F.O.B., United States Port of embarkation.
This exact hub configuration may change as a result of changes in the
projected traffic or other requirements. Such changes will be mutually agreed
upon in writing with the price impacts, if any, associated with the change
specified. The final price will be adjusted to reflect the delivered
configuration.
<TABLE>
<S> <C>
Hub Baseband Equipment (Per Exhibit A. Section 2.0) $ 943,530
System Control Center including SCC
(Per Exhibit A. Section 2.0) $ 178,850
System Engineering and Program Management
(Per Exhibit A. Section 2.0) $ 275,000
ISBN(TM) System Software License $ 33,000
-----------
TOTAL HUB EQUIPMENT AND SERVICES $ 1,430,380
Hub Baseband Equipment Spares (Per Exhibit A. Section 2.0) $ 123,720
-----------
Total $ 1,554,100
One time 10% discount 155,410
-----------
$ 1,398,690
Packing and Shipping to Port of Embarkation $ 5,990
-----------
TOTAL HUB EQUIPMENT, SERVICES, AND SPARES $ 1,404,680
</TABLE>
C-1
<PAGE> 18
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
1.1.1 OPTIONS (RFT)
<TABLE>
<S> <C>
Redundat INTELSAT F-3 SCAMP Earth Station $322,420
with 9.0 meter C-band antenna and 125 Watt HPA
Program Management $ 25,000
Spares $ 93,180
Installation $ 109,400
-----------
TOTAL RFT OPTIONS $ 550,000
</TABLE>
1.2 PERSONAL EARTH STATION INITIAL ORDER EQUIPMENT PRICING
The pricing schedule for the initial Order of PES(TM) equipment is
based on the Phase for which they are created as explained below.
<TABLE>
<CAPTION>
Item Unit Price Qty Extended Price
- ---- ---------- --- --------------
<S> <C> <C> <C>
Phase I
PES(TM) Basic Package 11,938 250 2,984,500
Shipping to port of embarkation 18,600
without crating**
Phase II
PES(TM) Basic Package 11,938 250 2,984,500
Shipping to port of embarkation 18,600
without crating**
--------------
TOTAL PES(TM) EQUIPMENT AND SHIPPING $6,006,200
</TABLE>
* See Exhibit A Section 2.4 for detail of PES(TM) equipment delivered at
each phase.
** If Buyer requests antennas to be crated. Buyer will reimburse Seller
actual expenses plus ten percent (10%) handling charge.
C-2
<PAGE> 19
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
1.3 ISBN(TM) SYSTEM EQUIPMENT AND SERVICES PRICING
<TABLE>
<S> <C>
Total Hub Equipment and Service $1,404,680
(Per Section 1.1 above)
Total PES(TM) Equipment and Shipping $6,006,200
(Per Section 1.2 above)
------------
TOTAL ISBN(TM) SYSTEM $7,410,880
</TABLE>
C-3
<PAGE> 20
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
SECTION 2.0
ISBN(TM)/PES(TM) SYSTEM EQUIPMENT OPTIONS
In addition to the equipment to be provided in accordance with
Subsections 1.1 and 1.2, additional equipment or software may be ordered by
Buyer, at its option, by providing written notice to Seller at any time during
the term of the Contract. Optional items are presented in the following
subsections. The prices indicated are exclusive of packing and shipping and
are valid for the period specified in Section III B of the Contract. Prices
for equipment or software ordered after this initial period shall be determined
consistent with the terms of Section III B of the Contract.
Pricing for the hub IF and Baseband Equipment, Subsection 2.1, is
based on the assumption that the equipment is not ordered for inclusion in the
initial system, but rather to be installed later as a system expansion.
Therefore, the pricing does not include System Engineering or Program
Management, but does include installation. The System Engineering and Program
Management will be quoted when the exact schedule is known and the degree of
Seller assistance desired by Buyer in network planning, etc. is defined.
2.1 HUB IF AND BASEBAND EQUIPMENT EXPANSION OPTIONS
2.1.1 NETWORK STARTUP EQUIPMENT PRICE: $338,900
(ONE SET REQUIRED PER OUTROUTE)
This is the minimum necessary equipment to support a network (one
outroute and its associated inroutes). It consists of an IF subsystem rack
which contains redundant outroute modems and the redundant backup inroute burst
channel demodulator, its does not include any online inroute demodulators. The
IF subsystem rack has additional capacity to hold up to 11 inroute burst
channel demodulators (item 2.1.4). The Network Startup Equipment also includes
a baseband rack which includes redundant Network Control Clusters and System
Interface Clusters in the bottom two chassis. This rack contains two
additional chassis that contain 24 additional slots capable of holding Data
Port Clusters and Voice Port Clusters. In addition, there are eight additional
slots (4 in each chassis) in the two lower trays that can hold Call Connection
Clusters, Voice Port Clusters (VPCs) or small Data Port Clusters (DPCs).
2.1.2 BASEBAND EXPANSION RACK PRICE: $38,900
This is a baseband expansion rack that has 48 spare slots to hold
additional baseband equipment. These can be DPCs or VPCs. The Baseband
expansion rack must be placed adjacent to the baseband rack included in the
network startup equipment. A baseband expansion rack is connected to only one
network.
C-4
<PAGE> 21
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
2.1.3 IF EXPANSION RACK PRICE: $88,900
This is an IF expansion rack that can hold up to 16 additional inroute
demodulators and includes 4 Burst Channel Demodulator chassis. This rack
counts as one of eight networks the System IF Distribution Chassis can support.
This rack must be placed adjacent to the IF rack included in the startup
equipment. An IF expansion rack is connected to only one network.
2.1.4 INROUTE BURST CHANNEL DEMODULATORS (BCD) PRICE: $22,000
(ONE REQUIRED PER INROUTE)
This is the demodulator required at the hub to receive the inroute.
Note: There is a maximum of 11 inroutes per outroute, without expanding into
an IF expansion rack.
2.1.5 DATA PORT CLUSTER (DPC) STARTUP EQUIPMENT PRICE: $15,500
(ONE PER DPC)
This is the common DPC equipment to support up to four Line Interface
Modules (LIMs). This equipment occupies two baseband equipment slots. It
consists of the Traffic Processor Module, the utility Processor Module and the
necessary jumpers, etc. to support up to four LIMs.
2.1.6 STANDARD LINE INTERFACE MODULES (LIMs) PRICE: $6,335
These are the standard LIMs. There are a maximum of four LIMs per
DPC. A LIM can support the data rates indicated below. These LIMs must be
placed adjacent to their DPC startup equipment. The price includes up to 100
ft. of interface cable per port. A LIM occupies one baseband equipment slot.
All ports on an individual LIM must support the same protocol. Standard
electrical interfaces include RS-232, V.35 and RS-449.
<TABLE>
<CAPTION>
Port Speed (kbps) No. of Ports per LIM
----------------- --------------------
<S> <C>
64* 1
56 1
19.2 2
9.6 4 (RS-232 or 422 only)
4.8 6 (RS-232 only)
1.2-2.4 6 (RS-232 only)
</TABLE>
*Pass-through or bit transparent mode only.
C-5
<PAGE> 22
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
2.1.7 SYNCHRONOUS BIT TRANSPARENT TRANSMISSION KIT PRICE: $8,880
One of these kits is required per DPC Redundancy Group. It consists
of the following:
- Two Receiver/Driver Module (RDM)
- Two Clock Terminators
- Two RDM to TX/RX Cables
- Cable wiring for clock distribution inside the DPC redundancy group
2.1.8 1:N REDUNDANT DPC (N=1,2,3) PRICE: $47,800
A 1:N redundant DPC supports redundancy of online DPC's. This
equipment occupies six baseband slots. A redundant DPC must be in the same
chassis or in an adjacent chassis to the online DPCs. The hardware compliment
of LIMs and electrical interfaces must be a superset of the DPCs that it
backs up.
2.1.9 VOICE STARTUP EQUIPMENT PRICE: $16,600
This includes the two Call Connection Clusters (CCCs) and the
necessary cables to provide timing to the VPCs. The CCCs occupy two baseband
slots.
2.1.10 VOICE PORT CLUSTER PRICE: $13,350
A VPC will support two voice channels. The VPC includes the Voice
Interface Module (VIM) and the VIM I/O Module. The interface is 4W plus E&M.
Signaling is via DTMF. The price includes up to 100 of interface cable per
voice channel. A VPC occupies one baseband equipment slot. There is a minimum
of two per network. An extra VPC must be included if redundancy (via hunt
group) of VPCs is desired.
2.1.11 SYSTEM IF DISTRIBUTION EQUIPMENT PRICE: $15,000
One required per up to 8 IF subsystems of IF expansion racks; if there
is one IF rack per network then one is required per 8 networks (or 8 outroutes)
to distribute and amplify the IF levels from the dowconverters into the IF
racks. This equipment mounts in one of the network IF subsystem racks.
2.2 OPTIONAL NETWORK DIAL BACKUP
2.2.1 NETWORK DIAL BACKUP UNIT PRICE: $33,450
This unit supports dial backup via wireline modems on up to 15 ports
on a single network. The price includes an Expansion Digital interface Unit
(EDIU) configured with an IOC and the Modem Backup Card which plugs into a BCD
chassis in an IF Rack. Remote Data Port Cards (RDPC) and terrestrial modems
are not included. The number of RDPCs and terrestrial modems required will
depend on the number of ports that are to be supported simultaneously (1-*5).
2.2.2 DIAL BACKUP UNIT HUB SITE LICENSE PRICE: $30,000
This license is required on a per hub site basis if one Dial Backup
Unit described above is to be utilized. (Available 4th quarter 1986).
C-6
<PAGE> 23
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
2.3 ADDITIONAL HUB IF AND BASEBAND SPARES
Pricing on individual hub spares is shown below. These prices are
Ex-Works Seller's facility and do not include installation or shipping.
<TABLE>
<CAPTION>
Item Unit Price
---- ----------
<S> <C>
Outroute Modem $17,780
Inroute Burst Channel Demodulator (4 module set) 22,000
Processor Module 5,000
Line Interface Module 4,500
LIM I/O (RS-232) 2,200
LIM I/O (V.35) 2,200
LIM I/O (RS-449) 2,600
TX/RX Controller (3 module set) 22,500
Power Supply 2,200
Voice Interface Module and VIM I/O 13,350
BCD Bus Repeater Module 2,100
Bus Repeater Module 2,000
MMB Jumper 300
MMB Terminator 200
BCD BRM Terminator 1,500
Blower 400
IF Amplifier for Network Distribution Chassis 700
SCC - SOC Interface Card 8,890
SCC - SIC Interface Card 9,750
IF Amplifier for System Distribution Chassis 400
IF Distribution Power Supply 400
</TABLE>
2.4 SYSTEM CONTROL CENTER OF OPTIONS
<TABLE>
<CAPTION>
Item Unit Price
---- ----------
<S> <C>
Slave System Operators Console (SOC) (color) $11,340
This SOC would operate daisy-chained off the master
SOC.
Master System Operators Console (SOC) (color) 20,000
This price includes the SOC and the VAX interface
card (ACC card) required for its support.
Note: If the master SOC is to be operated remotely,
the terrestrial modems required are not included.
</TABLE>
C-7
<PAGE> 24
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
2.5 SOFTWARE LICENSE OPTIONS
Software support for various protocols is available with purchase of
the required license. This license fee provides a perpetual paid up license,
but there is a monthly software maintenance fee (see System Maintenance
Contract).
<TABLE>
<CAPTION>
Protocol License Fee
-------- -----------
<S> <C>
SDLC Included in ISBN(TM) System License
Voice Included in ISBN(TM) System License
Synchronous Bit Transparent Included in ISBN(TM) System License
Asynchronous Bit Transparent Included in ISBN(TM) System License
HDLC/SDLC Pass-Through Included in ISBN(TM) System License
3270 Bisynchronous $20,000
HASP $50,000
TINET $50,000
IBM PU4-to-PU4 $50,000
Burroughs Poll Select (Modified Version) $50,000
DDCMP (available 4th Quarter 1988) $50,000
X.25 (concentrator configuration) $50,000
(available 4th Quarter 1988)
</TABLE>
C-8
<PAGE> 25
IMPSAT, S.A. OEM CONTRACT
8015349 (2/90P)
2.6 PERSONAL EARTH STATION(TM)
2.6.1 Additional Orders
Additional phases are implemented for the purchase of additional
PES(TM) equipment. Buyer will obtain additional orders as follows:
<TABLE>
<CAPTION>
Item Description Minimum Quantity Price
---- ----------- ---------------- -----
<S> <C> <C> <C>
1 Phased III Basic Package 0 $10,622
Consisting of:
i) Fully tested DIU/O modules
ii) Fully tested RFH units
2 Phase IV Basic Package 0 $ 9,588
Consisting of:
i) DIU/O kits of PC boards and chips
ii) Fully tested RFH units
iii) Fully tested IDM
3 Phase V Basic Package 3,000 minus $ 9,155
cumulative
quantities
Consisting of: ordered in the
previous phases
i) Kit of PC boards and chips DIU/O modules
ii) Fully tested RFH units with RF board
</TABLE>
* It is understood that the units delivered in Phases III through V will
need a degree of local integration by IMPSAT, S.A. in Argentina. It
is IMPSAT's responsibility to obtain required know-how transfer to
technology from HNS at each required Phase. Provision for license and
technology transfer, together with associated transfer fees for these
phases is made in the Manufacturing License and Technical Assistance
Agreement executed by the parties contemporaneously with execution of
this Agreement.
Revised 2/21/90
C-9
<PAGE> 26
IMPSAT, S.A. OEM CONTRACT
E-5349 (8/89P)
2.6.2 PES(TM) EQUIPMENT OPTIONS
Pricing on PES(TM) equipment options are shown below. These prices
are Ex-Works Seller's facility.
<TABLE>
<CAPTION>
Quantity Price
-------- -----
<S> <C> <C>
Expanded DIU (EDIU) All $2,750
Price for EDIU containing
15 additional card slots
2.4 Meter Antenna in lieu of All $2,600
1.2 or 1.8 meter antenna
(Incremental Price)
RS-232 to V.35 Interface Box All $385
(per V.35 port)
RS-232 to RS-449 Interface Box
IFL Cable (non-plenum) (minimum per foot $1.16
1000 foot roll)
IFL Cable (planum) (minimum 1000 per foot $2.70
foot roll)
Alignment Tool $240
MPC (with one PLC and one $250
Junction Box) Incremental price
for MPC rather than RDPC when
ordered as part of complete
PES(TM) (order required 90 days
in advance of delivery)
</TABLE>
Revised 8/2
C-10
<PAGE> 27
IMPSAT, S.A. DEM CONTRACT
E-5349 (8/89P)
2.6.3 PES(TM) MODULE PRICING
The pricing for PES(TM) is as follows. These prices are Ex-Works
Seller's facility:
<TABLE>
<CAPTION>
Item Unit Price
---- ----------
<S> <C>
RF Head $6,800
DIU/O Without Port Cards (Includes RF board, IDM, IOC) 4,330
RDPC 1,350
RVPC (2 Card Set) 2,760
IOC Circuit Card for DIU/O 1,525
IDU Power Supply 500
AEU Power Supply 500
1.8 m Antenna 600
RF Board 1,900
IDM Board 1,800
Multiport Port Card (MPC with two ports) 1,600
Multiport Expansion (per additional two ports) 500
Multiport Card Junction Box (for more than four I/O 300
ports)
</TABLE>
2.6.4 PES(TM) MODULE REPAIR PRICING
If PES(TM) maintenance service is performed by companies other than
HNS or its agents, PES(TM) equipment modules will be repaired or replaced for
the prices state below.
<TABLE>
<S> <C>
RF Head $1,200
DIU/O without port cards $250 plus 33% of current price of DIU/O
All other modules $250 plus 33% of current price of such modules
</TABLE>
Shipping costs from Buyer to Seller for the module to be repaired will
be paid by Buyer. Return shipping costs for the repaired module will be paid
by Seller.
Repaired or replaced units will have a warranty of 90 days from date
of shipment.
2.6.5 CANNOT DUPLICATE (CND)
During the warranty period, and to the extent PES(TM) maintenance
service is performed by companies other than HNS or its agents, the number of
units returned to HNS for repair or replacement, which are subsequently
classified as cannot duplicate (CND), shall not exceed 10% of the units
returned or 3, whichever is larger, of all equipment of that type returned
within the preceding fiscal quarter. CNDs in excess of 10% shall incur an
administrative testing and handling fee as specified below. This calculation
shall be made quarterly, and Buyer shall be billed and agrees to pay for each
CND above that number allowed.
Revised 8/2
C-11
<PAGE> 28
IMPSAT, S.A OEM CONTRACT
E-5349(8/89P)
PERSONAL EARTH STATION(TM)
2.6.1 ADDITIONAL ORDERS
Additional phases are implemented for the purchase of additional PES(TM)
equipment. Buyer will obtain additional orders as follows:
<TABLE>
<CAPTION>
Item Description Minimum Quantity Price
---- ----------- ---------------- -----
<S> <C> <C> <C>
1 Phase III Basic Package 0 $10,622
Consisting of:
i) Fully tested DIU/O modules
ii) Fully tested RFH units
2 Phase* IV Basic Package 0 $ 9,588
Consisting of:
i) DIU/O kits of PC boards and chips
ii) Fully tested RFH units
3 Phase* V Basic Package 5,000 minus $ 9,155
cumulative
quantities
Consisting of: ordered in the
previous phases
</TABLE>
i) Kit of PC boards and chips of DIU/O modules
ii) Fully tested RFH units with RF boards
* It is understood that the units delivered in Phases III through V will
need a degree of local integration by IMPSAT, S.A. in Argentina. It
is IMPSAT's responsibility to obtain required know-how transfer of
technology from HNS at each required Phase. Provision for license
and technology transfer, together with associated transfer fees for
these phases is made in the Manufacturing License and Technical
Assistance Agreement executed by the parties contemporaneously with
execution of this Agreement.
Revised 8/2
C-8
<PAGE> 29
IMPSAT, S.A. OEM CONTRACT
E-5349(9/88P)
2.6 PERSONAL EARTH STATION(TM)
2.6.1 ADDITIONAL ORDERS
Additional phases are implemented for the purchase of additional PES(TM)
equipment. Buyer will obtain additional orders as follows:
<TABLE>
<CAPTION>
Item Description Minimum Quantity Price
---- ----------- ---------------- -----
<S> <C> <C> <C>
1. Phase III Basic Package 0 $10,622
Consisting of:
i) Fully tested DIU modules
ii) Fully tested AEUs
iii) Fully tested RFH units
2. Phase* IV Basic Package 0 $ 9,588
Consisting of:
i) DIU kits of PC boards and chips
ii) Fully tested AEU modules
iii) Fully tested RFH units
3. Phase* V Basic Package 3,000 minus $ 9,155
cumulative
quantities
Consisting of: ordered in the
previous phases
</TABLE>
i) Kit of PC boards and chips of DIU modules
ii) Kit of PC boards and chips of AEU modules
iii) Fully test RFH units
* It is understood that the units delivered in Phases III through V will
need a degree of local integration by IMPSAT, S.A. in Argentina. It
is IMPSAT's responsibility to obtain required know-how transfer of
technology from HNS at each required Phase. Provision for license
and technology transfer, together with associated transfer fees for
these phases is made in the Manufacturing License and Technical
Assistance Agreement executed by the parties contemporaneously with
execution of this Agreement.
C-9
<PAGE> 30
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
2.6.2 PES(TM) EQUIPMENT OPTIONS
Pricing on PES(TM) equipment options are show below. These prices are
Ex-Works Seller's facility.
<TABLE>
<CAPTION>
Quantity Price
-------- -----
<S> <C> <C>
Expanded DIU (EDIU) All $2,750
Incremental price for EDIU containing
15 additional card slots
2.4 Meter Antenna in lieu of All $2,600
1.2 or 1.8 meter antenna
(Incremental Price)
RS-232 to V.35 Interface Box
(per V.35 port) All $385
RS-232 to RS-449 Interface Box
IFL Cable [ILLEGIBLE] per foot 1.16
IFL Cable [ILLEGIBLE] per foot 2.70
Alignment Tool [ILLEGIBLE] $240
MPC (with one PLC and one Junction Box) $250
Incremental price for MPC rather than
RDPC when ordered as pat of complete PES(TM)
(order required 90 days in advance of delivery)
</TABLE>
Revised 8/2
C-10
<PAGE> 31
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
2.6.2 PES(TM) EQUIPMENT OPTIONS
Pricing on PES(TM) equipment options are shown below. These prices
are Ex-Works Seller's facility.
<TABLE>
<CAPTION>
Quantity Price
-------- -----
<S> <C> <C>
Expanded DIU (EDIU)
Incremental price for EDIU containing All $2,750
15 card slots, rather than DIU.
when ordered as part of complete PES(TM)
2.4 Meter Antenna in lieu of All 2,600
1.2 or 1.8 meter antenna
(Incremental Price)
Expanded DIU (EDIU) All 4,150
Price for standalone unit
(rather than substitution for DIU)
Includes IOC card but no RDPCs.
RS-232 to V.35 Interface Box
(per V.35 port) All 385
RS-232 to RS-449 Interface Box
IFL Cable (PVC) per foot 1.50
IFL Cable (Teflon) per foot 2.50
Alignment Tool 240
48 VDC Power Supply AEU 585
48 VDC Power Supply DIU 585
RFH to AEU Cable Set 500
</TABLE>
C-10
<PAGE> 32
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
2.6.3 PES(TM) MODULE PRICING
The pricing for PES(TM) modules is as follows. These prices are
Ex-Works Seller's facility:
<TABLE>
<CAPTION>
Item Unit Price
---- ----------
<S> <C>
RF Head 6,800
IDU Without Port Cards (includes RF Baord,
IDM, IOC) 4,330
RDPC 1,350
RVPC (2 Card Set) 2,750
IOC Circuit Card for DIU 1,525
IDU Power Supply 500
AEU Power Supply 500
1.8 m Antenna 600
</TABLE>
2.6.4 PES(TM) MODULE REPAIR PRICING
If PES(TM) maintenance service is performed by companies other than HNS
or its agents, PES(TM) equipment modules will be repaired or replaced for the
prices stated below.
RF Head $1,200
IDU without port cards $250 plus 33% of current price of IDU
All other modules $250 plus 33% of current price of such
modules.
Shipping costs from Buyer to Seller for the module to be repaired will
be paid by Buyer. Return shipping costs for the repaired module will be paid by
Seller.
Repaired or replaced units will have a warranty of 90 days from date of
shipment.
2.6.5 CANNOT DUPLCATE (CND)
During the warranty period, and to the extent PES(TM) maintenance
service is performed by companies other than HNS or its agents, the number of
units returned to HNS for repair for replacement which are subsequently
classified as cannot duplicate (CND) shall not exceed 10% of the units returned
or 3, whichever is larger, of all equipment of that type returned within the
preceding fiscal quarter. CND's in excess of 10% shall incur an adminsitrative
testing and handling fee as specified below. This calculation shall be made
quarterly and Buyer shall be billed and agrees to pay for each CND above that
number allowed.
RF Board 1900
IDM Board 1800
Multiport Port Card (MPC with two Ports) 1600
Multiport Expansion (per additional two Ports) 500
Multiport Card Junction Box (For more than four I/O Ports) 300
C-11
<PAGE> 33
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
2.6.3 PES(TM) MODULE PRICING
The pricing for PES(TM) modules is as follows. These prices are
Ex-Works Seller's facility:
<TABLE>
<CAPTION>
Item Unit Price
---- ----------
<S> <C>
RF Head (Includes RFH to AEU Cabls) $5,600
AEU (Complete) 3,000
DIU with 1 RDPC 3,500
DIU Without Port Cards 2,530
RDPC 1,350
RVPC (2 Card Set) 2,750
AEU to RFH Cable Set 500
IOC Circuit Card for DIU 1,525
DIU Power Supply 500
Analog Modem Card (AEU) 1,200
Digital Modem Card (AEU) 700
AEU Power Supply 500
AEU Demod 600
1.8 m Antenna 600
</TABLE>
2.6.4 PES(TM) MODULE REPAIR PRICING
If PES(TM) maintenance service is performed by companies other than HNS
or its agents, PES(TM) equipment modules will be repaired or replaced for the
prices stated below.
RF Head $1,200
AEU (complete) $250 plus 33% of current price of AEU
DIU without port cards $250 plus 33% of current price of DIU
All other modules $250 plus 33% of current price of such
modules.
Shipping costs from Buyer to Seller for the module to be repaired will
be paid by Buyer. Return shipping costs for the repaired module will be paid by
Seller.
Repaired or replaced units will have a warranty of 90 days from date of
shipment.
2.6.5 CANNOT DUPLCATE (CND)
During the warranty period, and to the extent PES(TM) maintenance
service is performed by companies other than HNS or its agents, the number of
units returned to HNS for repair for replacement which are subsequently
classified as cannot duplicate (CND) shall not exceed 10% of the units returned
or 3, whichever is larger, of all equipment of that type returned within the
preceding fiscal quarter. CND's in excess of 10% shall incur an adminsitrative
testing and handling fee as specified below. This calculation shall be made
quarterly and Buyer shall be billed and agrees to pay for each CND above that
number allowed.
C-11
<PAGE> 34
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
<TABLE>
<CAPTION>
Module CND
------ ---
<S> <C>
RF Head $300
or
DIU/C without port cards
All other modules 20% of
appropriate module price
</TABLE>
2.7 TRAINING OPTIONS
<TABLE>
<CAPTION>
2.7.1 Additional Training Courses
<S> <C> <C> <C>
ISBN(TM) and PES(TM) System Introductory Course (3 days) $525 per student
ISBN(TM) and PES(TM) System Operations Course (5 days) $1,200 per student
ISBN(TM) and PES(TM) System Maintenance Course (10 days) $3,000 per student
PES(TM) Installation, Operation, and Maintenance Course (5 days) $1,100 per student
ISBN(TM) Network Sizing (3 days) $1,500 per student
2.7.2 Videotaping of Training
Videotaping a training $700 per day of training
course at Buyer's facility videotaped plus
travel and expenses
2.7.3 Training Course at Buyer Site
ISBN(TM) and PES(TM) System Introductory Course (3 days) $5,500 plus travel and
(10 students maximum) expenses
ISBN(TM) and PES(TM) System Operations Course (5 days) $8,000 plus travel and
(8 students maximum) expenses
ISBN(TM) and PES(TM) System Maintenance Course (10 days) $11,000 plus travel and
(4 students maximum) expenses
PES(TM) Installation, Operation, and Maintenance Course (5 days) $8,000 plus travel and expenses
ISBN(TM) Network Sizing (3 days) $6,500 plus travel
</TABLE>
Revised 8/2
C-12
<PAGE> 35
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
<TABLE>
<CAPTION>
Module CND
------ ---
<S> <C>
RF Head $300
AEU (complete) $250
or
DIU without port cards
All other modules 20% of
appropriate module price
</TABLE>
2.7 TRAINING OPTIONS
<TABLE>
<CAPTION>
2.7.1 Additional Training Courses
<S> <C> <C> <C>
ISBN(TM) and PES(TM) System Introductory Course (3 days) $525 per student
ISBN(TM) and PES(TM) System Operations Course (5 days) $1,200 per student
ISBN(TM) and PES(TM) System Maintenance Course (10 days) $3,000 per student
PES(TM) Installation, Operation, and Maintenance Course (5 days) $1,100 per student
ISBN(TM) Network Sizing (3 days) $1,500 per student
2.7.2 Videotaping of Training
Videotaping a training $700 per day of training
course at Buyer's facility videotaped plus
travel and expenses
2.7.3 Training Course at Buyer Site
ISBN(TM) and PES(TM) System Introductory Course (3 days) $5,500 plus travel and
(10 students maximum) expenses
ISBN(TM) and PES(TM) System Operations Course (5 days) $8,000 plus travel and
(8 students maximum) expenses
ISBN(TM) and PES(TM) System Maintenance Course (10 days) $11,000 plus travel and
(4 students maximum) expenses
PES(TM) Installation, Operation, and Maintenance Course (5 days) $8,000 plus travel and expenses
ISBN(TM) Network Sizing (3 days) $6,500 plus travel and expenses
</TABLE>
C-12
<PAGE> 36
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
Buyer must make available the necessary equipment to support the
training class at Buyer's facility. Price per course assumes the
maximum number of students indicated. The incremental cost of any
additional students shall be equal to the cost of the required
additional material.
2.8 ADDITIONAL DOCUMENTATION OPTIONS
<TABLE>
<CAPTION>
Title Price Per Copy
----- --------------
<S> <C>
System Description and Theory of Operations $100
SCC Operations Guide 100
System Operations and Maintenance Manual 100
IF Subsystem Operations and Maintenance Manual 75
Voice Port Cluster Operations and Maintenance Manual 50
Call Connection Cluster Operations and Maintenance Manual 50
Data Port Cluster Operations and Maintenance Manual 50
Network Control Cluster Operations and Maintenance Manual 50
System Interface Cluster Operations and Maintenance Manual 50
PES(TM) User's Guide 10
PES(TM) Service and Installation Manual 100
PES(TM) Remote Site Preparation Specification 75
</TABLE>
C-13
<PAGE> 37
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
SECTION 3.0
PAYMENT TERMS
"Buyer shall establish a confirmed, irrevocable letter of credit in
favor of Seller at the Bank of America, Los Angeles Main Office, Los
Angeles, California 90071, U.S.A., or another bank acceptable to
Seller, in the amount of 85% of the total price of each shipment. The
letter of credit will be established prior to each shipment, except
that the hub and the first 100 PESs(TM) will be covered by the same
letter of credit. The letter of credit shall be valid until all
payments to Seller have been made in accordance with the contract. The
letter of credit shall specifically instruct said bank to make
incremental payments to Seller in U.S. dollars against the letter of
credit in accordance with the payment schedule specified in the
contract. Such payments are to be upon demand, without delay and
without the necessity of any judicial or administrative action. If the
validity or the letter of credit expires prior to completion of
payments hereunder, Buyer shall, at the request of Seller, arrange for
the validity of the letter of credit to be extended for an appropriate
period. In the event Buyer is unable to secure any applicable letter
of credit as specified herein, the 5% down payment to be paid by Buyer
will be forfeited to Seller as cancellation charges and all
obligations of the parties under the Contract will be terminated,
unless the parties mutually agree that the contract should be extended
and other payment arrangements made.
All bank charges related to the letter of credit established by Buyer,
in accordance with the above, shall be paid by Buyer.
All payments hereunder shall be made in U.S. currency and Buyer shall
obtain any necessary government approvals and shall make any arrangements
necessary to make such payments.
3.1 HUB EQUIPMENT AND SERVICES
Payment for the hub Baseband Equipment, Engineering Services, and
Spares will be due upon completion of the following milestones:
<TABLE>
<CAPTION>
Months After Payment
Milestone Contract Start Due
--------- -------------- -------
<S> <C> <C>
Effective Date (4) 0 5% of Total Contract Price
Upon Shipment of Hub Equipment 7 1/2 60% of Total Hub Equipment
Services, Spares,
(Subsection 1.1);
and 10 PESs(TM)
Upon Shipment of 90 PES(TM) 9 95%
Completion of System Acceptance 10 35% of Total Hub Equipment,
Test or Qualified Acceptance Services, Spares (Subsection 1.1),
and 10 PESs(TM)
Upon Shipment of 100 PES(TM) 11 95%
</TABLE>
- ----------------
(4) Drafts and certification of completion of appropriate milestones will
be forwarded to Buyer for payment.
C-14
<PAGE> 38
IMPSAT, S.A. OEM CONTRACT
E-5349 (9/88P)
<TABLE>
<S> <C> <C>
Upon Shipment of 100 PES(TM) 13 95%
Upon Shipment of 100 PES(TM) 15 95%
Upon Shipment of 100 PES(TM) 17 95%
</TABLE>
3.2 PERSONAL EARTH STATIONS(TM)
Drafts against letters of credit for each PES(TM) (and appropriate
additional equipment, if any) delivered will be submitted upon shipment of
PES(TM).
3.3 SHIPPING AND OTHER COSTS
Costs associated with delivery of equipment ordered after the Initial
Order will be billed as follows:
PES(TM) shipping costs will be billed at the time of shipments at a
rate of actual shipment costs plus a ten percent handling fee.
Shipping costs of hub equipment will be billed at time of shipment.
Shipping costs of other items, such as spares, documentation, etc.,
will be billed at time of shipment.
3.4 OPTIONS
For any equipment, software or services options exercised, Drafts will
be submitted upon shipment or completion of work.
C-15
<PAGE> 39
<PAGE> 40
AMENDMENT NO. 6
THIS AMENDMENT NO. 6 (this "Amendment"), made this 6th day of December,
1994, by and between IMPSAT, S.A, a corporation organized under the laws of
Argentina ("IMPSAT-Argentina" or "Customer") and Hughes Network Systems, Inc.
("HNS").
WITNESSETH:
WHEREAS, IMPSAT-Argentina and HNS entered into a contract for the sale of
an Integrated Satellite Business Network ("ISBN") dated October 21,1988, which
contract was subsequently modified by amendments dated April 20, 1989, February
23, 1990, December 19, 1993. and June 1994 (collectively, the "Contract"); and
WHEREAS, under the terms and conditions of the Contract,
IMPSAT-Argentina's affiliated companies IMPSAT, S.A., a Columbian corporation
("IMPSAT-Columbia"), and IMPSAT, S.A., a Venezuelan corporation
("IMPSAT-Venezuela"), have ordered and taken delivery of ISBN equipment and
services ("Equipment and Services");
WHEREAS, IMPSAT-Argentina, IMPSAT-Columbia and IMPSAT-Venezuela as well as
two other affiliated companies in Ecuador and Mexico and any other affiliated
companies that may be Formed (collectively referred to as the "Companies" and
each individually referred to as a "Company"),would like to order and take
delivery from HNS of additional Equipment and Services during a twelve (12)
month period;
WHEREAS, IMPSAT-Argentina has requested, and HNS has agreed to supply
during a twelve (12) month period a specified additional amount of Equipment and
Services to the Companies, pursuant to the terms of the Contract and certain
additional Terms and conditions,
WHEREAS, IMPSAT-Argentina and HNS, the parties hereto, have agreed to
amend the Contract to provide for the supply or such ISBN Equipment and Services
and for such additional terms and conditions;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration acknowledged by the parties to have been given the
parties agree as follows:
1. INITIAL PAYMENTS
Customer shall deliver within thirty (30) days of the Effective Date the
following payments:
a. A deposit of five percent (5%) of the Total Discounted Price of the
Equipment and Services to be purchased hereunder (as defined in
Section 2 below); and
b, All amounts due and owing HNS by Customer or the Companies under the
Contract as of the date the deposit in section a. above is paid.
1
<PAGE> 41
2. EQUIPMENT AND SERVICES LIST AND PRICES
Customer agrees to purchase or to cause the Companies to purchase from HNS
during the twelve (12) month period commencing on the Effective Date hereof (the
"Period") the Equipment and Services set forth below on Exhibit A hereto at the
priced specified in Exhibit A. All prices listed on Exhibit A are F.O.B. Miami.
The Total Discounted Price for the Equipment and Services on Exhibit A is:
PES Equipment and Services $ 28,476,786
BULK ORDER DISCOUNT (2,846,779)
HES Equipment and Services 4,478,065
TOTAL DISCOUNTED PRICE- $ 30,099,072
3. SCHEDULE OF DELIVERIES
Attached hereto as Exhibit B is Customer's best forecast of the deliveries to be
made to the Companies hereunder during each of the four (4) three (3) month
periods (each a "Quarterly Period") commencing with the Effective Date hereof.
At least forty-five (45) days prior to each of the respective Quarterly Periods,
Customer must notify HNS of the precise collective delivery request of the
Companies hereunder for such Quarterly Period which precise request shall be
equal to at least eighty percent (80%) of the forecast submitted above for such
Quarterly Period. The amount of Equipment and Services by which a precise
request falls short of the forecast for such Quarterly Period (1-20%) shall be
automatically added to the delivery forecast for the next successive Quarterly
Period and thus shall be due to be delivered to and paid for by Customer
along with the Equipment and Services for that next successive Quarterly
Period.
Failure of Customer to make timely payments in accordance with the provisions of
Paragraph I above shall relieve HNS from its obligation to deliver in the
accordance with the Schedule of Exhibit B. Following receipt of the required
payments, the Customer and HNS shall agree on a new Schedule that shall replace
the schedule as contained herein.
Notwithstanding the foregoing, nothing contained herein shall relieve Customer
from fulfilling its obligations to take delivery of the scheduled deliveries
within the four (4) Quarterly Periods immediately following the Effective Date
hereof.
4. PAYMENT
HNS shall invoice the respective Company for each delivery requested under
Section 3 above upon Acceptance of the respective Equipment and Services in
accordance with the Statement of Work. Payment will be due sixty (60) days from
the date of such invoice. In the event that the respective Company does not
deliver to HNS payment in full for an invoice by such date. Customer agrees to
pay such overdue amounts to HNS along with the applicable late payment charge
specified in the Contract. All payments hereunder shall be made in U.S. currency
and Customer or the Companies shall obtain any necessary government approvals
and shall make any arrangements necessary to make such payments.
5. CREDIT LIMIT
The total sum owing by Customer or any of the other Companies under any payment
arrangement agreed to by both parties for Equipment and Services purchased
pursuant to this Amendment shall not exceed Five Million Five Hundred Thousand
Dollars ($ 5,500,000). No deliveries will be made hereunder in the event such
credit limit is reached or in the event that a requested delivery would cause
such credit limit to be reached. If a delivery may not be made due to the credit
limit, however, it does not affect Customer's obligation under Section 2 above
to take delivery of all of the Equipment and Services set forth on Exhibit A
within the Period.
2
<PAGE> 42
6. PRICING FOR ADDITIONAL PURCHASES
Section 2 of Exhibit C to the Contract is deleted and is replaced in its
entirety by the revised Section 2 attached hereto.
7. SYSTEMS MAINTENANCE AGREEMENTS
The parties hereby agree that within ninety (90) days of the Effective Date. HNS
shall enter into a system maintenance services agreement with each of the
respective Companies and that after all of such agreements are executed HNS
shall provide collectively to the Companies the services of one (1) HNS employee
to support such agreements.
The price for the Companies shall be determined in accordance with HNS'
standard pricing and terms and conditions for such services.
8. INSTALLATION AND MAINTENANCE SUPPORT
For three (3) year period commencing with the Effective Date hereof. Customer or
the Companies shall provide to HNS installation and maintenance support services
in the companies' countries of service at the following rates:
Installation Support:
According to IMPSAT Standard procedures for different sizes of antennas and type
of installation:
Installation Materials: Actual cost plus 15%
Travels & Living Expenses: Actual cost plus 15%
Labor: 850 US$ per day and per man
Maintenance Support:
Within 12 hours once requested call out services.
Materials: Actual cost plus 15%
Spares: To be supplied by HNS
Labor: 850 US$ per day and per man.
9. ASSIGNMENT OF CONTRACT
Customer shall have the right to assign its and obligations under the Contract
a future holding company subject to agreement between Customer and HNS.
10. MISCELLANEOUS
In addition to the deliveries as specified herein, HNS will deliver free of
charge, the following equipment:
- One (1) Network Start Up Equipment
- Two (2) demodulator - BCD's
- Two (2) DPC's
- Five (5) VPC's
- Eight (8) LIM's
- Fifty (50) C-Band PES's
- Fifty (50) Ku-Band PES's
Except for HUB equipment listed above which shall be delivered within 90 days of
notice from Customer, these deliveries shall follow delivery of equipment listed
in Exhibit A.
3
<PAGE> 43
11. RATIFICATION OF CONTRACT
In all other respects, the Contract remains unchanged and the parties hereby
ratify said Contract
WITNESS the following signatures.
HUGHES NETWORK SYSTEMS. INC. IMPSAT. S.A.
BY /s/ Signature illegible BY /s/ Signature illegible
------------------------------ -----------------------------
TITLE Executive Vice President TITLE Vice President
--------------------------- --------------------------
DATE 6 Dec, 1994 DATE 6/12/94
---------------------------- ---------------------------
4
<PAGE> 44
EXHIBIT A
SUMMARY OF PRICES
5
<PAGE> 45
EXHIBIT B
SCHEDULE OF DELIVERIES
6
<PAGE> 46
EXHIBIT C
REVISED SECTION 2.0
ISBN SYSTEM EQUIPMENT OPTIONS (ADDITIONAL PURCHASES)
In addition to the equipment to be provided in accordance with Subsections
1.1, additional equipment or software may be ordered by Buyer, at its option, by
providing written notice to Seller at any time during the term of the Contract.
Optional items are presented in the following subsections. The prices indicated
are those valid for the period of two years.
Pricing for the hub IF and baseband equipment. Subsection 2.1, is based on
the assumption that the equipment is not ordered for inclusion in the initial
system, but rather to be installed later as a system expansion. Therefore, the
pricing does not include system engineering or program management or
installation. The system engineering, program management and installation will
be quoted when the exact schedule is known, and the degree of seller assistance
desired by Buyer in network planning, etc., is defined.
2.1 HUB IF AND BASEBAND EQUIPMENT EXPANSION OPTIONS
Each of these options is defined in Subsection 2.4 of the technical
specification, Exhibit B. All prices are F.O.B. Miami.
<TABLE>
<CAPTION>
Item Unit Price
- ---- ----------
<S> <C>
Network startup equipment (one set required per outroute)
Dual Rack $269,154
Single Rack $183,056
Baseband expansion rack $ 30,638
IF expansion rack $ 70,604
Inroute Burst Channel Demodulator (BCD) (one required per inroute) $ 17,741
Data Port Cluster (DPC) startup equipment (one set per DPC)(basic memory config.) $ 10,289
DPC startup equipment (one set for DPC)(X.25 extended session configuration) $ 14,697
Standard Line Interface Modules (LIMs) (Up to 4 per DPC) (RS-232, V.35,
or RS-422) $ 5,007
Synchronous bit transparent transmission LIM $ 6,156
1:N redundant DPC (N=1,2,3) (Redundant DPC has 4 LIM's) $ 37,962
Startup LAN Cluster - Ethernet (including 2 LAN LIMs and I/Os) $ 44,650
Startup LAN Cluster-Token Ring (including 2 LAN LIMs and I/Os) $ 44,650
Startup LAN Cluster-Ethernet (including 4 LAN LIMs and I/Os) $ 62,700
Startup LAN Cluster-Token Ring (including 4 LIMs and I/Os) $ 62,700
Voice startup equipment (Call Connection Cluster - CCC) $ 11,714
Voice Port Cluster (VPC) (2 voice ports per VPC) $ 10,023
System IF distribution equipment (for 2 or more networks) $ 11,828
</TABLE>
7
<PAGE> 47
2.2 OPTIONAL NETWORK DIAL BACKUP
<TABLE>
<S> <C>
Network Dial Backup Unit $27,964
------------------------
</TABLE>
This unit supports dial backup via wireline modems on up to 15 ports on a
single network. The price includes an EDIU configured with an IOC and the modem
backup card, which plugs into a BCD chassis in an IF rack. Data Port Cards and
terrestrial modems are not included. The number of RDPCs and terrestrial modems
required will depend on the number of ports that are to be supported
simultaneously (1-15).
<TABLE>
<S> <C>
Fail Safe Hub License $25,080
---------------------
</TABLE>
This license is required on a per hub site basis if the dial backup unit
described above is to be utilized for fail-safe dial backup (Manual dial out
from hub).
<TABLE>
<S> <C>
Automatic/Fail Safe Dial Backup License $45,980
---------------------------------------
</TABLE>
This license is required on a per hub site basis for the Dial Backup Unit
described above and provides software to implement automatic dial backup through
a remote PES originated phone call. This license includes the Fail Safe Dial
Backup license as well.
2.3 ADDITIONAL HUB IF AND BASEBAND SPARES
Pricing on individual hub spares is shown below. These prices are F.O.B.
Miami and do not include installation or shipping.
<TABLE>
<CAPTION>
Item Unit Price
---- ----------
<S> <C>
Outroute modem $14,769
Inroute BCD complete (four module set) $17,471
Processor Module $ 3,971
LIM $ 3,572
LIM I/O (RS-232) $ 1,758
LIM I/O (V.35) $ 1,758
LIM I/O (RS-449) $ 2,062
LAN IM with I/O (Token Ring and Ethernet) $14,250
TX/RX controller (three module set) $17,870/set
Power supply $ 1,758
Voice Interface Module (VIM) $ 7,595
VIM I/O $ 4,085
BCD Bus Repeater Module $ 1,667
Bus Repeater Module $ 1,587
MMB jumper $ 238
MMB terminator $ 157
BCD BRM terminator $ 1,188
Blower $ 318
IF amplifier for network distribution chassis $ 556
SCC - SIC interface card $ 7,059
SCC-SIC interface card $ 7,743
IF amplifier for System Distribution Chassis $ 318
IF distribution power supply $ 318
</TABLE>
8
<PAGE> 48
2.4 SOFTWARE LICENSE OPTIONS
Software support for various protocols is available with purchase of the
required license. This license fee provides a perpetual paid up license, but
there is a monthly software maintenance fee (see System Maintenance Contract).
<TABLE>
<CAPTION>
Protocol License Fee
-------- -----------
<S> <C>
SDLC (PU4-to-PU2) $44,000*
Voice Included in ISBN System License
Synchronous bit transparent Included in ISBN System License
Asynchronous bit transparent Included in ISBN System License
HDLC/SDLC passthrough Included in ISBN System License
3270 bisynchronous $17,600*
IBM SDLC (PU4-to-PU4) $44,000*
Burroughs poll select (Modified Version) $44,000*
HASP $44,000*
X.25 $44,000*
X.3/X.28/X.29 PAD (must be added to X.25) $ 6,000 (purchased concurrently with X.25)
$16,000 (Purchased separately from X.25)
Ethernet LAN support $44,000*
Token Ring LAN support $44,000*
</TABLE>
* Choice of any single protocol to be included in the basic ISBN License.
2.5 PERSONAL EARTH STATION OPTIONS
2.5.1 PES EQUIPMENT OPTIONS
Pricing on PES equipment options are shown below. These prices are F.O.B.
Miami.
<TABLE>
<CAPTION>
Equipment Quantity Price
--------- -------- -----
<S> <C> <C>
PES Model 8000 with 1.8 meter antenna Each $7,695
with Circular or Linear, co-pol or x-pol,
5-watt C-band RF Head, 100 feet of IFL
cable, 4-slot Indoor Unit, and one
two-port MPC with junction box.
PES Model 8000 with 1.8 meter antenna Each $6,650
with linear co-pol or X-pol Feed, 1-watt
Ku-band RF Head, 100 feet of IFL cable,
4-slot Indoor Unit, and one tow-port MPC
with junction box
PES 8000 with 1.2 meter antenna with Each $6,365
linear co-pol or x-pol feed, 1 watt
Ku-band RF head, 100 feet of IFL cable,
4-slot indoor unit, and one two-port MPC
with junction box
</TABLE>
9
<PAGE> 49
<TABLE>
<CAPTION>
Equipment Quantity Price
- --------- -------- -----
<S> <C> <C>
PES Model 6500 with 1.2 meter antenna Each $5,985
with linear co-pol or X-pol Feed, 1-watt
Ku-band RF Head, 100 feet of IFL cable,
1-slot Indoor Unit, and one two-port MPC
with junction box
PES Model 4000 equipped with 1.8 meter C-band antenna Each $3,035
with Linear or Circular X-pol of Co-pol receive only feed,
LNA, 100 feet of IFL cable, 1-slot Indoor Unit and one two port
MPC with junction box.
PES Model 4000 equipped with 1.2 meter Ku-band antenna Each $2,935
with Linear X-pol of Co-pol receive only feed,
LNA, 100 feet of IFL cable, 1-slot Indoor Unit and one two port
MPC with junction box.
Multiport Port Cards (MPC) (with two interfaces Each $ 950
and one junction box) (Basic Memory configuration)
Multiport Port Cards (MPC) (with two interfaces Each $1,235
and one junction box) (Extended Memory configuration)
Multiport Card Expansion (two ports per card) Each $ 142
MPC Modem Backup Capability Each $ 334
(User Port and Backup Port per PLC)
Junction Box add on for MPC, CPC or TPC Each $ 237
(supports four I/0 ports) (use for addition of
serial ports to TPC or for ports 5 to 8 on MPC)
Remote Voice Port Modules 16 Kbps (VPMs) Each $1,400
Remote Voice Port Cards (RVPC) (5kbps CELP) 1 - 99 1,710
100-+ $1,235
Turbo Port Card with Ethernet interface (no serial) Each $2,375
(Add a junction box for 2 RS-232 ports
and one PLC for 3rd and 4th serial
port support)
Turbo Port Card with Token Ring LAN interface Each $2,612
(no serial) (Add a junction box for 2 RS-232
ports and one PLC for 3rd and 4th serial
port support)
Turbo Port Card with two serial RS-232 ports Each $1,900
(and junction box) (Add one PLC for
3rd and 4th serial port support)
(Add Token Ring or Ethernet PLC for LAN upgrade)
</TABLE>
10
<PAGE> 50
<TABLE>
<S> <C> <C>
Ethernet PLC for Turbo Port Card Upgrade to LAN Each $ 807
Token Ring PLC for Turbo Port Card Upgrade to LAN Each $ 950
Compact Port Cards (MPC with two RS-232 Each $1,035
interfaces and one junction box) (4 serial
ports max capability)
PES 2.4-meter antenna (equipment only) Each $2,288
additional
Extended Digital Interface Unit (EDIU) Each $1,938
Incremental price for EDIU containing
13 card slots rather than DIU
when ordered as part of complete PES
EDIU Each $3,296
Price for standalone unit
(rather than substitution for DIU)
Includes IFM card but no Port Cards
Two watt Ku-band PES upgraded Each $ 988
(at time of initial PES order)
2.4 meter antenna in lieu Each $2,288
of 1.2 or 1.8 m antenna
(incremental price)
Universal tripod mount Each $ 440
(1.2 meter or 1.8 meter antennas)
Nonpenetrating mount
1.2 meter or 1.8 meter Each $ 880
Lids for NPMs $ 220
Deicing (1.0, 1.2 or 1.8 meter, includes feedhorn heater)
Temperature sensor Each $1,012
Temperature and moisture sensor Each $1,100
Deicing (2.4 meter) (includes feedhorn heater) Each $2,420
RS-232 to V.35 interface box Each $ 308
(per V.35 port)
PES Dual autodial/answer modem Each $ 572
Quickpoint Mount (1.2, 1.8 or 2.4 meter antenna) Each $ 176
IDU Power Supply Unit (PSU) Each $ 95
IOC (Type 2) Each $ 800(2)
</TABLE>
11
<PAGE> 51
<TABLE>
<CAPTION>
Equipment Quantity Price
--------- -------- -----
<S> <C> <C>
RF Head (Type 3; 5-watt C-band) Each $4,512
RF Head (1-watt Ku-band) Each $3,325
IFM (All Types) Each $2,850
DIU without Port Cards (Type 3) Each $2,850
(C-band or Ku-band)
</TABLE>
2.5.2 PES (WITHOUT ANTENNA) SPARES PRICING
PES units may be purchased without antennas for use as spares. The
applicable pricing is the appropriate PES unit pricing for the Buyer's volume
reduced by $650 for a PES with a 1.8 m. antenna and by $450 for a PES with a 1.2
meter antenna
2.5.3 ONSITE TECHNICAL SUPPORT
Onsite HNS technical support, if required by Buyer, will be billed at $750
per day, plus 110% of actual expenses.
2.6 HYBRID AND TELEPHONY EARTH STATION EQUIPMENT OPTIONS
2.6.1 BASEBAND EQUIPMENT
<TABLE>
<S> <C> <C> <C>
CU2 TES Universal Channel Unit each $4,690
PLC-FIM FAX interface module each $ 665
RKMOUNT-KIT TES Rack Mount Kit each $ 196
HDCRK-110v High Density Rack each $3,255
TESHDC2-110v TES 14 slot chassis (wo/RFM) each $4,550
TESCHAS2-110v TES 4 slot chassis w/ RFM each $3,220
RFM RFM module each $2,100
</TABLE>
2.6.2 RADIO FREQUENCY TERMINAL EQUIPMENT
<TABLE>
<S> <C> <C>
ANT-CBX-LXP38 3.8 m C-band Xpol antenna each $12,065
RF-AC20W-CBR 20watt C-band Radio (redundant) each $54,600
IFL IFL Cable 1000 ft spool $ 1,250
INSTALL-KIT TES Installation Kit each $ 875
HES-IFM IFM Module Assembly each $ 2,100
HES-IF-KIT HES If Kit each $ 175
TES-IFL-KIT TES IFL Install Kit each $ 875
RF-CB20-xxx 5 watt to 20 watt RFE Upgrade Kit each $ 9,450
</TABLE>
12
<PAGE> 52
2.7 OPTIONAL TRAINING CLASSES
2.7.1 TRAINING COURSES AT GERMANTOWN, MARYLAND
<TABLE>
<CAPTION>
Course Title Price
------------ -----
<S> <C>
ISBN and PES System Introductory Course (3 days) $ 550 per student
ISBN and PES System Operations Course (5 days) $1,258 per student
ISBN and PES System Maintenance Course (10 days) $3,146 per student
ISBN Network Sizing Course (3 days) $1,153 per student
PES Installation, Operation and Maintenance Course (5 days) $1,571 per student
TES Executive Overview Course (1 day) $ 900 per student
TES System Architecture Course (3 days) $1,350 per student
TES Operations Course (7 days) $3,150 per student
TES Installation and Maintenance Course (5 days) $2,250 per student
TES Network Engineering and Management Course (5 days) $2,250 per student
</TABLE>
2.7.2 TRAINING COURSE AT BUYER SITE
<TABLE>
<CAPTION>
Course Title Price
------------ -----
<S> <C>
ISBN and PES System Introductory Course (3 days) $ 4,840
(10 students maximum)
ISBN and PES System Operations Course (5 days) $ 7,040
(8 students maximum)
ISBN and PES System Maintenance Course (10 days) $ 9,680
(4 students maximum)
ISBN Hub Earth Station Operations and Maintenance Course
(2 days) (10 students maximum) $ 6,600
PES Installation, Operation and Maintenance Course (5 days) $ 7,040
(10 students maximum)
ISBN Network Sizing Course (3 days) (8 students maximum) $ 4,840
TES System Architecture (3 days)(8 students maximum) $ 8,900
TES Operations (7 days)(8 students maximum) $11,900
TES Maintenance and Installation Course (5 days) (8 students maximum) $10,900
TES Network Engineering and Management Course (5 days)( 8 students maximum) $11,900
</TABLE>
Buyer must make available the necessary equipment to support the training
class at the Buyer's facility. Price per course assumes the maximum number of
students indicated. The incremental cost of any additional students shall be
equal to the cost of the required additional material. The reasonable travel,
food, and lodging expenses incurred by the instructor will be billed at HNS'
actual cost, plus 15%.
13
<PAGE> 53
2.8 ADDITIONAL DOCUMENTATION OPTIONS
<TABLE>
<CAPTION>
Title Price Per Copy
----- --------------
<S> <C>
ISBN
System Description and Theory of Operations $ 100
SCC Operations Guide $ 100
System Operations and Maintenance Manual $ 100
Quick Reference Manual $ 50
IF Subsystem Operations and Maintenance Manual $ 75
Voice Port Cluster Operations and Maintenance Manual $ 50
Data Port Cluster Operations and Maintenance Manual $ 50
Network Control Cluster Operations and Maintenance Manual $ 50
System Interface Cluster Operations and Maintenance Manual $ 50
Call Connection Cluster Operations and Maintenance Manual $ 50
PES User's Guide $ 10
PES Service and Installation Manual $ 100
PES Remote Site Preparation Specification $ 75
TES
Standard O&M Set $1,550
Standard NCS Set $3,000
Standard Reference Set $3,500
</TABLE>
The price of the TES RF System Operations and Maintenance Manual depends
upon the specific RF earth station purchased.
14
<PAGE> 1
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------ -----------------------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA
1993 1994 1995 1995 1995 1996 1996
------- ------- ------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPUTATION OF EARNINGS:
Registrant's total earnings
(loss) before fixed
charge additions......... $(4,336) $ 3,188 $(9,635) $ (12,443) $ (5,156) $ (4,634) $(3,679)
------- ------- ------- -------- ------- ------- -------
COMPUTATION OF FIXED
CHARGES:
Interest................... 6,676 8,437 16,518 19,326 12,398 17,824 16,869
------- ------- ------- -------- ------- ------- -------
Total earnings (loss) and
fixed charges............ $ 2,340 $11,625 $ 6,883 $ 6,883 $ 7,242 $ 13,190 $13,190
======= ======= ======= ======== ======= ======= =======
Ratio of earnings to fixed
charges.................. N/A 1.38 N/A N/A N/A N/A N/A
======= ======= ======= ======== ======= ======= =======
Deficiency of Earnings to
fixed charges............ $(4,336) N/A $(9,635) $ (12,443) $ (5,156) $ (4,634) $(3,679)
======= ======= ======= ======== ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 23.1
<PAGE> 2
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Pre-Effective Amendment No. 1 to
Registration Statement No. 333-12977 of IMPSAT Corporation of our report dated
February 23, 1996, appearing in the Prospectus, which is part of such
Registration Statement.
We also consent to the reference to us under the headings "Summary
Financial Data," "Selected Financial and Other Data" and "Experts" in such
Prospectus.
DELOITTE & TOUCHE LLP
Miami, Florida
November 20, 1996
<PAGE> 1
EXHIBIT 23.2
<PAGE> 2
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Pre-Effective Amendment No. 1 to
Registration Statement No. 333-12977 of IMPSAT Corporation of our report on the
consolidated financial statements of IMPSAT S.A. and its subsidiaries, dated
February 23, 1996, appearing in the Prospectus, which is part of such
Registration Statement.
We also consent to the reference to us under the headings "Summary
Financial Data," "Selected Financial and Other Data" and "Experts" in such
Prospectus.
DELOITTE & TOUCHE
Buenos Aires, Argentina
November 20, 1996
<PAGE> 1
EXHIBIT 23.4
[NICHOLSON y CANO ABOGADOS LETTERHEAD]
November 15, 1996
Securities and Exchange Commission
Division Of Corporate Finance
450 Fifth Avenue, N.W.
Washington, D.C. 20549
Re: File No. 333-12977 -- Pre-Effective Amendement
No. 1 to Registration Statement on Form S-4 of IMPSAT Corporation
Ladies and Gentlemen:
In connection with the Pre-Effective Amendment No. 1 to
the Registration Statement on Form S-4 of IMPSAT Corporation (the "Registration
Statement"), to be filed under the Securities Act of 1933, as amended ("1933
Act"), we hereby consent to the reference to us under captions "Available
Information" and "Risk Factors -- Holding Company Structure: Effective
Subordination of the Notes" in the Prospectus forming a part of the
Registration Statement. In giving this consent, we do not thereby admit that
we are within the category of persons whose consent is required under Section 7
of the 1933 Act or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ MARIA FREGUAS
----------------------------
Maria Freguas
<PAGE> 1
EXHIBIT 25
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) . . . / /
THE BANK OF NEW YORK
(Exact Name of Trustee as Specified in its Charter)
NEW YORK 13-5160382
(State of Incorporation (I.R.S. Employer
if not a National Bank) Identification No.)
48 WALL STREET, NEW YORK, N.Y. 10286
(Address of Principal Executive Offices) (Zip Code)
IMPSAT CORPORATION
(Exact Name of Obligor as Specified in its Charter)
DELAWARE 53-1910372
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
ALFEREZ PAREJA 256
(1107) BUENOS AIRES, ARGENTINA NOT APPLICABLE
(Address of Principal Executive Offices) (Zip Code)
12 1/8% SENIOR GUARANTEED NOTES DUE 2003
(TITLE OF THE INDENTURE SECURITIES)
<PAGE> 3
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Name Address
---------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the 2 Rector Street, New
State of New York York, NY 10006 and
Albany, NY 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New
York, NY 10045
Federal Deposit Insurance 550 17th Street, N.W.
Corporation Washington, D.C. 20429
New York Clearing House
Association New York, New York
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 4.)
16. LIST OF EXHIBITS.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to
exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to
Form T-1, filed with Registration Statement No. 33-6215, Exhibits
1a and 1b to Form T-1 filed with Registration Statement No.
33-21672 and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
2
<PAGE> 4
4. A copy of the existing By-Laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by section 321(b) of the Act.
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
3
<PAGE> 5
NOTE
Inasmuch as this Form T-1 is being filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Bank of New York, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
The City of New York, and State of New York, on the 4th day of September, 1996.
THE BANK OF NEW YORK
By /s/
--------------------------------
Assistant Treasurer
4
<PAGE> 6
Exhibit 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939 in connection with the proposed issue of 12 1/8% Senior Guaranteed Notes
Due 2003 by IMPSAT Corporation, we hereby consent that reports of examinations
by Federal, State, Territorial, or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
THE BANK OF NEW YORK
By
--------------------------------
Assistant Treasurer
Dated: September 4, 1996
5
<PAGE> 7
State of New York )
City of New York ) ss.:
County of New York )
Copy of Advertisement
[LOGO]
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1996,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin............ $ 2,461,550
Interest-bearing balances..................................... 835,563
Securities:
Held-to-maturity securities................................... 802,064
Available-for-sale securities................................. 2,051,263
Federal funds sold in domestic offices of the bank:
Federal funds sold............................................ 3,885,475
Loans and lease financing receivables:
Loans and leases, net of unearned income........... 27,820,159
LESS: Allowance for loan and lease losses.......... 509,817
LESS: Allocated transfer risk reserve.............. 1,000
Loans and leases, net of unearned income, allowance,
and reserve................................................. 27,309,342
Assets held in trading accounts................................. 837,118
Premises and fixed assets (including capitalized losses)........ 614,567
Other real estate owned......................................... 51,631
Investments in unconsolidated subsidiaries and associated
companies..................................................... 225,158
Customers' liability to this bank on acceptances outstanding.... 800,375
Intangible assets............................................... 436,668
Other assets.................................................... 1,247,908
-----------
Total assets.................................................... $41,558,682
===========
LIABILITIES
Deposits:
In domestic offices........................................... $18,851,327
Noninterest-bearing................................ 7,102,645
Interest-bearing................................... 11,748,682
In foreign offices, Edge and Agreement subsidiaries,
and IBFs.................................................... 10,965,604
Noninterest-bearing................................ 37,855
Interest-bearing................................... 10,927,749
Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased....................................... 1,224,886
Securities sold under agreements to repurchase................ 29,728
Demand notes issued to the U.S. Treasury........................ 118,870
Trading liabilities............................................. 673,944
Other borrowed money:
With original maturity of one year or less.................... 2,713,248
With original maturity of more than one year.................. 20,780
Bank's liability on acceptances executed and outstanding........ 803,292
Subordinated notes and debentures............................... 1,022,860
Other liabilities............................................... 1,590,564
-----------
Total liabilities............................................... 38,015,103
-----------
EQUITY CAPITAL
Common stock.................................................... 942,284
Surplus......................................................... 525,666
Undivided profits and capital reserves.......................... 2,078,197
Net unrealized holding gains (losses) on available-for-sale
securities.................................................... 3,197
Cumulative foreign currency translation adjustments............. (5,765)
-----------
Total equity capital............................................ 3,543,579
-----------
Total liabilities and equity capital............................ $41,558,682
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank, do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Penyi ) Directors
Alan R. Griffith )
Anthony Mroz, being duly sworn, says that he is the
Principal Clerk of the publisher of the AMERICAN
BANKER, a daily newspaper, published at One State Street
Plaza, in the city of New York, County of New York, State of
New York, and further states that the advertisement hereto
annexed has been regularly published in the said
AMERICAN BANKER on
May 22, 1996
/s/ ANTHONY MROZ
------------------------------
Principal Clerk
Subscribed and sworn to before me,
this 22nd day of May, 1996
/s/ DAWN BROWN
------------------------
DAWN BROWN
NOTARY PUBLIC, State of New York
No. 01 BR5021063
Qualified in Kings County
Commission Expires on December 6, 1997
