Document:

exv4w8

 

EXHIBIT 4.8

 

WARRANT AGREEMENT

between

IMPSAT FIBER NETWORKS, INC.

and

THE BANK OF NEW YORK,

as Warrant Agent

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 
	 	 	 	Page
	 	 	 	

	Parties
	 	 	1	 
	Recitals
	 	 	1	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	 	SECTION 1.01.          DEFINITIONS
	 	 	1	 
	 	SECTION 1.02.          TERMS GENERALLY
	 	 	4	 
	 	SECTION 1.03.          ACCOUNTING TERMS AND DETERMINATIONS
	 	 	5	 
	ARTICLE II ISSUANCE, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES
	 	 	5	 
	 	SECTION 2.01.          FORM OF WARRANT CERTIFICATES
	 	 	5	 
	 	SECTION 2.02.          EXECUTION OF WARRANT CERTIFICATES
	 	 	5	 
	 	SECTION 2.03.          ISSUANCE, DELIVERY AND REGISTRATION OF WARRANT CERTIFICATES
	 	 	6	 
	 	SECTION 2.04.          TRANSFER AND EXCHANGE OF WARRANT CERTIFICATES
	 	 	6	 
	ARTICLE III WARRANT PRICE, EXPIRATION DATE AND EXERCISE OF WARRANTS
	 	 	8	 
	 	SECTION 3.01.          WARRANT PRICE; EXPIRATION DATE
	 	 	8	 
	 	SECTION 3.02.          EXERCISE OF WARRANTS; COMMON STOCK RECORD DATE
	 	 	8	 
	 	SECTION 3.03.          NO FRACTIONAL SHARES TO BE ISSUED
	 	 	10	 
	 	SECTION 3.04.          ACQUISITION OF WARRANTS BY THE COMPANY; CANCELLATION OF WARRANTS
	 	 	11	 
	ARTICLE IV ADJUSTMENT OF WARRANT PRICE, SHARES OF COMMON STOCK
SUBJECT TO PURCHASE AND NUMBER OF WARRANTS	 	 	11	 
	 	SECTION 4.01.          ADJUSTMENT OF WARRANT PRICE
	 	 	11	 
	 	SECTION 4.02.          ELECTION TO ADJUST WARRANTS INSTEAD OF SHARES PER WARRANT
	 	 	17	 
	 	SECTION 4.03.          NO FRACTIONAL WARRANTS TO BE ISSUED
	 	 	17	 
	 	SECTION 4.04.          RIGHTS UPON CONSOLIDATION, MERGER, SALE, TRANSFER OR RECLASSIFICATION
	 	 	18	 
	 	SECTION 4.05.          COVENANT TO RESERVE SHARES FOR ISSUANCE ON EXERCISE
	 	 	19	 
	 	SECTION 4.06.          CONDITION PRECEDENT TO REDUCTION OF WARRANT PRICE BELOW PAR VALUE OF
                                 SHARES OF COMMON STOCK; COMPLIANCE WITH GOVERNMENTAL  REQUIREMENTS;
                                 SUSPENSION OF EXERCISE OF WARRANTS
	 	 	20	 
	 	SECTION 4.07.          PAYMENT OF TAXES ON STOCK CERTIFICATES ISSUED UPON EXERCISE
	 	 	20	 
	 	SECTION 4.08.          WARRANT AGENT NOT RESPONSIBLE FOR ADJUSTMENTS OR VALIDITY OF STOCK
	 	 	20	 
	 	SECTION 4.09.          STATEMENTS ON WARRANTS
	 	 	21	 
	 	SECTION 4.10.          NO DILUTION OR IMPAIRMENT
	 	 	21	 
	ARTICLE V OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS
	 	 	21	 
	 	SECTION 5.01.          ENFORCEMENT OF RIGHTS
	 	 	21	 
	 	SECTION 5.02.          NO RIGHTS AS STOCKHOLDERS
	 	 	21	 
	 	SECTION 5.03.          MUTILATED OR MISSING WARRANT CERTIFICATES
	 	 	22	 
	 	SECTION 5.04.          OBTAINING STOCK EXCHANGE LISTINGS
	 	 	22	 
	 	SECTION 5.05.          RULES 144 AND 144A
	 	 	22	 
	 	SECTION 5.06.          1933 ACT AND APPLICABLE STATE SECURITIES LAWS
	 	 	22	 
	 	SECTION 5.07.          OBTAINING OF GOVERNMENTAL APPROVALS
	 	 	23	 
	 	SECTION 5.08.          DELIVERY OF PROSPECTUSES
	 	 	23	 
	ARTICLE VI OTHER COVENANTS OF COMPANY
	 	 	23	 
	 	SECTION 6.01.          RESTRICTIONS ON PERFORMANCE
	 	 	23	 

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	 	SECTION 6.02.          MODIFICATION OF RELATED AGREEMENTS
	 	 	23	 
	ARTICLE VII CONCERNING THE WARRANT AGENT
	 	 	24	 
	 	SECTION 7.01.          PAYMENT OF CERTAIN TAXES
	 	 	24	 
	 	SECTION 7.02.          CHANGE OF WARRANT AGENT
	 	 	24	 
	 	SECTION 7.03.          COMPENSATION; FURTHER ASSURANCES
	 	 	26	 
	 	SECTION 7.04.          RELIANCE ON COUNSEL
	 	 	26	 
	 	SECTION 7.05.          PROOF OF ACTIONS TAKEN
	 	 	26	 
	 	SECTION 7.06.          CORRECTNESS OF STATEMENTS
	 	 	26	 
	 	SECTION 7.07.          VALIDITY OF AGREEMENT
	 	 	27	 
	 	SECTION 7.08.          USE OF AGENTS
	 	 	27	 
	 	SECTION 7.09.          LIABILITY OF WARRANT AGENT
	 	 	27	 
	 	SECTION 7.10.          LEGAL PROCEEDINGS; EXPENSES
	 	 	27	 
	 	SECTION 7.11.          OTHER TRANSACTIONS IN SECURITIES OF THE COMPANY
	 	 	27	 
	 	SECTION 7.12.          ACTIONS AS AGENT
	 	 	28	 
	 	SECTION 7.13.          APPOINTMENT AND ACCEPTANCE OF AGENCY
	 	 	28	 
	ARTICLE VIII MISCELLANEOUS PROVISIONS
	 	 	28	 
	 	SECTION 8.01.          AMENDMENTS, ETC
	 	 	28	 
	 	SECTION 8.02.          SUCCESSORS AND ASSIGNS
	 	 	29	 
	 	SECTION 8.03.          NOTICES
	 	 	29	 
	 	SECTION 8.04.          APPLICABLE LAW
	 	 	29	 
	 	SECTION 8.05.          BENEFITS OF THIS AGREEMENT
	 	 	30	 
	 	SECTION 8.06.          REGISTERED WARRANT HOLDERS
	 	 	30	 
	 	SECTION 8.07.          INSPECTION OF AGREEMENT
	 	 	30	 
	 	SECTION 8.08.          HEADINGS
	 	 	30	 
	 	SECTION 8.09.          COUNTERPARTS
	 	 	30	 
	 	EXHIBIT A                FORM OF WARANT CERTIFICATE
	 	 	A-1	 

- ii -

 

WARRANT AGREEMENT

     THIS WARRANT AGREEMENT (this “Agreement”) dated as of March 25, 2003
between IMPSAT Fiber Networks, Inc., a Delaware corporation (including, on or
after the effective date of the Plan, as defined herein, its successor, as
reorganized pursuant to Chapter 11, Title 11 of the United States Bankruptcy
Code (the “Bankruptcy Code”)) (the “Company”), and the Warrant Agent as defined
herein.

     WHEREAS, a plan of reorganization under Chapter 11 of the Bankruptcy Code
for the Company (the “Plan”) was confirmed on December 11, 2002 by order of the
United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”), and has become effective; and

     WHEREAS, the Plan provides for the execution and delivery of this
Agreement by the Company and the issuance of the Warrants (as defined herein)
on the terms and subject to the conditions herein set forth.

     NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     SECTION 1.01.      Definitions. As used in this Agreement, the following terms
shall have the following respective meanings (all terms defined herein in the
singular are to have the correlative meanings when used in the plural and vice
versa):

     1933 Act: shall mean the Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulations promulgated
thereunder.

     Bankruptcy Code: shall have the meaning specified in the preamble.

     Bankruptcy Court: shall have the meaning specified in the recitals.

     Board of Directors: shall mean the Board of Directors of the Company.

     Business Day: shall mean any day of the week other than a Saturday,
Sunday or a day on which commercial banks in New York City are authorized or
required by law to remain closed.

     Case: shall mean the case filed in the Bankruptcy Court entitled In re
IMPSAT Fiber Networks, Inc., Debtor Chapter 11 Case No. 02-12882 (REG) under
the Bankruptcy Code.

     Cashless Exercise and Cashless Exercise Ratio: shall have the meanings
specified in Section 3.02 herein.

 

 

     Commission: shall mean the U.S. Securities and Exchange Commission.

     Common Stock: shall mean the Company’s common stock, par value $0.01 per
share, as constituted on the Distribution Date and any stock into which such
common stock may thereafter be converted or changed, and also shall include any
other common stock of the Company of any other class. References herein and in
the Warrant to Common Stock outstanding “on a fully diluted basis” at any time
means the number of shares of Common Stock then issued and outstanding,
assuming full conversion, exercise and exchange of all Convertible Securities
and Rights that are (or may become) exchangeable for, or exercisable or
convertible into, Common Stock, including the Warrants.

     Company: shall have the meaning specified in the preamble.

     Control: shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
Controlling and Controlled shall have meanings correlative thereto.

     Convertible Securities: shall mean evidences of indebtedness, interests
other securities or rights that are exchangeable for or exercisable or
convertible into shares of Common Stock, either immediately or upon the arrival
of a specified date or the occurrence of a specified event.

     Distribution Date: shall mean the date of the original issuance of the
Warrant hereunder, which shall be March 25, 2003.

     Exchange Act: means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

     Exercise Date: shall have the meaning specified in Section 3.02(a).

     Expiration Date: shall mean 5:00 p.m., New York time, on the eighth
anniversary of the Initial Exercise Date.

     Final Order: shall mean an order, judgment, ruling or other decree issued
and entered by the Bankruptcy Court (as entered on the docket in the Case), or
any state or federal court or other tribunal located in one of the states,
territories, or possessions of the United States of America or the District of
Columbia, which judgment, order or other decree has not been reversed, stayed,
modified or amended, and as to which (x) the time to appeal or to seek review,
rehearing or certiorari has expired and as to which no appeal or petition for
review, rehearing or certiorari is pending or has been timely filed, or (y) any
appeal that has been or may be taken or any petition for certiorari that has
been or may be filed has been resolved by the highest court to which the order or
judgment was appealed or from which certiorari was sought.

- 2 -

 

     GAAP: shall mean United States generally accepted accounting principles,
consistently applied throughout the relevant period.

     HSR Act: shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

     Initial Exercise Date: shall mean the date on which the Plan becomes
effective pursuant to a Final Order of the Bankruptcy Court.

     Lien: shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset that it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.

     Officer’s Certificate: shall have the meaning specified in Section
4.01(e).

     Option Plans: shall mean the Company’s 2003 Stock Option Plan and any
stock option plan, stock grant plan, stock purchase, stock option or employment
arrangement approved from time to time by the Board of Directors, and any
modification, renewal or extension thereof if approved by the Board of
Directors.

     Person: shall mean a natural person, a corporation, a partnership, a
trust, a joint venture, a governmental authority or any other entity or
organization.

     Plan: shall have the meaning specified in the recitals.

     Registration Rights Agreement: shall mean the Registration Rights
Agreement, dated as of the date hereof, among the Company, IMPSAT S.A. and the
holders listed on the signature pages thereto.

     Related Agreements: shall mean the Registration Rights Agreement, the
certificate of incorporation of the Company and the by-laws of the Company.

     Rights: shall mean any rights, options or warrants to subscribe for or
purchase, or any securities convertible into or exchangeable for, shares of
Common Stock.

     Rule 144: shall mean Rule 144 (or any similar provision then in force)
under the 1933 Act.

     Subsidiary: shall mean, with respect to any Person, (a) any corporation
more than 50% of the outstanding securities having ordinary voting power of
which shall at the time be owned or controlled, directly or indirectly, by such
Person and/or by one or more of its Subsidiaries, or (b) any company,
partnership, association, joint venture or similar business organization more
than 50% of the ownership interests having ordinary voting power of which shall at the time be directly or indirectly owned and
controlled by such Person and/or by one or more of its Subsidiaries.

- 3 -

 

     Warrant Agent: shall mean The Bank of New York or any successor to it
appointed pursuant to Section 7.02.

     Transfer Restricted Security: shall mean any Warrant (and any Warrant
Stock underlying such Warrant) issued hereunder other than pursuant to the
exemption from registration under the 1933 Act provided under Section 1145(a)
of the Bankruptcy Code, until such security ceases to be a Transfer Restricted
Security as provided under Section 2.04 hereof.

     Warrant Agent’s Office: shall mean, for so long as The Bank of New York
shall be the Warrant Agent, the address specified in Section 8.03 and,
thereafter, the office or agency maintained by the successor Warrant Agent in
the Borough of Manhattan, New York, New York or the principal office of the
successor Warrant Agent.

     Warrant Certificates: shall have the meaning specified in Section 2.01.

     Warrant Price: shall mean a price of $15.00 for each share of Common
Stock issuable upon exercise of a Warrant, as adjusted pursuant to Article IV.

     Warrant Register: shall have the meaning specified in Section 2.03.

     Warrant Shares: shall have the meaning specified in Section 4.01(h).

     Warrant Stock: shall mean any shares of Common Stock issuable from time
to time upon exercise of any Warrant.

     Warrants: shall mean the Warrants to purchase Common Stock, issued
pursuant to this Agreement, up to an aggregate (as adjusted pursuant to Article
IV) of 3,155,244 shares of Common Stock (which represents, as of the
Distribution Date, 15% of the outstanding shares of Common Stock on a fully
diluted basis), and any Warrant issued upon transfer, division or combination
of, or in substitution for, any thereof.

     SECTION 1.02.      Terms Generally. The definitions of terms herein shall
apply to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation.” Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, and (c) all references herein to Articles, Sections (or subsections), Exhibits, Annexes and Schedules shall be construed to refer
to Articles and Sections (or subsections) of, and Exhibits, Annexes and
Schedules to, this Agreement or the Warrant, as the case may be, and (e) unless
the context otherwise requires, the words “asset” and “property” shall be
construed to have

- 4 -

 

the same meaning and effect and to refer to any tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

     SECTION 1.03.      Accounting Terms and Determinations. Except as otherwise
may be expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required hereby to be delivered to any Person shall be
prepared, in accordance with GAAP.

ARTICLE II

ISSUANCE, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES

     SECTION
2.01.      Form of Warrant Certificates. The Warrants shall be
evidenced by certificates in definitive fully registered form (the “Warrant
Certificates”) substantially in the form of Exhibit A hereto, and designated as
Warrants to purchase Common Stock of IMPSAT Fiber Networks, Inc., and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required, in accordance with the advice
of counsel to the Company, to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system, or to conform to customary
usage, or as may, consistently herewith, be determined to be necessary or
appropriate by the Company, as evidenced by the execution by the Company’s
officers of the Warrant Certificates. The Warrant Certificates shall be in a
machine printable format and in a form reasonably satisfactory to the Warrant
Agent. Each Warrant Certificate shall evidence the right, subject to the
provisions of this Agreement and of the Warrant Certificate, to purchase one
share of Common Stock at the Warrant Price for each Warrant represented by
such Warrant Certificate, subject to adjustment pursuant to the provisions of
Article IV.

     SECTION
2.02.      Execution of Warrant Certificates. Each Warrant
Certificate, whenever issued, shall be dated as of the date of countersignature
thereof by the Warrant Agent (either upon initial issuance or upon exchange,
substitution or transfer), shall be signed manually by, or bear the facsimile
signature of, the Chairman of the Board, the Chief Executive Officer, the
President or a Vice President of the Company, shall have the Company’s seal or
a facsimile thereof affixed or imprinted thereon and shall be attested by the
manual or facsimile signature of the Secretary or an Assistant Secretary of the
Company. In case any officer of the Company whose manual or facsimile
signature has been placed upon any Warrant Certificate shall have ceased to be
such before such Warrant Certificate is issued, it may be issued with the same effect as if such officer had not ceased to be
such at the date of issuance. Warrant Certificates shall be countersigned by
the Warrant Agent and shall not be valid for any purpose unless so
countersigned. Warrant Certificates may be countersigned by the Warrant Agent,
with the same effect, notwithstanding that any Persons whose manual or
facsimile signatures appear thereon as proper officers of the Company shall
have ceased to be such officers at the time of such countersignature. Any
Warrant Certificate may be signed on behalf of the Company by any Person who,
at the actual date of the execution of such Warrant

- 5 -

 

Certificate, shall be a
proper officer of the Company to sign such Warrant Certificate, although at the
date of the execution of this Agreement any such Person was not such an
officer.

     SECTION 2.03.      Issuance, Delivery and Registration of Warrant Certificates.
The Company shall sign and deliver to the Warrant Agent, and the Warrant Agent
shall, and the Company shall cause the Warrant Agent to, countersign and
deliver to

     (a)  Nortel Networks Limited or its assignees, on the Distribution Date,
two Warrant Certificates representing 953,689 Warrants and 1,714,286 Warrant,
respectively;

     (b)  Sirti Argentina S.A. or its assignees, on the Distribution Date, 2
Warrant Certificates representing 238,045 Warrants and 82,276 Warrants,
respectively;

     (c)  Citibank N.A. or its assignees, on the Distribution Date, Warrant
Certificates representing 82,802 Warrants;

     (d)  Hughes Network Systems or its assignees, on the Distribution Date,
Warrant Certificates representing 33,934 Warrants;

     (e)  DMC Stratex Networks, Inc. or its assignees, on the Distribution Date,
Warrant Certificates representing 14,831 Warrants;

     (f)  Compaq Financial Services Argentina S.R.L. or its assignees, on the
Distribution Date, Warrant Certificates representing 10,682 Warrants;

     (g)  El Camino Resources de America Latina, Inc. or its assignees, on the
Distribution Date, Warrant Certificates representing 23,249 Warrants;

     (h)  Compaq Financial Services Ltda. or its assignees, on the Distribution
Date, Warrant Certificates representing 1,450 Warrants; and

     The Warrant Agent shall, and the Company shall cause the Warrant Agent to,
countersign and deliver Warrant Certificates upon exchange or transfer of or
substitution for, one or more previously countersigned Warrant Certificates as
hereinafter provided. The Warrant Agent shall maintain the Company’s books and
records (the “Warrant Register”) for the registration of Warrant Certificates
(including registration of the Warrant Certificates described above) and the
registration of transfers of Warrant Certificates after the Distribution Date.
The Company shall sign and deliver to the Warrant Agent an adequate supply of Warrant Certificates for the Warrant
Agent to perform its obligations pursuant to this Section 2.03 hereof.

     SECTION 2.04.      Transfer and Exchange of Warrant Certificates.

     (a)      Notwithstanding anything to the contrary contained herein, neither any
Warrant nor any Warrant Stock may be assigned or otherwise transferred to any
Person unless such transfer is made pursuant to an effective registration
statement or otherwise in accordance with the requirements of the 1933 Act and
applicable state securities laws.

- 6 -

 

Until the Transfer Restricted Securities
cease to be Transfer Restricted Securities as hereinafter provided,
certificates evidencing Transfer Restricted Securities (and only such
certificates) will bear a legend in substantially the following form:

	 
	THE ISSUANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”)
OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE, AND
SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED OTHER
THAN IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND THE RULES AND
REGULATIONS THEREUNDER OR AN EXEMPTION THEREFROM AND
FROM ANY APPLICABLE STATE SECURITIES LAWS.

	 
	THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT
DATED AS OF MARCH 25, 2003, AMONG THE COMPANY,
IMPSAT S.A., THE HOLDERS LISTED ON EXHIBIT A THERETO
AND SUCH OTHER PARTIES WHO MAY BE MADE A SIGNATORY
THERETO FROM TIME TO TIME, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY.

     The Company shall instruct the Warrant Agent in writing of the Warrants
that should be so legended and shall supply the Warrant Agent with such
legended Warrant Certificates. For purposes of this Agreement, any such
securities shall cease to be Transfer Restricted Securities (i) when they have
been sold or otherwise disposed of (unless such securities are thereby acquired
and held by a Person who is an affiliate (within the meaning of Rule 144) of
the Company) pursuant to an effective registration statement under the 1933
Act, including any such registration statement filed pursuant to the
Registration Rights Agreement, (ii) when they may be distributed to the public
pursuant to Rule 144 by a Person who is not an affiliate (within the meaning of
Rule 144) of the Company, or (iii) when they have been distributed to the
public pursuant to Rule 144.

     (b)        Subject to the first sentence of subsection (a) above, the Warrant
Agent, from time to time, shall register the transfer of all or any whole
number of Warrants covered by any outstanding Warrant Certificates in the
Warrant Register upon surrender at the Warrant Agent’s Office of Warrant
Certificates accompanied by a written instrument or instruments of transfer,
the form of assignment set forth on the Warrant Certificate or any other form
satisfactory to the Company and the Warrant Agent, duly executed by the
registered Warrant holder or such holder’s attorney duly authorized in writing.
Upon any such registration of transfer, a new Warrant Certificate shall be

- 7 -

 

countersigned by the Warrant Agent and issued to the transferee and the
surrendered Warrant Certificate shall promptly be canceled by the Warrant
Agent. Warrant Certificates may be exchanged at the option of the holder
thereof, upon surrender, properly endorsed by the registered holders, at the
Warrant Agent’s Office, with written instructions, for other Warrant
Certificates countersigned by the Warrant Agent representing in the aggregate
the same number of Warrants. The Company or the Warrant Agent may require the
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any such exchange or transfer.

ARTICLE III

WARRANT PRICE, EXPIRATION DATE AND EXERCISE OF WARRANTS

     SECTION 3.01.      Warrant Price; Expiration Date. Each Warrant Certificate
shall entitle the registered holder thereof, subject to the provisions thereof
and of this Agreement, to purchase from the Company at any time commencing at
the opening of business on the Initial Exercise Date and before 5:00 p.m., New
York time, on the Expiration Date, one share of Common Stock for each of the
Warrants specified therein, at the Warrant Price, subject to adjustment as
provided in Article IV hereof, payable in full at the time of purchase. Each
Warrant not exercised during the applicable period set forth above shall become
void.

     SECTION 3.02.      Exercise of Warrants; Common Stock Record Date.

     (a)      Commencing at the opening of business on the Initial Exercise Date,
Warrants may be exercised by the registered holders thereof as provided in this
Section 3.02. To exercise any Warrant, the registered holder thereof (A) must
surrender the Warrant Certificate evidencing such Warrant at the Warrant
Agent’s Office with the Election to Exercise form set forth on the Warrant
Certificate duly completed and executed by the registered holder thereof or
such holder’s attorney duly authorized in writing, (B) must pay in full to the
Warrant Agent for the account of the Company (i) in cash (including by wire
transfer to an account designated by the Company), (ii) by certified or
official bank check, (iii) by Cashless Exercise (as defined below) if otherwise
in compliance with applicable law, or (iv) by any combination of the foregoing,
the Warrant Price for each share of Common Stock as to which such Warrant is
exercised and any applicable taxes that the Company is not required to pay as
set forth in Section 4.07 or 7.01, (C) if applicable, must have satisfied any
necessary filing requirements under the HSR Act, in respect of its acquisition of the
shares of Common Stock upon such exercise and the waiting period under such HSR
Act shall have expired or been terminated without objection to such
acquisition, and (D) if such exercise would cause control of the Company to
change for purposes of the rules, regulations and policies of the Federal
Communications Commission (the “FCC”), must have received the consent or
approval of the FCC to such change in control (which consent or approval the
Company agrees to use its reasonable efforts to assist and cooperate with such
registered holder in promptly seeking and obtaining). The date on which such
holder satisfies all of those requirements is the “Exercise Date.” A “Cashless
Exercise” shall

- 8 -

 

mean an exercise of a Warrant in accordance with the
immediately following two sentences. To effect a Cashless Exercise, the holder
may exercise a Warrant or Warrants without payment of the Warrant Price in cash
by surrendering such Warrant or Warrants (represented by one or more Warrant
Certificates) and, in exchange therefor, receiving such number of shares of
Common Stock equal to the product of (1) that number of shares of Common Stock
for which such Warrant or Warrants are exercisable and which would be issuable
in the event of an exercise with full payment in cash of the Warrant Price and
(2) the Cashless Exercise Ratio (as defined below). The “Cashless Exercise
Ratio” shall equal a fraction, the numerator of which is the excess of the
current market price (calculated as set forth in Section 4.01(e) herein) per
share of Common Stock on the date of exercise over the Warrant Price per share
of Common Stock as of the date of exercise and the denominator of which is the
current market price (calculated as set forth in Section 4.01(e) herein) per
share of Common Stock on the date of exercise. A registered Warrant holder may
exercise all or any number of whole Warrants represented by a Warrant
Certificate. Upon surrender of a Warrant Certificate representing more than
one Warrant in connection with a holder’s option to elect a Cashless Exercise,
such holder must specify the number of Warrants for which such Warrant
Certificate is to be exercised (without giving effect to such Cashless
Exercise). All provisions of this Agreement shall be applicable with respect
to a Cashless Exercise of a Warrant Certificate for less than the full number
of Warrants represented thereby.

     (b)        Subject to the provisions of subsection (e) below and Section 4.07
hereof, as soon as practicable (and in any event within five (5) Business Days)
after the Exercise Date, the Warrant Agent shall promptly requisition from the
transfer agent of the Common Stock and deliver to or upon the order of such
registered Warrant holder a certificate or certificates for the number of full
shares of Common Stock to which such Warrant holder is entitled, registered in
such name or names as may be directed by such holder (if other than to such
registered holder, (i) to the extent such transfer is not validly restricted
and (ii) upon payment of any transfer taxes that are required to be paid by
such holder or its transferees in connection with any transfer by such
registered holder), together with cash, as provided in Section 3.03 hereof, in
respect of any fractional shares, and, if the number of Warrants represented by
a Warrant Certificate shall not have been exercised in full, a new Warrant
Certificate delivered to the holder of the Warrant Certificate or to such
holder’s duly authorized assignee, countersigned by the Warrant Agent, for the
number of Warrants remaining unexercised, together with cash, as provided in
Section 4.03 hereof, in respect of the balance of any fractional Warrants
represented by the surrendered Warrant Certificate. Any shares of Common Stock
issued upon a Warrant holder’s exercise of any Warrant shall be validly
authorized and issued,fully paid, non-assessable, free of preemptive rights and free from all
taxes (other than those specified in clause (ii) above), liens, charges,
security interests and claims created or incurred by the Company in respect of
the issuance thereof.

     (c)      A Warrant shall be deemed to have been exercised immediately prior to
the close of business on the Exercise Date. Each Person in whose name any such
certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the holder of record of such shares at the close of
business on the Exercise Date, irrespective of the date of delivery of such
share certificate, except that, if the Exercise

- 9 -

 

Date is a date when the stock transfer books of the Company are closed, such Person shall be deemed to have
become the holder of such shares at the close of business on the next
succeeding date on which the stock transfer books are open (whether before or
after the Expiration Date).

     (d)        The Warrant Agent shall promptly notify both the Company and the
transfer agent of the Common Stock in writing of any exercise of any Warrants,
of the number of Warrants being exercised, the amount of money (if any)
received by it upon the exercise of the Warrants and (after receipt, where
applicable, from the Company of the Cashless Exercise Ratio) of the number of
shares delivered upon the exercise of such Warrants, and shall pay to the
Company within 72 hours after receipt by wire transfer or certified or official
bank check payable to the order of the Company the amount of money received by
it upon the exercise of Warrants (less any amount paid by the Warrant Agent in
respect of a fractional share upon such exercise in accordance with Section
3.03 hereof). The Warrant Agent shall hold any proceeds collected and not yet
paid to the Company in a federally insured escrow account. If there is a
Cashless Exercise with respect to such Warrants, the Company shall promptly
calculate and transmit notice to the Warrant Agent of the Cashless Exercise
Ratio. A detailed accounting statement setting forth the number of Warrants
exercised, the amount of funds received and the number of shares issued in
connection with such exercise and all expenses incurred by the Warrant Agent as
provided in this Agreement shall be transmitted to the Company on payment to
the Company of the funds so received upon exercise. The Warrant Agent shall
render to the Company a complete accounting setting forth the number of
Warrants exercised, the identity of the Persons exercising such Warrants, the
number of shares issued, the amounts distributed to the Company and all
expenses incurred by the Warrant Agent as provided in this Agreement as of the
Expiration Date.

     (e)        Subject to Section 8.06 hereof, if the Warrant Agent is instructed to
deliver shares upon the exercise of Warrants or to deliver a Warrant
Certificate representing unexercised Warrants, in either case registered in a
name or names other than the name or names in which a Warrant Certificate
tendered in connection with such exercise is registered, the Warrant Agent may
require such documents, and such evidence of payment of applicable transfer
taxes, as it may reasonably deem necessary to enable it to carry out the
instructions of the bearer.

     (f)        The Warrant Agent may assume that any Warrant exercised is permitted
to be exercised under applicable law and shall have no liability for acting in
reliance upon such assumption.

     SECTION
3.03.      No Fractional Shares to
Be Issued. Notwithstanding anything
to the contrary contained in this Agreement, if the number of shares of Common
Stock purchasable on the exercise of each Warrant is adjusted pursuant to the
provisions of Section 4.02 hereof, the Company shall not be required to issue
any fraction of a share of Common Stock or to distribute stock certificates
that evidence fractional shares of Common Stock. If Warrant Certificates
evidencing more than one Warrant shall be surrendered for exercise at one time
by the same holder, the number of full shares that shall be issuable upon
exercise thereof shall be computed on the basis of the aggregate

- 10 -

 

number of Warrants so surrendered. If any fraction of a share of Common Stock would,
except for the provisions of this Section 3.03, be issuable on the exercise of
any Warrant or Warrants, the Company shall purchase such fraction for an amount
in cash equal to the then-current market price of such fraction computed in
accordance with Section 4.01(e) hereof (assuming, for the purpose of such
computation, that the date of surrender of such Warrants to the Warrant Agent
shall be the applicable record date referred to in Section 4.01(e)). The
Warrant holders, by their acceptance of the Warrant Certificates, expressly
waive their right to receive any fraction of a share of Common Stock (other
than in cash as provided in this Section 3.03) or a stock certificate
representing a fraction of a share of Common Stock.

     SECTION 3.04.      Acquisition of Warrants by the Company; Cancellation of
Warrants. The Company shall have the right, except as limited by law or other
agreement, to purchase or otherwise acquire Warrants at such times, in such
manner and for such consideration as it may deem appropriate; provided that
nothing herein shall provide the Company with the right to require any Person
to sell or dispose of any Warrants. The Warrant Agent shall cancel any Warrant
Certificate delivered to it for exercise, in whole or in part, or delivered to
it for transfer, exchange, or substitution, and no Warrant Certificates shall
be issued in lieu thereof unless such exercise, transfer, exchange or
substitution is expressly permitted by the provisions of this Agreement. On
request of the Company, the Warrant Agent shall deliver canceled Warrant
Certificates held by it to the Company. If the Company shall acquire any of
the Warrants, such acquisition shall not operate as a redemption or termination
of the right represented by such Warrants unless and until the Warrant
Certificates evidencing such Warrants are surrendered to the Warrant Agent for
cancellation.

ARTICLE IV

ADJUSTMENT OF WARRANT PRICE, SHARES OF COMMON STOCK

SUBJECT TO PURCHASE AND NUMBER OF WARRANTS

     SECTION 4.01.      Adjustment of Warrant Price.

     The Warrant Price specified in Section 3.01 shall be subject to adjustment
from time to time as follows:

     (a)      If the Company after the date hereof shall (i) pay a dividend or make
a distribution in the form of Common Stock or other shares of capital stock of
the Company to the holders of Common Stock, (ii) subdivide or split the
outstanding shares of Common Stock into a larger number of shares of Common
Stock, or (iii) combine the outstanding shares of Common Stock into a smaller
number of shares of Common Stock, then in any such case the Warrant Price in
effect immediately prior thereto shall be adjusted to a price obtained by
multiplying such Warrant Price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding prior to such action and the
denominator shall be the number of shares of Common Stock outstanding after
giving effect to such action. An adjustment made pursuant to clause (i) of
this subsection (a) shall become effective retroactively immediately after the
record date for

- 11 -

 

such dividend or distribution, and an adjustment made pursuant
to clause (ii) or (iii) of this subsection (a) shall become effective
immediately after the effective date of such subdivision or combination.

     (b)        If the Company after the date hereof shall issue Rights to the holders
of Common Stock or any class thereof entitling such holders (in the case of
rights, options or warrants), for a period expiring within 45 days after the
record date mentioned below, to subscribe for or purchase shares of Common
Stock or any class thereof or (in the case of convertible or exchangeable
securities) to convert such securities into, or exchange them for, shares of
Common Stock or any class thereof, in each case, at a price per share of Common
Stock (or, in the case of convertible or exchangeable securities, having an
effective initial offering price per share of Common Stock, based upon (x) the
initial offering price of such securities, (y) the initial conversion or
exchange ratio of such securities and (z) any additional consideration
initially payable upon conversion or exchange) less than the then-current
market price per such share (as determined pursuant to subsection (e) below)
(each, a “Below-Market Rights Issuance”) on the record date mentioned below,
the Warrant Price in effect immediately prior thereto shall be adjusted to a
price obtained by multiplying such Warrant Price by a fraction of which (i) the
numerator shall be (A) the number of shares of Common Stock outstanding on such
record date plus (B) the number of additional shares of Common Stock that the
aggregate offering price of the total number of shares of Common Stock (or, in
the case of convertible or exchangeable securities, that the aggregate
effective initial offering price for the shares of Common Stock to be delivered
upon conversion or exchange of such convertible or exchangeable securities,
based upon (x) the initial offering price of such convertible or exchangeable
securities, (y) the initial conversion or exchange ratio of such securities and
(z) any additional consideration initially payable upon conversion or exchange)
so to be offered would purchase at the then-current market price of the Common
Stock, and (ii) the denominator shall be (A) the number of shares of Common
Stock outstanding on such record date plus (B) the number of additional shares
of Common Stock to be offered for subscription or purchase (or, as the case may
be, into or for which the convertible or exchangeable securities so to be
offered are initially convertible or exchangeable). Any such adjustments shall
be made whenever such Rights are issued and shall become effective
retroactively immediately after the record date for the determination of
stockholders entitled to receive such Rights. Upon expiration of the period
during which any such Rights may be exercised, any adjustment previously made pursuant to the foregoing provisions shall be recalculated
to take into consideration only those Rights actually exercised during the
applicable period for exercise and notice of any such further adjustment to the
Warrant Price shall be given to Warrant holders as herein provided; provided,
however, that no such readjustment shall have the effect of increasing the
Warrant Price above the amount, or of decreasing the number of shares of Common
Stock purchasable upon the exercise of Warrants below the number, in effect
immediately prior to the adjustment to which such readjustment applies. The
provisions of this Section 4.01(b) shall apply to Below-Market Rights Issuance
to Persons other than the holders of Common Stock or any class thereof,
provided, however, that references in this Section 4.01(b) (1) to current
market price per share of Common Stock shall be to the product of (i) such
current market price as determined pursuant to

- 12 -

 

subsection (e) below and (ii) 0.85, (2) to rights, options or warrants shall be
to all rights, options or warrants, without regard to their expiration date,
and (3) to record date shall be to the date of issuance of the Rights.

     (c)      If the Company after the date hereof shall issue or distribute to the
holders of Common Stock or any class thereof evidences of its indebtedness or
assets (excluding any cash dividend or distribution paid out of retained
earnings (as such term is used in GAAP)), Rights (other than Rights for which
an adjustment to the Warrant Price is made pursuant to Section 4.01(b)), or
shares of capital stock of any class (other than the Common Stock) or rights to
subscribe therefor (such indebtedness, assets, Rights, shares and rights to
subscribe therefor, a “Distribution”), in each such case the Warrant Price in
effect immediately prior thereto shall be adjusted to a price obtained by
multiplying such Warrant Price by a fraction of which (i) the numerator shall
be (A) the then-current market price per share (determined as provided in
subsection (e) below) of the Common Stock of each class of Common Stock,
multiplied by the number of outstanding shares of such class, less (B) the
then-current fair market value (as determined by the Board of Directors by a
duly adopted resolution in its reasonable and good faith judgment whose
determination shall be final and binding and shall be described in a
statement filed with the Warrant Agent, a copy of which statement shall be sent
by the Warrant Agent to the Warrant holders upon their written request) of the
aggregate amount of the Distribution, and (ii) the denominator shall be (A) the
then-current market price per share (determined as provided in subsection (e)
below) of the Common Stock of each class of Common Stock, multiplied by the
number of outstanding shares of such class, in each case, on the record date
mentioned below. The Company shall provide the Warrant Agent with any
indenture or other instrument defining the rights of the holders of any
Distribution referred to in this subsection 4.01(c). Any such adjustment shall
be made whenever any such Distribution is made and shall become effective
retroactively immediately after the record date for the determination of
stockholders entitled to receive such Distribution. Upon expiration of the
period during which any rights or securities granted pursuant to this
subsection (c) may be exercised, converted or exchanged, as the case may be,
any adjustment previously made pursuant to the foregoing provisions shall be
recalculated to take into consideration only those rights and securities
actually exercised, converted and exchanged, as the case may be, during the
applicable period for exercise, conversion and exchange, and notice of any such
further adjustment to the Warrant Price shall be given to Warrant holders as
herein provided.

     (d)      If the Company after the date hereof shall issue shares of Common
Stock to the holders of Common Stock or any class thereof at a price per share
of Common Stock less than the then-current market price per such share (as
determined pursuant to subsection (e) below) (a “Below-Market Common Stock
Issuance”) on the date the Company issues such additional shares, the Warrant
Price in effect immediately prior thereto shall be adjusted to a price obtained
by multiplying such Warrant Price by a fraction of which (i) the numerator
shall be (A) the number of shares of Common Stock outstanding on the date of
issuance of such additional shares of Common Stock plus (B) the number of
additional shares of Common Stock that the aggregate consideration received for
the issuance of such additional shares would purchase at the then-current
market price of the Common Stock, and (ii) the denominator shall be the number
of

- 13 -

 

shares of Common Stock outstanding immediately after the issuance of such
additional shares. The provisions of this Section 4.01(d) shall apply to
Below-Market Common Stock Issuance to Persons other than the holders of Common
Stock or any class thereof, provided, however, that references in this Section
4.01(d) to current market price per share of Common Stock shall be to the
product of (i) such current market price as determined pursuant to subsection
(e) below and (ii) 0.85.

     (e)      The current market price per share of any class of Common Stock on any
date shall be deemed to be the average of the daily mean between the high and
low sales prices, regular way, of the shares of such class of Common Stock on
the exchange on which such shares are listed as specified below for the twenty
consecutive Trading Days (as defined below) preceding such date. If there
shall not have been a sale, regular way, on any such Trading Day, the mean of
the last reported bid and asked quotations regular way on the exchange
specified below on such day shall be deemed to be the only sale price. The
exchange specified for purposes of this subsection (e) shall be: (i) the New
York Stock Exchange, Inc. or the Nasdaq National Market; or (ii) if the shares
of the applicable class of Common Stock are not listed thereon, then that
national securities
exchange on which the applicable class of Common Stock is listed having
the largest volume of trading in the applicable class of Common Stock during
the calendar year or portion thereof next preceding such computation;
provided,
however, that if the shares of the applicable class of Common Stock shall not
be listed on any such exchange on any such twenty Trading Days, the average of
the closing high bid and low asked prices for the applicable class of Common
Stock in the over-the-counter market on each Trading Day on which such shares
are not so listed, as reported by the National Association of Securities
Dealers Automatic Quotation System or, if not so reported, then as reported by
the National Quotation Bureau Incorporated, or if such organization is not in
existence, by an organization providing similar services (as determined by the
Board of Directors of the Company), shall be deemed to be the only sale price
on such Trading Day); or (iii) if the shares of the applicable class of Common
Stock shall not be so reported on any of such Trading Days, then the current
market price per share of such class shall be the fair market value thereof as
determined in the reasonable and good faith judgment of the Board of Directors
whose determination shall be final and binding and shall be described in a
statement filed with the Warrant Agent. For the purpose of this subsection
(e), “Trading Day” shall mean a day on which the securities exchange specified
for purposes of this subsection (e) shall be open for business or, if the
shares of the applicable class of Common Stock shall not be listed on such
exchange for such period, a day with respect to which quotations of the
character specified for purposes of this subsection (e) shall be reported.

     (f)      In any case in which this Section 4.01 shall require that an
adjustment be made retroactively immediately following a record date, the
Company may elect to defer (but only until five Business Days following the
filing by the Company with the Warrant Agent of a certificate signed by the
Chairman of the Board, Chief Executive Officer, the President or any Vice
President of the Company (an “Officer’s Certificate”) as required in subsection
(i) of this Section 4.01) issuing to the holder of any Warrant exercised after
such record date the shares of Common Stock issuable upon such exercise in
excess of the shares of Common Stock issuable upon such exercise prior to such
adjustment.

- 14 -

 

     (g)      No adjustment shall be required unless such adjustment would require
an increase or decrease in the Warrant Price then subject to adjustment of at
least one percent (1%) of such Warrant Price; provided,
however, that any
adjustments that are not made by reason of this subsection (g) shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 4.01 shall be made to the nearest thousandth of a cent. If
any action would require adjustment of the Warrant Price or the property into
which Common Stock is convertible or exchangeable pursuant to more than one of
the provisions described in this Article IV in a manner such that such
adjustments are duplicative, only one adjustment shall be made and such
adjustment shall be the amount of adjustment that has the highest absolute
value to the holders of the Warrants.

     (h)      Unless the Company shall have exercised its election as provided in
Section 4.02, upon each adjustment of the Warrant Price as a result of the
calculations made in this Section 4.01(a), (b), (c) and (d), the number of
shares of Common Stock purchasable upon exercise of a Warrant (the
“Warrant
Shares”) shall be increased to the
product (calculated by the nearest thousandth) obtained by multiplying the
number of shares of Common Stock purchasable upon exercise of the Warrants
immediately prior to such adjustment by a fraction, the numerator of which
shall be the Warrant Price in effect immediately prior to such adjustment and
the denominator of which shall be the Warrant Price in effect immediately after
such adjustment.

     (i)      Whenever an adjustment in the Warrant Price is made as required or
permitted by the provisions of Sections 4.01 of this Agreement, the Company
shall promptly file with the Warrant Agent an Officer’s Certificate setting
forth the adjusted Warrant Price as provided in this Section 4.01 and either
the adjusted number of Warrants Shares as provided in this Section 4.01 or the
adjusted number of outstanding Warrants as provided in Section 4.02, and
setting forth in reasonable detail the facts requiring such adjustment and the
computation thereof (and the number of shares of Common Stock (or portions
thereof) subject to purchase upon exercise of a Warrant after such adjustment),
and shall promptly mail or cause to be mailed a notice of such adjustment to
each registered Warrant holder at such holder’s last address as the same
appears on the Warrant Register. The Warrant Agent shall be under no duty or
responsibility with respect to any such certificate except to exhibit the same
to any holder of Warrants desiring inspection thereof. The Warrant Agent shall
not be deemed to have knowledge of such adjustment unless and until such
certificate shall have been delivered to it in accordance with Section 8.03.
Upon the written request of any registered Warrant holder, the Company shall
also promptly deliver a copy of such certificate to the Company’s transfer
agent.

     (j)        In case:

		
	 	     (1)      the Company shall declare a dividend (or any other distribution)
on shares of Common Stock or any class thereof; or

- 15 -

 

		
	 	     (2)      the Company shall authorize the granting to the holders of
shares of Common Stock or any class thereof of rights to subscribe for or
purchase any shares of capital stock of any class or of any other right;
or
	 
	 	     (3)      of any reclassification of shares of Common Stock or any class
thereof (other than a subdivision or combination of outstanding shares of
Common Stock or any class thereof) or of any consolidation or merger to
which the Company is a party and, in each case, for which approval of any
stockholders of the Company is required, or of the sale or transfer of
all or substantially all of the assets of the Company (which requires
such approval); or
	 
	 	     (4)      of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;

then the Company shall cause to be filed with the Warrant Agent, and shall
cause to be mailed to the holders of the Warrants, at their last addresses as
they shall appear upon the Warrant Register, at least 20 days prior to the
applicable date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such
dividend, distribution or rights, or, if a record is not to be taken, the date
as of which the holders of Common Stock (or any class thereof) entitled to such
dividend, distribution or rights are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and, if applicable,
the date as of which it is expected that holders of Common Stock (or any class
thereof) of record shall be entitled to exchange their shares of Common Stock
for securities or other property (including cash) deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up; provided, however, that a failure to give any such
notice, or any defect therein, shall not affect the validity of the proceedings
referred to in clauses (1), (2), (3) or (4) above.

     (k)      The Company shall be entitled, but not required, to make such
reductions in the Warrant Price, in addition to those required by this Section
4.01, as it in its discretion shall determine to be advisable (as evidenced in
a duly adopted resolution of the Board of Directors), including in order that
any dividend in or distribution of shares of Common Stock (or any class
thereof) or shares of capital stock of any class other than Common Stock,
subdivision, reclassification or combination of shares of Common Stock,
issuance of Rights, or any other transaction having a similar effect, shall not
be treated as a distribution of property by the Company to its stockholders
under Section 305 of the Internal Revenue Code of 1986, as amended or any
successor provision and shall not be taxable to them.

     (l)      Notwithstanding anything to the contrary contained in this Agreement,
no adjustment to the Warrant Price or in the number of outstanding Warrants
shall be made as a result of, or in connection with (i) the issuance of options
or rights to purchase Common Stock issued to directors, officers or employees
of the Company or its Subsidiaries pursuant to any Option Plan, or (ii) the
issuance of shares of Common Stock or other securities issued by the Company
pursuant to and in accordance with the Plan.

- 16 -

 

     SECTION
4.02.      Election to Adjust Warrants
Instead of Shares Per Warrant.
The Company may elect, on or after the date of any adjustment of the Warrant
Price pursuant to Section 4.01 hereof, to increase the number of Warrants
outstanding in substitution for any adjustment in the number of Warrant Shares
pursuant to Section 4.01(h). The aggregate Warrants outstanding immediately
after such adjustment in the number of Warrants shall be exercisable for the
same number of shares of Common Stock for which the aggregate Warrants
outstanding immediately prior to such adjustment would have been exercisable
had the Company instead elected to adjust the number of Warrant Shares pursuant
to Section 4.01(h). Each Warrant held of record prior to such adjustment of
the number of Warrants shall become that number of Warrants (calculated to the
nearest thousandth) obtained by (i) multiplying the number of Warrants held of
record prior to adjustment of the number of Warrants by the Warrant Price in
effect prior to adjustment of the Warrant Price pursuant to Section 4.01
hereof, and (ii) dividing the product so obtained by the Warrant Price in
effect after adjustment of the Warrant Price pursuant to Section 4.01 hereof.
The Warrant Price shall remain unchanged by any adjustment to the number of
outstanding Warrants pursuant to this Section 4.02. The Company shall make a
public announcement of its election to adjust
the number of Warrants, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. The record
date may be the date on which the Warrant Price is adjusted or any day
thereafter, but shall not be less than 10 or more than 30 days later than the
date of public announcement. Upon each adjustment of the number of Warrants
pursuant to this Section 4.02, the Company shall cause the Warrant Agent, as
promptly as practicable, to distribute to holders of record of the Warrant
Certificates on such record date either (i) Warrant Certificates evidencing,
subject to Section 4.03, any additional Warrants to which such holders shall be
entitled as a result of such adjustment, or (ii) at the option of the Company,
in substitution and replacement for the Warrant Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof (if
required by the Company), new Warrant Certificates evidencing all the Warrants
to which such holders shall be entitled after such adjustment. Warrant
Certificates to be so distributed shall be issued, executed and countersigned
in the manner specified in this Agreement (but shall bear, if the Company
elects to replace Warrant Certificates pursuant to clause (ii) above, the
Warrant Price as adjusted pursuant to Section 4.01 hereof), shall represent the
same class of Warrants as was represented by the Warrant Certificates so
surrendered and shall be registered in the names of the holders of record of
the Warrant Certificates on the record date specified in the public
announcement.

     For the purposes of this Section 4.02, “public announcement” shall mean
publication at least once in a newspaper printed in the English language and
customarily published at least once a day for at least five days in each
calendar week and of general circulation in the Borough of Manhattan, New York,
New York.

     SECTION
4.03.      No Fractional Warrants to
Be Issued. Notwithstanding
anything to the contrary contained in this Agreement, the Company shall not be
required to issue fractions of Warrants on any distribution of Warrants to
Warrant holders pursuant to Section 4.02 hereof or otherwise or to distribute
Warrant Certificates that evidence fractional Warrants. If any fraction of a
Warrant would, except for the

- 17 -

 

provisions of this Section 4.03, be issuable upon
an adjustment of the Warrant Price and distribution of Warrants pursuant to
Section 4.02 hereof or otherwise, the Company shall purchase such fraction for
an amount in cash equal to the then-current market value of such fraction
computed in accordance with Section 4.01(e) hereof (with respect to the current
market price of the Warrant rather than the per share current market price of
the Common Stock and assuming, for the purpose of such computation, that the
effective date of such adjustment of the Warrant Price, or such other relevant
date, shall be the applicable record date referred to in Section 4.01(e)). The
Warrant holders, by their acceptance of the Warrant Certificates, expressly
waive their right to receive any fraction of a Warrant (other than in cash as
provided in this Section 4.03) or a Warrant Certificate representing a fraction
of a Warrant upon the adjustment thereof in accordance with this Article IV or
otherwise.

     SECTION
4.04.      Rights Upon
Consolidation, Merger, Sale, Transfer or Reclassification.

     (a)      In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of the Warrants (other than a change in par value,
or from par value to no par value, or as a result of a subdivision or
combination), any consolidation of the Company with or merger of the Company
into another Person, any merger of another Person into the Company (other than
a merger or consolidation that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company) or any lease, sale or conveyance to another Person of the property
of the Company as an entirety or substantially as an entirety in one or a
series of related transactions, lawful provision shall be made as part of the
terms of such transaction or transactions and as a condition thereto, and in a
supplemental agreement hereto, whereby the holder of each Warrant then
outstanding shall have the right thereafter (until the Expiration Date) to
receive, upon exercise thereof, in lieu of each share of Common Stock
deliverable upon such exercise immediately prior to such event, the kind and
amount of shares and/or other securities and/or property and/or cash receivable
upon such reclassification, consolidation, merger, lease, sale or conveyance by
a holder of one share of Common Stock, including provisions pursuant to
subsection (f) below.

     (b)      In case of any liquidation, dissolution or winding up of the affairs
of the Company, the Company shall, subject to applicable law, make prompt,
proportionate, equitable, lawful and adequate provision as part of the terms of
such dissolution, liquidation or winding up such that the holder of a Warrant
may thereafter receive, on exercise of such Warrant, in lieu of each share of
Common Stock of the Company which such holder would have been entitled to
receive upon exercise of such Warrant, the same kind and amount of any stock,
securities or assets as may be issuable, distributable or payable on any such
dissolution, liquidation or winding up with respect to each share of Common
Stock of the Company; provided, however, that in the event of any such
dissolution, liquidation or winding up, the right to exercise the Warrants
shall terminate on a date fixed by the Company, such date to be not earlier
than the 60th day next succeeding the date on which notice of such termination
of the right to exercise the Warrants has been given by mail to the holders
thereof in accordance with Section 4.01(i).

- 18 -

 

     (c)       Any supplemental agreement entered into pursuant to Section 4.04(a)
shall, as applicable, state the Warrant Price in terms of one full share of
Common Stock of the Company or one full share of the common stock of any
successor, leasing or purchasing Person.

     (d)      The above provisions of this Section 4.04 shall similarly apply,
mutatis mutandis, to successive reclassifications and changes of shares of
Common Stock and to successive consolidations, mergers, leases, sales or
conveyances.

     (e)       Notice of the execution of any supplemental agreement entered into
pursuant to Section 4.04(a) shall be mailed by the Company to registered
holders of Warrants as soon as practicable after the execution of such
supplemental agreement.

     (f)       In the event that at any time as a result of the provisions of this
Section 4.04, the holder of any Warrant thereafter surrendered for exercise
shall become entitled to receive any shares or other securities other than
shares of Common Stock, thereafter the price or prices of such other shares or
other securities so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Article IV with respect to Common Stock, and
the provisions of the other Articles of this Agreement (including Article III)
with respect to Common Stock shall apply on like terms to any such other shares
or other securities.

     SECTION
4.05.      Covenant to Reserve
Shares for Issuance on Exercise. The
Company covenants that it will at all times reserve and keep available free of
preemptive or similar rights out of its authorized and unissued Common Stock,
solely for the purpose of issue upon exercise of Warrants as herein provided,
the full number of shares of Common Stock, if any, then issuable if all
outstanding Warrants then exercisable were to be exercised. The Company
covenants that all shares of Common Stock which shall be so issuable shall be
duly and validly issued, fully paid and non-assessable and shall not be subject
to preemptive or similar rights, and shall be free from taxes, liens, charges
or security interests thereto (other than those created by holders of the
Warrants or by former holders of the Warrants in their capacity as such
holders) the Company and entitled to the benefit of the Registration Rights
Agreement as provided therein.

     The Company hereby authorizes and directs its current and future transfer
agents for the Common Stock and for any shares of the Company’s capital stock
issuable upon the exercise of any of the Warrants at all times to reserve such
number of authorized shares as shall be requisite for such purpose. The
Warrant Agent is hereby authorized to requisition from time to time from any
such transfer agents stock certificates required to honor outstanding Warrants
upon exercise thereof in accordance with the terms of this Agreement, and the
Company hereby authorizes and directs such transfer agents to comply with all
such requests of the Warrant Agent. The Company will supply such transfer
agents with duly executed stock certificates for such purposes and will provide
or otherwise make available any cash which may be payable as provided in this
Article IV. Promptly after the Expiration Date, the Warrant Agent shall
certify to the Company the

- 19 -

 

aggregate number of Warrants then outstanding, and
thereafter no shares shall be reserved in respect of such Warrants.

     SECTION
4.06.      Condition Precedent to Reduction of Warrant Price Below Par
Value of Shares of Common Stock; Compliance with Governmental
Requirements;
Suspension of Exercise of Warrants. Before taking any action that would cause
an adjustment reducing the Warrant Price to below the then par value of any of
the shares of Common Stock issuable upon exercise of the Warrants, the Company
will take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of such Common Stock at such adjusted Warrant Price.

     The Company covenants that if any shares of Common Stock required to be
reserved for purposes of exercise of Warrants require, under any federal or
state law or rule or regulation of any national securities exchange or market,
registration with or approval of any governmental authority, or listing on any
national securities exchange or market before such shares may be issued upon
exercise, the Company will in good faith and as expeditiously as possible
endeavor to cause such shares to be duly registered, approved or listed on the
relevant national securities exchange or market, as the case may be;
provided,
however, that in no event shall such shares of Common Stock be issued, and the
Company is hereby authorized to suspend the exercise of all Warrants, for the
period during which such registration, approval or listing is required but not
in effect.

     SECTION
4.07.      Payment of Taxes on Stock
Certificates Issued upon Exercise.
The initial issuance or delivery of certificates of Common Stock upon the
exercise of Warrants shall be made without charge to the exercising Warrant
holders for any transfer, stamp or similar tax or for any other governmental
charges that may be imposed in respect of the issuance or delivery of such
stock certificates, and such stock certificates shall be issued in the
respective names of, or in such names as may be directed by, the registered
holders of the Warrants exercised; provided, however, that the Company shall
not be required to pay any tax or such other charges that may be payable in
respect of any transfer involved in the issuance and delivery of any such stock
certificate, any Warrant Certificates or other securities in a name other than
that of the registered holder of the Warrant Certificate surrendered upon
exercise of the Warrant, and the Company shall not be required to issue or
deliver such certificates or other securities unless and until the Person or
Persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the reasonable satisfaction of
the Company that such tax has been paid.

     SECTION
4.08.      Warrant Agent Not Responsible for Adjustments or Validity of
Stock. The Warrant Agent shall not at any time be under any duty or
responsibility to any Warrant holder to determine whether any facts exist that
may require an adjustment of the Warrant Price, or with respect to the nature
or extent of any such adjustment when made, or with respect to the method
employed herein or in any supplemental agreement
in making the same. The Warrant Agent shall not be accountable with
respect to the validity or value (or the kind or amount) of any shares of
Common Stock or of any securities or property which may at any time be issued
or

- 20 -

 

delivered upon the exercise of any Warrant or upon any adjustment pursuant
to this Article IV, and it makes no representation with respect thereto. The
Warrant Agent shall not be responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver any shares of Common Stock or
stock certificates or other securities or property upon the surrender of any
Warrant for the purpose of exercise or upon any adjustment pursuant to this
Article IV, or to comply with any of the covenants of the Company contained in
this Article IV.

     SECTION
4.09.      Statements on
Warrants. The form of Warrant Certificate
need not be changed because of any adjustment made pursuant to this Article IV,
and Warrant Certificates issued after such adjustment may state the same
Warrant Price and the same number of shares of Common Stock as are stated in
the Warrant Certificates initially issued pursuant to this Agreement. The
Company, however, may at any time in its sole discretion (which shall be
conclusive) make any change in the form of Warrant Certificate that it may deem
appropriate and that does not affect the substance thereof; and any Warrant
Certificate thereafter issued or countersigned, whether in exchange or
substitution for an outstanding Warrant Certificate or otherwise, may be in the
form as so changed.

     SECTION
4.10.      No Dilution or
Impairment.

     The Company shall not participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company.

ARTICLE V

OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS

     SECTION
5.01.      Enforcement of Rights. Notwithstanding any of the
provisions of this Agreement, without the consent of the Warrant Agent, the
holder of any Warrant may, in and for his, her or its own behalf, enforce, and
may institute and maintain any suit, action or proceeding against the Company
suitable to enforce, his, her or its right to exercise the Warrant or Warrants
evidenced by such holder’s Warrant Certificate in the manner provided in such
Warrant Certificate and in this Agreement. Because a breach of the provisions
of this Agreement could not adequately be compensated by money damages, holders
of Warrants shall be entitled, in addition to any other right or remedy
available to them, to an injunction restraining such breach or a threatened
breach and to specific performance of any such provision of this Agreement, and
in either case no bond or other security shall be required
in connection therewith, and the parties hereby consent to the issuance of
such injunction and to the ordering of specific performance by a court of
competent jurisdiction.

     SECTION
5.02.      No Rights as
Stockholders. Nothing contained in this
Agreement or in any Warrant Certificate shall be construed as conferring, prior
to the date of exercise of such Warrant, on the holder of any Warrant or its
transferee any rights

- 21 -

 

whatsoever as a stockholder of the Company, either at law
or equity, including but not limited to the right to vote at, or to receive
notice of, any meeting of stockholders of the Company; nor shall any such
holder, by reason of the ownership or possession of a Warrant or the Warrant
Certificate representing the same, either at, before or after exercising such
Warrant, have any right to receive any cash dividends, stock dividends,
allotments or rights, or other distributions (except as specifically provided
herein), paid, allotted or distributed or distributable to the stockholders of
the Company as stockholders of the Company prior to the date of the exercise of
such Warrant.

     SECTION
5.03.      Mutilated or Missing
Warrant Certificates. If any Warrant
Certificate is lost, stolen, mutilated or destroyed, the Company shall issue or
cause to be issued, and the Warrant Agent shall countersign, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen, mutilated
or destroyed, upon receipt of a proper affidavit or other evidence satisfactory
to the Company and the Warrant Agent (and surrender of any mutilated Warrant
Certificate) and indemnity in form and amount reasonably satisfactory to the
Company and the Warrant Agent in each instance protecting the Company and the
Warrant Agent, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants as the Warrant Certificate so lost, stolen,
mutilated or destroyed. Any such new Warrant Certificate shall constitute an
original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone. An applicant for such a substitute Warrant Certificate
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe.

     SECTION
5.04.      Obtaining Stock Exchange
Listings. The Company will from
time to time take all action which may be necessary so that the shares of
Common Stock issuable upon the exercise of Warrants, immediately upon such
issuance, will be listed on the principal securities exchanges and markets
within the United States or Canada (including the Nasdaq National Market), if
any, on which other shares of Common Stock are then listed or quoted.

     SECTION
5.05.      Rules 144 and
144A. While any Warrants remain outstanding,
the Company covenants that it shall file the reports required to be filed by it
under the Exchange Act, and the rules and regulations adopted by the Commission
thereunder, in a timely manner in accordance
with the requirements of the Exchange Act. If at any time the Company is
not required to file such reports, it will distribute to each holder or
beneficial owner of Warrants that are “restricted securities” within the
meaning of Rule 144 and are not saleable in full under paragraph (k) of Rule
144, such information as is necessary to permit sales pursuant to Rule 144A
under the 1933 Act.

     SECTION
5.06.      1933 Act and Applicable
State Securities Laws. The Company
shall comply with all applicable laws, including the 1933 Act and any
applicable state securities laws, in connection with the offer and sale of
Common Stock (and other securities and property deliverable) upon exercise of
the Warrants.

- 22 -

 

     SECTION
5.07.      Obtaining of Governmental
Approvals. In the event that the
Warrants are registered pursuant to an effective registration statement under
the 1933 Act, the Company will from time to time take all action required to be
taken by it which may be necessary to obtain and keep effective any and all
permits, consents and approvals of governmental agencies and authorities and
securities acts filings under United States federal and state laws, if
applicable, and the rules and regulations of all stock exchanges on which the
Warrants are listed which may be or become requisite in connection with (i) the
issuance, sale, transfer, and delivery to the Company of the Warrant
Certificates, (ii) the exercise of the Warrants or (iii) the issuance, sale,
transfer and delivery by the Company of the shares of Common Stock issued upon
the exercise of the Warrants.

     SECTION
5.08.      Delivery of
Prospectuses. If, and to the extent that, the
Company may be required by the 1933 Act or any other applicable federal or
state law to furnish a prospectus to Warrant holders upon their exercise of
Warrants, the Company shall cause to be kept, either at the Warrant Agent’s
Office or at such other location designated by the Company, sufficient
quantities of such prospectuses for delivery to Warrant holders upon their
exercise of Warrants, and shall deliver such prospectuses or cause such
prospectuses to be delivered to such Warrant holders together with the shares
of Common Stock or other securities receivable by such Warrant holders upon
their exercise of Warrants.

ARTICLE VI

OTHER COVENANTS OF COMPANY

          The Company agrees with each of the Warrant holders, for so long as the
Warrants shall be outstanding, as follows:

     SECTION
6.01.      Restrictions on
Performance.

     The Company shall not at any time enter into any agreement or other
instrument that would make the performance of the Company’s obligations under
this Agreement,
including the issuance of Warrant Stock upon the exercise of the Warrant,
a breach of or default under such agreement or instrument.

     SECTION
6.02.      Modification of Related
Agreements.

     The Company shall not amend, or consent to any modification, supplement or
waiver of any provision of any Related Agreements after the date hereof, which
modification, supplement or waiver would (a) restrict the transferability of
the Warrant or (unless the restriction applies to the Common Stock in addition
to the Warrant Stock) of the Warrant Stock, (b) restrict the transferability of
the rights of a holder under this Agreement to any transferee of all or a
portion of such holder’s Warrants or (c) require any consent or other approval
of any Person to the exercise of the Warrant or the issuance Warrant Stock upon
such exercise.

- 23 -

 

ARTICLE VII

CONCERNING THE WARRANT AGENT

     SECTION 7.01.      Payment of Certain Taxes. The Company will from time to
time promptly pay all transfer, stamp or similar taxes and all other
governmental charges that may be imposed upon the Company or otherwise in
respect of the initial issuance of the Warrants and the initial issuance or
delivery of shares of Common Stock upon the exercise of Warrants, but the
Company shall not be obligated to pay any transfer, stamp or similar taxes or
other governmental charges in respect of any transfer of the Warrants or of
such shares effected by any holder thereof.

     SECTION 7.02.       Change of Warrant Agent.

     (a)        The Warrant Agent, or any successor to it hereafter appointed, may
resign its duties and be discharged from all further duties and liabilities
hereunder (except liabilities arising as a result of the Warrant Agent’s own
negligence, willful misconduct or bad faith) after giving 30 days’ notice in
writing to the Company, except that such shorter notice may be given as the
Company shall, in writing, accept as sufficient. At least 15 days prior to the
date such resignation is to become effective, the Warrant Agent shall cause a
copy of such notice of resignation to be mailed to the registered holder of
each Warrant Certificate. If the office of the Warrant Agent becomes vacant by
resignation or incapacity to act or otherwise, the Company shall appoint a
successor Warrant Agent in place of the Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by the registered holder of any Warrant
Certificate, then the Warrant Agent or the registered holder of any Warrant
Certificate may apply, at the expense of the Company, to any court of competent
jurisdiction for the appointment of a new Warrant Agent.

     (b)        The Warrant Agent may be removed by the Company at any time upon 30
days’ written notice to the Warrant Agent; provided, that the Warrant Agent
shall not be
removed until a successor Warrant Agent meeting the qualifications hereof
shall have been appointed.

     (c)      Any successor Warrant Agent, whether appointed by the Company or by a
court, shall be a corporation or banking association organized, in good
standing and doing business under the laws of the United States of America or
any state thereof or the District of Columbia, and authorized under such laws
to exercise corporate trust powers and subject to supervision or examination by
federal or state authority and having a combined capital and surplus of not
less than $10,000,000. The combined capital and surplus of any such successor
Warrant Agent shall be deemed to be the combined capital and surplus as set
forth in the most recent report of its condition published prior to its
appointment pursuant to law or to the requirements of a federal or state
supervising or examining authority. After appointment, any successor Warrant
Agent shall be vested with all the authority, powers, rights, immunities,
duties and obligations of its predecessor Warrant Agent with like effect as if
originally named as Warrant Agent

- 24 -

 

hereunder, without any further assurance,
conveyance, act or deed; provided, however, that in no event shall any
successor Warrant Agent be liable for any breach, default or failure of
performance by the predecessor Warrant Agent of any covenant or obligation
under this Agreement existing on the date the successor Warrant Agent assumes
authority pursuant to this Section 7.02. If for any reason it becomes
necessary or appropriate, the predecessor Warrant Agent shall execute and
deliver, at the expense of the Company, an instrument transferring to such
successor Warrant Agent all the authority, powers and rights of such
predecessor Warrant Agent hereunder; and upon request of any successor Warrant
Agent, the Company shall make, execute, acknowledge and deliver any and all
instruments in writing to more fully and effectively vest in and confirm to
such successor Warrant Agent all such authority, powers, rights, immunities,
duties and obligations. Upon assumption by a successor Warrant Agent of the
duties and responsibilities hereunder, the predecessor Warrant Agent shall,
upon payment of its charges hereunder, deliver and transfer, at the expense of
the Company, to the successor Warrant Agent any property at the time held by it
hereunder and, if for any reason it becomes necessary or expedient to have the
former Warrant Agent execute and deliver any further assurance, conveyance, act
or deed, the same shall be done at the expense of the Company and shall be
legally and validly executed and delivered by the former Warrant Agent. As
soon as practicable after such appointment, the Company shall give notice
thereof to the predecessor Warrant Agent, the registered holders of the
Warrants and each transfer agent for the shares of its Common Stock. Failure
to give such notice, or any defect therein, shall not affect the validity of
the appointment of the successor Warrant Agent.

     (d)        Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
or banking association succeeding to all or substantially all the stock
transfer business of the Warrant Agent, meeting the requirements for successor
Warrant Agents under Section 7.02(c) hereunder (including execution of an
instrument to assume the duties and responsibilities of a Warrant Agent
hereunder), shall be the successor Warrant Agent under this Agreement without
any further act, provided that such corporation is eligible for appointment as
a successor to the Warrant Agent. Any such successor Warrant Agent
shall promptly cause notice of its succession as Warrant Agent to be
mailed to the Company and to the registered holder of each Warrant Certificate.
In case at the time such successor Warrant Agent shall succeed to the agency
created by this Agreement, any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrant
Certificates so countersigned, and in case at that time any of the Warrant
Certificates shall not have been countersigned, any successor to the Warrant
Agent may countersign such Warrant Certificates either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent; and in
all such cases Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.

     (e)        In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignatures under its
prior name and

- 25 -

 

deliver such Warrant Certificates so countersigned; and in case
at that time any of the Warrant Certificates shall not have been countersigned,
the Warrant Agent may countersign such Warrant Certificates either in its prior
name or in its changed name; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this
Agreement.

     SECTION 7.03.      Compensation; Further Assurances. The Company agrees (i)
that it will pay the Warrant Agent such fees as shall have been agreed in
writing between the Company and the Warrant Agent for its services as Warrant
Agent hereunder and, except as otherwise expressly provided, will pay or
reimburse the Warrant Agent upon demand for all reasonable expenses,
disbursements and advances incurred or made by the Warrant Agent in accordance
with any of the provisions of this Agreement (including the reasonable
compensation, expenses and disbursements of its agents and counsel) except any
such expense, disbursement or advance as may arise from its or any of their
gross negligence, willful misconduct or bad faith; and (ii) that it will
perform, execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Warrant Agent for the carrying
out or performing of the provisions of this Agreement. The provisions of this
section shall survive the expiration of the Warrants and the termination of
this Agreement.

     SECTION
7.04.      Reliance on Counsel. The Warrant Agent may consult with
legal counsel of its selection (who may be legal counsel for the Company), and
the opinion or advice of such counsel shall be full and complete authorization
and protection to the Warrant Agent as to any action taken or omitted by it in
good faith and in accordance with such written opinion or advice, provided that
such counsel shall be reasonably acceptable to the Company.

     SECTION 7.05.      Proof of Actions Taken.
Whenever in the performance of its duties under this Agreement the Warrant
Agent shall deem it necessary or desirable that any matter be proved or
established by the Company prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of bad faith on the part of the
Warrant Agent, be deemed to be conclusively proved and established by an
Officer’s Certificate delivered to the Warrant Agent; and such Officer’s
Certificate shall, in the absence of bad faith on the part of the Warrant
Agent, be full authority to the Warrant Agent for any action taken, suffered or
omitted in good faith by it under the provisions of this Agreement in reliance
upon such certificate; but in its discretion the Warrant Agent may in lieu
thereof accept other evidence of such fact or matter or may require such
further or additional evidence as to it may deem reasonable.

     SECTION 7.06.      Correctness of Statements. The Warrant Agent shall not be
liable for or by reason of any of the statements of fact or recitals contained
in this Agreement or in the Warrant Certificates (except its countersignature
thereof) or be required to verify the same, and all such statements and
recitals are and shall be deemed to have been made by the Company only.

- 26 -

 

     SECTION
7.07.      Validity of Agreement. The Warrant Agent shall not be under
any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (other than such execution and delivery by the
Warrant Agent) or in respect of the validity or execution of any Warrant
Certificates (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Warrant Certificate; nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued pursuant to this
Agreement or any Warrants or as to whether any shares of Common Stock will,
when issued, be validly issued and fully paid and nonassessable, nor shall the
Warrant Agent be responsible for the legality of the terms hereof in its
capacity as an administrative agent.

     SECTION 7.08.      Use of Agents. The Warrant Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents and shall not be liable
for the acts or omissions of any such agents or attorneys appointed with due
care hereunder.

     SECTION 7.09.      Liability of Warrant Agent. The Warrant Agent shall incur
no liability or responsibility to the Company or to any holder of Warrants for
any action taken in reliance on any notice, resolution, waiver, consent, order,
certificate, or other paper, document or instrument believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties. The Company agrees to indemnify the Warrant Agent and hold it
harmless against any and all
liabilities, including judgments, costs and reasonable counsel fees and
expenses, for anything done or omitted in good faith by the Warrant Agent in
the execution of this Warrant Agreement, except as a result of the Warrant
Agent’s gross negligence or willful misconduct or bad faith. The provisions of
this Section 7.09 shall survive the expiration of the Warrants and the
termination of this Agreement.

     SECTION 7.10.      Legal Proceedings; Expenses. The Warrant Agent shall be
under no obligation to institute any action, suit or legal proceeding or to
take any other action likely to involve expense unless the Company or one or
more holders of Warrants shall furnish the Warrant Agent with security and
indemnity satisfactory to it for any costs and expenses which may be incurred,
but this provision shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether with or without any
such security or indemnity.

     SECTION 7.11.      Other Transactions in Securities of the Company. The
Warrant Agent in its individual or any other capacity may become the owner of
the Warrants or other securities of the Company, or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Warrant Agent under this Warrant Agreement. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity for
the Company, for any committee or body of holders of shares, securities or
other obligations of the Company or for any other legal entity.

- 27 -

 

     SECTION 7.12.      Actions as Agent. The Warrant Agent shall act hereunder
solely as agent and not in a ministerial capacity, and its duties shall be
determined solely by the provisions hereof, and no implied duties or
obligations shall be read into this Agreement against the Warrant Agent. The
Warrant Agent shall not be liable for anything that it may do or refrain from
doing in good faith in connection with this Agreement except for its own gross
negligence or willful misconduct or bad faith.

     SECTION 7.13.      Appointment and Acceptance of Agency. The Company hereby
appoints the Warrant Agent to act as agent for the Company in respect of the
Warrants and Warrant Certificates upon the terms and conditions set forth
herein and in the Warrant Certificates. The Warrant Agent hereby accepts the
agency established by this Agreement and agrees to perform the same upon the
terms and conditions herein set forth. The Warrant Agent shall have the powers
and authority specifically granted to and conferred upon it in the Warrant
Certificates and hereby.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

     SECTION 8.01.      Amendments, etc.

     (a)      Notwithstanding the provisions of subsection (b) below, the Warrant
Agent may, without the consent or concurrence of the registered holders of the
Warrants, enter into one or more supplemental agreements or amendments with the
Company for the purpose of evidencing the rights of Warrant holders upon any
consolidation, merger, sale, transfer, reclassification, liquidation or
dissolution pursuant to Section 4.04 hereof, making any changes or corrections
in this Agreement that are required to cure any ambiguity, to correct or
supplement any provision contained herein that may be defective or inconsistent
with any other provision herein or any clerical omission or mistake or manifest
error herein contained, or making such other provisions in regard to matters or
questions arising under this Agreement as shall not adversely affect the
interests of the holders of the Warrants or be inconsistent with this Agreement
or any supplemental agreement or amendment.

     (b)      With the consent of the registered holders of at least a majority in
number of the Warrants at the time outstanding, the Company and the Warrant
Agent may at any time and from time to time by supplemental agreement or
amendment add any provisions to or change in any manner or eliminate any of the
provisions of this Agreement or of any supplemental agreement or modify in any
manner the rights and obligations of the Warrant holders and of the Company;
provided, however, that no such supplemental agreement or amendment shall,
without the consent of the registered holder of each outstanding Warrant
affected thereby, (1) alter the provisions of this Agreement so as to affect
adversely in any material respect the terms upon which the Warrants are
exercisable; or (2) reduce the number of Warrants outstanding the consent of
whose holders is required for any such supplemental agreement or amendment;
provided, further, however, that it is understood and agreed that the
provisions contained in the last sentence of Section 4.01(b) and Section
4.01(d) may be amended or waived with the

- 28 -

 

consent of the registered holders of
at least a majority in number of the Warrants at the time outstanding.

     (c)      Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms in this Section, the Warrant Agent shall execute such supplement
or amendment. Notwithstanding any other provision hereof, the Warrant Agent’s
consent must be obtained regarding any amendment or supplement pursuant to this
Section 8.01 that alters the Warrant Agent’s Warrants or duties.

     SECTION 8.02.      Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

     SECTION 8.03.      Notices. Any notice or demand authorized by this Agreement
to be given or made by the Warrant Agent or by the holder of any Warrant to or
on the Company shall be sufficiently given or made if sent by mail first-class,
postage prepaid or by facsimile, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:

	 	 	 
	 	 	
IMPSAT Fiber Networks, Inc.
	 	 	
Elvira Rawson de Dellepianne 150
	 	 	
11th Floor
	 	 	
C1107BCA Buenos Aires Argentina
	 	 	
Attention: Chief Executive Officer
	 	 	
Fax: 5411-5170-3518

     Any notice or demand authorized by this Agreement shall be given or made
by the holder of any Warrant or by the Company to or on the Warrant Agent shall
be sufficiently given or made if sent by mail first class, postage prepared or
by facsimile, addressed (until another address is filed in writing by the
Warrant Agent with the Company and provided in writing to the registered
holders of the Warrants), as follows:

	 	 	 
	 	 	
The Bank of New York
	 	 	
101 Barclay Street, Floor 11E
	 	 	
New York, New York 10286
	 	 	
Attention: Stock Transfer Department
	 	 	
Fax: 212-815-6979

     Any notice of demand authorized by this Agreement to be given or made to
the holder of any Warrants shall be sufficiently given or made if sent by
first-class mail, postage prepaid to the last address of such holder as it
shall appear on the Warrant Register.

     SECTION 8.04.      Applicable Law. The validity, interpretation and
performance of this Agreement and of the Warrant Certificates shall be governed
by and construed in accordance with the laws of the state of New York, without
regard to principles of conflicts of law. The parties hereto hereby waive the
right to a jury trial in

- 29 -

 

any action arising out of this Agreement. Any dispute
arising out of this Agreement shall be litigated in the borough of Manhattan,
New York City, New York, and the parties hereby submit to the nonexclusive
jurisdiction of such courts and acknowledge that such courts are a convenient
forum.

     SECTION 8.05.      Benefits of this Agreement.
Nothing in this Agreement expressed and nothing that may be implied from
any of the provisions hereof is intended, or shall be construed, to confer
upon, or give to, any Person other than the Company, the Warrant Agent and the
holders of the Warrants any right, remedy or claim under or by reason of this
Agreement or of any covenant, condition, stipulation, promise or agreement
hereof, and all covenants, conditions, stipulations, promises and agreements in
this Agreement contained shall be for the sole and exclusive benefit of the
Company, the Warrant Agent and their successors and assigns and of the holders
of the Warrants.

     SECTION 8.06.      Registered Warrant Holders. Prior to due presentment for
registration of transfer, the Company and the Warrant Agent may deem and treat
the Person in whose name any Warrants are registered in the Warrant Register as
the absolute owner thereof for all purposes whatever (notwithstanding any
notation of ownership or other writing thereon made by anyone other than the
Company or the Warrant Agent) and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary or be bound to recognize any
equitable or other claim to or interest in any Warrants on the part of any
other Person and shall not be liable for any registration of transfer of
Warrants that are registered or to be registered in the name of a fiduciary or
the nominee of a fiduciary unless made with actual knowledge that a fiduciary
or nominee is committing a breach of trust in requesting such registration of
transfer or with such knowledge of such facts that its participation therein
amounts to bad faith. The terms “Warrant holder” and “holder” of any Warrants
and all other similar terms used herein shall mean such Person in whose name
Warrants are registered in the Warrant Register.

     SECTION 8.07.      Inspection of Agreement. A copy of this Agreement shall be
available at all reasonable times for inspection by any registered Warrant
holder at the designated office of the Warrant Agent. The Warrant Agent may
require any such holder to submit his, her or its Warrant Certificate (or a
proper affidavit or other evidence satisfactory to the Warrant Agent of the
loss, theft, mutilation or destruction of such Warrant Certificate) for
inspection by it before allowing such holder to inspect a copy of this
Agreement.

     SECTION 8.08.      Headings. The Article and Section headings herein are for
convenience only and are not a part of this Agreement and shall not affect the
interpretation thereof.

     SECTION 8.09.      Counterparts. The Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original.

- 30 -

 

SIGNATURE PAGE TO

WARRANT AGREEMENT

     IN WITNESS WHEREOF, this Agreement has been duly, executed by the parties
hereto as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	
 
	 	IMPSAT FIBER NETWORKS, INC.
	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 
	 	 	 	 	 	

	 	 	 	 	 	Name:
	 	 	 	 	 	Title:
	 	 	 	 	 	 	 
	 	 	 	 	THE BANK OF NEW YORK
	 	 	 	 	As Warrant Agent
	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 
	 	 	 	 	 	

	 	 	 	 	 	Name:
	 	 	 	 	 	Title:

 

 

EXHIBIT A     Form of Warant Certificate

	 	 	 	 	 	 	 
	No. [  
]-[   ]	 	
 
	 	     
	 	Warrants

VOID AFTER MARCH [
     ], 2011

THE ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) OR
PURSUANT TO THE SECURITIES LAWS OF ANY STATE, AND SUCH SECURITIES MAY NOT BE
SOLD OR TRANSFERRED OTHER THAN IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS
OF THE 1933 ACT AND THE RULES AND REGULATIONS THEREUNDER OR AN EXEMPTION
THEREFROM AND FROM ANY APPLICABLE STATE SECURITIES LAWS.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE THE BENEFITS OF A
REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 25, 2003, AMONG THE COMPANY,
IMPSAT S.A., THE HOLDERS LISTED ON EXHIBIT A THERETO AND SUCH OTHER PARTIES WHO
MAY BE MADE A SIGNATORY THERETO FROM TIME TO TIME, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE COMPANY.

WARRANTS TO PURCHASE COMMON STOCK

OF IMPSAT FIBER NETWORKS, INC.

     IMPSAT FIBER NETWORKS, INC., a Delaware corporation (hereinafter called
the “Company”), for value received, hereby certifies that or registered assigns, is the owner of the number of Warrants set forth above,
each of which represents the right, at any time commencing on the Initial
Exercise Date (as such term is defined in the Warrant Agreement (as hereinafter
defined)) and before 5:00 p.m., New York time, on March [     ], 2011 on which
date such Warrants expire, initially to purchase, subject to the terms hereof
and of the Warrant Agreement (as hereinafter defined), one share of Common
Stock per Warrant, par value $.01 per share, of the Company (hereinafter called
the “Common Stock”) at the price of $15.00 per share (the “Warrant Price”),
subject to the terms and conditions hereof and of the Warrant Agreement, each
such purchase to be made, and to be deemed effective for the purpose of
determining the date of exercise, only upon surrender hereof to the Company at
the Warrant Agent’s Office, with the Election to Exercise Form on the reverse
hereof duly completed and signed, and upon payment in full to the Warrant Agent
for the account of the Company of the Warrant Price (a) in cash (including by
wire transfer to an account designated by the Company), (b) by certified or
official bank check, (c) by Cashless Exercise (as defined below) if otherwise
in compliance with applicable law, or (d) by any combination of the foregoing,
and upon compliance with and subject to the conditions set forth herein and in
the Warrant Agreement, including satisfaction of any necessary filing
requirements under the HSR Act. For purposes of this Warrant, a “Cashless
Exercise” shall mean an exercise of

- A-1 -

 

 

a Warrant in accordance with the immediately following two sentences. To
effect a Cashless Exercise, the holder may exercise a Warrant or Warrants
without payment of the Warrant Price in cash by surrendering such Warrant or
Warrants (represented by one or more Warrant Certificates) and in exchange
therefor, receiving such number of shares of Common Stock equal to the product
of (1) that number of shares of Common Stock for which such Warrant or Warrants
are exercisable and which would be issuable in the event of an exercise with
full payment in cash of the Warrant Price and (2) the Cashless Exercise Ratio.
The “Cashless Exercise Ratio” shall equal a fraction, the numerator of which is
the excess of the current market price per share of Common Stock on the date of
exercise (as determined pursuant to Section 4.01(e) of the Warrant Agreement)
over the Warrant Price per share of Common Stock as of the date of exercise and
the denominator of which is the current market price per share of Common Stock
on the date of exercise (as determined pursuant to Section 4.01(e) of the
Warrant Agreement). Upon surrender of a Warrant Certificate representing more
than one Warrant in connection with the holder’s option to elect a Cashless
Exercise, such holder must specify the number of Warrants for which such
Warrant Certificate is to be exercised (without giving effect to the Cashless
Exercise). All provisions of the Warrant Agreement shall be applicable with
respect to a Cashless Exercise of a Warrant Certificate for less than the full
number of Warrants represented thereby. Capitalized terms that are not
otherwise defined herein shall have the meanings ascribed to them in the
Warrant Agreement.

     The Warrant Price, the number of Warrant Shares and/or the number of
Warrants outstanding, are subject to adjustment in certain events as provided
in the Warrant Agreement. In the event the Company elects to adjust the number
of Warrants outstanding in substitution for any adjustment in the number of
Warrant Shares, the Company shall cause the Warrant Agent to distribute to
holders of record of Warrant Certificates either Warrant Certificates
evidencing any additional Warrants issuable pursuant to the adjustment or
substitute Warrant Certificates to replace all outstanding Warrant Certificates
in accordance with the provisions of the Warrant Agreement. The Company shall
not be required to issue fractions of Warrants or Warrant Certificates
evidencing fractional Warrants upon any such adjustment or otherwise, but the
Company shall make adjustment in cash for any fraction of a Warrant which the
registered holder of Warrants would have been entitled to receive upon such
adjustment as provided in the Warrant Agreement.

     This Warrant Certificate is issued under and in accordance with the
Warrant Agreement dated as of March 25, 2003 (herein called the “Warrant
Agreement”), between the Company and The Bank of New York, as Warrant Agent,
and is subject to and is to be construed in accordance with the terms and
provisions of the Warrant Agreement, which terms and provisions are hereby
incorporated by reference herein and made a part hereof. Every holder of this
Warrant Certificate consents to all of the terms contained in the Warrant
Agreement by acceptance hereof. A copy of the Warrant Agreement is available
for inspection by the registered holder hereof at the office of the Warrant
Agent at the following address:

- A-2 -

 

 

	 	 	 
	 	 	
The Bank of New York
	 	 	
101 Barclay Street, Floor 11E
	 	 	
New York, New York 10286
	 	 	
Attention: Stock Transfer Department
	 	 	
Fax: 212-815-6979

     The Company shall not be required upon the exercise of the Warrants
represented hereby to issue fractions of shares of Common Stock, to distribute
stock certificates that evidence fractional shares of Common Stock or to issue
Warrant Certificates representing fractional Warrants, but shall make
adjustment in cash for any fraction of a share as provided in the Warrant
Agreement. If the Warrants represented hereby shall be exercised in part, the
registered holder hereof shall be entitled to receive, upon surrender hereof,
another Warrant Certificate for the balance of the number of whole Warrants not
exercised as provided in the Warrant Agreement.

     Commencing on the day after the Distribution Date, this Warrant
Certificate may be exchanged by any holder thereof either separately or in
combination with other Warrant Certificates at the Warrant Agent’s Office for
new Warrant Certificates representing the same aggregate number of Warrants
evidenced by the Warrant Certificate or Warrant Certificates exchanged, upon
surrender of this Warrant Certificate and upon compliance with and subject to
the conditions set forth herein and in the Warrant Agreement.

     Commencing on the day after the Distribution Date, this Warrant
Certificate is transferable at the Warrant Agent’s Office by the registered
holder hereof in person or by such holder’s attorney duly authorized in
writing, upon surrender of this Warrant Certificate and upon compliance with
and subject to the conditions set forth herein and in the Warrant Agreement.
Upon any such transfer, a new Warrant Certificate or new Warrant Certificates
of different denominations, representing in the aggregate a like number of
Warrants, will be issued to the transferee. Every holder of Warrants, by
accepting this Warrant Certificate, consents and agrees with the Company, the
Warrant Agent and with every subsequent holder of this Warrant Certificate that
until due presentation for the registration of transfer of this Warrant
Certificate on the Warrant Register maintained by the Warrant Agent, the
Company and the Warrant Agent may deem and treat the Person in whose name this
Warrant Certificate is registered as the absolute and lawful owner for all
purposes whatsoever and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.

     The Company is authorized by the Warrant Agreement to suspend the exercise
of all Warrants for any period during which any shares of Common Stock reserved
for exercise of Warrants require, under any federal or state law or rule or
regulation of any national securities exchange or market, registration with or
approval of any governmental authority or listing on any national securities
exchange or market and such registration, approval or listing is not in effect.

- A-3 -

 

 

     Nothing contained in the Warrant Agreement or in this Warrant Certificate
shall be construed as conferring on the holder of any Warrants or such holder’s
transferee any rights whatsoever as a stockholder of the Company.

     This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent.

     The Warrant Agreement and each Warrant Certificate, including this Warrant
Certificate, shall be deemed a contract made under the laws of the State of New
York and for all purposes shall be governed by and construed in accordance with
the laws of the State of New York, without regard to principles of conflicts of
law.

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.

     Dated:          , 2003

	 	 	 	 	 	 
	 	 	 	IMPSAT FIBER NETWORKS, INC.
	 
	[CORPORATE SEAL]	 	 	 	 
	 
	 	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:
	 	 	 	 	 	 
	ATTEST:	 	 	 	 
	 	 	 	 	 	 
	By	 	 	 	 
	 	
	 	 	 	 
	 	Name:	 	 	 	 
	 	Title:	 	 	 	 
	 	 	 	 	 	 
	COUNTERSIGNED	 
	 	 	 	THE BANK OF NEW YORK
	 	 	 	as Warrant Agent
	 	 	 	 	 	 
	Date of Countersignature:	 	
By:	 	 
	 	 	 	 	

	
	 	Authorized Signatory

- A-4 -

 

 

ELECTION TO EXERCISE

(To be executed upon exercise of Warrant)

To IMPSAT FIBER NETWORKS, INC.:

     The undersigned hereby irrevocably elects to exercise      of the
Warrants represented by the within Warrant Certificate and to purchase
thereunder the shares of Common Stock issuable upon exercise of such Warrants,
as provided for therein, and tenders herewith payment of the purchase price in
full as follows: $     in the form of cash or a certified or official bank
check and the remainder of such purchase price to be paid in the form of
surrender of Warrants pursuant to a Cashless Exercise (as defined in the
Warrant Agreement) for      shares of Common Stock at the current Cashless
Exercise Ratio.

     Please issue a certificate or certificates for such shares of Common Stock
in the name of, and pay any cash for any fractional share to:

	 	 	 	 	 
	PLEASE INSERT SOCIAL SECURITY OR	 	
Name:	 	 
	OTHER IDENTIFYING NUMBER OF	 	 	

	ASSIGNEE	 	 	(Please Print Name and Address)
	 	 	
Address	 	 
	
	 	 	

	 	 	
Signature	 	 
	
	 	 	

	 	 	 	 	 
	 	NOTE:	 	
The above signature should correspond
exactly with the name on the face of this
Warrant Certificate or with the name of
assignee appearing in the assignment form
below. In the event of any assignment, the
Warrant Agent may require evidence of payment
of any applicable transfer taxes.	 

AND, if said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the Warrants represented
by the within Warrant Certificate less any fraction of a Warrant paid in cash.

Dated:          , 20

THE SIGNATURES) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION,
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
RULE 17Ad-15 OF THE SECURITIES AND EXCHANGE COMMISSION.

- A-5 -

 

 

ASSIGNMENT

(To be executed only upon assignment of Warrant Certificate)

     For value received the Assignee named below all of the rights of the
undersigned represented by the within Warrant Certificate, with respect to the
number of Warrants set forth below:

	 	 	 	 	 
	Name of Assignee	 	Address	 	No. of Warrants
	
	 	
	 	

	
	 	

	 	

	
	 	

	 	

	
	 	

	 	

together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint                attorney,
to transfer said
Warrant Certificate on the books of the within-named Company, with full power
of substitution in the premises.

Dated:            , 20

	 	 	 	 	 
	 	 	

	 	 	
NOTE:
	 	The above signature should
correspond exactly with the
name on the face of this
Warrant Certificate.

Signature guaranteed:

THE SIGNATURES) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION,
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
RULE 17Ad-15 OF THE SECURITIES AND EXCHANGE COMMISSION.

- A-6 -exv10w4

 

Exhibit 10.4

US$43,786,000

AMENDED AND RESTATED FINANCING AGREEMENT

dated as of March 25, 2003,

by and among

IMPSAT S.A.

as Borrower,

NORTEL NETWORKS LIMITED,

as Administrative Agent,

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Collateral Agent

and

The Lenders Party Hereto From Time to Time

as Lenders

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 
	W I T N E S S E T H:
	 	 	1	 
	SECTION 1. Definitions
	 	 	2	 
	 	Section 1.1. Defined Terms
	 	 	2	 
	 	Section 1.2. Other Definitions
	 	 	20	 
	 	Section 1.3. Interpretation
	 	 	21	 
	 	Section 1.4. Accounting Principles and Terms
	 	 	22	 
	SECTION 2. The Credit Facility
	 	 	22	 
	 	Section 2.1. Loans
	 	 	22	 
	 	Section 2.2. Notes
	 	 	23	 
	SECTION 3. Payment of Principal, Interest and Fees
	 	 	23	 
	 	Section 3.1. Repayment of Principal
	 	 	23	 
	 	Section 3.2. Prepayments
	 	 	23	 
	 	Section 3.3. Interest
	 	 	26	 
	 	Section 3.4. Agent’s Fees
	 	 	27	 
	 	Section 3.5. Nature of Payments
	 	 	27	 
	 	Section 3.6. Payment Procedures
	 	 	28	 
	 	Section 3.7. Administrative Agent’s Determination
	 	 	28	 
	 	Section 3.8. Payments Pro Rata
	 	 	28	 
	 	Section 3.9. Governmental Approvals
	 	 	29	 
	SECTION 4. Payment in Dollars; Event of Sovereign Risk
	 	 	29	 
	 	Section 4.1. Obligation to Pay in Dollars; Judgment Currency
	 	 	29	 
	 	Section 4.2. Event of Sovereign Risk
	 	 	29	 
	 	Section 4.3. Waiver of “Pesification”
	 	 	31	 

i

 

	 	 	 	 	 	 
	SECTION 5. Funding and Yield Protection
	 	 	31	 
	 	Section 5.1. Taxes
	 	 	31	 
	 	Section 5.2. Illegality
	 	 	32	 
	 	Section 5.3. Increased Costs and Yield Protection
	 	 	33	 
	SECTION 6. Deliveries; Conditions Precedent
	 	 	35	 
	 	Section 6.1. Closing Documents
	 	 	35	 
	 	Section 6.2. Plan and Plan Confirmation
	 	 	36	 
	 	Section 6.3. Security Documents
	 	 	37	 
	 	Section 6.4. Accounts Payable Financing Agreement
	 	 	37	 
	 	Section 6.5. Material Agreements
	 	 	37	 
	 	Section 6.6. Representations and Warranties
	 	 	37	 
	 	Section 6.7. Covenants
	 	 	37	 
	 	Section 6.8. Litigation
	 	 	37	 
	 	Section 6.9. No Defaults
	 	 	38	 
	 	Section 6.10. Material Adverse Change
	 	 	38	 
	 	Section 6.11. Payment of Fees
	 	 	38	 
	 	Section 6.12. Capitalization of ISCH Indebtedness
	 	 	38	 
	 	Section 6.13. English Language
	 	 	38	 
	SECTION 7. Representations and Warranties
	 	 	38	 
	 	Section 7.1. Corporate Status
	 	 	39	 
	 	Section 7.2. Corporate Power
	 	 	39	 
	 	Section 7.3. Governmental Approvals
	 	 	39	 
	 	Section 7.4. No Violation
	 	 	40	 
	 	Section 7.5. Proceedings
	 	 	40	 
	 	Section 7.6. Taxes
	 	 	41	 

ii

 

	 	 	 	 	 	 
	 	Section 7.7. Financial Statements
	 	 	41	 
	 	Section 7.8. The Project
	 	 	41	 
	 	Section 7.9. Environmental Matters
	 	 	42	 
	 	Section 7.10. Transactions with Affiliates
	 	 	42	 
	 	Section 7.11. Indebtedness
	 	 	42	 
	 	Section 7.12. Properties
	 	 	42	 
	 	Section 7.13. Intellectual Property
	 	 	43	 
	 	Section 7.14. Books and Records
	 	 	43	 
	 	Section 7.15. The Licenses
	 	 	43	 
	 	Section 7.16. No Material Adverse Change
	 	 	44	 
	 	Section 7.17. Insurance
	 	 	44	 
	 	Section 7.18. Collateral
	 	 	44	 
	 	Section 7.19. Investment Company; Public Utility Holding Company
	 	 	44	 
	 	Section 7.20. Immunity
	 	 	45	 
	 	Section 7.21. Margin Stock; Regulation U
	 	 	45	 
	 	Section 7.22. Solvency
	 	 	45	 
	 	Section 7.23. No Event of Default; Compliance with Material Agreements
	 	 	45	 
	 	Section 7.24. Fees or Compensation
	 	 	45	 
	 	Section 7.25. Termination of Lucent Agreements
	 	 	45	 
	 	Section 7.26. True and Complete Disclosure
	 	 	45	 
	SECTION 8. Covenants
	 	 	46	 
	 	Section 8.1. Affirmative Covenants
	 	 	46	 
	 	Section 8.2. Negative Covenants
	 	 	56	 
	 	Section 8.3. Financial Covenants
	 	 	59	 
	SECTION 9. Security
	 	 	61	 

iii

 

	 	 	 	 	 	 
	 	Section 9.1. Grant of Security Interest
	 	 	61	 
	 	Section 9.2. Escrow Accounts
	 	 	61	 
	 	Section 9.3. Release of Collateral
	 	 	62	 
	 	Section 9.4. Further Identification of the Collateral
	 	 	62	 
	 	Section 9.5. Further Assurances
	 	 	62	 
	SECTION 10. Events Of Default
	 	 	63	 
	 	Section 10.1. Events of Default
	 	 	63	 
	 	Section 10.2. Remedies Upon Event of Default
	 	 	68	 
	 	Section 10.3. Cumulative Rights
	 	 	69	 
	SECTION 11. Expenses And Indemnification
	 	 	69	 
	 	Section 11.1. Expenses
	 	 	69	 
	 	Section 11.2. Indemnification
	 	 	70	 
	SECTION 12. Assignment And Participation
	 	 	70	 
	 	Section 12.1. Assignment
	 	 	70	 
	 	Section 12.2. Participation
	 	 	72	 
	 	Section 12.3. Information
	 	 	72	 
	SECTION 13. Option to Revise Structure
	 	 	72	 
	 	Section 13.1. Option to Revise
	 	 	72	 
	 	Section 13.2. Transaction Costs
	 	 	73	 
	 	Section 13.3. Terms of Replacement Notes
	 	 	73	 
	 	Section 13.4. Application of Proceeds
	 	 	73	 
	 	Section 13.5. Termination of Option
	 	 	74	 
	SECTION 14. Governing Law and Jurisdiction
	 	 	74	 
	 	Section 14.1. Governing Law
	 	 	74	 
	 	Section 14.2. Waiver of Jury Trial
	 	 	74	 

iv

 

	 	 	 	 	 	 
	 	Section 14.3. Jurisdiction; Venue for Suit
	 	 	74	 
	 	Section 14.4. Waiver of Immunity
	 	 	74	 
	 	Section 14.5. Process Agent
	 	 	75	 
	 	Section 14.6. Legal Process in Other Jurisdictions
	 	 	76	 
	SECTION 15. The Agents
	 	 	76	 
	 	Section 15.1. Authorization and Action
	 	 	76	 
	 	Section 15.2. Agent’s Reliance
	 	 	76	 
	 	Section 15.3. Lender Credit Decision
	 	 	77	 
	 	Section 15.4. Lender Indemnification
	 	 	77	 
	 	Section 15.5. Successor Agents
	 	 	77	 
	SECTION 16. General Provisions
	 	 	78	 
	 	Section 16.1. Notices
	 	 	78	 
	 	Section 16.2. Severability of Provisions
	 	 	79	 
	 	Section 16.3. Binding Effect; Successors and Assigns
	 	 	79	 
	 	Section 16.4. Amendment; Waiver
	 	 	80	 
	 	Section 16.5. Entire Agreement
	 	 	80	 
	 	Section 16.6. No Novation
	 	 	80	 
	 	Section 16.7. Right of Set-Off
	 	 	80	 
	 	Section 16.8. Release and Waiver
	 	 	81	 
	 	Section 16.9. Further Assurances
	 	 	81	 
	 	Section 16.10. Term of Agreement; Survival
	 	 	81	 
	 	Section 16.11. Headings
	 	 	81	 
	 	Section 16.12. Counterparts
	 	 	81	 
	 	Section 16.13. Confidentiality
	 	 	81	 
	 	Section 16.14. Cooperation
	 	 	82	 

v

 

AMENDED AND RESTATED FINANCING AGREEMENT

THIS AMENDED AND RESTATED FINANCING AGREEMENT (this “Agreement”) dated
as of March 25, 2003, by and among IMPSAT S.A., a corporation (sociedad
anónima) organized pursuant to the laws of the Republic of Argentina (the
“Borrower”); Nortel Networks Limited (formerly known as Nortel Networks
Corporation) (“Nortel”), a corporation organized pursuant to the laws of
the Province of Ontario, Canada, as administrative agent (the
“Administrative Agent”); Deutsche Bank Trust Company Americas, a New
York banking corporation, as collateral agent (the “Collateral Agent”);
and the several lenders party hereto from time to time, as lenders (together
with Nortel, the “Lenders”).

W I T N E S S E T H:

     WHEREAS, the parties hereto are each party to an Amended and Restated
Financing Agreement dated as of June 11, 2001 as amended pursuant to amendments
dated as of October 25, 2001 and November 24, 2001 respectively (as the same
may have been further amended, supplemented or otherwise modified, the
“Existing Financing Agreement”);

     WHEREAS, the Lenders made available to the Borrower under the terms and
conditions of the Existing Financing Agreement a credit facility in the
original maximum principal amount of one hundred forty nine million one hundred
thousand Dollars (US$149,100,000) to assist in financing the purchase by the
Borrower or its Affiliates of telecommunications equipment and services
manufactured or supplied by Nortel or its Affiliates related to the design,
procurement, installation, commissioning, and operation of a broadband
telecommunications network in Argentina (the “Project”) under (i) a
Turnkey Project Agreement by and among the Borrower, Nortel Networks de
Argentina S.A. (“Nortel Argentina”) and Nortel dated as of September 6,
1999 (as amended, supplemented or otherwise modified from time to time, the
“Turnkey Contract”) and (ii) a Supply Contract by and among the
Borrower, Nortel Argentina, Nortel and certain Affiliates of Nortel and the
Borrower dated as of November 5, 1999 (as amended, and restated as of May 30,
2002, the “Supply Agreement”) (the Turnkey Contract and the Supply
Agreement, collectively, the “Nortel Contracts”);

     WHEREAS, the Borrower is a Subsidiary of IMPSAT Fiber Networks, Inc.
(formerly known as IMPSAT Corporation), a corporation organized pursuant to the
laws of the State of Delaware, U.S.A. (“IMPSAT”);

     WHEREAS, pursuant to the terms of a certain Guarantee Agreement dated as
of October 25, 1999 executed by IMPSAT in favor of the Lenders (as the same may
have been amended, supplemented or otherwise modified, the “Existing
Guarantee”) IMPSAT has guaranteed the payment and performance of all past,
present and future liabilities, obligations and indebtedness of the Borrower to
the Lenders arising under, pursuant to or in connection with the Existing
Financing Agreement;

     WHEREAS, the Borrower and IMPSAT desire to restructure the outstanding
indebtedness under the Existing Financing Agreement (together with all accrued
and unpaid interest thereon, collectively, the “Existing Debt”);

1

 

     WHEREAS, in order to implement a restructuring of the Existing Debt and a
restructuring of certain other obligations of IMPSAT, the Borrower and other
Subsidiaries of IMPSAT, IMPSAT filed (i) a voluntary petition for relief under
Chapter 11 of Title 11 of the United States Code on June 11, 2002 (the
“Chapter 11 Proceedings”) and (ii) as part of such Chapter 11
Proceedings a disclosure statement and plan of reorganization (the
“Plan”) (which was approved by the United States Bankruptcy Court for
the Southern District of New York and subsequently confirmed on December 11,
2002);

     WHEREAS, US$76,491,953 of the principal amount of the Existing Debt has
been assigned to, and assumed by, IMPSAT immediately prior hereto (the
“Assumed Obligations”);

     WHEREAS, the Lenders have agreed to restructure the remaining balance of
the Existing Debt (the “Existing Debt Balance”) in the aggregate
original principal amount of forty three million seven hundred eighty-six
thousand Dollars ($43,786,000) pursuant to the terms of this Agreement;

     WHEREAS, the Borrower, the Lenders, the Administrative Agent and the
Collateral Agent have agreed to amend and restate the Existing Financing
Agreement to provide for the Term Loans and certain other amendments on the
terms set forth in this Agreement, which Agreement shall become effective upon
satisfaction of the conditions precedent set forth herein;

     WHEREAS, it is the intent of the parties hereto that this Agreement not
constitute a novation of the obligations and liabilities under the Existing
Financing Agreement or evidence payment of all or any of such obligations or
liabilities, that this Agreement amend and restate in its entirety the Existing
Financing Agreement, and that from and after the Closing Date the Existing
Financing Agreement be of no further force or effect except as to evidence the
incurrence of the obligations of the Borrower and IMPSAT thereunder and the
representations and warranties made thereunder;

     NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the Parties
agree as follows:

SECTION 1. Definitions.

Section 1.1. Defined Terms.

     The following capitalized terms shall have the meanings set forth in this
Section 1.1 when used in this Agreement, including its preamble and recitals:

     “Accounts Payable Financing Agreement” means the financing
agreement entered into by and between the Borrower and Nortel as lender as of
March 25, 2003, with an aggregate principal amount of $10,287,919.

     “Affiliate” means, as to any Person (a) each Person that, directly
or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the Voting Stock of
such Person, (b) each Person that controls, is controlled by or is under common
control with, such Person and (c) in the case of individuals, the immediate
family

2

 

 members, spouses and lineal descendants of individuals who are Affiliates
of the Borrower or IMPSAT. For purposes of this definition, “control” of a
Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through
the ownership of Voting Stock, by contract, by virtue of being an executive
officer or a director or otherwise.

     “Agents” means the Administrative Agent and the Collateral Agent.

     “Applicable Law” means any statute, law, regulation, ordinance,
rule, judgment, writ, rule of common law, common law duty, code, order, decree,
governmental approval, administrative order, directed duty, request, license,
authorization, permit, approval, concession, grant, franchise, directive,
guideline, policy, requirement, or other governmental restriction, or any
similar form of decision of, determination by, agreement with, or requirements
of (or any interpretation or administration of any of the foregoing by) any
Governmental Authority, whether in effect as of the date hereof or thereafter
(including any Environmental Laws).

     “Argentina” means the Republic of Argentina.

     “Argentine GAAP” means generally accepted accounting principles in
Argentina as established from time to time by the Consejo Profesional de
Ciencias Económicas.

     “Assignment and Assumption Agreement” means an assignment and
assumption agreement between a Lender and an Eligible Assignee, and accepted by
the Administrative Agent, substantially in the form of Exhibit A.

     “Authorized Officer” means, with respect to any Person, each of the
following officers of such Person: (a) the Chief Executive Officer; (b) the
Chief Financial Officer or (c) any other Person having substantially similar
responsibilities and authority.

     “BBVA” means BBVA Banco Frances S.A. (acting in its capacity as
trustee to the Guaranty Trust Agreement dated October 25, 2002, entered into
among Sirti Argentina, S.A., BBVA Banco Frances S.A. and Sirti S.p.A.).

     “Borrower Annual Operating Budget” means, with respect to each
fiscal year of the Borrower beginning with its fiscal year ending on December
31, 2003, an annual operating budget delivered to the Lenders pursuant to
Section 8.1(b)(6), with respect to such fiscal year.

     “Borrower Business Plan” Unless and until the Borrower shall have
delivered to the Lenders a revised or updated business plan in accordance with
Sections 8.1(b)(2) or (5), means the six-year consolidated Business Plan of the
Borrower dated as of December 15, 2002, and not including any subsequent
amendments, supplements or replacements thereof.

     “Borrower Capital Markets Transaction” means any public offering or
private placement of debt securities of the Borrower or any of its
Subsidiaries.

     “Borrower’s Net Debt” means, on any date, (a) the Borrower’s Total
Debt outstanding on such date (excluding all Indebtedness of others guaranteed
by the Borrower); minus (b) the

3

 

 amount of the Intercompany Indebtedness of the Borrower evidenced by
Subordinated Intercompany Notes outstanding on such date; minus (c) the
aggregate amount of cash and Temporary Cash Investments of the Borrower and its
Subsidiaries that are subject to a Lien in favor of the Lenders pursuant to the
Security Documents.

     “Brazil” means the Federative Republic of Brazil.

     “Brazil Agreements” means, collectively, the Financing Documents as
defined in the Nortel Brazil Financing Agreement and the Brazil Supply
Agreement.

     “Brazil Supply Agreement” means the Supply Contract dated as of
November 5, 1999 (as amended from time to time) among IMPSAT Brazil, Nortel and
Nortel Brazil

     “Business Day” means a day other than a Saturday, Sunday, or any
other day on which commercial banks in New York City, United States of America,
or the City of Buenos Aires, Argentina are authorized or required by Applicable
Law to close.

     “Business Plans” means, collectively, the Borrower Business Plan,
the Borrower Annual Operating Budget and the IMPSAT Business Plan.

     “Capital Adequacy Regulation” means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
Applicable Law, whether or not having the force of law, in each case of general
applicability regarding capital adequacy of banks and branches thereof or
corporations controlling banks.

     “Capital Expenditures” means, with respect to any Person for any
period, the additions to property, plant and equipment and other capital
expenditures of such Person and its Subsidiaries for such period, as the same
are or would be set forth in a consolidated statement of cash flows of such
Person and its Subsidiaries for such period.

     “Capital Lease” means, with respect to any Person, any lease of (or
other indebtedness arrangement conveying the right to use) any property
(whether real, personal or mixed) by such Person as lessee that, in accordance
with U.S. GAAP, would be required to be classified and accounted for as a
capital lease or a liability on the balance sheet of such Person.

     “Capital Stock” means, with respect to any Person, all shares,
interests, rights to purchase, warrants, options, or other equivalents of or
interests in the common or preferred equity of such Person.

     “Central Bank” means the Banco Central de la República Argentina.

     “Change of Control” means an event or circumstance as a result of
which: (i) a “person” or “group” (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act), other than a Permitted Investor or any Existing
Securityholder or its Affiliates, becomes the ultimate “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act) of Voting Stock representing more
than thirty percent (30%) of the total voting power of the Voting Stock of
IMPSAT on a fully diluted basis and such ownership represents a greater
percentage of the total

4

 

 voting power of the Voting Stock of IMPSAT, on a fully diluted basis, than
is held by the Existing Securityholders and their Affiliates on such date; (ii)
individuals who on the date hereof constitute the board of directors of IMPSAT
(together with any new directors whose election by the board of directors or
whose nomination for election by IMPSAT’s stockholders was approved by a vote
of at least two-thirds of the members of the board of directors of IMPSAT then
in office who either were members of the board of directors of IMPSAT on the
date hereof or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the members of the
board of directors of IMPSAT then in office; or (iii) IMPSAT is the “beneficial
owner” of less than fifty percent (50%) of the Voting Stock of the Borrower.

     “Charter Documents” means, with respect to any Person (other than
an individual), its founding act, charter, certificate of incorporation,
by-laws, memorandum and articles of association, estatutos sociales and other
similar documents regarding its organization or constitution.

     “Closing Date” means the date on which all conditions set forth in
Section 6 herein have been satisfied.

     “Control” means: (a) the beneficial ownership of more than fifty
percent (50%) of the total Voting Stock then outstanding of a Person; or (b)
even if less than such percentage of outstanding Voting Stock is owned, the
power to direct the management and policies of such Person, directly or through
one or more intermediaries, whether through the ownership of voting securities,
by contract, or otherwise.

     “Current Assets” means, at any time, the total assets of the
Borrower and its Subsidiaries which would be shown as current assets on a
balance sheet of the Borrower and its Subsidiaries prepared in accordance with
U.S. GAAP at such time, provided that in determining such current assets (a)
notes and accounts receivable shall be included only if good and collectible
and payable on demand or within one year from such date (and not by their terms
or by the terms of any instrument or agreement relating thereto directly or
indirectly renewable or extendible at the option of the obligor beyond such
year) and shall be valued at their face value less reserves or accruals for
uncollectible accounts determined to be sufficient in accordance with U.S.
GAAP, and (b) life insurance policies (other than the cash surrender value of
any unencumbered policies that is properly classified as a current asset in
accordance with U.S. GAAP) shall be excluded.

     “Current Liabilities” means, at any time, the total liabilities of
the Borrower and its Subsidiaries which would be shown as current liabilities,
including the current portion of long term Indebtedness, minus the current
portion of deferred Revenue, on a balance sheet of the Borrower and its
Subsidiaries prepared in accordance with U.S. GAAP.

     “Debt Service” means, with respect to any Person for any period,
the sum of (i) the total Interest Expense of such Person and its Subsidiaries
during such period (excluding any original issue discount, interest paid in
kind or amortized debt discount, to the extent included in determining Interest
Expense), plus (ii) all amounts of principal and premium, if any, paid or

5

 

 required to be paid during such period in respect of Total Debt (excluding
Indebtedness in respect of guarantees except to the extent paid by such Person
during such period) of such Person and its Subsidiaries; provided,
however, with respect to the determination of Excess Cash Flow, amounts
of principal which are paid under revolving credit or similar facilities shall
be counted, but only to the extent that any amounts so paid may not, by the
terms of such revolving credit or similar facilities, be reborrowed or redrawn
(or in the case of term Indebtedness with contractual rights of extension or
roll-over to the extent that such extension or roll-over would be prohibited
pursuant to the terms of this Agreement); and provided, further, with
respect to the calculation of the Debt Service Coverage Ratio contained in
Section 8.3(b), amounts of principal which are paid under revolving credit or
similar facilities and then reborrowed during the same calendar quarter shall
be counted without duplication.

     “Default” means any event, occurrence, factual or legal condition
which, if continued uncured or unchanged would, with the passage of time or the
giving of notice or both, become or constitute an Event of Default.

     “Default Interest Rate” means an interest rate per annum equal to
fourteen percent (14%) at any time after March 25, 2005.

     “Disposal” means, with respect to any property (including, without
limitation, all tangible and intangible assets and rights to payment) of the
Borrower or any Subsidiary thereof, any direct or indirect sale, conveyance,
transfer, alienation, lease, IRU, loan, sale-and-repurchase, sale-leaseback or
other transaction or arrangement as a result of which the Borrower or
Subsidiary party to such transaction or arrangement relinquishes all or
substantially all marketable rights in and to such property; and the verb
“Dispose of” has a corresponding meaning.

     “Dollars and US$” means the lawful currency of the United States of
America.

     “EBITDA” means, with respect to any Person for any period, the Net
Income of such Person and its Subsidiaries for such period after (a) restoring
thereto amounts deducted in determining Net Income for such period including,
without duplication, (1) Interest Expense for such period, (2) taxes based upon
net income, (3) depreciation and amortization, and (4) other non-cash charges;
(b) adding the amount that is contributed by IMPSAT to the Borrower’s Paid in
Capital with respect to MU Expenses in compliance with the requirements of
Section 8.1(o) for such period; and (c) deducting therefrom (1) non-cash income
or losses to the extent included in determining Net Income and (2) deferred
Revenues attributable to IRUs recognized as Revenues during such period.

     “Eligible Assignees” means, prior to the occurrence of an Event of
Default, any Person so long as such Person is not a direct competitor of the
Borrower, and after the occurrence of an Event of Default, any Person.

     “Environmental Laws” means any and all applicable statutes, laws,
judicial decisions, regulations, ordinances, rules, judgments, orders, decrees,
codes, injunctions, permits, concessions, grants, franchises, licenses,
agreements, and other governmental restrictions relating

6

 

 to the environment or the effect of the environment on human health or to
emissions, discharges or release of pollutants, contaminants, Hazardous
Substances, or wastes into the environment, including (without limitation)
ambient air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, Hazardous Substances, or
wastes or the clean-up or other remediation thereof.

     “Environmental Liabilities” means all liabilities in connection
with, or relating to, the business, assets, presently or previously owned or
leased property, activities (including, without limitation, off-site disposal)
or operations of the Borrower or any of its Subsidiaries, whether vested or
unvested, contingent or fixed, actual or potential, known or unknown, which
arise under or relate to matters covered by the Environmental Laws.

     “Equipment” means (i) all equipment, hardware, materials, and other
items of property together with all embedded firmware and hardwired logic,
software (including computer programs contained on a magnetic or optical
storage medium, in a semiconductor device, or in another memory device, or
system memory or supplied on any other storage medium) used in the construction
or operation of the Network, and (ii) any building infrastructure with respect
to any facility necessary to house or hold any of the items referenced in the
immediately preceding clause (i) (including grounding, air-conditioning systems
(both general and special), fire alarm and extinguisher systems, elevators,
water and sewer systems, uninterruptible power supply, main power boards, power
distribution boards, towers and transformers, power generators, electrical
rectifiers and batteries, cable and equipment ladders, trays and racks,
technical floors, security systems and all other infrastructure subsystems
required for the proper function of the Network), in each case purchased from
Nortel and its Affiliates pursuant to the Nortel Contracts with the proceeds of
the Existing Financing Agreement and the Financing Agreement dated as of
October 25, 1999 (which was amended and restated by the Existing Financing
Agreement) together with all replacements, components, parts, improvements, and
upgrades installed thereon or affixed thereto.

     “Equipment Pledge Agreement” means (i) the contract of registered
pledge (contrato de prenda con registro) dated August 31, 2000 and registered
on September 4, 2000, as amended as of December 28, 2000 and registered on
January 2, 2001, as further amended on October 5, 2001 and registered on
October 12, 2001, and as further amended on March 25, 2003 and filed for
registration on March 25, 2003, and from time to time thereafter, among the
Borrower, Deutsche Bank, S.A., as subagent of the Collateral Agent, Nortel and
BBVA (the “Existing Equipment Pledge Agreement”); and (ii) any other
contract of registered pledge (contrato de prenda con registro), substantially
in the form of the Existing Equipment Pledge Agreement, among the Borrower, the
Collateral Agent (or a subagent thereof), the Lenders, pursuant to which the
Borrower shall pledge Equipment to the Collateral Agent for the benefit of the
Lenders, as security for the Term Loans.

     “Equity” means, with respect to any Person at any date, the
consolidated stockholders’ equity of such Person and its Subsidiaries as of
such date, determined in accordance with U.S. GAAP.

7

 

     “Event of Sovereign Risk” means (a) failure by the Central Bank to
exchange or to approve or permit the exchange of Pesos for Dollars, the
unavailability of Dollars in any legal exchange market in Argentina in
accordance with normal commercial practice, or any other action of any
Argentine Governmental Authority that has the effect of restricting such
exchange or the transfer of Pesos for Dollars outside Argentina and (b) a
declaration of a banking moratorium or any suspension of payments by banks in
Argentina, or the imposition by any Argentine Governmental Authority of any
moratorium on the required rescheduling of or required approval of the payment
of any indebtedness in Argentina.

     “Excess Cash Flow” means, with respect to any Person, for any
period: (a) such Person’s EBITDA for such period; minus (b) the sum of
the following items, determined for such Person and its Subsidiaries on a
consolidated basis: (i) Debt Service paid for such period, (ii) cash Capital
Expenditures (net of any financing proceeds used to fund such Capital
Expenditures) for such period (but by the Borrower only to the extent that the
Borrower is in compliance with the covenant contained in Section 8.3(f)), (iii)
the net increase (or minus any net decrease) in working capital, excluding cash
included therein, from the opening of business on the first day, to the close
of business on the last day, of such period, and (iv) taxes based upon net
income payable with respect to such period paid in cash; provided,
however, that in the case of the calculation of “Excess Cash
Flow” for IMPSAT (x) this figure shall not include any such positive
amounts, but shall include any such negative amounts, in each case attributable
to the Borrower or IMPSAT Brazil for such period and (y) the amount of Debt
Service projected to be paid in accordance with the IMPSAT Business Plan during
the fiscal year immediately following the fiscal year most recently ended for
such period shall be deducted from what would otherwise be the result of the
calculation of “Excess Cash Flow”.

     “Exchange Act” means the U.S. Securities Exchange Act of 1934, as
amended.

     “Existing Indebtedness” means, with respect to the definition of
“Solvent,” the Indebtedness that is listed on Schedule 1.1, and with
respect to Sections 8.1(j)(2), 8.2(n) and Sections 10.1(f)(1), 10.1(f)(2),
10.1(l)(1) and 10.1(l)(2), the Indebtedness listed on Schedule 10.1(f).

     “Existing Securityholders” means each Person holding IMPSAT’s
Capital Stock or securities of IMPSAT convertible into or exchangeable for
IMPSAT’s Capital Stock, in each case, representing five percent (5%) or more of
IMPSAT’s total Capital Stock on a fully diluted basis as of the Closing Date.

     “Expropriation Event” means: (i) any taking by condemnation,
nationalization, seizure, expropriation or other appropriation by any
Governmental Authority of all or any material portion of the Collateral, (ii)
any assumption by any Governmental Authority of control of all or any material
portion of the Collateral or the business operations of the Borrower or any of
its Subsidiaries or any of any such Person’s share capital, (iii) any taking of
any action by a Governmental Authority which results in the involuntary
dissolution or disestablishment of the Borrower or any of its Subsidiaries, or
(iv) any taking of any action by any Governmental Authority that prevents the
Borrower and its Subsidiaries, taken as a whole, from carrying on their
business or operations or a material part thereof.

8

 

     “Fiber Optic Cable” means the fiber optic cable and other related
equipment purchased by the Borrower from Lucent Argentina pursuant to a
Purchase and Sale Agreement dated August 18, 1999 between the Borrower and
Lucent Argentina, together with all replacements, components, parts,
improvements and upgrades installed thereon or affixed thereto. For the
avoidance of doubt, any fiber optic cable or other related equipment included
after the date hereof in any of the ducts comprising the Network other than the
duct in which the Fiber Optic Cable is located shall not be deemed to be “Fiber
Optic Cable” for any purpose under this Agreement.

     “Financing Documents” means this Agreement, the Notes, all
Assignment and Assumption Agreements, the Security Documents, the IMPSAT
Guarantee and any other instruments, documents and agreements executed by or on
behalf of the Borrower or for the benefit of the Lenders in connection with the
Term Loans.

     “Governmental Approvals” means any authorization, consent, license
(including, but not limited to, the Licenses), approval, grant, franchise,
concession, identification number, lease, ruling, certification, exemption,
action, filing, registration, permit, order, decree, sanction, or other
authorization of any nature to be granted by any Governmental Authority, as now
or hereafter necessary under any Applicable Law.

     “Governmental Authority” means any nation or government, any state
or other political subdivision thereof (including, but not limited to, federal,
national, state, provincial, regional and municipal) and any entity exercising
executive, legislative, judicial, regulatory, or administrative authority or
functions of, or pertaining to, government or any court or arbitrator.

     “Hazardous Substance” means any substance, materials or waste
subject to regulation, or that forms the basis of liability, under
Environmental Laws because of its toxic, radioactive, caustic or otherwise
dangerous or hazardous qualities.

     “IMPSAT Brazil” means IMPSAT Comunicações Ltda., a company
organized pursuant to the laws of Brazil.

     “IMPSAT Business Plan” means the six-year consolidated business
plan of IMPSAT and its Subsidiaries dated as of December 15, 2002, and not
including any subsequent amendments, supplements or replacements thereof.

     “IMPSAT Capital Markets Transaction” means (i) any public offering
or private placement of debt securities of IMPSAT or (ii) any public offering
or private placement of debt securities of any Subsidiary of IMPSAT (other than
the Borrower or IMPSAT Brazil) which is guaranteed by IMPSAT, provided,
however; the following shall not constitute IMPSAT Capital Markets
Transactions: (a) any such offering described in clauses (i) or (ii) above, one
hundred percent (100%) of the net proceeds of which are used to refinance
Indebtedness of a Subsidiary of IMPSAT in existence on the date hereof; or (b)
the commencement of any such offering described in clause (ii) above after the
second anniversary of the Closing Date.

9

 

     “IMPSAT Convertible Notes” means the Series A Convertible Notes and
the Series B Convertible Notes.

     “IMPSAT Exit Cash Balance” means, as of any date of determination,
an amount equal to the greater of (a) zero Dollars (US$0.00) or (b) the result
of (i) US$60,244,024 (representing the value of the aggregate cash and
Temporary Cash Investments held by IMPSAT as of the Closing Date) less (ii) the
aggregate amount of all expenditures and investments made by IMPSAT since the
Closing Date.

     “IMPSAT Guarantee” means the Guarantee Agreement dated as of March
25, 2003, executed by IMPSAT in favor of the Lenders, a copy of which is
attached hereto as Exhibit B.

     “Indebtedness” means, with respect to any Person at any time and
from time to time, the sum, without duplication, of the following: (a) all
obligations of such Person for money borrowed (whether by loan, the issuance of
debt securities or otherwise); (b) the available amount at such time of all
letters of credit issued for the account of such Person and all outstanding
reimbursement obligations with respect thereto; (c) all liabilities or
obligations secured by any Lien on any property owned by such Person; (d) all
capitalized lease obligations; (e) all Indebtedness of others guaranteed by
such Person; (f) all obligations of such Person to pay the deferred purchase
price or acquisition price of property or services, other than (1) Trade
Payables and accrued expenses incurred owing by the Borrower to IMPSAT or any
of its Subsidiaries and (2) any other Trade Payables and accrued expenses
incurred, that are not past due by more than sixty (60) days; (g) all
obligations of such Person under trade or bankers’ acceptances or under
agreements providing for swaps, ceiling rates, ceiling and floor rates, or
contingent participation or other hedging mechanisms with respect to the
payment of interest; and (h) all indebtedness, liabilities and obligations of
such Person to redeem or retire shares of Capital Stock of such Person.

     “Independent Auditor” means with respect to IMPSAT, Deloitte &
Touche LLP, and with respect to the Borrower, Deloitte & Touche Argentina or
such other internationally recognized firm of certified public accountants as
may be approved by the Administrative Agent.

     “Intercompany Indebtedness” means all Indebtedness of the Borrower
for money borrowed from IMPSAT or any of IMPSAT’s Subsidiaries, or any
Indebtedness of any of the Borrower’s Subsidiaries for money borrowed from
IMPSAT or any of IMPSAT’s Subsidiaries, including the Borrower.

     “Intercompany Subordination Agreement” means any subordination
agreement executed by the Borrower or any of its Subsidiaries and in
substantially the form of Exhibit C.

     “Interest Expense” means, with respect to any Person for any
period, interest expense, both expensed and capitalized, of such Person and its
Subsidiaries for such period, including accrued interest and the interest
component of capital lease obligations, all commissions, discounts, fees and
charges (excluding interest expense in respect of guarantees except to the
extent paid by such Person during such period).

10

 

     “Interest Payment Date” means, initially, September 25, 2005 and
each successive date that is six (6) calendar months thereafter (being the same
day of the calendar month) until the Maturity Date.

     “Investment” means the acquisition of any Capital Stock,
partnership or other equity interests, evidence of Indebtedness, securities
(including any option, warrant or other right to acquire any of the foregoing)
of, the making of any loans or advances to, the guaranteeing of any obligations
of any Person, or the purchase or other acquisition (in one transaction or a
series of transactions) of any assets constituting a business unit.

     “IRU” means the creation of an indefeasible right of use of any
portion of the Borrower’s telecommunications network by the Borrower or any
Subsidiary thereof, including, but not limited to, an usufructo under Argentine
law, which provides for either (a) a Lien or a real property interest in favor
of the grantee or customer thereof or (b) payment to the Borrower or any
Subsidiary of the Borrower in a form other than periodic payments at quarterly
or more frequent intervals and is for a term of more than five years.

     “IRU Cost” means: (i) for any Permitted IRU granted in respect of
any duct, the number of kilometers of duct subject to the IRU, multiplied by
(A) in the case of a Long Haul IRU, four thousand two hundred seventy eight and
06/100 Dollars (US$4,278.06) and (B) in the case of Metropolitan IRU, twenty
two thousand six hundred sixty four and 32/100 Dollars (US$22,664.32); and (ii)
for any Permitted IRU granted in respect of fiber optic cable, the number of
kilometers of fiber optic cable subject to the IRU multiplied by the product of
one hundred fifteen Dollars (US$115.00) and the number of strands of fiber
optic cable over which the IRU is granted.

     “ISCH” means International Satellite Communications Holding Ltd.

     “ISCH Letter Agreement” means the Letter Agreement dated May 31,
2002, by and among ISCH, Nortel, Deutsche Bank Trust Company Americas and
IMPSAT.

     “Lending Office” means, with respect to any Lender, the office of
that Lender designated as its Lending Office by notice to the Administrative
Agent and the Borrower.

     “Licenses” means the Spectrum Authorization and the other licenses
listed in Schedule 7.15 and such other licenses, concessions,
authorizations, permits, or the like (including any additions or amendments
thereto) issued or granted by the SC or any other Governmental Authority from
time to time in favor of the Borrower or any of its Subsidiaries and required
for the completion of the Project, the operation of the Network and the conduct
of the Telecommunications Business.

     “Lien” means, with respect to any Person, any security interest,
lien, pledge, mortgage, charge, or encumbrance (including any agreement to give
any of the foregoing), title retention agreement, finance lease or trust
receipt, or a consignment or bailment for security purposes, or other security
arrangement or any other arrangement on or with respect to any asset or revenue
of such Person.

11

 

     “Long Haul IRU” means an IRU which is not a Metropolitan IRU.

     “Lucent Argentina” means Lucent Technologies S.A. Argentina.

     “Lucent Argentina 2000 Financing Agreement” means the Financing
Agreement dated as of September 29, 2000, as amended and restated as of June
11, 2001, among the Borrower, Lucent Argentina, as a lender and as
administrative agent, Bankers Trust Company, as collateral agent, and the other
lenders party thereto from time to time, pursuant to which Lucent Argentina has
made available to the Borrower a credit facility in a principal amount not to
exceed sixteen million Dollars (US$16,000,000) to finance the purchase of
certain products and services from Lucent Argentina and/or its Affiliates for
construction and operation of the Project.

     “Material Adverse Change” means an event, circumstance or
development of whatever nature that has had or could reasonably be expected to
have a Material Adverse Effect.

     “Material Adverse Effect” means a material adverse effect on (a)
the business, assets, results of operations, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries, taken as a whole, or IMPSAT;
(b) the ability of the Borrower or IMPSAT to perform their respective
obligations under any of the Project Agreements; (c) the rights and remedies of
the Lenders or the Agents under the Financing Documents; (d) the validity or
enforceability of this Agreement or any of the other Project Agreements; or (e)
the Licenses or the rights of the Borrower and its Subsidiaries thereunder.

     “Material Agreements” With respect to any Person, each contract to
which such Person is a party involving aggregate consideration payable to or
by such Person of US$2,500,000.00 or more in any 12-month period or otherwise
material to the business, condition (financial or otherwise), operations,
performance, properties or prospect of such Person.

     “Material Subsidiary” means, with respect to any Person, any
Subsidiary of such Person that, together with its Subsidiaries, (i) for the
most recent fiscal year of such Person, accounted for more than 10% of the
consolidated revenues of such Person or (ii) as of the end of such fiscal year,
was the owner of more than 10% of the consolidated assets of such Person, all
as set forth on the most recently available consolidated financial statements
of such Person for such fiscal year.

     “Maturity Date” means March 25, 2009.

     “Metropolitan IRU” means an IRU granted in respect of a portion of
the Network which is located within one of the metropolitan areas of Buenos
Aires, Rosario, Cordoba and Mendoza.

     “Mortgage Deeds” means: (i) the deeds of mortgage dated August 2,
2000, August 4, 2000 between the Borrower and Nortel, as collateral agent on
behalf of the Lenders and the deed of mortgage dated March 25, 2003 among the
Borrower and Nortel, BBVA and Deutsche Bank S.A. as subagent of the Collateral
Agent on behalf of the Lenders (the “Existing Mortgage Deeds”); and (ii)
any other deed or deeds, substantially in the form of the Existing Mortgage
Deed, pursuant to which the Borrower or its Subsidiaries shall grant mortgages
from time to time

12

 

 in favor of the Collateral Agent (or its subagent) for the benefit of the
Lenders, to secure the repayment of the Term Loans.

     “MU Expenses” means, for any period, the salary, Selling G&A and
other expenses of the Borrower which are properly attributable to the
employment and activities during such period of IMPSAT management personnel
employed by the Borrower.

     “Net Income” means, for any period, the net income (loss) of a
Person and its Subsidiaries, determined on a consolidated basis, for such
period in accordance with U.S. GAAP.

     “Net Proceeds” means, with respect to any event (a) the proceeds
received in respect of such event in the form of cash and Temporary Cash
Investments, including (i) any cash received in respect of any non-cash
proceeds, but only as and when received, (ii) in the case of an insured
casualty event, insurance proceeds, and (iii) in the case of an Expropriation
Event or similar event, expropriation awards and similar payments, net of (b)
the sum of (i) all reasonable fees and out-of-pocket expenses paid by the
Borrower and its Subsidiaries to third parties other than IMPSAT or its
Subsidiaries in connection with such event, (ii) in the case of a Disposal, the
amount of all payments required to be made by the Borrower and its Subsidiaries
as a result of such event to repay Indebtedness (other than Indebtedness
secured under the Security Documents) secured by the asset or property Disposed
of or otherwise subject to mandatory prepayment as a result of such event,
(iii) the amount of all taxes paid (or reasonably estimated to be payable) by
the Borrower and its Subsidiaries as a direct result of any gain recognized in
connection with such event, and (iv) the amount of any reserves established by
the Borrower and its Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next succeeding year and that are directly attributable to such event
(as determined reasonably and in good faith by the chief financial officer of
the Borrower in conformity with U.S. GAAP); provided, however,
that evidence with respect to (b)(i) through (iv) is provided to the
Administrative Agent in form and substance reasonably satisfactory to it.

     “Net Proceeds Account” means the net proceeds account to be
established by the Collateral Agent for the purpose of holding Net Proceeds in
the circumstances contemplated in Section 3.2(a)(2).

     “Network” means the broadband telecommunications network in
Argentina operated by the Borrower and certain of its Affiliates that was
constructed by Nortel and its Affiliates pursuant to the Turnkey Contract.

     “Nortel Brazil” means Northern Telecom do Brasil Comercio e
Servicos Ltda.

     “Nortel Brazil Financing Agreement” means the Amended and Restated
Financing Agreement dated as of March 25, 2003, by and among IMPSAT Brazil,
Nortel and IMPSAT.

     “Note” means a promissory note of the Borrower, substantially in
the form of Exhibit D, provided, however, that at the
request of any Lender, all Term Loans to be made by such Lender may be
evidenced by promissory notes of the Borrower in a form different from
Exhibit D if the

13

 

 purpose of such request is that such Notes be capable of characterization
as executive instruments (“títulos ejecutivos") under Argentine law and if the
alternate form of Note is approved by the Agents, which approval shall not be
unreasonably withheld.

     “Obligations” means all present and future obligations, liabilities
and other amounts, whether or not contingent, owing to any Lender pursuant to
this Agreement or any other Financing Document, including principal, accrued
interest and fees.

     “Paid in Capital” means, with respect to any Person, at any time,
the aggregate amount of capital contributed to such Person in the form of cash
or capitalized Indebtedness; provided, that in the case of the Borrower,
“Paid in Capital” means the sum of (x) four hundred twenty three million seven
hundred seventy four thousand five hundred forty six Dollars (US$423,774,546)
plus (y) the aggregate amount of capital contributed to the Borrower in the
form of cash or capitalized Indebtedness after the Closing Date.

     “Party” means the Borrower, each Lender, the Administrative Agent
and the Collateral Agent, individually, and “Parties” means two (2) or
more of them.

     “Permitted Disposals” means, with respect to the Borrower or any
Subsidiary thereof: (a) any Disposal in the ordinary course of business of
assets which are obsolete or which are replaced in the ordinary course of
business; (b) any Disposal of the assets of a Subsidiary of the Borrower to the
Borrower or another Subsidiary of the Borrower, or any Disposal of the assets
of the Borrower to one of its Subsidiaries, provided that any such
assets that are subject to a security interest in favor of the Administrative
Agent on behalf of the Lenders must remain subject to such security interest
after such Disposal; (c) any Disposal of inventory in the ordinary course of
business; (d) the Disposals listed on Schedule 1.1(b); (e) Permitted
IRUs; (f) any Disposal of assets (other than IRUs) not constituting Collateral
for their fair market value as determined in good faith by the Borrower, the
aggregate proceeds of which do not exceed US$2,000,000; and (g) any IRU of the
type referred to in clause (a) of the definition of “IRU” with respect to
assets not constituting Collateral for fair market value as determined in good
faith by the Borrower, the aggregate proceeds of which do not exceed
US$2,000,000 for each such IRU.

     “Permitted Indebtedness” means (a) Indebtedness pursuant to the
Financing Documents; (b) Intercompany Indebtedness, provided, that such
Intercompany Indebtedness is evidenced by a Subordinated Intercompany Note; (c)
contingent Indebtedness in respect of bonds or letters of credit provided to
guarantee bids or performance under contracts in the ordinary course of
business; (d) Indebtedness of the Borrower which is in existence on the Closing
Date and set forth on Schedule 7.11; (e) purchase money Indebtedness and
Capital Lease obligations in an amount not greater than US$5,000,000 in the
aggregate outstanding at any one time; provided that the maximum
amount of such Indebtedness owing to any one lender and its Affiliates shall
not exceed US$1,000,000; (f) purchase money Indebtedness and Capital Lease
obligations in an amount not greater than the result of (i) US$25,000,000 less
(ii) any outstanding Indebtedness incurred pursuant to clause (e) above, in the
aggregate outstanding at any one time; provided that such
Indebtedness has a final maturity date equal to or later than the final
maturity date of, and has an average life to maturity equal to or greater than
the average life

14

 

 to maturity of, the Indebtedness pursuant to the Financing Documents; (g)
unsecured Indebtedness incurred for the operation and maintenance of such
Person’s Telecommunications Business, including, without limitation, for
working capital purposes, in an amount outstanding at any time not greater than
US$10,000,000 in the aggregate; (h) Indebtedness of the Borrower for money
borrowed from financial institutions which Indebtedness is either fully
collateralized by cash deposits of IMPSAT or fully funded by IMPSAT through the
acquisition of one hundred percent (100%) participation in such Indebtedness
from such financial institution, provided that such Indebtedness is
either (i) non-recourse with respect to the Borrower or any of its assets or
(ii) subordinated to the Obligations pursuant to a subordination agreement in
form and substance satisfactory to the Required Lenders; and (i) Indebtedness
incurred and applied to refinance Indebtedness permitted by each of clauses (a)
and (d) above; provided, however, that with respect to any such
refinancing Indebtedness, (1) the principal amount of such refinancing
Indebtedness does not exceed the principal amount of the Indebtedness so
refinanced; (2) such refinancing Indebtedness has a final maturity date equal
to or later than the final maturity date of, and has an average life to
maturity equal to or greater than the average life to maturity of, the
Indebtedness being refinanced; and (3) such Indebtedness is incurred and/or
guaranteed by the Borrower and any Subsidiary which has incurred or guaranteed,
as the case may be, the Indebtedness to be refinanced.

     “Permitted Investments” means: (a) Investments which are in
existence on the Closing Date and set forth on Schedule 1.1(a); (b)
Temporary Cash Investments; (c) Investments in the form of Intercompany
Indebtedness which constitutes Permitted Indebtedness; (d) accounts receivable
owing to the Borrower or any Subsidiary thereof if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; (e) payroll, travel and similar advances and advances to
suppliers to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business and in the aggregate do not at any time
exceed US$1,000,000; and (f) stock, obligations or securities received in
satisfaction of judgments, work-outs, assignments for the benefit of creditors
or other similar judicial proceedings.

     “Permitted Investor” means (a) any Person that is in the
Telecommunications Business and (x) for its last four consecutive fiscal
quarters has generated revenues of at least one billion Dollars
(US$1,000,000,000) or earnings before interest, income taxes, depreciation and
amortization of at least one hundred eighty million Dollars (US$180,000,000),
or (y) on the date of determination has an equity market capitalization of at
least three billion Dollars (US$3,000,000,000) or (b) any Subsidiary of such
Person.

     “Permitted IRU” means: (a) an IRU of the type referred to in clause
(b) of the definition of “IRU” or (b) an IRU of the type referred to in clause
(a) of the definition of “IRU”, with respect to any portion of the Network with
an IRU Cost of two million Dollars (US$2,000,000) or less for each such IRU;
provided, however, that the maximum number of ducts that may be
subject to Permitted IRUs shall be three (3) (including the IRU granted by the
Borrower to South American Crossing Ltd. in respect of one duct on the Network
between Buenos Aries and Mendoza in accordance with Article 2 of the TAC
Turnkey Construction and IRU Agreement

15

 

 among the Borrower, IMPSAT S.A. (Chile) and South American Crossing Ltd.
dated September 22, 1999) in the case of Long Haul IRUs, and four (4) in the
case of Metropolitan IRUs.

     “Permitted Liens” means:

     (a)     Liens under the Financing Documents;

     (b)     Liens securing taxes not yet due or being contested in good faith by
appropriate proceedings diligently conducted for which adequate cash reserves
determined in accordance with Argentine GAAP have been established (and as to
which the property subject to any such Lien is not yet subject to foreclosure,
seizure, arrest, sale, collection, levy or loss on account thereof) and so long
as (x) the contesting of, or failure to comply with, such requirements does not
in any material way jeopardize such Person’s ability or authority to operate
all or any part of its business or value or continuing priority of the security
interests in favor of the Administrative Agent on behalf of the Lenders in the
Collateral and (y) all such contests of, and failures to comply with, such
requirements would not in the aggregate have an Material Adverse Effect;

     (c)     nonconsensual statutory Liens which are imposed by Applicable Law
arising in the ordinary course of business and securing obligations which are
not yet due and payable or which are being contested in good faith by
appropriate proceedings diligently conducted for which adequate cash reserves
determined in accordance with Argentine GAAP have been established (and as to
which the property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof) and so long as (x) the contesting of, or
failure to comply with, such requirements does not in any material way
jeopardize such Person’s ability or authority to operate all or any part of its
business or value or continuing priority of the security interests in favor of
the Administrative Agent on behalf of the Lenders in the Collateral and (y) all
such contests of, and failures to comply with, such requirements would not in
the aggregate have an Material Adverse Effect;

     (d)     pledges or deposits made in the ordinary course of business to secure
payment of worker’s compensation insurance, unemployment insurance, pensions or
social security programs;

     (e)     easements, rights-of-way, restrictions and other similar encumbrances
on real property which, in the aggregate, are not substantial in amount and
which do not in any case materially detract from the value of the property to
the Borrower or materially interfere with the ordinary conduct of the business
of the Borrower or a Subsidiary;

     (f)     Liens arising by virtue of any Applicable Law in favor of banks or
other financial institutions on cash or rights of setoff or similar rights as
to deposit accounts or other funds maintained with a creditor depository
institution;

     (g)     Liens on goods (and the documents of title relating thereto) the
purchase price, shipment or storage of which is financed by a documentary
letter credit issued for the account of the Borrower or a Subsidiary thereof in
the ordinary course of business, provided that such Lien secures only
the obligations of the Borrower or such Subsidiary in respect of such letter of
credit;

16

 

     (h)     Liens created pursuant to Capital Leases;

     (i)     Liens in favor of customs and revenue authorities arising as a matter
of Applicable Law to secure payment of customs duties in connection with the
importation of goods in the ordinary course of business (and as to which the
property subject to any such Lien is not yet subject to foreclosure, seizure,
arrest, sale, collection, levy or loss on account thereof);

     (j)     Liens incurred or deposits made to secure the performance of tenders,
bids, leases, statutory or regulatory obligations, bankers’ acceptances, surety
and appeal bonds, contracts (other than for Indebtedness), performance and
return-of-money bonds and other obligations of a similar nature incurred in the
ordinary course of business (exclusive of obligations for the payment of
borrowed money);

     (k)     Liens (including extensions and renewals thereof) upon real or
personal property, in each case other than in respect of the Network;
provided, however, that (i) such Lien is created solely for the
purpose of securing Indebtedness incurred to finance the cost (including the
cost of design, development, acquisition, construction, installation,
improvement, transportation or integration) of the item of property or assets
subject thereto and such Lien is created prior to, at the time of or within one
hundred eighty (180) days after the later of the acquisition, the completion of
construction or the commencement of full operation of such property, (ii) the
principal amount of the Indebtedness secured by such Lien does not exceed one
hundred percent (100%) of such cost and (iii) any such Lien shall not extend to
or cover any property or assets other than such item of property or assets and
any improvements on such item;

     (l)     Liens arising from the rendering of a final judgment or order against
the Borrower or any of its Subsidiaries that does not give rise to an Event of
Default;

     (m)     Liens in respect of (i) Permitted IRUs referred to in clause (b) of
the definition of “Permitted IRU” and (ii) Permitted Disposals referred to in
clause (g) of the definition of “Permitted Disposals”; and

     (n)     Liens existing on the Closing Date and listed on Schedule
7.12(a).

     “Person” means an individual, a partnership, a joint venture, a
corporation, a trust, a limited liability company, an unincorporated
organization or a Governmental Authority.

     “Pesos” means the lawful currency of Argentina.

     “Prepayment Event” means (a) any Disposal by the Borrower or any of
its Subsidiaries of any of such Person’s properties or assets, whether tangible
or intangible, other than a Permitted Disposal or any other Disposal permitted
to be made under Section 8.2(j); (b) any Expropriation Event; and (c) any
casualty or other insured damage to any material asset of the Borrower or any
Subsidiary thereof.

     “Principal Repayment Date” means, initially, March 25, 2005 and
each successive date that is six (6) calendar months thereafter (being the same
day of the calendar month) until the Maturity Date.

17

 

     “Project Agreements” means the Financing Documents, the Supply
Agreement and the other agreements entered into by the Borrower and its
Subsidiaries with Nortel or its Affiliates in connection with the Project.

     “Project Party” means any party to a Project Agreement.

     “Required Lenders” means, at any time, Lenders holding more than
fifty percent (50%) in aggregate principal amount of the Term Loans then
outstanding.

     “Revenues” means, with respect to any Person for any period, the
consolidated revenues of such Person and its Subsidiaries.

     “SC” means the Argentine Secretariat of Communications (“Secretaría
de Comunicaciones").

     “Secured Parties” means, collectively, the Agents and the Lenders,
and each a “Secured Party”.

     “Securities Act” means the U.S. Securities Act of 1933, as amended.

     “Security Documents” means the Mortgage Deeds, the Equipment Pledge
Agreements, and any other agreements entered into pursuant to Section 9.

     “Series A Convertible Notes” means the Guaranteed Convertible
Senior Notes – Series A issued by IMPSAT in accordance with the Plan on the
Closing Date to the holders of the senior notes issued in connection with the
2003 Indenture.

     “Series B Convertible Notes” means the Guaranteed Convertible
Senior Notes – Series B issued by IMPSAT in accordance with the Plan on the
Closing Date to Nortel and BBVA.

     “Sirti” means Sirti Argentina S.A.

     “Solvent” means with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person’s
property would constitute an unreasonably small capital. The amount of
contingent liabilities (such as litigation, guarantees and pension plan
liabilities) at any time shall be computed as the amount which, in light of all
facts and circumstances existing at the time, represents the amount which can
reasonably be expected to become an actual or matured liability.
Notwithstanding the foregoing, the determination of the “Solvency” of the
Borrower and IMPSAT shall be made without reference to any defaults under the
Existing Financing Agreement existing immediately prior to the Closing Date or
any Existing Indebtedness.

18

 

     “Spectrum Authorization” means the authorization granted by the SC,
revocable in nature, to use the radioelectric spectrum in accordance with the
Argentine Telecommunications Law 19,798, as it may be amended from time to
time.

     “Subordinated Intercompany Note” means a promissory note of the
Borrower, or any Subsidiary of the Borrower, in form and substance satisfactory
to the Lenders, evidencing Intercompany Indebtedness of the Borrower for money
borrowed from IMPSAT or any of the Borrower’s Subsidiaries, or evidencing
Indebtedness of any of the Borrower’s Subsidiaries for money borrowed from the
Borrower, any other Subsidiary of the Borrower or IMPSAT, which is subordinated
pursuant to an Intercompany Subordination Agreement.

     “Subsidiary” means, with respect to any Person, any other Person
that is directly or indirectly Controlled by the first Person.

     “Telecommunications Business” means telecommunications services,
value added telecommunications services, radio paging, mobile
telecommunications, personal telecommunications services, trunking, transport
of broadcasting signals, information technology, Internet services and related
and ancillary services in Argentina in which the Borrower or any of its
Subsidiaries is from time to time engaged.

     “Temporary Cash Investment” means any of the following: (a) direct
obligations of the United States of America or any agency thereof or
obligations fully and unconditionally guaranteed by the United States of
America or any agency thereof; (b) time deposit accounts, certificates of
deposit and money market deposits maturing within one year of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of two
hundred fifty million Dollars (US$250,000,000) (or the foreign currency
equivalent thereof) and has outstanding debt which is rated “A” (or such
similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act) or any money market fund sponsored by a registered broker dealer or mutual
fund distributor; (c) repurchase obligations with a term of not more than
thirty (30) days for underlying securities of the types described in clause (a)
above entered into with a bank meeting the qualifications described in clause
(b) above; (d) commercial paper, maturing not more than ninety (90) days after
the date of acquisition, issued by a corporation (other than an Affiliate of
the Borrower) organized and in existence under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America with a rating the time as of which any investment therein is
made of “P-1” (or higher) according to Moody’s Investor Service, Inc.
(“Moody’s”) or “A-1” (or higher) according to Standard & Poor’s Ratings
Services (“S&P”); (e) securities with maturities of six (6) months or less from
the date of acquisition issued or fully and unconditionally guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least “A” by
S&P or Moody’s and (f) certificates of deposit maturing not more than one (1)
year after the acquisition thereof by the Borrower or a Subsidiary thereof and
issued by any of the ten (10) largest banks (based on assets as the last
December 31) organized under the laws of Argentina; provided,
however, that such

19

 

 bank is not under intervention, receivership or any similar arrangement at
the time of the acquisition of such certificate of deposit, and provided
further, that at no time shall the aggregate outstanding amount of such
certificates of deposit exceed five percent (5%) of the Borrower’s Revenue for
the immediately preceding fiscal year unless so required by the Central Bank.

     “Term Loan Commitment” an amount equal to forty three million seven
hundred eighty six thousand Dollars (US$43,786,000) representing the Existing
Debt Balance.

     “Total Debt” means, with respect to any Person at any time and from
time to time, the aggregate amount of any and all Indebtedness of such Person
and its Subsidiaries then outstanding.

     “Trade Payables” means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or guaranteed by such Person or any of its Subsidiaries
arising in the ordinary course of business in connection with the acquisition
of goods or services and required to be paid within one year.

     “U.S. GAAP” means generally accepted accounting principles as
promulgated or adopted by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants and its predecessors,
consistently applied.

     “Voting Stock” means, with respect to any Person, Capital Stock
ordinarily having the power to vote for the election of directors, managers or
other voting members of the governing body of such Person.

     “Warrants” means the warrants to purchase common stock of IMPSAT on
a fully-diluted basis issued by IMPSAT to the Lenders in accordance with the
terms of the Plan on the Closing Date.

     “2003 Indenture” means the Indenture dated as of July 30, 1996
among IMPSAT, as Issuer, the Borrower, as Guarantor, and The Bank of New York,
as Trustee, relating to the 12 1/8% Senior Guaranteed Notes due 2003 of IMPSAT.

Section 1.2. Other Definitions.

     The following terms shall have the meaning given to them in the Section
indicated below:

	 	 	 
	Term	 	
Section
	Administrative Agent	 	
Preamble
	Agreement	 	
Preamble
	Amendment	 	
8.2(e)
	Assumed Obligations	 	
Seventh Recital
	Bankruptcy Code	 	
10.1(g)
	Borrower	 	
Preamble
	Chapter 11 Proceedings	 	
Sixth Recital
	Collateral	 	
9.1
	Collateral Agent	 	
Preamble

20

 

	 	 	 
	Deferred Payment Date	 	
4.2(c)
	Event of Default	 	
10.1
	Excluded Taxes	 	
5.1(a)
	Existing Debt	 	
Fifth Recital
	Existing Debt Balance	 	
Eighth Recital
	Existing Financing Agreement	 	
First Recital
	Existing Guarantee	 	
Fourth Recital
	Financing Agreements	 	
13.1
	FRBs	 	
4.2(b)
	IMPSAT	 	
Third Recital
	Indemnitees	 	
11.2
	Information	 	
16.13
	Lenders	 	
Preamble
	Nortel	 	
Preamble
	Nortel Argentina	 	
Second Recital
	Nortel Contracts	 	
Second Recital
	Note(s)	 	
2.2(a)
	Par Bonds	 	
4.2(b)
	Placement Agent	 	
16.14
	Plan	 	
Sixth Recital
	Prepayment	 	
3.2(a)
	Project	 	
Second Recital
	Reference Dealers	 	
4.2(b)
	Register	 	
2.1(b)
	Release	 	
9.3(b)
	Release Instruments	 	
9.3(b)
	Release Notice	 	
9.3(b)
	Released Collateral	 	
9.3(b)
	Replacement Notes	 	
13.1
	Second Currency	 	
4.1
	Security Reinforcement	 	
8.1(q)
	Sovereign Event Deferral Period	 	
4.2(c)
	Specified Place of Payment	 	
4.1
	Supply Agreement	 	
Second Recital
	Syndication Agents	 	
16.14
	Taxes	 	
5.1(a)
	Transaction Costs	 	
13.2
	Term Loan(s)	 	
2.1(a)
	Turnkey Contract	 	
Second Recital

Section 1.3. Interpretation.

     In this Agreement: (a) the singular includes the plural and the plural the
singular; (b) words importing any gender include the other gender; (c)
references to statutes or regulations are to be construed as including all
statutory or regulatory provisions consolidating, amending or replacing the
statute or regulation referred thereto; (d) references to “writing”
include printing,

21

 

 typing, lithography and other means of reproducing words in a tangible
visible form; (e) references to articles, sections (or subdivisions of
sections), exhibits, annexes or schedules are to this Agreement unless
otherwise indicated; (f) references to agreements and other contractual
instruments shall be deemed to include all schedules and exhibits to such
agreements and all subsequent amendments and other modifications to such
agreements and contractual instruments, but only to the extent such amendments
and other modifications are not prohibited by the terms hereof; (g) references
to Persons include their respective permitted successors and assigns and, in
the case of Governmental Authorities, Persons succeeding to their respective
functions and capacities, and (h) the terms “date of this Agreement” and “date
hereof” mean March 25, 2003.

Section 1.4. Accounting Principles and Terms.

     Except as otherwise provided in this Agreement: (a) all computations and
determinations as to financial matters, and all financial statements to be
delivered under this Agreement, shall be made or prepared in accordance with
U.S. GAAP applied on a consistent basis; (b) with respect to accounting terms
or financial information defined or described in reference to a Person and its
Subsidiaries, all such terms and information shall be construed as applying to
such Person and its Subsidiaries on a consolidated basis in accordance with
U.S. GAAP; and (c) all accounting terms used in this Agreement shall have the
meanings respectively ascribed to such terms by U.S. GAAP.

SECTION 2. The Credit Facility

Section 2.1. Loans.

     (a)     Lenders’ Agreement to Lend. Each Lender severally agrees, upon
the terms and conditions set forth herein, on the Closing Date to make a term
loan (each a “Term Loan” and collectively the “Term Loans”) in an
aggregate principal amount equal to the Term Loan Commitment. Any amounts that
are repaid or prepaid may not be reborrowed. The aggregate principal amount of
all Term Loans shall not at any time exceed the maximum amount of the Term Loan
Commitment. Each Lender’s pro rata percentage of the Term Loan Commitment is
as set forth on Schedule 2.1.

     (b)     Register. The Administrative Agent shall maintain at its
address a register (the “Register”) on which it shall record, from time
to time, the names and addresses of the Lenders, the amount of the Term Loans
made by each Lender and each repayment and prepayment in respect of the Term
Loans of each Lender. The entries made on the Register shall, to the extent
permitted by Applicable Law, be prima facie evidence of the existence and
amounts of the Obligations therein recorded, and the Borrower, the Agents and
the Lenders shall treat each Person whose name is recorded in the Register as
the owner of a Term Loan or Note hereunder as the owner thereof for all
purposes of this Agreement, notwithstanding any notice to the contrary;
provided, however, that the failure of the Administrative Agent
to maintain the Register or any error therein shall not in any manner affect
the obligation of the Borrower to repay (with applicable interest) the Term
Loans of such Lender in accordance with the terms of this Agreement. The
Register shall be available for inspection by the Borrower and any Lender at
any reasonable time and from time to time upon reasonable prior notice.

22

 

Section 2.2. Notes.

     (a)     Execution and Delivery. The Borrower’s obligation to pay the
principal of, and interest on, each Term Loan made by each Lender shall be
evidenced by a Note duly executed and delivered by the Borrower to the
Administrative Agent and payable to the order of the relevant Lender. Each
Note shall be entitled to the benefits of this Agreement and the other
Financing Documents and (subject to variations in form approved by the Agents
as provided in the definition of “Note” contained herein) shall (1) be
dated the date hereof; (2) be in a stated principal amount equal to such
Lender’s pro rata share of the Term Loan Commitment as set forth on Schedule
2.2; (3) be payable in installments as provided in Section 3.1; and (4)
bear interest as provided in Section 3.3. The Administrative Agent shall
deliver to each Lender each Note payable to such Lender.

     (b)     Release. Each Note shall be surrendered to the Borrower against
final payment thereof on the Maturity Date or such earlier date as the Term
Loans are paid in full.

     (c)     Interpretation. In the event of any inconsistencies between
this Agreement and any Note, the terms of this Agreement shall control;
provided, however, that nothing in this clause (c) shall limit
the rights of any Lender to bring any action or enforce its rights or remedies
under any Note.

SECTION 3. Payment of Principal, Interest and Fees

Section 3.1. Repayment of Principal.

     The principal amount of each Term Loan shall be repaid by the Borrower in
nine (9) consecutive semi-annual installments on the Principal Repayment Dates
of which each but the last shall be equal in amount, and the final installment
shall be the aggregate of the then outstanding principal amount of all Term
Loans. In addition, all accrued and unpaid interest thereon, all fees and
other amounts owed hereunder and all other Obligations of the Borrower then
outstanding and shall be payable on the Maturity Date. The amount of each
principal installment of the Term Loans, other than the final installment,
shall be equal to US$4,865,111.11.

Section 3.2. Prepayments.

     (a)     Mandatory Prepayments.

     The Borrower shall prepay the principal amount of the Term Loans, in whole
or in part, together with interest accrued thereon to the date of prepayment
(each such prepayment, a “Prepayment”) upon the occurrence of any of the
following events, as follows:

               (1)     Illegality. The Borrower shall make Prepayments on the dates
and in the amounts specified in Section 5.2(a) if so required pursuant to such
Section; provided, however, that in no event shall the amount
payable in respect of this clause (1) exceed the principal amount specified on
the Claimed Amount Schedule as of the relevant date on which such Prepayment is
made.

23

 

               (2)     Prepayment Events. The Borrower shall make Prepayments under
this Subsection 3.2(a)(2) and Subsection 3.2(a)(2) of the Accounts Payable
Financing Agreement upon the receipt of Net Proceeds in respect of any
Prepayment Event in an amount equal to such Net Proceeds, which Prepayment
shall be applied among this Subsection 3.2(a)(2), Subsection 3.2(a)(2) of the
Accounts Payable Financing Agreement and Subsection 3.2(a)(2) of that certain
Financing Agreement between the Borrower and BBVA dated as of March 25, 2003
(the “BBVA Financing Agreement”) pro rata based on (x) the then
outstanding balance of the Term Loans, (y) the then outstanding balance of the
term loans under the Accounts Payable Financing Agreement and (z) the then
outstanding balance of the term loans under the BBVA Financing Agreement;
provided, however, that in the case of a Prepayment Event
consisting of a casualty or other insured damage, the Borrower shall not be
subject to such prepayment obligation if no Default or Event of Default has
occurred and is continuing and (i) if the property that was the subject of such
casualty or damage is subject to a Lien permitted under paragraph (l) of the
definition of “Permitted Liens” and the Person secured by such Lien is named as
the loss payee of the insurance proceeds payable with respect to such casualty
or damage, or (ii) if within the period of thirty (30) days following the
receipt of such Net Proceeds the Borrower (A) notifies the Administrative Agent
that it intends to reinvest such Net Proceeds within the six (6) months
thereafter in the payment of the costs of repairing, restoring, rebuilding or
replacing the portion of the property that was the subject of such casualty or
damage; and (B) certifies that such repair, restoration, rebuilding or
replacement will be completed within a period of six (6) months from the
occurrence of the relevant casualty event; and provided further, that if
the Net Proceeds from such a casualty event or damage exceed five million
Dollars (US$5,000,000), the full amount thereof shall be paid to the Collateral
Agent to be held by the Collateral Agent in the Net Proceeds Account and shall
be released by the Collateral Agent to or at the direction of the Borrower as
and when required for payment of such costs of repair, restoration, rebuilding
or replacement; provided, however, that in no event shall the
amount payable in respect of this clause (2) exceed the principal amount
specified on the Claimed Amount Schedule as of the relevant date on which such
Prepayment is made.

               (3)     Prepayment Under IMPSAT Convertible Notes. Concurrently with
the making of any voluntary or mandatory prepayment in respect of the
securities issued pursuant to any of the IMPSAT Convertible Notes (not
including any voluntary or mandatory prepayment made in connection with the
refinancing of the aggregate principal and interest due under such securities),
the Borrower shall make a Prepayment in an amount which bears to the aggregate
principal amount of the Term Loans then outstanding the same ratio as the
amount of the prepayment of the relevant securities bears to the aggregate
principal amount of such securities then outstanding; provided,
however, that in no event shall the amount payable in respect of this
clause (3) exceed the principal amount specified on the Claimed Amount Schedule
as of the relevant date on which such Prepayment is made.

               (4)     Excess Cash Flow of the Borrower. Within fifteen (15) Business
Days after the Borrower shall have submitted to the Administrative Agent its
annual financial statements pursuant to Section 8.1(a) in respect of any fiscal
year of the Borrower, the Borrower shall make a Prepayment under this
Subsection 3.2(a)(4), Subsection 3.2(a)(4) of the Accounts Payable Financing
Agreement and Subsection 3.2(a)(4) of the BBVA Financing Agreement in an
aggregate amount equal to fifty percent (50%) of the Borrower’s Excess Cash
Flow for such

24

 

 fiscal year, which Prepayment shall be applied between this Subsection
3.2(a)(4), Subsection 3.2(a)(4) of the Accounts Payable Financing Agreement and
Subsection 3.2(a)(4) of the BBVA Financing Agreement pro rata based on (x) the
then outstanding balance of the Term Loans, (y) the then outstanding balance of
the term loans under the Accounts Payable Financing Agreement and (z) the then
outstanding balance of the term loans under the BBVA Financing Agreement.

               (5)     Excess Cash Flow of IMPSAT. Within fifteen (15) days after the
Borrower shall have submitted, or shall have caused to be submitted, to the
Administrative Agent IMPSAT’s annual financial statements pursuant to Section
8.1(a) in respect of any fiscal year of IMPSAT, the Borrower shall make a
Prepayment under this Subsection 3.2(a)(5), Subsection 3.2(a)(5) of the Nortel
Brazil Financing Agreement, Subsection 3.2(a)(5) of the Accounts Payable
Financing Agreement and Subsection 3.2(a)(5) of the BBVA Financing Agreement in
an aggregate amount equal to fifty percent (50%) of IMPSAT’s Excess Cash Flow
for such fiscal year, which Prepayment shall be applied among this Subsection
3.2(a)(5), Subsection 3.2(a)(5) of the Nortel Brazil Financing Agreement,
Subsection 3.2(a)(5) of the Accounts Payable Financing Agreement and Subsection
3.2(a)(5) of the BBVA Financing Agreement pro rata based on (w) the then
outstanding balance of the Term Loans, (x) the then outstanding balance of the
term loans under the Nortel Brazil Financing Agreement, (y) the then
outstanding balance of the term loans under the Accounts Payable Financing
Agreement and (z) the then outstanding balance of the term loans under the BBVA
Financing Agreement, provided, however, that no Prepayment shall
be required pursuant to this clause to the extent that IMPSAT does not have
sufficient funds (excluding the IMPSAT Exit Cash Balance) to otherwise allow
the Borrower to effect such a Prepayment and (a) such Prepayment would require
a distribution be made to IMPSAT by any Subsidiary thereof that would be
subject to any withholding or other taxes, (provided that the Borrower,
IMPSAT and the affected Subsidiary(ies) of IMPSAT have used good faith efforts
to effect such a distribution in a manner that lawfully eliminates any such
withholding or other taxes) or (b) such Prepayment would require a distribution
be made to IMPSAT from any Subsidiary of IMPSAT that is not permitted to be
made pursuant to the terms of any agreement relating to Indebtedness of such
Subsidiary; and provided further that the amount of any Prepayments that
are not made by reason of clause (a) or (b) above shall be deferred and payable
at such time that IMPSAT has sufficient cash to effect such Prepayment.

               (6)     Borrower Capital Markets Transactions. The Borrower shall, or
shall cause its Subsidiaries to, make a Prepayment upon the receipt by the
Borrower or any of its Subsidiaries of the Net Proceeds of any Borrower Capital
Markets Transaction. With respect to such Net Proceeds, the amount of
aggregate Prepayment required by this Subsection 3.2(a)(6), Subsection
3.2(a)(6) of the Accounts Payable Financing Agreement and Subsection 3.2(a)(6)
of the BBVA Financing Agreement shall be equal to fifty percent (50%) of such
Net Proceeds, which Prepayment shall be applied among this Subsection
3.2(a)(6), Subsection 3.2(a)(6) of the Accounts Payable Financing Agreement and
Subsection 3.2(a)(6) of the BBVA Financing Agreement pro rata based on (x) the
then outstanding balance of the Term Loans, (y) the then outstanding balance of
the term loans under the Accounts Payable Financing Agreement and (z) the then
outstanding balance under the BBVA Financing Agreement.

               (7)     IMPSAT Capital Markets Transactions. The Borrower shall, or
shall cause its Subsidiaries or IMPSAT (as applicable) to, make a Prepayment
upon the receipt by the

25

 

 Borrower or any of its Subsidiaries or IMPSAT of the Net Proceeds of any
IMPSAT Capital Markets Transaction. With respect to such Net Proceeds, the
amount of aggregate Prepayment required by this Subsection 3.2(a)(7),
Subsection 3.2(a)(7) of the Nortel Brazil Financing Agreement, Subsection
3.2(a)(7) of the Accounts Payable Financing Agreement and Subsection 3.2(a)(7)
of the BBVA Financing Agreement shall be equal to fifty percent (50%) of such
Net Proceeds, which Prepayment shall be applied among this Subsection
3.2(a)(7), Subsection 3.2(a)(7) of the Nortel Brazil Financing Agreement,
Subsection 3.2(a)(7) of the Accounts Payable Financing Agreement and Subsection
3.2(a)(7) of the BBVA Financing Agreement pro rata based on (w) the then
outstanding balance of the Term Loans, (x) the then outstanding balance of the
term loans under the Nortel Brazil Financing Agreement, (y) the then
outstanding balance of the term loans under the Accounts Payable Financing
Agreement and (z) the then outstanding balance of the term loans under the BBVA
Financing Agreement.

               (8)     IRUs. Promptly after the Borrower’s receipt of the Net Proceeds
of each Permitted IRU referred to in clause (b) of the definition of “Permitted
IRU” (or, in the case of any Permitted IRU payable in more than one payment,
after the receipt of the first payment), the Borrower shall make a Prepayment
in an amount equal to the greater of (a) 125% of the IRU Cost of such Permitted
IRU or (b) fifty percent (50%) of such Net Proceeds.

     All amounts required to be prepaid under this Section 3.2(a) shall be paid
to the Administrative Agent promptly (but in any case within ten (10) Business
Days except as otherwise provided in Sections 3.2(a)(4) and 3.2(a)(5)) after
the receipt by the Borrower and/or its Affiliates of such amount.

     (b)     Optional Prepayments. Upon not less than seven (7) Business
Days prior written notice to the Administrative Agent, the Borrower may make a
Prepayment without premium or penalty, on any Business Day, subject to the
limitations imposed by Applicable Law, if any, provided that such
Prepayment shall only be allowed if the amount thereof is equal to one million
Dollars (US$1,000,000) or an integral multiple thereof, except that if the
aggregate principal amount of the Term Loans then outstanding is less than one
million Dollars (US$1,000,000), the Borrower may prepay such aggregate
principal amount. Upon receipt of such notice by the Administrative Agent, the
Borrower’s obligation to make such Prepayment shall be irrevocable and binding.

     (c)     Order of Application. All Prepayments under this Section 3.2
shall be applied in inverse order of scheduled future installment repayments of
the Term Loans.

Section 3.3. Interest.

     (a)     Interest Rate. Until March 25, 2005, no interest shall accrue
on the outstanding principal balance of the Term Loans. Commencing on March
25, 2005 interest shall accrue on the outstanding principal balance of the Term
Loans at a fixed rate of ten percent (10%) per annum and shall be payable in
arrears on each Interest Payment Date, with the initial Interest Payment Date
of September 25, 2005, and continuing on each Interest Payment Date thereafter
until such Term Loan is paid in full.

26

 

     (b)     Default Interest. Notwithstanding the provisions of Section
3.3(a), (i) upon the occurrence and during the continuance of any Event of
Default after March 25, 2005, the Borrower shall pay to the Lenders on demand
interest at the Default Interest Rate on the unpaid principal balance of each
Term Loan and (ii) with respect to the amount of any interest, fee or any other
amount payable by the Borrower hereunder or under the Notes, which has not been
paid in full when due (whether at stated maturity, by acceleration, prepayment
or otherwise), for the period from and including the due date thereof to and
including the date the same is paid in full (both before and after judgment),
whether or not any notice of default in the payment thereof has been delivered,
the Borrower shall pay to the Lenders interest thereon, to the extent permitted
by Applicable Law, in arrears on the date such amount shall be paid in full at
the Default Interest Rate. Interest payable under this Section 3.3(b)(ii) shall
be compounded on any overdue amount at three (3) month intervals commencing on
the date on which the default occurred.

     (c)     Computation. Interest on all Term Loans shall be computed on
the basis of three hundred sixty (360) days and actual days elapsed (including
the first day but excluding the last) occurring in the period for which
payable.

     (d)     Interest under the Existing Financing Agreement. The Lenders
hereby waive any obligations of the Borrower to pay any accrued and unpaid
interest owing under the Existing Financing Agreement between the date when due
and the Closing Date. All accrued and unpaid interest on the Existing
Financing Agreement through the Closing Date shall, subject to the satisfaction
or waiver on the Closing Date of the conditions set forth in Section 6 herein,
be forgiven and cancelled by the Lenders.

Section 3.4. Agent’s Fees.

     The Borrower shall pay (i) to the Administrative Agent an annual fee of
sixty thousand Dollars (US$60,000) in advance on the Closing Date and on each
anniversary thereof, provided such fee or any portion thereof shall be
non-refundable for any partially completed period, and (ii) to the Collateral
Agent the reasonable and customary fee charged by the Collateral Agent for
acting in such capacity as shall be agreed between the Borrower and the
Collateral Agent.

Section 3.5. Nature of Payments.

     All payments under this Agreement and under the Notes shall be paid on the
dates when due without presentment, demand, protest, or notice of any kind, all
of which are hereby expressly waived. Such payments shall be made in Dollars
and in immediately available funds, without setoff, recoupment, counterclaim,
or any other deduction of any nature.

27

 

Section 3.6. Payment Procedures.

     (a)     Deposit Account. All payments hereunder and under the Notes
shall be made to the Administrative Agent for the ratable account of each
Lender entitled thereto, in Dollars by wire transfer of immediately available
funds to the Administrative Agent’s account indicated below, or such other
account as the Administrative Agent may designate to the Borrower in writing
(the “Deposit Account”), not later than 1:00 P.M. New York time on the
date when due.

	 	Administrative Agent’s Deposit Account:

Citibank N.A. New York

Swift Number CITIUS33

ABA # 021000089

For Credit to the account of Nortel Networks Limited

Account #38545364

     Any payments under this Agreement that are made later than 1:00 p.m. (New
York time) shall be deemed to have been made on the next succeeding Business
Day.

     (b)     Business Days. Whenever any payment to be made hereunder or
under any Note shall be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day, provided
that should such next succeeding Business Day fall in the next calendar month,
such due date shall be the immediately preceding Business Day.

Section 3.7. Administrative Agent’s Determination.

     Any determination made by the Administrative Agent as to the interest
rate, the Default Interest Rate, and the amounts of interest, principal and
other amounts due hereunder shall be conclusive in the absence of manifest
error.

Section 3.8. Payments Pro Rata.

     (a)     Pro Rata. The Administrative Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in respect of any
amount due and payable by the Borrower hereunder, except as otherwise expressly
provided herein, it shall distribute such payment to the Lenders pro rata based
upon their respective shares, if any, of the Obligations with respect to which
such payment was received.

     (b)     Excess Payments. Each of the Lenders agrees that, if it should
receive any payment hereunder (either by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker’s lien, by
counterclaim or cross action, or otherwise), which is applicable to the payment
of the principal of or interest on the Term Loans or the fees, with the result
that such Lender receives a greater proportion of the amount then due to it
hereunder than any other Lender receives in respect of the amount due to such
other Lender hereunder, then such Lender receiving such excess payment shall
purchase for cash without recourse or warranty from the other Lenders an
interest in the Obligations of the Borrower to such other Lenders in such
amount as shall result in a proportional participation by all the Lenders in
such payment; provided, however, that if all or any portion of
such excess amount is thereafter recovered from

28

 

 such Lender, such purchase shall be rescinded and the purchase price
restored to the extent of such recovery, without interest.

Section 3.9. Governmental Approvals.

     The Borrower shall obtain all necessary Governmental Approvals (including,
but not limited to, approvals from the Central Bank) in connection with the
performance of any of its obligations hereunder and with respect to any
payments to be made under this Agreement and the other Financing Documents, and
provide copies thereof to the Administrative Agent promptly after the
Borrower’s receipt thereof.

SECTION 4. Payment in Dollars; Event of Sovereign Risk

Section 4.1. Obligation to Pay in Dollars; Judgment Currency.

     This is an international transaction in which the specification of Dollars
and payment in the place specified pursuant to this Agreement (the
“Specified Place of Payment”), is of the essence, and Dollars shall be
the currency of account in all events. The Obligations of the Borrower shall
not be discharged by an amount paid in another currency or in another place,
whether pursuant to a judgment or otherwise, to the extent that the amount so
paid on conversion to Dollars and transferred to the Specified Place of Payment
under normal banking procedures does not yield the amount of Dollars in the
Specified Place of Payment due hereunder. If for the purpose of obtaining
judgment in any court it is necessary to convert a sum due hereunder in Dollars
into another currency (the “Second Currency”), the rate of exchange
which shall be applied shall be that at which in accordance with normal banking
procedures the Lenders could purchase Dollars with the Second Currency on the
Business Day next preceding that on which judgment is rendered. The obligation
of the Borrower in respect of any such sum due to the Lenders hereunder or
under the Notes shall, notwithstanding the rate of exchange actually applied in
rendering such judgment, be discharged only to the extent that on the Business
Day following receipt by the Lenders of any sum adjudged to be due hereunder or
under the Notes in the Second Currency, the Lenders may in accordance with
normal banking procedures purchase and transfer to the Specified Place of
Payment Dollars with the amount of the Second Currency so adjudged to be due;
and the Borrower hereby, as a separate obligation and notwithstanding any such
judgment, agrees to indemnify the Lenders against, and to pay the Lenders on
demand in Dollars, any difference between the sum originally due to the Lenders
in Dollars and the amount of Dollars so purchased and transferred (including,
without limitation, all costs and expenses of the Lenders incurred in
connection therewith, such as transfer taxes, commissions and fees).

Section 4.2. Event of Sovereign Risk.

     Without prejudice to Section 4.1, in the event that not less than three
(3) Business Days before any payment is due hereunder any Lender notifies the
Administrative Agent that an Event of Sovereign Risk has occurred and is
continuing, the Administrative Agent shall notify the Borrower and each Lender
of the occurrence of such event and the Borrower shall at its own expense and
at each Lender’s sole option (which option shall be deemed to be that set forth
in

29

 

 Section 4.2(b) below unless notice shall have been received from such
Lender as described in Section 4.2(b) or (c) below):

     (a)     Dollars. Obtain the required amount of Dollars through (1) the
sale of any public or private bond or tradable security, (2) the purchase of
Dollars in New York, with whatever legal tender, or (3) failing both (1) and
(2), any other legal mechanism for the acquisition of Dollars in any exchange
market; or

     (b)     Best Firm Bid Price. If a Lender shall have notified the
Administrative Agent and the Borrower prior to a date of payment that its
option shall be that set forth in this Section 4.2(b), make the required
payment in the city of Buenos Aires, Argentina, by the delivery of, at such
Lender’s sole option, (1) Argentine Floating Rate Bonds (“FRBs”), (2)
Argentine Par Bonds (“Par Bonds”) or (3) any other securities
exchangeable for FRBs or Par Bonds in accordance with Argentine regulations,
which, in any of cases (1) through (3) if sold at the best firm bid price
quoted, for the relevant amount, on the date of payment in New York by the
Reference Dealers would cause such Lender to receive, after taxes, fees,
commissions and any other costs, an amount of Dollars equal to the amount
required to be paid by the Borrower for the account of such Lender on such
payment date (for purposes of this Section 4.2(b), the “best firm bid price”
shall be determined on the basis of quotes obtained from the Reference Dealers
and, if only one quote is obtained, on the basis of such quote; and
“Reference Dealers” shall mean J.P. Morgan Chase & Co., Banque Nationale
de Paris, and Merrill Lynch & Co. or, if none of the foregoing is quoting a
firm bid price for such payment date, then the “Reference Dealers” shall be
those dealers (which may be as few as one dealer) selected by such Lender to be
Reference Dealers for the purposes of this Section 4.2(b)); or

     (c)     Deferral. If a Lender shall have notified the Administrative
Agent and the Borrower prior to a date of payment that its option shall be that
set forth in this Section 4.2(c), defer payment of the amount due as specified
in such notice until the earlier of (1) the date which is one Business Day
following the date on which such Lender shall, in its sole discretion, notify
the Administrative Agent and the Borrower that such Event of Sovereign Risk is
no longer in effect, or (2) the date (which date shall be not more than ninety
(90) calendar days following the date on which the payment was originally due)
on which such Lender shall notify the Administrative Agent and the Borrower
that payment is to be made in accordance with the procedure outlined in either
Section 4.2(a) or (b) above, as such Lender shall elect. If a payment
obligation of the Borrower is so deferred pursuant to this Section 4.2(c), then
the period between the original payment date and the deferred date for payment
determined in accordance with the first sentence of this Section 4.2(c) (the
“Deferred Payment Date”) shall be the “Sovereign Event Deferral
Period”. If such Lender shall subsequently provide notice that the
Borrower is to make payment as specified in (x) Section 4.2(c)(1) above or (y)
Section 4.2(c)(2) above pursuant to an election to apply the mechanism set
forth in Section 4.2(a) above (which subsequent notice shall specify the Dollar
amount due on the Deferred Payment Date concerned), then the Borrower shall
make payment in Dollars of all outstanding amounts due hereunder (including,
without limitation, interest accrued during the Sovereign Event Deferral
Period) on such Deferred Payment Date in accordance with the terms of this
Agreement. Alternatively, if such Lender shall subsequently provide notice that
the Borrower is to make payments pursuant to the mechanism set forth in Section
4.2(b) above (which subsequent notice shall specify the

30

 

 Dollar amount due on the Deferred Payment Date concerned, as well as the
securities to be used for payment and the account in Argentina to which such
securities are to be delivered), then the Borrower shall make payment of all
outstanding amounts due hereunder (including, without limitation, interest
accrued during the Sovereign Event Deferral Period) on such Deferred Payment
Date in accordance with such Lender’s notice.

     (d)     Accrual of Interest Unaffected. Any undertaking of operations
to obtain Dollars according to this Section 4.2 shall not affect the accrual of
interest (including default interest) in accordance herewith. Nothing in this
Section 4.2 shall impair any of the rights of the Agents or the Lenders under
this Agreement or be construed to entitle the Borrower to refuse to make
payments hereunder in Dollars for any reason whatsoever, including, without
limitation, any of the following:

               (1)     the purchase of Dollars in Argentina by any means becomes more onerous
or burdensome for the Borrower than as of the date hereof; and

               (2)     the exchange rate in force in Argentina for the conversion of Pesos to
Dollars changes significantly from that in effect as of the date hereof.

Section 4.3. Waiver of “Pesification”.

     The Borrower hereby irrevocably and unconditionally waives any and all
rights it may have at any time to convert the currency of account for the
Obligations from Dollars into Pesos or any other currency or type of security
pursuant to any Applicable Law now or hereafter in effect in Argentina,
including without limitation, Argentine Decree No. 214/02, as amended.

SECTION 5. Funding and Yield Protection

Section 5.1. Taxes.

     (a)     Payment Net of Taxes. Any and all payments by the Borrower in
respect of amounts due under this Agreement, the Notes and any other Financing
Document shall be made free and clear of, and without withholding or deduction
for or on account of, any present or future taxes (including, without
limitation, income taxes, value added taxes, sales taxes, use taxes, stamp or
documenting taxes, excise taxes, property taxes and asset taxes), duties,
levies, fees, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, of whatever nature now or hereafter imposed, assessed or
levied (including interest, penalties or additions thereto) by any Argentine
Governmental Authority or by any other Governmental Authority from or through
which any payment is made hereunder or under the other Financing Documents
(“Taxes”), except income or franchise taxes imposed on any Lender by the
laws of the jurisdiction, whether federal, state or local, in which it is
resident or organized (“Excluded Taxes”). If any Taxes, other than any
Excluded Taxes, are required by Applicable Law to be withheld or deducted from
or in respect of any sum payable under this Agreement, the Notes or any other
Financing Document:

               (1)     the Borrower shall pay such additional amount as may be necessary to
ensure that after reduction for all required withholdings or deductions for
Taxes, other than

31

 

 Excluded Taxes (including withholdings or deductions applicable to
additional sums payable under this Section 5.1), the net amount actually
received by the Lenders free and clear of such withholding or deduction is
equal to the amount the Lenders would have received had no such withholdings or
deductions been made;

               (2)     the Borrower shall make such withholdings or deductions; and

               (3)     the Borrower shall pay the full amount withheld or deducted to the
relevant Governmental Authorities in accordance with the Applicable Laws and
prior to the date on which penalties attach thereto.

     (b)     Indemnity. The Borrower shall indemnify and hold the Agents
and the Lenders harmless from and against, and shall reimburse the Lenders on
demand for, the full amount of Taxes (including, without limitation, any Taxes
imposed on amounts payable under this Section 5.1) paid by the Lenders other
than Excluded Taxes, and for any loss, liability, claim or expense (including
penalties, interest, and legal fees) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted, and which the
Agents or the Lenders may incur at any time arising out of, or in connection
with, any failure of the Borrower to make any payment of such Taxes when due.

     (c)     Other Taxes. The Borrower shall pay all Taxes (including
notary public and filing fees), other than Excluded Taxes, associated with the
execution, delivery, filing, recording, or registration of, or foreclosure with
respect to, this Agreement, the Notes and the other Financing Documents, and
shall indemnify and hold the Agents and the Lenders harmless from and against
any and all liabilities with respect to, or resulting from, any failure or
delay in paying such Taxes.

     (d)     Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the Obligations of the Borrower under this
Section 5.1 shall survive the payment in full of all principal and interest
hereunder and under the Notes.

     (e)     Tax Receipts. Within thirty (30) days after the date of any
payment of Taxes required to be made under this Section 5.1, the Borrower shall
furnish to the Administrative Agent a copy of any official tax receipts
evidencing such payment.

Section 5.2. Illegality.

     (a)     Prepayment. If the introduction of any Applicable Law, or any
change in any Applicable Law, or any change in the interpretation or
administration of any Applicable Law, makes or has made it unlawful for a
Lender or its applicable Lending Office to maintain any Term Loan, the Borrower
shall, upon receipt of notice of such determination and demand from such Lender
(with a copy to the Administrative Agent), prepay in full the Term Loan of such
Lender then outstanding, together with any accrued and unpaid interest thereon
and any fees required to be paid under Section 3.4, on the next Interest
Payment Date for such Term Loan following the date the notice is given;
provided, however, that if such Lender notifies the Borrower that
earlier Prepayment is necessary in order to enable such Lender to comply with

32

 

 such Applicable Law or change and specifies an earlier date for the
Prepayment, the Borrower shall make the Prepayment on the date so specified.

     (b)     Lender’s Duty to Mitigate. Before giving notice to the
Administrative Agent under this Section 5.2, the affected Lender shall endeavor
to designate a different Lending Office with respect to its Term Loan or
endeavor in good faith to provide another structure for its Term Loan if such
designation or alternative structure will avoid the need for giving such notice
or making such demand and will not, in the Lender’s sole determination, be
illegal or cause such Lender to suffer any economic, legal, regulatory or other
disadvantage.

Section 5.3. Increased Costs and Yield Protection.

     (a)     Notice; Additional Payments. If due to either (1) the
introduction of, any change in, or any change in the interpretation or
administration by any competent authority of, any Applicable Law, or (2) the
compliance by a Lender with any guideline or request from any central bank or
any other Governmental Authority (whether or not having the force of law), in
each case, made subsequent to the date of this Agreement, there shall be any
increase in the cost to such Lender of agreeing to make or making, funding or
maintaining its Term Loan, then such Lender shall notify the Administrative
Agent and the Borrower accordingly, and upon receipt from such Lender (through
the Administrative Agent) of a demand for payment of additional amounts) the
Borrower shall pay to the Administrative Agent for the account of such Lender,
such additional amounts as are sufficient to compensate such Lender for such
increased costs; provided that any such additional amounts shall not
duplicate any amounts payable by the Borrower under Section 5.2.

     (b)     Capital Adequacy Regulations. If (1) the effectiveness of any
Capital Adequacy Regulation, (2) any change in any Capital Adequacy Regulation,
(3) any change in the interpretation or administration of any Capital Adequacy
Regulation by any competent authority, including with respect to compliance by
a Lender (or its Lending Office) or any corporation controlling the Lender with
any Capital Adequacy Regulation, in each case, made subsequent to the date of
this Agreement, affects the amount of capital reserves or other funds required
or expected to be maintained by such Lender (or its Lending Office) or any
corporation controlling such Lender and, after taking into consideration such
Lender’s or such corporation’s policies with respect to capital adequacy and
otherwise anticipated return on capital, such Lender determines that the amount
of such capital reserves or other funds is increased as a consequence of its
Term Loans and other obligations under this Agreement, then the Borrower, upon
receipt from such Lender (through the Administrative Agent) of a demand for
payment of additional amounts, shall pay to such Lender additional amounts
sufficient to compensate such Lender, the Lending Office or the corporation for
the increased cost to such Lender, Lending Office or other corporation or the
reduction in the rate of return to such Lender, Lending Office or other
corporation on its capital caused by its compliance with such Capital Adequacy
Regulation, provided, however, that any such additional amounts
shall not duplicate any amounts payable by the Borrower under Section 5.3(a).

     (c)     Lender’s Duty to Mitigate. Before giving notice to the
Administrative Agent under this Section 5.3, the affected Lender shall endeavor
to designate a different Lending Office

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 with respect to its Term Loan if such designation will avoid the need for
giving such notice or making such demand and will not, in the Lender’s sole
determination, be illegal or cause such Lender to suffer any economic, legal,
regulatory or other disadvantage.

34

 

SECTION 6. Deliveries; Conditions Precedent

     On the Closing Date, the following conditions shall have been satisfied:

Section 6.1. Closing Documents.

     The Borrower shall have delivered, or caused to be delivered to the
Administrative Agent the following documents, each in form and substance
satisfactory to the Administrative Agent and the Lenders and their respective
counsel:

     (a)     Note. The original Note or Notes duly executed by the
Borrower.

     (b)     IMPSAT Guarantee. The IMPSAT Guarantee duly executed by
IMPSAT.

     (c)     Other Financing Documents. In addition to the Note and IMPSAT
Guarantee pursuant to clauses (a) and (b) above, each of the Financing
Documents duly executed by the respective parties thereto.

     (d)     Charter Documents. (1) true copies of IMPSAT’s and the
Borrower’s respective Charter Documents in effect on the Closing Date certified
by Authorized Officers of each of the Borrower and IMPSAT respectively and; (2)
true copies of all corporate action taken by IMPSAT and the Borrower
respectively relative to the Financing Documents which have been properly
adopted and have not been modified or amended, certified by Authorized Officers
of each of the Borrower and IMPSAT respectively;

     (e)     Officer’s Certificates. Certificates, dated the Closing Date,
signed by an Authorized Officer of IMPSAT and the Borrower, respectively, and
certifying: (1) the name, true signatures and incumbency of the Authorized
Officers of each of IMPSAT and the Borrower authorized to execute and deliver
this Agreement and the other Financing Documents to which each is a party; (2)
no Default or Event of Default exists under this Agreement; (3) the accuracy as
of the Closing Date of the matters set forth in Section 6.6; (4) a Certificate
of Good Standing (or equivalent certificate) for IMPSAT duly issued by the
Secretary of State of Delaware; and (5) that each of the Borrower and IMPSAT is
Solvent following the consummation of the transactions contemplated herein and
pursuant to the Plan on the Closing Date.

     (f)     Licenses. Documents which evidence, to the satisfaction of the
Administrative Agent, the Borrower’s ownership of the Licenses and that the
Licenses are in full force and effect.

     (g)     Opinions of Counsel. A favorable written legal opinion
addressed to the Administrative Agent, the Collateral Agent and each of the
Lenders and dated the Closing Date as to such matters as shall be required by
the Administrative Agent, any Lender or their respective counsel, from each of:

               (1)     Arnold & Porter, in its capacity as special U.S. Counsel to the
Borrower and in its capacity as U.S. Counsel to IMPSAT, and

35

 

               (2)     Nicholson y Cano, Argentine Counsel to the Borrower.

     (h)     Governmental Approvals. Evidence that the following
Governmental Approvals have been obtained and are in full force and effect, and
all registrations, applications, tariffs, reports and other documents in
connection therewith required to be filed and/or registered with any Person
have been filed and registered:

               (1)     All Governmental Approvals, if any, then necessary in connection with
the execution, delivery or performance by the Borrower of this Agreement and
any other Financing Documents to which the Borrower is a party;

               (2)     All Governmental Approvals, if any, then necessary in connection with
the exercise by the Administrative Agent, the Collateral Agent or any Lender of
its rights or remedies under this Agreement or any other Financing Documents;
and

               (3)     All material Governmental Approvals, if any, then necessary in
connection with the continuing operation of the Telecommunications Business by
the Borrower and its Subsidiaries and the implementation of the Project.

     (i)     Process Agent. A letter from CT Corporation System, currently
located at 111 Eighth Avenue, New York, New York 10011, in a form satisfactory
to the Administrative Agent in its sole discretion, indicating its consent to
its appointment as agent for service of process by the Borrower; and evidence
that the fees of such agent have been paid in full for the period commencing on
the date hereof until six (6) months after the Maturity Date.

     (j)     Insurance. Certificates of all insurance required by Section
8.1(d), which certificates (1) state the names of the insurance companies, the
amounts of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby, (2) have been executed by an Authorized
Officer of the respective insurer, and (3) certify that all premiums and other
payments have been timely paid and that such insurance is otherwise not subject
to cancellation by the insurer during its term, except for nonpayment of
premiums, in which case at least fifteen (15) days prior written notice of
termination must be given to the Administrative Agent.

     (k)     2003 Stock Option Plan. A copy of IMPSAT’s stock incentive
plan (the “2003 Management Stock Option Plan”).

     (l)     Business Plans. Copies of the Business Plans, together with a
certificate of the chief or principal accounting or financial officer of
IMPSAT, dated the Closing Date, certifying as to the reasonableness of the
assumptions and expectations contained therein and that there are presently no
facts known to such Person that would make either Business Plan misleading in
any material respect.

     (m)     Management Employment Agreements. Copies of the employment
agreements of IMPSAT’s senior management contemplated by the Plan.

Section 6.2. Plan and Plan Confirmation.

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     (a)     Plan. All transactions contemplated by the Plan, including,
without limitation, the assignment to, and the assumption by, IMPSAT of the
Assumed Obligations, the issuance of the Series B Convertible Notes and the
Warrants and all of the transactions contemplated by the Nortel Brazil
Financing Agreement, shall have closed, and copies of all documents related
thereto shall have been delivered to, and approved by, the Administrative
Agent.

     (b)     Plan Confirmation. The Plan shall have been confirmed by the
United States Bankruptcy Court for the Southern District of New York and shall
be effective.

Section 6.3. Security Documents.

     All Security Documents theretofore executed and delivered in connection
with the Existing Financing Agreement and together with any amendments,
supplements or modifications thereto and any other Security Documents executed
and delivered in connection with this Agreement shall be sufficient to create
in favor of the Administrative Agent on behalf of the Lenders a legal, valid
and enforceable first priority security interest (except for Permitted Liens
that are purchase money Liens or that have priority under Applicable Law) in
and to the Collateral. All filings, recordings and deliveries of instructions
and other actions necessary or desirable in the opinion of the Administrative
Agent or its counsel in order to protect, preserve and perfect the Liens
provided in such Security Documents shall have been duly executed by the
Borrower and its Subsidiaries, as applicable, and registered, or filed for
registration and a certified copy of the registered agreement or deed or of the
official receipt or other document evidencing such filing, as the case may be,
shall have been delivered to the Administrative Agent.

Section 6.4. Accounts Payable Financing Agreement.

     The Accounts Payable Financing Agreement shall have been duly executed by
the parties thereto, and the Administrative Agent shall have received a copy
thereof.

Section 6.5. Material Agreements.

     Subject to confidentiality restrictions, the Administrative Agent shall
have received complete and correct copies, certified by an Authorized Officer
of the Borrower, of all of the Borrower’s Material Agreements.

Section 6.6. Representations and Warranties.

     All representations and warranties made by the Borrower, any Subsidiary
thereof or IMPSAT in the Financing Documents shall be true and correct in all
material respects.

Section 6.7. Covenants.

     The Borrower shall be in compliance with all covenants contained in Section 8.

Section 6.8. Litigation.

37

 

     No litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority shall be pending, or to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues which challenges the validity
or legality of this Agreement or any other Project Agreement or any of the
transactions contemplated hereby or thereby.

Section 6.9. No Defaults.

     No Default or Event of Default shall exist hereunder and no default or
event of default shall exist under any of the Brazil Agreements (regardless of
whether or not there has been a notice of default or acceleration thereunder).

Section 6.10. Material Adverse Change.

     Since the confirmation date of the Plan, no Material Adverse Change shall
have occurred and be continuing.

Section 6.11. Payment of Fees.

     The Borrower shall have paid all fees and expenses, including without
limitation, all fees payable on the Closing Date pursuant to Section 3.4 and
the reasonable fees and expenses of counsel to the Administrative Agent and
Lenders and local counsel to the Administrative Agent and Lenders.

Section 6.12. Capitalization of ISCH Indebtedness.

     Notwithstanding any prior agreement, including the ISCH Letter Agreement,
all Indebtedness owed by the Borrower or IMPSAT to ISCH under the Lucent
Argentina 2000 Financing Agreement shall have been capitalized by IMPSAT in the
Borrower with no further obligation or liability on the part of either the
Borrower or IMPSAT, and the Administrative Agent shall have received evidence,
in form and substance satisfactory to it, that such Indebtedness has been
capitalized.

Section 6.13. English Language.

     All Charter Documents and other documents and resolutions required to be
delivered pursuant to this Agreement, the other Project Agreements, and the
Licenses shall, if not in English, and if the Administrative Agent so requests,
be accompanied by an English translation (which, if the Administrative Agent so
requests, shall be a certified translation prepared by an Argentine certified
translator) which the Administrative Agent shall have the right to rely upon
for all purposes hereof and the other Project Agreements. All costs of
translation shall be payable by the Borrower.

SECTION 7. Representations and Warranties.

     The Borrower hereby represents and warrants to each Agent and each Lender
that the statements contained in this Section 7 are true, correct and complete
as of the date hereof.

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Section 7.1. Corporate Status.

     (a)     Each of the Borrower and its Subsidiaries and IMPSAT (i) is a sociedad
anónima or corporation, as the case may be, duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
and (ii) has the power and authority to own its property and assets, to carry
on its business in each jurisdiction in which it operates, and to incur
Indebtedness and to create or suffer to exist Liens on its properties created
under the Security Documents. IMPSAT is the holder, directly or indirectly, of
at least ninety-five percent (95%) of the Capital Stock of the Borrower. Set
forth on Schedule 7.1(a) hereto is a complete list of the Subsidiaries
of IMPSAT and the Borrower, the jurisdiction of organization of each such
Subsidiary and the amount and percentage of Capital Stock of each such
Subsidiary owned by IMPSAT and the Borrower.

     (b)     Except as set forth on Schedule 7.1(b) hereto, neither the
Borrower, its Subsidiaries or IMPSAT conducts business under any assumed names
or trade names, or has conducted business under any other names, or any assumed
names or trade names at any time prior to the date hereof.

Section 7.2. Corporate Power.

     (a)     Authority. Each of the Borrower and IMPSAT and their
respective Subsidiaries has full power and authority to enter into the
Financing Documents to which it is a party or, when executed and delivered, it
will become a party, all of which have been duly authorized by all proper and
necessary corporate action, and has duly executed and delivered each such
Financing Document which has been entered into as of the date hereof.

     (b)     Validity and Enforceability. Assuming due execution and
delivery thereof by the other parties thereto, each such Financing Document
constitutes, or when executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower, IMPSAT and their respective Subsidiaries,
as the case may be, enforceable against them in accordance with its terms,
except, in each case, to the extent such enforceability may be restricted by
bankruptcy, insolvency or similar Applicable Laws affecting the enforcement of
creditors’ rights generally or by general principles of equity.

Section 7.3. Governmental Approvals.

     (a)     Financing Documents. All Governmental Approvals that are
required by the Borrower, its Subsidiaries or IMPSAT in connection with the
execution, delivery or performance by, or enforcement against, the Borrower,
its Subsidiaries and IMPSAT of this Agreement and all other Financing Documents
to which the Borrower, its Subsidiaries or IMPSAT is a party have been
obtained, are in full force and effect, and the Borrower, its Subsidiaries and
IMPSAT are in compliance in all material respects with such Governmental
Approvals, other than the Governmental Approvals to be given by the Central
Bank to transfer funds outside of Argentina in connection with the payments to
be made hereunder and under the Note.

39

 

     (b)     Operations. All Governmental Approvals that are required by
the Borrower, its Subsidiaries or IMPSAT in connection with the business,
operations and activities of the Borrower and its Subsidiaries as now conducted
or as contemplated by the Borrower Business Plan have been obtained.

     (c)     No Proceedings. There is no proceeding pending or, to the
knowledge of the Borrower or any of its Subsidiaries, threatened against the
Borrower, its Subsidiaries or IMPSAT that seeks to rescind, terminate, suspend,
modify or otherwise affect any Governmental Approvals, in each case that would
have a Material Adverse Effect.

Section 7.4. No Violation.

     Neither the execution, delivery or performance by the Borrower, IMPSAT or
any of their respective Subsidiaries of any Project Agreement to which it is a
party, nor the use by the Borrower of the proceeds of the loans made under the
Existing Financing Agreement as restructured by this Agreement:

     (a)     will violate or conflict with any term or condition of any License or
other Governmental Approval obtained by the Borrower or any of its
Subsidiaries;

     (b)     will contravene any material provision of any Applicable Law binding
on the Borrower, IMPSAT or any of their respective Subsidiaries or any of their
assets;

     (c)     will conflict with, or be inconsistent with, or result in any breach
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (other than Permitted Liens)
upon any of the properties or assets of the Borrower, IMPSAT or any of their
respective Subsidiaries pursuant to the terms of any indenture, mortgage,
credit agreement, loan agreement or any other agreement, contract or instrument
to which the Borrower, IMPSAT or any such Subsidiary is a party or by which
each such Person or any of its respective properties or assets are bound or to
which they may be subject; or

     (d)     will violate any provision of the Charter Documents of the Borrower,
IMPSAT or any of their respective Subsidiaries; except to the extent that any
of the violations contained in clauses (c) and (d) above could not reasonably
be expected to have a Material Adverse Effect.

Section 7.5. Proceedings.

     (a)     No Proceedings. Except as set forth in Schedule 7.5,
there is no litigation, investigation or proceeding pending or, to the
knowledge of the Borrower or IMPSAT after reasonable inquiry, threatened before
any arbitrator or Governmental Authority against the Borrower, IMPSAT or any of
their respective Subsidiaries, nor, to the knowledge of the Borrower after
reasonable inquiry, any circumstances or conditions that might give rise to any
such proceedings, which could reasonably be expected to have a Material Adverse
Effect.

     (b)     No Orders. No injunction, writ, temporary restraining order or
any order of any nature has been issued by any court or Governmental Authority
(1) purporting to enjoin or

40

 

 restrain the execution, delivery or performance of this Agreement or any
other Financing Documents, or (2) which could reasonably be expected to have a
Material Adverse Effect.

Section 7.6. Taxes.

     The Borrower, IMPSAT and their respective Subsidiaries have (a) timely
filed all required tax returns, reports and declarations; (b) paid all
applicable taxes and governmental assessments and charges shown thereon or
determined to be due and payable except for such taxes, if any, as are being
contested in good faith by appropriate proceedings diligently conducted and as
to which (i) adequate cash reserves have been established in accordance with
U.S. or Argentine GAAP, as applicable, on the books of the Borrower, IMPSAT and
such Subsidiaries, as the case may be, or (ii) the aggregate amount of such
unpaid taxes, assessments and charges is less than one hundred thousand Dollars
(US$100,000) (and as to which it or its property is not yet subject to
foreclosure, seizure, arrest, sale, collection, levy or loss on account
thereof); and (c) set aside on its books provisions reasonably adequate for
payment of all taxes for all elapsed periods.

Section 7.7. Financial Statements.

     (a)     Balance Sheets, etc. The consolidated balance sheet of the
Borrower and its Subsidiaries and the consolidated balance sheet of IMPSAT and
its Subsidiaries as of September 30, 2002, and the related consolidated
statements of income or operations, retained earnings and changes in financial
position (or of cash flow, as the case may be) of each of the Borrower and
IMPSAT for the period then ended, were correct as of their respective dates and
fairly presented the financial condition of the Borrower or IMPSAT and their
respective Subsidiaries as of such dates, as the case may be; and results of
operations for the period covered thereby. The financial statements to be
delivered pursuant to Section 8.1 hereof shall be correct and shall fairly
present in all such cases the financial condition of the Borrower or IMPSAT, as
the case may be, as of the dates thereof and the results of its operations for
the periods ended on said dates, and all are or shall be prepared in accordance
with U.S. GAAP.

     (b)     No Liabilities. Neither the Borrower nor IMPSAT had or will
have on the dates of the financial statements referred to in Section 7.7(a) any
material contingent liabilities, liabilities for taxes, or material losses from
any commitments, except as specifically referred to, or reflected, or provided
for, in said financial statements as at said dates.

Section 7.8. The Project.

     (a)     Business Plans. The Business Plans accurately state in all
material respects all costs and expenses incurred and to be incurred in
connection with the business of the Borrower and IMPSAT as applicable. All
projections and budgets furnished or to be furnished to the Lenders by or on
behalf of the Borrower and IMPSAT and the summaries of significant assumptions
related thereto, including (without limitation) all information in the Business
Plans: (1) have been and will be prepared with due care; (2) fairly present,
and will fairly present, in all material respects, the expectations of the
Borrower and IMPSAT as to the matters covered

41

 

 thereby, and (3) are based on, and will be based on, reasonable
assumptions as to all factual and legal matters relative to the estimates
therein.

     (b)     Material Information. There are no statements or conclusions
in any of the projections or budgets furnished to the Administrative Agent
which are based upon or include information known to the Borrower or IMPSAT to
be misleading or which fail to take into account material information regarding
the matters reported therein.

Section 7.9. Environmental Matters.

     Each of the Borrower, its Subsidiaries and IMPSAT has duly complied with,
and its business, operations, assets, equipment, property, leaseholds, and
other facilities are in compliance with, all applicable Environmental Laws.
None of the Borrower, its Subsidiaries or IMPSAT has, nor to the knowledge of
the Borrower or IMPSAT after reasonable inquiry, has any other Person,
released, discharged, generated, manufactured, produced, stored, or disposed of
in, on, under, or about any sites of the Borrower, or transported thereto or
therefrom, any hazardous material or Hazardous Substance that could reasonably
be expected to subject the Lenders to any liability or the Borrower, its
Subsidiaries or IMPSAT to any liability that could have a Material Adverse
Effect. There is no proceeding pending against the Borrower, its Subsidiaries
or IMPSAT, and to the best knowledge of the Borrower or IMPSAT after reasonable
inquiry, no investigation or inquiry by any Governmental Authority is
threatened or contemplated, with respect to the presence or release of
hazardous materials or Hazardous Substances in, on, from, or to the sites of
the Borrower.

Section 7.10. Transactions with Affiliates.

     Except for the Plan or as disclosed in Schedule 7.10, none of the
Borrower, IMPSAT or any of their respective Subsidiaries are parties to any
contract, agreement or arrangement (whether or not in the ordinary course of
business) with the Borrower, IMPSAT, another Subsidiary of the Borrower or
IMPSAT or any of their respective Affiliates that is not on an arms-length
basis.

Section 7.11. Indebtedness.

     As of the date hereof, none of the Borrower, IMPSAT or their respective
Subsidiaries is a party to or bound by any note or agreement with respect to
Indebtedness other than the Indebtedness arising under this Agreement and the
Indebtedness set forth in Schedule 7.11, which is a complete and
accurate list of all Indebtedness of the Borrower, IMPSAT and their respective
Subsidiaries, showing as of such date the outstanding principal amount thereof,
and with respect to which, none of the Borrower, its Subsidiaries and IMPSAT
have any ability to borrow or reborrow any additional amounts thereunder.

Section 7.12. Properties.

     (a)     Title. The Borrower or a Subsidiary of the Borrower (1) has
good record and marketable title in fee simple (or the Argentine equivalent
thereof) or valid leasehold interests in or rights of use with respect to, all
real property used in the ordinary conduct of the

42

 

 Telecommunications Business, except for such defects in title as could
not, individually or in the aggregate, reasonably be expected to interfere with
the Borrower’s ability to conduct such business as currently or expected or
projected to be conducted or to utilize such properties for their intended
purposes; and (2) is, or will be upon its acquisition thereof in accordance
with the Supply Agreement, the sole owner of the Collateral. The assets of the
Borrower, its Subsidiaries and IMPSAT reflected in the most recent balance
sheet referred to in Section 7.7 are not subject to any Liens other than
Permitted Liens (including those described on Schedule 7.12(a)), and
each has good and legal title thereto. The Borrower and the Subsidiaries have
not created and are not contractually obligated to create any Lien, other than
Permitted Liens or Liens to be created or permitted to be created under the
Financing Documents to which they are a party, on or with respect to any of
their assets, rights or revenues.

     (b)     Condition. All assets material to the Telecommunications
Business are in good repair, working order and condition (ordinary wear and
tear excepted).

     (c)     Bank Accounts. Each of IMPSAT, the Borrower and its
Subsidiaries has full right and title to each of its bank or other financial
accounts (including any disbursement, deposit, operating, payroll, securities
and commodity accounts, and each such bank or other financial account is not
subject to any Lien other than (1) banker’s liens, rights of setoff or similar
rights as to such deposit accounts or other funds maintained with such creditor
depository institution or (2) Permitted Liens.

Section 7.13. Intellectual Property.

     The Borrower or IMPSAT owns all of the patents, trademarks, permits,
service marks, trade names, copyrights, franchises and formulas, or rights with
respect to the foregoing, used in the marketing of any of the Borrower’s and
its Subsidiaries’ services (a list of which is attached as Schedule
7.13, as updated from time to time by notice to the Administrative Agent)
and the Borrower owns or has obtained assignments of all such and other rights
of whatever nature necessary for the present conduct of the Telecommunications
Business or as presently contemplated to be conducted, without any known
conflict with the rights of others other than as set forth in Schedule
7.13 and except as could not reasonably be expected to have a Material
Adverse Effect.

Section 7.14. Books and Records.

     Each of IMPSAT, the Borrower and its Subsidiaries maintains its books and
records (including appropriate copies, backups and archives of such books and
records) in accordance with standard industry practice, Applicable Law and U.S.
GAAP or Argentine GAAP, as applicable.

Section 7.15. The Licenses.

     Schedule 7.15 contains a true and complete list of all Licenses
owned by or granted to the Borrower or its Subsidiaries. Each License is
legally valid, in full force and effect, duly registered, not subject to any
administrative review or appeal, or subject to any proceeding the

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 outcome of which could result in the revocation, in whole or in part, for
any reason not within the control of the Borrower or IMPSAT. The Borrower has
paid when due all amounts required to be paid and otherwise has complied with
all conditions the compliance with which is required in order to preserve its
rights under the Licenses. No Licenses other than those listed in Schedule
7.15 are required in order for the Borrower and its Subsidiaries to
install, exploit and operate the Network and to engage in the
Telecommunications Business as it is currently conducted by them, and as
contemplated by the Borrower Business Plan.

Section 7.16. No Material Adverse Change.

     There has been no Material Adverse Change since the confirmation date of the Plan.

Section 7.17. Insurance.

     The insurance policies and coverage required by Section 8.1(d) are in full
force and effect, all premiums and other payments required thereunder have been
timely paid and such policies and coverage are otherwise not subject to
cancellation by the insurer during the respective terms thereof, except for
nonpayment of premiums, in which case at least fifteen (15) days prior written
notice of termination must be given to the Administrative Agent.

Section 7.18. Collateral.

     All actions necessary for the establishment and perfection of the
Collateral Agent’s Lien on the Collateral that has been acquired by the
Borrower prior to such date, including any required consents, acknowledgments,
filings, registration, notarization or recordation thereof, and the payment of
all related fees, taxes and expenses shall have been completed, and the
Collateral Agent (on behalf of the Secured Parties) shall have an effective,
valid, legally binding and enforceable Lien on the Collateral, which Lien is
superior and prior to the Liens of all third parties (other than the Permitted
Liens that are purchase money Liens or that have priority under Applicable
Law).

Section 7.19. Investment Company; Public Utility Holding Company.

     None of the Borrower, IMPSAT or any of their respective Subsidiaries is an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, or, directly or indirectly, “controlled” by or acting on behalf of
any Person that is an “investment company”, within the meaning of said Act, or
a “holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of a “holding company” or of a “subsidiary” of a “holding company”
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.

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Section 7.20. Immunity.

     The execution, delivery, and performance of the Financing Documents
constitute private and commercial acts rather than governmental or public acts.
Under Applicable Law, neither the Borrower, IMPSAT, nor any of their respective
Subsidiaries nor any of their respective revenues or properties has any right
of immunity from suit, court jurisdiction, attachment prior to judgment,
attachment in aid of execution of a judgment, execution of a judgment or from
set-off, Liens, counterclaim or any other legal process or remedy with respect
to its obligations under the Financing Documents or the other Project
Agreements.

Section 7.21. Margin Stock; Regulation U.

     None of the Borrower, IMPSAT or any of their respective Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock. The
making of the Term Loans and the use of the proceeds thereof has not and will
not violate Regulation U or X of the Board of Governors of the Federal Reserve
System.

Section 7.22. Solvency.

     After giving effect to (a) the making (or deemed making) of the Term Loans
on the Closing Date and the transactions contemplated by this Agreement and the
Plan, and (b) the payment and accrual of all transaction costs in connection
with the restructuring, each of the Borrower and IMPSAT is Solvent.

Section 7.23. No Event of Default; Compliance with Material Agreements.

     After giving effect to the transactions contemplated by this Agreement and
the Plan, no event has occurred and is continuing and no condition exists which
constitutes a Default or an Event of Default. After giving effect to the
transactions contemplated by this Agreement and the Plan, neither the Borrower
nor IMPSAT is in violation of any term of any Material Agreement to which it is
respectively a party or by which it or its respective properties are bound,
except for such violations that in the aggregate would not have a Material
Adverse Effect.

Section 7.24. Fees or Compensation.

     Since the commencement of the Chapter 11 Proceedings, no fee or other
compensation has been paid or will be payable in connection with the
transactions contemplated by this Agreement except as set forth herein and as
described in the Plan.

Section 7.25. Termination of Lucent Agreements.

     All financing and supply agreements and commitments thereunder between
IMPSAT and any of its Subsidiaries or Affiliates and Lucent Argentina, S.A. and
any of its Affiliates have been irrevocably terminated and no longer have any
force or effect.

Section 7.26. True and Complete Disclosure.

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     All information heretofore or hereafter furnished by or on behalf of the
Borrower or IMPSAT or any of their respective Subsidiaries to the Agents or the
Lenders, and all representations and warranties made herein, are true and
correct in all material respects, and do not contain any material misstatement
of fact or omit to state a material fact necessary to make the statements
contained herein and therein not misleading at such time.

SECTION 8. Covenants.

Section 8.1. Affirmative Covenants.

     Until payment in full of the Obligations and so long as this Agreement
remains in effect, the Borrower shall, and shall cause its Subsidiaries to,
comply with each of the following covenants and agreements:

     (a)     Annual and Quarterly Reporting Requirements. The Borrower
shall deliver, or cause to be delivered, to the Administrative Agent:

               (1)     as to the Borrower:

                         (i)     as soon as practicable, but in no event later than ninety (90) days
after the end of each fiscal year of the Borrower, a copy of the consolidated
annual financial statements of the Borrower and its Subsidiaries (including its
consolidated balance sheet as at the close of such calendar year, consolidated
statements of income, retained earnings and changes in financial position or of
cash flow, as the case may be, for such fiscal year with related notes
specifying significant accounting practices and their impact on such financial
statements and with related schedules), and accompanied by an opinion thereon
of the Independent Auditor, which opinion shall state, subject to no
qualifications, that said financial statements fairly present the financial
condition and results of operations of the Borrower and its Subsidiaries, as at
the end of, and for, such fiscal year and that said financial statements have
been prepared in accordance with Argentine GAAP or U.S. GAAP. Such annual
financial statements: (A) shall be in the English language; (B) in the case
that such financial statements have been prepared in accordance with Argentine
GAAP, shall be accompanied by a reconciliation to U.S. GAAP of the Borrower’s
net income and shareholders’ equity and convenience translations to Dollars;
and (C) shall be accompanied by a statement, for each of the calendar quarters
of the fiscal year, of each new entry of deferred Revenues and the current sum
of all deferred Revenues for the past four consecutive calendar quarters. From
time to time, at the request of the Administrative Agent, the Borrower shall
deliver to the Administrative Agent such additional financial information as
the Administrative Agent may reasonably request; and

                         (ii)     as soon as practicable, but in any event no later than forty-five
(45) days after the end of each of the first three (3) quarters of each fiscal
year of the Borrower, the unaudited consolidated financial statements of the
Borrower and its Subsidiaries (including its consolidated balance sheet as at
the close of such quarter, consolidated statements of income, retained earnings
and changes in financial position or of cash flow, as the case may be, for such
quarter and with related schedules) for such period and for the period from the
beginning of the respective fiscal year to the end of such quarterly period and
the related balance sheets at the end

46

 

 of such period, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding fiscal year
accompanied by a certificate of the Chief Financial Officer of the Borrower,
which certificate shall state that such financial statements fairly present the
financial condition and results of operations, as the case may be, of the
Borrower in accordance with Argentine GAAP or U.S. GAAP, as at the end of, and
for, such period (subject to normal year end audit adjustments), and, in the
case that such financial statements have been prepared in accordance with
Argentine GAAP, by a reconciliation to U.S. GAAP of the Borrower’s net income
and shareholders’ equity and convenience translations to Dollars. Such
quarterly financial statements shall be accompanied by a statement, for each of
the past four consecutive calendar quarters, of each new entry of deferred
Revenues and the current sum of all deferred Revenues for the past four
consecutive calendar quarters.

               (2)     as to IMPSAT:

                         (i)     as soon as practicable, but in any event no later than ninety (90)
days after the end of each fiscal year of IMPSAT, a copy of the annual
consolidated financial statements of IMPSAT and its Subsidiaries (including its
consolidated balance sheet as at the close of such calendar year, consolidated
statements of income, retained earnings and changes in financial position or of
cash flow, as the case may be, for such fiscal year with related notes
specifying significant accounting practices and their impact on such financial
statements and with related schedules), and accompanied by an opinion thereon
of the Independent Auditor, which opinion shall state, subject to no
qualifications, that said financial statements fairly present the financial
condition and results of operations of IMPSAT and its Subsidiaries, as at the
end of, and for, such fiscal year and that said financial statements have been
prepared in accordance with U.S. GAAP. Such annual financial statements shall
be in the English language. From time to time, at the request of the
Administrative Agent, IMPSAT shall deliver to the Administrative Agent such
additional financial information as the Administrative Agent may reasonably
request; and

                         (ii)     as soon as practicable, but in any event no later than forty-five
(45) days after the end of each of the first three (3) quarters of each fiscal
year of IMPSAT, the consolidated unaudited financial statements of IMPSAT and
its Subsidiaries (including its consolidated balance sheet as at the close of
such quarter, consolidated statements of income, retained earnings and changes
in financial position or of cash flow, as the case may be, for such quarter and
with related schedules) for such period and for the period from the beginning
of the respective fiscal year to the end of such quarterly period and the
related balance sheets at the end of such period, setting forth in each case in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year accompanied by a certificate of the Chief Financial
Officer of IMPSAT which certificate shall state that such financial statements
fairly present the financial condition and results of operations, as the case
may be, of IMPSAT and its Subsidiaries in accordance with U.S. GAAP, as at the
end of, and for, such period (subject to normal year end audit adjustments).

               (3)     Simultaneously with the delivery of the Financial Statements referred
to in clauses (1) and (2) above, a statement certified by the chief or
principal financial or accounting officer of the Borrower or IMPSAT, as the
case may be:

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                         (i)     setting forth in reasonable detail computations evidencing compliance
with the covenants set forth in Section 8.3 herein;

                         (ii)     stating that as of the date thereof no Default or Event of Default
has occurred and is continuing or exists, or if a Default or Event of Default
has occurred and is continuing or exists, specifying in detail the nature and
period of existence thereof and any action with respect thereto taken or
contemplated to be taken by the Borrower or IMPSAT as applicable; and

                         (iii)     stating that the signer has personally reviewed this Agreement and
that such certificate is based on an examination made by or under the direct
supervision of the signer sufficient to assure that such certificate is
accurate.

               (4)     Within fifteen (15) days after the delivery of the Financial
Statements referred to in clause (1)(i) above, a report that includes
calculations showing in reasonable detail the Borrower’s Excess Cash Flow for
such fiscal year, if any, certified as correct by the Borrower’s chief or
principal accounting or financial officer.

               (5)     Within fifteen (15) days after the delivery of the Financial
Statements referred to in clause (2)(i) above, a report that includes
calculations showing in reasonable detail IMPSAT’s Excess Cash Flow for such
fiscal year, if any, certified as correct by IMPSAT’s chief or principal
accounting or financial officer.

     (b)     Additional Reporting Requirements.

               (1)     Without prejudice to the requirement to have such documents approved
by the Administrative Agent, promptly upon the execution and delivery thereof,
the Borrower shall provide the Administrative Agent with copies of all Project
Agreements (including any amendments, additions or replacements).

               (2)     Promptly upon the completion thereof and in no event later than thirty
(30) days thereafter, the Borrower shall provide the Administrative Agent with
a copy of any material amendment, addition or revised version of each of the
Business Plans.

               (3)     Promptly upon the execution and delivery thereof, the Borrower shall
provide the Administrative Agent with copies of all agreements regarding leases
and similar transactions contemplated by Section 8.2(m); provided that
the Administrative Agent shall maintain the confidentiality of the parties,
terms and conditions of such agreements subject to the exceptions contained in
the first paragraph of Section 16.13.

               (4)     The Borrower shall, and shall cause IMPSAT to, provide to the
Administrative Agent and the Lenders copies of any proposed public announcement
referencing the Administrative Agent or any of the Lenders by name with respect
to any financial accommodation proposed or granted by the Administrative Agent
or such Lender before such announcement is made to the public. Subject to
Applicable Law, such announcement shall be subject to the prior approval of the
Administrative Agent or such Lender, such approval not to be unreasonably
withheld. To the extent that Applicable Law requires such public announcement
to

48

 

 be filed with any Governmental Authority, the Borrower shall, and shall
cause IMPSAT to, provide copies of such public announcement to the
Administrative Agent and the Lenders at least two (2) Business Days prior to
filing such public announcement with such Governmental Authority.

               (5)     If requested by the Administrative Agent, the Borrower shall deliver,
or cause to be delivered, to the Administrative Agent and the Lenders within
forty-five (45) days after the beginning of each fiscal year, updated Borrower
and IMPSAT Business Plans, quarterly projections of its and IMPSAT’s
anticipated income, expenses, cash flow, assets and liabilities through the
Maturity Date prepared in good faith on assumptions believed by Borrower and
IMPSAT to be reasonable and in form and substance satisfactory to the
Administrative Agent.

               (6)     The Borrower shall deliver to the Administrative Agent and the Lenders
within forty-five (45) days after the beginning of each fiscal year, an updated
Borrower Annual Operating Budget including monthly projections of its
anticipated income, expenses, cash flow, assets and liabilities prepared in
good faith on assumptions believed by Borrower to be reasonable and in form and
substance satisfactory to the Administrative Agent.

               (7)     The Borrower shall, and shall cause IMPSAT to, provide prior written
notice of any board meeting of the Borrower or IMPSAT as applicable, as well as
copies of any materials distributed to the board members of each such Person to
the Administrative Agent.

               (8)     From time to time, the Borrower shall deliver to the Administrative
Agent such other information regarding the business of the Borrower, its
Subsidiaries, IMPSAT, the Project, the Network and the Telecommunications
Business as the Administrative Agent or any Lender may reasonably request.

     (c)     Notices. The Borrower shall promptly, but in no event later
than three (3) Business Days after (unless otherwise indicated below) the
Borrower obtains knowledge of the occurrence of the following events, give
notice to the Administrative Agent of the occurrence of any of the following:

               (1)     a Default or an Event of Default;

               (2)     a default by the Borrower, IMPSAT or any of their Affiliates under any
Project Agreement;

               (3)     except to the extent that it could not reasonably be expected to have
a Material Adverse Effect, any (i) (A) commencement or Material Adverse Change
in respect of any litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority; or (B) any material litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority which, to the knowledge of the Borrower is threatened by or against
the Borrower, IMPSAT, any of their respective Subsidiaries, or against any of
their properties or revenues which: (x) purport to affect or pertain to this
Agreement or any of the other Project Agreements or any of the transactions
contemplated hereby or thereby, or (y) if determined adversely, could
reasonably be expected to have a Material Adverse Effect; (ii) issuance by any

49

 

 Governmental Authority of an injunction, writ, temporary restraining order
or any order of any nature purporting to enjoin or restrain the execution,
delivery or performance of this Agreement or any other Project Agreements, or
directing that the transactions contemplated hereunder or thereunder not be
consummated as herein or therein provided; (iii) issuance by any Governmental
Authority of any injunction, order, decision or other restraint purporting to
enjoin, restrain, prohibit (or which would have the effect of prohibiting) the
making of the Term Loans, or invalidate (or which would have the effect of
invalidating) any provision of this Agreement or any of the other Project
Agreements, including provisions regarding the granting of Liens on the
Collateral or the priority of such Liens; or (iv) any other event, circumstance
or development that could be reasonably expected to cause or result in a
Material Adverse Change.

               (4)     thirty (30) days prior to the movement of any Equipment or any other
Collateral outside of Argentina having, in the aggregate, at any time, a
replacement value in excess of five hundred thousand Dollars (US$500,000);

               (5)     thirty (30) days prior thereto in writing, the movement of the
principal place of business of the Borrower or IMPSAT to any location other
than as set forth in the Security Documents; and

               (6)     any material change in the business of the Borrower, any of its
Subsidiaries or IMPSAT.

     The Administrative Agent and the Collateral Agent shall have the right to
request, with respect to any such notice, a statement of an Authorized Officer
of the Borrower setting forth reasonable details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto.

     (d)     Insurance. The Borrower shall:

               (1)     maintain or cause to be maintained in full force and effect at all
times on and after the date hereof and continuing until the Maturity Date, with
responsible insurance companies having a Best Insurance Reports rating of A or
better and a financial size category of “10” or higher (or other companies
reasonably acceptable to the Administrative Agent) and in an amount not less
than the amount of all the Term Loans, and in any event, not less than the full
replacement cost of all Collateral:

                         (i)     “all risk” property insurance, including earthquake, windstorm and
flood, with a limit of loss per occurrence acceptable to the Administrative
Agent in its reasonable discretion from time to time;

                         (ii)     equipment and machinery breakdown insurance covering breakdown and
resulting damage including rotating equipment such as generators and electrical
equipment (including transformers, switch gear and electrical apparatus) for
their full replacement value;

                         (iii)     business interruption insurance covering risk of loss as a result of
the cessation or material interruption of the Telecommunications Business
resulting from an

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 insured loss under the Borrower’s property policy for an indemnity period
of six (6) months or any part thereof, the initial amount of such insurance to
provide for the payment during the six (6) months commencing from the date
hereof of not less than the gross revenues to be earned by the Borrower for
such six (6) month period, calculated based on the Business Plans and to be
adjusted by the Borrower semiannually from the date hereof thereafter, less any
non-continuing costs and expenses during the relevant indemnity period,
provided however, in no event shall the Borrower be required to
obtain insurance coverage greater than is customary for similarly situated
businesses in the Borrower’s industry; and

                         (iv)     third party liability insurance, including bodily injury and property
damage, with a limit of no less than two million Dollars (US$2,000,000) per
occurrence.

               (2)     within sixty (60) days after receipt by the Borrower of a written
request from the Administrative Agent, accompanied by a pro forma political
risk insurance policy which contains terms and conditions commercially
reasonable under then current market conditions, and the obtention of which
will not increase the “all-in” financing cost of the Term Loans to the
Borrower, obtain such a policy and maintain such political risk insurance in
full force and effect until the Maturity Date.

               (3)     file with the Administrative Agent not more than seven (7) days after
each policy anniversary, certificates of all insurance then in effect, stating
the names of the insurance companies, the amounts of the insurance, the dates
of the expiration thereof and the properties and risks covered thereby and
specifically listing the special provisions enumerated for such insurance
required by this Section 8.1(d).

     The certificates of insurance referred to in clause (3) hereof shall be
executed by an authorized representative of each insurer, and certify that all
premiums and other payments required in respect of such insurance have been
timely paid and that such insurance is otherwise not subject to cancellation,
modification or change in coverage by the insurer during its term, except for
nonpayment of premiums, in which case at least fifteen (15) days prior written
notice of termination must be given to the Administrative Agent. Upon request,
the Borrower will promptly furnish the Agents with evidence of such insurance
relating to the Collateral and all information relating to the replacement cost
and location of the same.

     In each case, the insurance policies shall designate the Administrative
Agent as additional insured in respect of the liability insurance related to
the Equipment and the sole loss payee in respect of the property insurance
related to the Equipment. All amounts payable to the Administrative Agent
according to the foregoing under property insurance policies shall be paid to
an account of the Administrative Agent (i) upon the occurrence of an Event of
Default; or (ii) if the insured loss materially impairs the Borrower’s ongoing
operations. In such event, funds received by the Administrative Agent under
such property insurance policies shall be made available to the Borrower for
application to the costs of repairing, restoring, rebuilding or replacing the
portion of the Collateral with respect to which such proceeds were obtained;
provided that, subject to the provisions of Sections 3.2 and 9.1 hereof,
such repaired, restored, rebuilt or replaced asset shall be or become a part of
the Collateral. The Administrative Agent shall at the request of the Required
Lenders pay any insurance premiums directly, on Borrower’s

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 behalf, and Borrower shall reimburse Lenders through the Administrative
Agent promptly for any such payment made by Lenders, provided,
however, the Administrative Agent shall have no obligation to pay any
such insurance premiums.

     The Administrative Agent reserves the right at any time upon any material
change in the risk profile of the Borrower or its Subsidiaries (including any
change in the business conducted by any such Person or any Applicable Law
affecting the potential liability of such Person) to require additional forms
and limits of insurance to, in the Administrative Agent’s reasonable opinion,
adequately protect both the Administrative Agent’s and the Lenders’ interests
in all or any portion of the Collateral and to ensure that each of the Borrower
and its Subsidiaries are protected by insurance in amounts and coverage
customary for its industry. If requested by the Administrative Agent, which
request shall not be made more frequently than once in any calendar year, each
of the Borrower and its Subsidiaries shall deliver to the Administrative Agent
from time to time a report of a reputable insurance broker, satisfactory to the
Administrative Agent, with respect to its insurance polices.

     (e)     Compliance with Applicable Law and Contracts. The Borrower
shall, and shall cause its Subsidiaries to, comply in all material respects
with:

               (1)     the requirements of all Applicable Law, including obtaining and
maintaining all Governmental Approvals. If any authorization, consent,
approval, permit or license from any Governmental Authority shall become
necessary or required in order to fulfill the obligations hereunder or under
any of the other Financing Documents, the Borrower shall immediately take or
cause to be taken all reasonable steps to obtain such authorization, consent,
approval, permit or license and furnish the Administrative Agent evidence
thereof;

               (2)     the provisions of its respective Charter Documents; and

               (3)     all Material Agreements to which it respectively is a party.

     (f)     Operation of the Network. The Borrower shall operate and
maintain the Network, and retain and maintain the staff sufficient to operate
and maintain the Network, in accordance with the Business Plans, and otherwise
comply in all material respects with, and satisfy the requirements of, all
Licenses and Applicable Laws.

     (g)  Taxes, etc. The Borrower shall pay, or arrange for payment,
prior to the date when due of all (1) taxes imposed on the Borrower and its
Subsidiaries, and (2) present and future claims, levies, or liabilities
(including, without limitation, claims for labor, service, materials and
supplies) for sums which have become due and payable and which, if unpaid,
might by law become a Lien or otherwise have a Material Adverse Effect,
except for any such tax, claim, levy or liability the payment of which
is being contested in good faith by proper proceedings diligently conducted for
which adequate cash reserves determined in accordance with Argentine GAAP have
been established and are being maintained, (and as to which it or its property
is not yet subject to foreclosure, seizure, arrest, sale, collection, levy or
loss on account thereof). The Borrower shall make timely and accurate filings
of all tax returns and material

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 governmental reports required to be filed or submitted under any
Applicable Laws, and shall otherwise take such actions as are necessary to
comply with Applicable Laws relating to taxes.

     (h)     Maintenance of Books and Records; Access. The Borrower shall,
and shall cause each of its Subsidiaries to, keep adequate books and records of
account, in which complete and accurate entries will be made in accordance with
Argentine GAAP, reflecting the financial condition of the Borrower and its
Subsidiaries and shall permit the Administrative Agent and the Lenders, and any
of their respective officers, employees and agents, at all reasonable times and
with prior notice to the Borrower, (i) to inspect, audit and make extracts of
the books and records of such Person; (ii) to inspect the properties and
facilities of such Person; (iii) to discuss such books and records with the
representatives, employees (including officers) and accountants of such Person
and with the Independent Auditor; and (iv) to inspect, review, evaluate and
make test verifications and counts of such Person’s accounts, the Equipment
other Collateral and assets; in each case at the Lender’s expense, unless a
Default or an Event of Default exists.

     The Borrower shall promptly supply to the Administrative Agent copies of
any reports on its or its Subsidiaries’ business and activities which are
publicly distributed as well as any other reports thereon and reports made to
any Governmental Authority as the Administrative Agent may from time to time
reasonably request.

     The Borrower shall maintain an adequate billing, software and accounting
system, including books, accounts and records, and shall prepare all financial
statements required hereunder in accordance with Argentine GAAP, consistently
applied, and in compliance with all Applicable Laws.

     If a Default or Event of Default shall have occurred and be continuing
each of the Borrower and its Subsidiaries shall make available to the
Administrative Agent and its counsel, as quickly as is possible under the
circumstances, originals or copies of all books and records which the
Administrative Agent may reasonably request and deliver any document or
instrument necessary for the Administrative Agent, as it may from time to time
reasonably request, to obtain records from any service bureau or other Person
which maintains records for the Borrower or its Subsidiaries.

     (i)     Rank of Debt. The Borrower shall take any and all action
necessary to ensure that the Term Loans at all times continue to be the direct
and unconditional obligation of the Borrower and rank at least pari passu (in
respect of priority of payment, security or otherwise) to all other secured or
unsecured Indebtedness of the Borrower, except that such ranking shall not
apply to the rights of secured Indebtedness over collateral subject to
Permitted Liens that are purchase money Liens or that have priority under
Applicable Law.

     (j)     Payment of Obligations. The Borrower shall, and shall cause
each of its Subsidiaries to, pay or discharge obligations that if not paid,
could result in a Material Adverse Effect, before the same shall become
delinquent or in default, except where (1) other than as to the obligations
described in (2) below (w) the validity or amount thereof is being contested in
good faith by appropriate proceedings diligently conducted: (x) adequate cash
reserves have been established with respect thereto in accordance with
Argentine GAAP; (y) the failure to make

53

 

 payment pending such contest could not reasonably be expected to result in
a Material Adverse Effect and (z) proceedings to foreclose any Lien which may
have attached as security for such obligation have not commenced, or (2) with
regard to any Existing Indebtedness (x) the Borrower is diligently and in good
faith pursuing a settlement and restructuring of such obligations; (y) no
judgment has been entered which would constitute a Default under Section
10.1(l); and (z) proceedings to foreclose any Lien which may have attached as
security for such obligation have not commenced.

     (k)     Environmental Matters. The Borrower shall promptly give to the
Administrative Agent notice in writing if the Borrower or any Subsidiary
thereof (1) receives any complaint, order, citation, notice of inquiry,
proceeding, investigation or action or other written communication from any
Person with respect to, or (2) otherwise acquires actual knowledge of (i) the
existence or alleged existence of any Environmental Liability or any actual or
alleged violation of any applicable Environmental Law arising at, upon, under,
within or in connection with any property now or previously owned, leased,
operated or used by the Borrower, IMPSAT or any of their respective past or
present Subsidiaries, or any part thereof, or due to the operations or
activities of any such Person, on or in connection with such property or any
part thereof (including receipt by the Borrower or its Affiliates of any notice
of the happening of any event involving the release of a reportable quantity of
any Hazardous Substance under any applicable Environmental Law or cleanup of
any Hazardous Substance), (ii) any release of any Hazardous Substance on such
property or any part thereof in a quantity that is reportable under any
applicable Environmental Law, (iii) the commencement of any cleanup pursuant to
or in accordance with any applicable Environmental Law of any Hazardous
Substances on or about such property or any part thereof, and (iv) any pending
or threatened proceeding for the termination, suspension or non-renewal of any
permit required under any applicable Environmental Law. The Borrower shall
obtain (at its sole cost and expense) and deliver to the Administrative Agent
on behalf of the Lenders such environmental site assessments, reports or
studies that the Administrative Agent shall reasonably require from time to
time.

     (l)     Licenses. The Borrower shall, and shall cause its Subsidiaries
(1) to maintain the Licenses in full force and effect, at all times on and
after the date hereof; (2) upon receipt of any notification from any
Governmental Authority that the Borrower is in breach of any License, or that
any License is subject of an inquiry, proceeding or investigation: (i) promptly
notify the Administrative Agent thereof, providing copies of all relevant
documents, correspondence and other information; and (ii) take prompt and
adequate remedial action to remedy such breach, which action shall be taken
within the cure period, if any, set out in such notification and (3) provide
copies of all material notices and correspondence received from, or sent to,
any Governmental Authority relating to the Borrower, IMPSAT, the Licenses or
the Network.

     (m)     Regulatory Filings. The Borrower shall, and shall cause its
Subsidiaries to, deliver to the Administrative Agent, promptly after the
sending or filing thereof, copies of all non-confidential reports filed by the
Borrower, any of its Subsidiaries or IMPSAT with the SC, the United States
Securities and Exchange Commission, the Central Bank, the Argentine National
Securities Commission (Comisión Nacional de Valores) or the Buenos Aires Stock
Exchange and all non-confidential reports filed with any other Governmental
Authority, except,

54

 

 in all such cases, reports the failure of which to be filed could not
reasonably be expected to have a Material Adverse Effect.

     (n)     Continuance of Business. The Borrower shall, and shall cause
its Subsidiaries to: (x) do or cause to be done all things necessary to
maintain, renew and keep in full force and effect (i) the Licenses and relevant
Governmental Approvals, (ii) their respective corporate existence and good
standing and (iii) all other rights and privileges and franchises related to
Telecommunications Business, except in the case of clauses (ii) and
(iii) to the extent that the failure to do so would not have a Material Adverse
Effect, and (y) continue to engage primarily in the business now conducted by
it.

     (o)     MU Expenses. The Borrower shall invoice and collect from
Affiliates of the Borrower not less than 50% of all MU Expenses incurred during
each calendar quarter, such amounts to be collected not later than 30 days
after the end of such calendar quarter, provided, however, that
if for any calendar quarter the Borrower invoices and collects less than the
entire required amount of MU Expenses, it shall not be in breach of this
covenant if, within the same 30-day period, IMPSAT makes a contribution to the
Borrower’s Paid In Capital, in cash or by means of the capitalization of
Indebtedness, in an amount equal to the amount of the deficiency.

     (p)     Maintenance of Assets. The Borrower shall, and shall cause its
Subsidiaries to, do or cause to be done all things necessary to maintain all of
its assets material to the Telecommunication Business in good repair, working
order and condition (ordinary wear and tear excepted) and supplied with all
necessary equipment.

     (q)     Security Reinforcements; Registration. Within 15 days after
the clearance through customs of any and all pieces of Equipment, including,
without limitation, all pieces of Equipment listed on Schedule 8.1(q)
hereto, the Borrower shall (i) in the event such pieces of Equipment do not
have identification numbers, assign and affix identification numbers so as to
make such Equipment identifiable, (ii) prepare a security reinforcement request
(refuerzo de garantía) so as to incorporate such Equipment into the Equipment
Pledge Agreement (a “Security Reinforcement”) in form and substance
acceptable to the Administrative Agent, (iii) execute such Security
Reinforcement and present it to the Collateral Agent (or its designee) for its
signature, and (iv) as soon as practicable, but in no event later than 5 days
from its execution, submit such executed Security Reinforcement to the
corresponding registry office (Registro Nacional de Créditos Prendarios) for
filing; provided that it shall not be deemed a breach by the Borrower of
this Section 8.1(q) if the foregoing is not accomplished as a result of the
actions or omissions of another Person.

     (r)     Observer Seat. For so long as at least thirty million Dollars
(US$30,000,000) in aggregate principal amount of Indebtedness remains
outstanding under this Agreement and the Nortel Brazil Financing Agreement
taken together, the Lender holding the largest single amount of Indebtedness
under this Agreement and the Nortel Brazil Financing Agreement shall have the
right to designate one observer to attend all meetings of the board of
directors of the Borrower.

     (s)     Mendoza Permit of Use. The Borrower shall use its best efforts
to assist the Administrative Agent in obtaining an amendment to the Permit of
Use issued to the Borrower by

55

 

 the Municipality of La Paz in the Province of Mendoza a copy of which is
attached as Schedule 8.1(s) hereto permitting the Administrative Agent
or its designee, to be an assignee of the rights, benefits and privileges of
the Borrower under such Permit of Use for the benefit of the Lenders.

     (t)     Further Assurances. The Borrower shall, and shall cause its
Subsidiaries to, at such Person’s expense and upon the request of the
Administrative Agent, duly execute and deliver, or cause to be duly executed
and delivered, to the Administrative Agent and the Lenders such further
instruments and do and cause to be done such further acts as may be necessary
or proper in the reasonable opinion of the Administrative Agent to carry out
more effectively the provisions and purposes of this Agreement or any other
Financing Document.

Section 8.2. Negative Covenants.

     Until the Maturity Date, and so long as this Agreement remains in effect,
the Borrower shall comply in all respects with each of the following covenants
and agreements:

     (a)     Fundamental Changes. The Borrower shall not, and shall not
permit its Subsidiaries to, dissolve, liquidate, merge with another Person or,
except as permitted by Section 8.2(k), create any new Subsidiary without the
prior written consent of the Administrative Agent on behalf of the Required
Lenders.

     (b)     Liens. The Borrower shall not, and shall not permit its
Subsidiaries to, create, incur, assume or suffer to exist, any Lien upon or
with respect to such Person’s accounts receivable, the Collateral, any rights
under the Licenses, any Governmental Approvals or in or to the Network or the
Project Agreements or any other tangible or intangible property or assets, or
any part thereof, of such Person other than any Permitted Lien.

     (c)     Restricted Payments. The Borrower agrees not to, and to cause
its Subsidiaries not to:

               (1)     reduce such Person’s capital; or

               (2)     declare or pay any dividends or make any distributions or other
payments or delivery of property or cash in respect of: (i) the interest of
such Person’s shareholders or other equity owners; or (ii) any Indebtedness
which is by its terms subordinate or junior in right of payment to the Term
Loans, except that the Borrower may pay dividends or make a distribution or
other payment of interest or principal of Intercompany Indebtedness owing to
IMPSAT the purpose of which is to assist IMPSAT to make interest payments as
and when due under the Series A and Series B Convertible Notes, but only if at
the time of and after giving effect to such distribution:

                         A. no Default or Event of Default shall have occurred and be continuing;

                         B. the aggregate amount of all such distributions by the Borrower during
the fiscal year of the Borrower in which the date of such distribution occurs
shall not exceed the lesser of (x) (1) two times the Borrower’s EBITDA for the
two consecutive fiscal quarters ending with the fiscal quarter most recently
ended prior to the date of such dividend, distribution

56

 

 or payment (the “Preceding Fiscal Quarter”), minus (2) the
aggregate amount of Debt Service payable by the Borrower and its Subsidiaries
during the 12 calendar months next following the Preceding Fiscal Quarter and
(y) twenty-five percent (25%) of the sum of IMPSAT’s projected (1) Delaware
state franchise taxes for such fiscal year, (2) director and officer liability
insurance premiums for such fiscal year and (3) non-consolidated interest
expenses for such fiscal year.

     (d)     Guarantees. The Borrower shall not, and shall not permit its
Subsidiaries to, enter into or become bound by any agreements guaranteeing the
Indebtedness of another Person, except as permitted by clauses (a), (c) and (d)
of the definition of “Permitted Indebtedness.”

     (e)     Document Amendments. The Borrower shall not, and shall not
permit its Subsidiaries to, agree to any modification, amendment, waiver,
supplement, rescission or termination (collectively, “Amendment”) of any
(i) License, (ii) Governmental Approval (other than Licenses), (iii) Project
Agreement or (iv) Material Agreement, without, in each case, the prior written
approval of the Administrative Agent on behalf of the Required Lenders,
except to the extent that such Amendment could not reasonably be
expected to have a Material Adverse Effect; provided, however,
that in the case of clause (i), the Borrower shall give the Administrative
Agent no less than five (5) Business Days prior written notice of such Person’s
proposed Amendment during which period the Administrative Agent shall have the
exclusive right (which it shall not exercise unreasonably) to reject such
Amendment.

     (f)     Transactions with Affiliates. Except as expressly permitted by
this Agreement, the Borrower shall not, and shall not permit its Subsidiaries
to, directly or indirectly, enter into any transaction with an Affiliate,
except in the ordinary course of and pursuant to the reasonable requirements of
the business of the Borrower and upon commercially reasonable terms no less
favorable to the Borrower than those that could be obtained on an arm’s length
basis from a Person which is not an Affiliate.

     (g)     Indebtedness. The Borrower shall not, and shall not permit its
Subsidiaries to, incur, create, assume or suffer to exist, or permit to incur,
create, assume or suffer to exist, or become or remain liable, for or on
account of any Indebtedness except (1) Indebtedness hereunder, and (2)
Permitted Indebtedness.

     (h)     Non-Related Activities. The Borrower shall not, and shall not
permit its Subsidiaries to, engage, directly or indirectly, in any activity,
unless such activity is, directly or indirectly, related to the
Telecommunications Business of each such Person as conducted and proposed to be
conducted on the date hereof, without the prior written consent of the
Administrative Agent on behalf of the Required Lenders.

     (i)     Corporate Actions. The Borrower shall not, and shall not
permit its Subsidiaries to, (i) change or otherwise alter the end of such
Person’s fiscal year or such Person’s corporate purpose, or (ii) otherwise
amend such Person’s Charter Documents in any manner without the prior written
consent of the Administrative Agent on behalf of the Required Lenders; except
in the case of clause (ii) as could not reasonably be expected to have a
Material Adverse Effect.

57

 

     (j)     Disposals. The Borrower shall not, and shall not permit its
Subsidiaries to, (whether by a single transaction or a number of related or
unrelated transactions and whether at one time or over a period of time)
Dispose of the Collateral or, without the prior written consent of the
Administrative Agent on behalf of the Required Lenders, any such Person’s other
property or assets, whether tangible or intangible, in each case other than
Permitted Disposals.

     (k)     Investments. The Borrower shall not, and shall not permit any
of its Subsidiaries to make any Investment other than (i) Permitted Investments
or (ii) Investments in one or more Persons which will, upon the making of such
Investment, become a Subsidiary or be merged or consolidated with or into or
transfer or convey all or substantially all of its assets to, the Borrower or a
Subsidiary thereof; provided, however, that (1) such Person’s
primary business is the Telecommunications Business, (2) the Borrower would
have been in compliance with the covenants contained in Section 8.3 of this
Agreement as of the end of the last four fiscal quarters, giving pro forma
effect to such Investment, and the projections for the Borrower, giving effect
to such Investment, would be in compliance with the covenants contained in
Section 8.3 of this Agreement as of the end of the next four fiscal quarters,
(3) no Indebtedness is assumed or incurred in connection with the acquisition
other than Permitted Indebtedness, (4) such Person shall have executed and
delivered a guaranty of the Obligations to the Administrative Agent for the
benefit of the Lenders in form an substance satisfactory to the Administrative
Agent on behalf of the Lenders and (5) such Person (except where such Person is
merged into the Borrower or a Subsidiary thereof) agrees in writing to be bound
by the terms of the Financing Documents; and provided further
that an Investment will not be permitted under this clause (ii) if the sum of
consideration to be paid in respect of such Investment plus the consideration
paid in respect of all previous Investments made under this clause (ii) exceeds
US$2,000,000 in the aggregate. For purposes of the foregoing clause,
“consideration” shall mean with respect to any acquisition all cash and
non-cash consideration actually paid or required to be paid by the Borrower or
any of its Subsidiaries, including the principal amount of any assumed
Indebtedness and deferred amounts in the nature of holdbacks (to the extent not
distributed to the Borrower or any of its Subsidiaries.

     (l)     Change in Accounting Policies. The Borrower shall not, and
shall not permit any of its Subsidiaries to, make any change in accounting
policies or reporting practices (including changing its fiscal year) which,
individually or in the aggregate, materially affects any determination as to
the Borrower’s compliance with its Obligations, including any financial
covenants, without the prior written consent of the Administrative Agent on
behalf of the Required Lenders; provided that if such change is required
by Argentine GAAP, the Borrower shall, prior to making such change, only be
required to notify the Administrative Agent of such change and the effect
thereof.

     (m)     Leases. The Borrower shall not, and shall not permit any of
its Subsidiaries to, without the prior written consent of the Administrative
Agent on behalf of the Required Lenders, enter into any lease (including an IRU
of the type referred to in clause (b) of the definition of “IRU”) or similar
transaction with any Person for the use of any part of the Network except
leases or similar transactions in the ordinary course of business in respect of
which the lessee acknowledges in writing, after the Lien on the property to be
leased has been perfected under the applicable Security Document, the existence
of such Lien and the right of the Collateral Agent,

58

 

 upon the occurrence of certain events, to assume the rights of the
Borrower under the lease, including the right to receive payment thereunder.

     (n)     Unscheduled Payments. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any voluntary or optional principal or
unscheduled interest payment on any Indebtedness other than (i) the
Obligations, (ii) Indebtedness of the type referred to in clause (b) of the
definition of Permitted Indebtedness, so long as such payment is otherwise in
compliance with Section 8.2(c), or (iii) in connection with a settlement or
restructuring of any Existing Indebtedness; provided that (1) such
payment of any of the Existing Indebtedness could not reasonably be expected to
have a Material Adverse Effect, and (2) the aggregate amount of all such
payments shall not exceed US$2,000,000 (unless the amount of such payment is
distributed by IMPSAT to the Borrower in the form of a cash capital
contribution).

     (o)     Bankruptcy. For so long as Nortel shall have the right to
elect one member of IMPSAT’s Board of Directors in accordance with the terms of
IMPSAT’s Charter Documents, the Borrower shall not, and shall not permit any of
its Subsidiaries to, commence a voluntary case concerning itself under any
bankruptcy law of Argentina (including, without limitation, Argentine Law No.
24.522) without the written consent of the Administrative Agent on behalf of
the Lenders.

     (p)     Extension of Accounts. With respect to any accounts receivable
of the Borrower or its Subsidiaries, the Borrower shall not, and shall cause
its Subsidiaries not to, (i) grant any material extension of the time of
payment of any thereof, (ii) compromise, compound or settle for a material
amount less than the full amount thereof, (iii) release any Person liable for
the payment thereof or (iv) allow any credit or discounts whatsoever thereon,
in each case which extension, discounts, credits, releases, compromises,
compounds or settlements could reasonably be expected to have a Material
Adverse Effect.

Section 8.3. Financial Covenants.

     (a)     Borrower’s Net Debt to Paid in Capital Ratio. The Borrower
shall not at any time permit the ratio of (i) the Borrower’s Net Debt
outstanding on the last day of any fiscal quarter to (ii) the Borrower’s Paid
in Capital on such date, to exceed a ratio of 0.27 to 1.00.

     (b)     Debt Service Coverage Ratio. The Borrower shall not at any time
permit the ratio of (i) two times the Borrower’s EBITDA for the two
consecutive fiscal quarters ending on the date set forth below to (ii) the
Borrower’s Debt Service for the four (4) consecutive fiscal quarters ending on
such date, to be less than the ratio set forth opposite such date below:

	 	 	 	 	 
	Date	 	Ratio
	
	 	

	The last day of each fiscal quarter of 2005
	 	 	0.56:1	 
	The last day of each fiscal quarter of 2006
	 	 	0.82:1	 
	The last day of each fiscal quarter of 2007
	 	 	0.98:1	 
	The last day of each fiscal quarter of 2008
	 	 	1.39:1	 

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     (c)     Borrower’s Minimum EBITDA. The Borrower shall not at any time
permit its EBITDA for any fiscal year set forth below to be less than the
amount set forth opposite such date below:

	 	 	 	 	 
	Fiscal Year	 	Minimum EBITDA
	
	 	

	2003
	 	US$(1,300,000)
	2004
	 	US$(400,000)

     (d)     Interest Service Coverage Ratio. The Borrower shall not at any
time permit the ratio of (i) two times the Borrower’s EBITDA for the two
consecutive fiscal quarters ending on the date set forth below to (ii) the
Borrower’s Interest Expense for the four (4) consecutive fiscal quarters ending
on such date, to be less than ratio set forth opposite such date below:

	 	 	 	 	 
	Date	 	Ratio
	
	 	

	The last day of each fiscal quarter of 2005
	 	 	0.73:1	 
	The last day of each fiscal quarter of 2006
	 	 	2.03:1	 
	The last day of each fiscal quarter of 2007
	 	 	3.60:1	 
	The last day of each fiscal quarter of 2008
	 	 	6.68:1	 

     (e)     Current Ratio. The Borrower shall not at any time permit the
ratio of (i) the Borrower’s Current Assets on the last day of any fiscal
quarter set forth below to (ii) the Borrower’s Current Liabilities for the
period ending on such date, to be less than the ratio set forth opposite such
date below:

	 	 	 	 	 
	Fiscal Quarter	 	Ratio
	
	 	

	Each fiscal quarter of 2003
	 	 	0.66:1	 
	Each fiscal quarter of 2004
	 	 	0.48:1	 
	Each fiscal quarter of 2005
	 	 	0.49:1	 
	Each fiscal quarter of 2006
	 	 	0.51:1	 
	Each fiscal quarter of 2007
	 	 	0.57:1	 
	Each fiscal quarter of 2008
	 	 	0.63:1	 

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     (f)     Capital Expenditures Ratio. The Borrower shall not at any time
make Capital Expenditures in a particular fiscal quarter to the extent that the
making of such Capital Expenditures would cause the ratio of (i) the Borrower’s
Capital Expenditures for any fiscal quarter set forth below to (ii) Revenues
(excluding Revenues attributable to IRUs recognized as Revenues during such
period) for such fiscal quarter to exceed the ratio set forth opposite such
fiscal quarter below:

	 	 	 	 	 
	Fiscal Quarter	 	Ratio
	
	 	

	Each fiscal quarter of 2003
	 	 	0.20:1	 
	Each fiscal quarter of 2004
	 	 	0.20:1	 
	Each fiscal quarter of 2005
	 	 	0.17:1	 
	Each fiscal quarter of 2006
	 	 	0.12:1	 
	Each fiscal quarter of 2007
	 	 	0.12:1	 
	Each fiscal quarter of 2008
	 	 	0.12:1	 

SECTION 9. Security

Section 9.1. Grant of Security Interest.

     To secure the prompt payment of the Obligations, and to secure the
performance of and compliance with all the agreements, covenants and provisions
of the Financing Documents, the Borrower shall and shall cause its
Subsidiaries, pursuant to the Security Documents, to grant, assign, pledge and
convey to the Collateral Agent for the benefit of each Secured Party a
first-priority security interest, subject only to Permitted Liens that have
priority as purchase money Liens or pursuant to Applicable Law, in (i) all
Equipment, (ii) real property and other tangible and intangible property and
rights previously acquired by the Borrower and its Subsidiaries pursuant to the
Nortel Contracts with the proceeds of the Existing Financing Agreement and the
Financing Agreement dated as of October 25, 1999 (which was amended and
restated by the Existing Financing Agreement), and (iii) the Fiber Optic Cable
(all such property and rights, together with all proceeds of any thereof and
any cash and cash equivalents held from time to time in the Net Proceeds
Account, collectively, the “Collateral”). The Borrower hereby confirms
to the Secured Parties that it shall, and shall cause each of its Subsidiaries
to, take all actions required by the Security Documents or otherwise deemed
reasonably necessary or reasonably desirable by the Administrative Agent in
order to create, perfect and maintain the perfection of the Secured Parties’
first-priority Lien in the Collateral, subject only to Permitted Liens. The
Borrower hereby ratifies, confirms and reaffirms the validity and
enforceability of the Security Documents executed and delivered in connection
with the Existing Financing Agreement as well as the Liens created pursuant to
such documents as valid, subsisting and continuing to secure the Obligations.

Section 9.2. Escrow Accounts.

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     To secure the prompt payment of principal of and interest on the Term
Loans, the Borrower shall grant to the Collateral Agent for the benefit of the
Secured Parties a first-priority security interest in the Net Proceeds Account
and each other escrow account, if any, and in all funds deposited therein.

Section 9.3. Release of Collateral.

     (a)     Security Interest. The Borrower hereby further agrees and
confirms that, except for any Collateral released pursuant to Section 9.3(b),
the Secured Parties’ security interest in the Collateral shall not be released
by the Collateral Agent until and unless (1) the Borrower shall have paid in
full all amounts due and payable under this Agreement and under any Security
Document and shall have performed all of its Obligations or (2) the Required
Lenders shall have consented to such release, in their sole discretion.

     (b)     Release Instruments. In connection with any Disposal of
Collateral permitted by the terms hereof, the Borrower may request a release of
such Collateral (the “Released Collateral”) by delivering to the
Collateral Agent a notice (each, a “Release Notice”), which shall refer
to this Section, describe in reasonable detail the proposed Released Collateral
and be accompanied by (1) an officer’s certificate of the Borrower certifying
that no Event of Default has occurred and is continuing and that the officers
of the Borrower executing any and all documents in connection with the release
were duly authorized to do so and (2) the proposed instrument of release (the
“Release”) executed by all necessary parties thereto other than the
Collateral Agent (collectively, the “Release Instruments”).

     (c)     Counterparts. The Collateral Agent shall execute, acknowledge,
if applicable, and deliver to the Borrower counterparts of the documents
described in Sections 9.3(b)(1) and 9.3(b)(2) within five (5) Business Days of
receipt by the Collateral Agent of a Release provided that the conditions set
forth in the Release Instruments and herein with respect to dispositions of
Collateral have been satisfied. The Borrower at its own expense shall execute,
deliver, obtain and record such instruments as the Collateral Agent may
reasonably require, including, without limitation, amendments to the Security
Documents or this Agreement necessary to reflect such release. The Borrower
shall reimburse the Collateral Agent upon demand for all reasonable costs and
expenses (including reasonable attorneys’ fees and expenses) incurred by the
Collateral Agent in connection with any actions taken by it pursuant to this
Section.

Section 9.4. Further Identification of the Collateral.

     The Borrower shall, and shall cause its Subsidiaries to, furnish the
Administrative Agent on behalf of the Lenders from time to time statements and
schedules further identifying and describing the Collateral and each location
thereof and such other reports in connection with the Collateral as the
Administrative Agent may reasonably request, all in reasonable detail.

Section 9.5. Further Assurances.

     At any time and from time to time, upon the written request of the
Administrative Agent, and the sole expense of the Borrower, the Borrower shall,
and shall cause its Subsidiaries to,

62

 

 promptly execute, deliver and record any documents, instruments,
agreements and amendments, and take all such further action, as the
Administrative Agent may reasonably deem desirable in obtaining the full
benefits of the security interests granted by this Agreement and the other
Financing Documents.

SECTION 10. Events Of Default

Section 10.1. Events of Default.

Each of the following events shall constitute an “Event of Default”
hereunder:

     (a)     Non-Payment. The Borrower shall fail to pay:

               (1)     any installment of the principal amount of any Term Loan as and when
the same becomes due and payable hereunder (whether at stated maturity, by
acceleration, mandatory prepayment or otherwise); or

               (2)     any interest on any Term Loan or any other amount payable hereunder or
under any Note, when and as the same shall become due and payable (whether at
stated maturity, by acceleration, mandatory prepayment or otherwise) and such
failure shall continue unremedied for three (3) Business Days.

     (b)     Representations and Warranties. Any representation, warranty,
certification or statement made by or on behalf of the Borrower, any Subsidiary
thereof or IMPSAT in any Financing Document or any amendment thereof or in any
certificate, report, financial statements or opinion delivered pursuant to or
otherwise in connection with any Financing Document shall prove to have been
false, incorrect, or misleading in any material respect as of the time made,
delivered or deemed made or delivered.

     (c)     Covenants. The Borrower, any Subsidiary thereof or IMPSAT
shall fail to perform or observe any term, covenant, condition or agreement:

               (1)     contained in this Agreement (other than the covenants contained in
Section 8.1) or any other Financing Document and such default shall continue
beyond any cure or grace period specifically applicable thereto pursuant to the
terms of such Financing Document; or

               (2)     contained in Section 8.1 hereof and such default shall continue
unremedied for a period of ten (10) Business Days after the earlier of (i) the
date on which the Borrower obtains knowledge of such default or (ii) the date
on which notice thereof shall have been received by the Borrower from the
Administrative Agent (which notice will be given at the request of any Lender).

     (d)     IMPSAT Convertible Notes. IMPSAT or any of its Subsidiaries
shall default in:

               (1)     any payment of any Indebtedness under the IMPSAT Convertible Notes; or

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               (2)     the observance or performance of any agreement, covenant or condition
under the IMPSAT Convertible Notes or any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to cause, or
to permit the holder of any IMPSAT Convertible Note to cause any such
Indebtedness to become due or subject to mandatory repurchase or repayment
prior to its stated maturity.

     (e)     Brazil Agreements. An event of default shall have occurred
under the Nortel Brazil Financing Agreement or any other of the Brazil
Agreements.

     (f)     Default Under Other Indebtedness.

               (1)     The Borrower, any Subsidiary thereof or IMPSAT shall default in any
payment of any Indebtedness (other than the Term Loans under this Agreement or
the loans under the Nortel Brazil Financing Agreement) aggregating in excess of
five million Dollars (US$5,000,000); provided, however, that the
foregoing shall not apply to the Existing Indebtedness;

               (2)     The Borrower, any Subsidiary thereof or IMPSAT shall default in the
observance or performance of any agreement or condition relating to any
Indebtedness (other than the Financing Documents, Nortel Brazil Financing
Agreement or the IMPSAT Convertible Notes) aggregating in excess of five
million Dollars (US$5,000,000), or contained in any instrument or agreement
evidencing, securing, or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder of such Indebtedness to cause any such
Indebtedness to become due or subject to mandatory repurchase or repayment
prior to its stated maturity; provided, however, that the
foregoing shall not apply to the Existing Indebtedness;

               (3)     Any Material Subsidiary of IMPSAT shall default in any payment of any
Indebtedness (other than the Term Loans under this Agreement or the loans under
the Nortel Brazil Financing Agreement) aggregating in excess of five million
Dollars (US$5,000,000); or

               (4)     Any Material Subsidiary of IMPSAT shall default in the observance or
performance of any agreement or condition relating to any Indebtedness (other
than the Financing Documents, Nortel Brazil Financing Agreement or the IMPSAT
Convertible Notes) aggregating in excess of five million Dollars
(US$5,000,000), or contained in any instrument or agreement evidencing,
securing, or relating thereto, or any other event shall occur or condition
exist, with respect to which default or other event or condition, the holders
of such Indebtedness have caused any such Indebtedness to become due or subject
to mandatory repurchase or repayment prior to its stated maturity.

     (g)     Bankruptcy. The Borrower, any Subsidiary thereof, IMPSAT or any
Material Subsidiary of IMPSAT shall commence a voluntary case concerning itself
under any bankruptcy law of Argentina (including, without limitation, Argentine
Law No. 24.522) or any other jurisdiction or Title 11 of the United States Code
entitled “Bankruptcy,” as now or hereafter in effect, or any successor thereto
(the “Bankruptcy Code”); or an involuntary case is commenced

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 against the Borrower, any Subsidiary thereof, IMPSAT or any Material
Subsidiary of IMPSAT under any such laws, and the petition is not contested
within 10 days, or is not dismissed within 30 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of the Borrower, any
Subsidiary thereof, IMPSAT or any Material Subsidiary of IMPSAT, or the
Borrower, any Subsidiary thereof, IMPSAT or any Material Subsidiary of IMPSAT
commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction whether now or hereafter in effect relating
to the Borrower, any Subsidiary thereof, IMPSAT or any Material Subsidiary of
IMPSAT, or there is commenced against the Borrower, any Subsidiary thereof,
IMPSAT or any Material Subsidiary of IMPSAT any such proceeding which remains
undismissed for a period of thirty (30) days; or the Borrower, any Subsidiary
thereof, IMPSAT or any Material Subsidiary of IMPSAT is adjudicated insolvent
or bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Borrower, any Subsidiary thereof, IMPSAT or any
Material Subsidiary of IMPSAT suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue undischarged or
unstayed for a period of thirty (30) days; or the Borrower, any Subsidiary
thereof, IMPSAT or any Material Subsidiary of IMPSAT makes a general assignment
for the benefit of creditors; or the Borrower, any Subsidiary thereof, IMPSAT
or any Material Subsidiary of IMPSAT shall generally not pay its debts as they
become due or there shall otherwise occur a cesación de pagos (within the
meaning of Argentine law); or any corporate action is taken by the Borrower,
any Subsidiary thereof, IMPSAT or any Material Subsidiary of IMPSAT for the
purpose of effecting any of the foregoing.

     (h)     Financing Documents. Any Financing Document shall cease to be
in full force and effect, or shall cease to give the Lenders the Liens and the
material rights, powers and privileges purported to be created thereby
(including, without limitation, a perfected security interest in, and Lien on,
all of the Collateral described therein in favor of the Lenders, superior to
and prior to the rights of all third Persons, and subject only to Permitted
Liens that are purchase money Liens or that have priority under Applicable
Law).

     (i)     Other Project Agreements. The Borrower or any Project Party
(other than Nortel) shall breach or otherwise fail to perform any material
obligation under the Project Agreements or such Project Agreements shall cease
for any reason (other than for a reason attributable to Nortel) to be in full
force and effect except at the stated termination date thereof, or shall be
assigned or otherwise transferred, terminated, or rescinded by any Project
Party thereto; provided that it shall not be an Event of Default if, not
later than one hundred twenty (120) days of any such breach or failure by such
other Project Party, or the effective date of any termination or rescission in
respect of such other Project Agreement (other than a termination or rescission
based on a breach or failure by the Borrower), such breach or failure is cured
or a substitute vendor enters into a new written agreement with the Borrower to
continue to provide the equipment, systems and services contemplated under such
Project Agreement on terms that conform to and will not result in a deviation
from the then current Business Plans.

     (j)     Licenses. Any Governmental Authority shall commence any
proceeding to cancel, revoke, suspend or substantially and adversely modify any
License necessary for the Project, which proceeding (i) could reasonably be
expected to have a Material Adverse Effect,

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 and (ii) has not been stayed or enjoined within five Business Days after
the commencement of any such proceeding.

     (k)     Governmental Actions.

               (1)     Any Governmental Authority shall have (A) condemned, nationalized,
seized, compulsorily acquired, or otherwise expropriated all or any material
part of the property or other assets of the Borrower or any of its Subsidiaries
or of any capital stock of the Borrower or any of its Subsidiaries, or (B)
assumed custody or control either of such property or other assets or of the
business or operations of the Borrower or any of its Subsidiaries or of their
capital stock, or shall have taken any action for the dissolution of the
Borrower or any of its Subsidiaries or any other action that would prevent the
Borrower or any of its Subsidiaries or their respective officers from carrying
on the business or operations of the Borrower or any such Subsidiary in all
material respects; provided, however, that this paragraph shall
not apply to any Subsidiary of the Borrower (i) the property or assets of which
do not comprise part of the Network or the Collateral, (ii) which is not a
party to any of the Financing Documents and (iii) the total Equity of which is
less than one hundred thousand Dollars (US$100,000), unless the Governmental
Action in question is reasonably likely to have a Material Adverse Effect.

               (2)     Any Governmental Approvals material for the operation or maintenance
of the Network shall cease to be in full force and effect. A Governmental
Approval shall be deemed to cease to be in full force and effect (x) when an
order revoking or terminating said Governmental Approval shall be issued and
such order is no longer subject to further administrative and judicial review,
or (y) when any Governmental Authority having jurisdiction over any such
Governmental Approval shall, prior to the termination thereof, decide not to
renew such Governmental Approval and such decision shall not be subject to
further administrative or judicial review.

     (l)     Judgments.

               (1)     A final judgment, award, decree, fine or penalty for the payment of
money in respect of any Existing Indebtedness in excess of five million dollars
(US$5,000,000) individually or in the aggregate shall be rendered by one or
more courts, administrative tribunals or other bodies having jurisdiction
against the Borrower or any of its Subsidiaries, and the same shall not be
discharged (or provision satisfactory to the Administrative Agent shall not be
made for such discharge), or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof, and the Borrower,
within such thirty (30) day period or such longer period during which the
execution of such judgment or judgments shall have been stayed, shall not have
appealed therefrom and caused the execution thereof to be stayed during such
appeal.

               (2)     Other than in respect of any Existing Indebtedness, a final judgment,
award, decree, fine or penalty for the payment of money in excess of one
million Dollars (US$1,000,000) individually or in the aggregate shall be
rendered by one or more courts, administrative tribunals or other bodies having
jurisdiction against the Borrower or its Subsidiaries, and the same shall not
be discharged (or provision satisfactory to the

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 Administrative Agent shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within thirty (30) days from the date
of entry thereof, and the Borrower, within such thirty (30) day period or such
longer period during which the execution of such judgment or judgments shall
have been stayed, shall not have appealed therefrom and caused the execution
thereof to be stayed during such appeal.

               (3)     A final judgment, award, decree, fine or penalty for the payment of
money in excess of five million Dollars (US$5,000,000) individually or in the
aggregate shall be rendered by one or more courts, administrative tribunals or
other bodies having jurisdiction against IMPSAT or any of its Material
Subsidiaries, and the same shall not be discharged (or provision satisfactory
to the Administrative Agent shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within thirty (30) days from the date
of entry thereof, and IMPSAT, within such thirty (30) day period or such longer
period during which the execution of such judgment or judgments shall have been
stayed, shall not have appealed therefrom and caused the execution thereof to
be stayed during such appeal.

     (m)     Currency Restrictions. Argentina or any Governmental Authority
thereof shall impose restrictions on the free transferability of Dollars to or
from Argentina or Dollars shall, in the reasonable judgment of the Required
Lenders, be unavailable within Argentina at a commercially reasonable rate of
exchange, and the Borrower shall not, within ten (10) Business Days after
notice from the Administrative Agent, have demonstrated to the satisfaction of
the Administrative Agent that such restrictions will not have a Material
Adverse Effect on the ability of the Borrower to perform its Obligations or on
the availability of Dollars for purposes of paying any amounts required to be
paid pursuant to this Agreement or the other Financing Documents;
provided, however, (without in any way limiting the obligations
of the Borrower under Section 4, including the obligation of the Borrower to
discharge the Obligations in Dollars), that the foregoing shall not apply to
any such restrictions in effect as of the date hereof or any extensions of time
of any such restrictions in effect as of the date hereof.

     (n)     IMPSAT Guarantee. IMPSAT shall breach any covenant or
agreement in the IMPSAT Guarantee.

     (o)     Change in Control. A Change in Control shall have occurred
without the prior written approval of the Lenders holding at least sixty six
and two thirds percent (66 2/3%) in aggregate principal amount of the Term
Loans then outstanding.

     (p)     Legal Existence; Taxes. The Borrower or IMPSAT shall have
failed to maintain its legal existence or the Borrower, any Subsidiary thereof
or IMPSAT shall have failed to pay taxes as they come due.

     (q)     Impairment of Collateral. The Collateral Agent shall fail at
any time to have a valid and perfected Lien on, subject to no prior or equal
Liens other than Permitted Liens, or any Security Document shall fail to be
provided in respect of, or shall fail to grant the interests required by
Section 9 in, any material portion of the Collateral.

     (r)     Material Adverse Change. A Material Adverse Change shall have
occurred.

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     (s)     Accounts Payable Financing Agreement. An event of default
shall have occurred under the Accounts Payable Financing Agreement.

Section 10.2. Remedies Upon Event of Default.

     (a)     Rights
and Remedies. If any Event of Default (other
than the Event of Default referred to in Section 10.1(g)) has occurred and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of the Required Lenders (1) declare all of the Term Loans to be due
and payable, whereupon the Term Loans, together with interest accrued thereon
and all other amounts due under this Agreement and the Notes, shall immediately
mature and become due and payable, without presentment, demand, diligence,
protest, notice of acceleration, or other notice of any kind, all of which the
Borrower hereby expressly waives; and/or (2) exercise on behalf of itself and
the Lenders all other rights and remedies available to it and the Lenders under
this Agreement and the other Financing Documents. Upon the occurrence of any
Event of Default, the Lenders and the Agents shall have, in addition to any
other rights and remedies contained in this Agreement and the other Financing
Documents, all of the rights and remedies of a secured party under the laws of
Argentina or other Applicable Laws, all of which rights and remedies shall be
cumulative and non-exclusive, to the extent permitted by Applicable Law.

     (b)     Bankruptcy. Upon the occurrence of an Event of Default
referred to in Section 10.1(g) of this Agreement:

               (1)     the obligations of the Lenders shall immediately terminate;

               (2)     the Term Loans, together with all interest accrued thereon and all
other amounts due under this Agreement and the Notes, shall immediately mature
and become due and payable, without any other presentment, demand, diligence,
protest, notice of acceleration, or other notice of any kind, all of which each
of the Borrower hereby expressly waives; and

               (3)     the Administrative Agent may, or at the request of the Required
Lenders shall, exercise (or shall direct the Collateral Agent to exercise) on
behalf of itself and the Lenders all other rights and remedies available to it
and the Lenders under this Agreement and the other Financing Documents.

     (c)     Other Remedies. In addition to such remedies as are provided
for in this Agreement and the other Financing Documents, the Lenders’ remedies
upon the occurrence and during the continuance of an Event of Default shall
include, to the extent permitted by Applicable Law, (1) a right to apply or
require the Borrower to apply, for the benefit of the Lenders or a third party
selected by the Lenders, for any necessary orders, permits or licenses in
connection with the operation or abandonment of the Network, the
Telecommunications Business or any part thereof; and (2) a right to have a
receiver appointed by a court of competent jurisdiction in order to manage,
protect and preserve the Network, the Telecommunications Business and the
Collateral and to continue the operation of the Telecommunications Business,
and to collect the revenues and profits thereof and apply the same to the
payment of all expenses and other charges of such receivership until the sale
or other final disposition of the Collateral.

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     (d)     Actions. In connection with the foregoing remedies, the
Borrower shall take such further actions and execute all such instruments as
the Administrative Agent or the Collateral Agent deems necessary. The Borrower
agrees that the Administrative Agent or the Collateral Agent may enforce any
obligation of the Borrower as set forth in this Agreement by an action for
specific performance.

     (e)     Advances. The Lenders may (but shall not be obligated to) make
advances from their own funds to preserve, protect or obtain any of the
Collateral, including amounts to pay Taxes, insurance and the like, and all
such advances shall become part of the Obligations and shall be repayable to
the Lenders with interest thereon from the date of such advances until paid at
the Default Interest Rate.

     (f)     Claimed Amount. Notwithstanding anything to the contrary
contained in this Agreement or in any of the other Financing Documents, upon
the occurrence of any Event of Default, the rights and remedies of the Lenders
hereunder with respect to the collection and receipt of the unpaid principal
balance of the Term Loans and the Notes shall be limited to the principal
amounts specified on the Schedule of Claimed Amounts attached hereto as
Exhibit E (the “Claimed Amount Schedule”) (as these amounts may
be reduced by the amount of any prepayment made pursuant to Section 3.2
hereof).

Section 10.3. Cumulative Rights.

     No failure or delay on the part of the Lenders, the Administrative Agent
or the Collateral Agent in exercising any right, power, or remedy accruing to
them hereunder shall impair any such right, power, or remedy, nor shall such
failure or delay in exercising any right, power, or remedy with respect to any
particular occurrence of an Event of Default be construed as a waiver of any
such right, power, or remedy for any other or future occurrence of an Event of
Default, nor shall any single or partial exercise of any such right or power
preclude any other or further exercise thereof or the exercise of any other
right or power hereunder. To the fullest extent permitted by Applicable Law,
all remedies, either under this Agreement or by Applicable Law otherwise
afforded the Lenders, shall be cumulative and not alternative.

SECTION 11. Expenses And Indemnification

Section 11.1. Expenses.

     The Borrower agrees to pay on demand (a) all reasonable and documented
costs and expenses of the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment,
protocolization and registration of the Financing Documents, including the
reasonable and documented fees and expenses of counsel for the Agents with
respect thereto, with respect to advising the Agents as to their rights and
responsibilities or the perfection, protection or preservation of their and the
Lenders’ rights or interests under the Financing Documents, with respect to
negotiations with the Borrower, IMPSAT or with other creditors of the Borrower
or IMPSAT arising out of any Default or any events or circumstances that may
give rise to an Event of Default, and with respect to presenting claims in or
otherwise participating in or monitoring any bankruptcy, insolvency or other
similar

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 proceeding involving creditors’ rights generally and any proceeding
ancillary thereto, and (b) all reasonable and documented costs and expenses of
the Agents and the Lenders in connection with the enforcement of the Financing
Documents, including in any action, suit or litigation, any bankruptcy,
insolvency or other similar proceeding affecting creditors’ rights (including,
without limitation, the reasonable and documented fees and expenses of counsel
for each Agent and the Lenders with respect thereto).

Section 11.2. Indemnification.

     Without regard to whether the Borrower or any other Person has disclosed
any fact to Nortel, the Administrative Agent, the Collateral Agent or any
Lender, the Borrower hereby agrees to indemnify and hold harmless each of the
Agents and Lenders and each of their respective officers, directors, employees,
consultants and advisors (collectively, the “Indemnitees”) from and
against any and all actions, suits, claims, damages, demands, judgments,
losses, liabilities, costs or expenses whatsoever, including reasonable
attorneys’ fees, which any Indemnitee may sustain or incur (or which may be
claimed against any Indemnitee by any Person whatsoever) to the extent arising
by reason of or in connection with:

     (a)     the Term Loans or the proposed use of the proceeds thereof;

     (b)     the payment or failure to pay the Obligations;

     (c)     the occurrence of an Event of Default;

     (d)     the pursuit by either Agent or any Lender of any legal remedy in
connection with an Event of Default;

     (e)     the entering into any Financing Document by either Agent or any
Lender, or enforcing their remedies hereunder or thereunder; or

     (f)     any Environmental Law as a result of the past, present or future
operations of the Borrower any of its Subsidiaries or IMPSAT (or any
predecessor in interest to any such Persons);

provided, however, that, the Borrower shall not be required to
indemnify any Indemnitee for any actions, suits, claims, damages, demands,
judgments, losses, liabilities, costs or expenses to the extent caused by such
Indemnitee’s willful misconduct or gross negligence.

SECTION 12. Assignment And Participation

Section 12.1. Assignment.

     (a)     Requirements. Each Lender may assign to one or more Eligible
Assignees all or any portion of its rights and obligations under this Agreement
(including, without limitation, the Term Loans owing to it and the Note or
Notes held by it); provided, however, that (1) each such
assignment shall be of a uniform, and not a varying, percentage of all rights
and obligations under and in respect of this Agreement; (2) except in the case
of an assignment to a Person that,

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 immediately prior to such assignment, was a Lender or an assignment of all
of a Lender’s rights and obligations under this Agreement, the amount of any
Term Loan proposed to be assigned (determined as of the date of the Assignment
and Assumption Agreement with respect to such assignment) shall in no event be
less than one million Dollars (US$1,000,000); (3) the parties to each such
assignment shall execute and deliver an Assignment and Assumption Agreement and
(4) with respect to any such Eligible Assignee that is not (a) a Lender; (b) a
commercial bank or savings and loan association or savings bank organized under
the laws of the United States of America (or any State thereof) or Canada (or
any Province thereof), and having total assets in excess of one hundred million
Dollars (US$100,000,000); (c) a commercial bank organized under the laws of any
other country that is a member of the Basel Accord and the Organization of
Economic Cooperation and Development or has concluded special lending
arrangements with the International Monetary Fund associated with its general
arrangements to borrow, or a political subdivision of any such country, and
having total assets in excess of one hundred million Dollars (US$100,000,000),
so long as such bank is acting through a branch or agency located in a country
in which it is organized or another country that is described in this clause
(c); (d) a finance company, insurance company or other financial institution or
fund (whether a corporation, partnership, trust or other entity) that is
principally engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business and having total assets in excess
of one hundred million Dollars (US$100,000,000); or (e) the beneficiary of the
Guaranty Trust Agreement entered into among Sirti, BBVA and Sirti S.p.A., dated
October 25, 2002; and for which the effective tax rate of any Taxes, other than
Excluded Taxes, required by Applicable Law to be withheld or deducted from or
in respect of any sum payable to such Eligible Assignee under this Agreement or
any other Financing Document shall exceed a rate of 15.05%, the obligation of
the Borrower in respect of Section 5.1(a) shall be limited to the amount that
would have been otherwise payable if such effective tax rate was 15.05%.

     (b)     Notice. Promptly following an assignment described in (a)
above, the parties to such assignment shall deliver the executed Assignment and
Assumption Agreement entered into between the assignor Lender and the assignee
to the Administrative Agent for its acknowledgment and recording in the
Register together with a non-refundable processing and recordation fee of three
thousand five hundred Dollars (US$3,500). The assigning Lender shall also
deliver a notice to the Borrower in respect of such assignment (unless such
notice has already been given) and the assignee shall furnish the
Administrative Agent with a completed administrative details questionnaire.

     (c)     Recording. Upon its receipt of an Assignment and Assumption
Agreement executed by the assignor Lender and the assignee, the Administrative
Agent shall promptly acknowledge such Assignment and Assumption Agreement and
record the information contained therein in the Register in accordance with the
provisions of Section 2.1(c) and give notice of such acknowledgment and
recordation to the Lenders and the Borrower. Any assignment of any Term Loan
or Note hereunder shall become effective on the day when the relevant
Assignment and Assumption Agreement is recorded by the Administrative Agent in
the Register.

     (d)     Exchange of Notes. Concurrently with the delivery of an
Assignment and Assumption Agreement to the Administrative Agent pursuant to (c)
above, or as soon thereafter as practicable, the assignor Lender shall
surrender the Note evidencing the Term Loan being

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 assigned thereunder for cancellation against delivery to the assignor
Lender and/or the assignee of one or more new Notes executed by the Borrower in
the same aggregate principal amount.

     (e)     Release. From and after the date on which an Assignment and
Assumption Agreement is effective and solely to the extent of such assignment,
the assignor Lender shall be released of its commitments and obligations under
this Agreement and the assignee shall thereupon become a Party and shall have
the same rights and interest and assume the same obligations and liabilities as
having been assigned to it by the assignor Lender.

Section 12.2. Participation.

     Any Lender may sell participations to any Person in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Term Loans owing to it and the Note or
Notes held by it), provided, however, that (a) such Lender’s
obligations under this Agreement shall remain unchanged, (b) such Lender shall
remain solely responsible to the other Parties for the performance of such
obligations, (c) such Lender shall remain the holder of any such Note for all
purposes of this Agreement, and (d) the Borrower, the Agents and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.

Section 12.3. Information.

     Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 12, disclose to
the assignee or participant or proposed assignee or participant, any
information relating to the Borrower, the Borrower’s Subsidiaries and IMPSAT
furnished to such Lender by or on behalf of the such Person; provided that,
prior to any such disclosure, the assignee or participant or proposed assignee
or participant shall agree to preserve the confidentiality of any confidential
information received by it from such Lender.

SECTION 13. Option to Revise Structure.

Section 13.1. Option to Revise.

     Subject to Applicable Law the Administrative Agent on behalf of the
Required Lenders shall have the right, no more than once during the term of
this Agreement, upon giving not less than sixty (60) days’ prior written notice
to the Borrower, to cause the structure of the Term Loans to be revised to
facilitate access to all financial markets, including banks, insurance
companies, investment companies, other financial institutions or governmental
agencies, to sell or refinance the Term Loans, including by requiring all or a
portion of the Term Loans to be replaced by a public offering or private
placement of debt securities of IMPSAT (“Replacement Notes”) in an
aggregate principal amount of not less than one hundred million Dollars
(US$100,000,000) for the purpose of the Prepayment of outstanding Term Loans,
concurrently with the prepayment of term loans under the Nortel Brazil
Financing Agreement and the prepayment of the term loans under the Accounts
Payable Financing Agreement (the Nortel Brazil Financing Agreement, the
Accounts Payable Financing Agreement and this Agreement,

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 collectively, the “Financing Agreements”); provided that any
such revisions and/or replacement shall neither decrease the economic benefit
or the term of the Term Loans to IMPSAT and the Borrower nor have an “all-in”
financing cost to IMPSAT in excess of ten and one quarter percent (10.25%) per
annum, and further provided, that the aggregate principal amount of the
Replacement Notes shall in no event, without the consent of IMPSAT, exceed the
sum of the outstanding balance of the Term Loans, the outstanding balance of
the term loans under the Nortel Brazil Financing Agreement and the outstanding
balance of the term loans under the Accounts Payable Financing Agreement. The
Lenders and the Borrower shall cooperate with respect to the determination of
the optimal timing for such revisions or replacement, including for issuance of
the Replacement Notes and any other issuance of debt securities by the Borrower
or IMPSAT. Upon receipt of such notice from the Administrative Agent, the
Borrower shall cooperate with the Placement Agent and Nortel as set forth in
Section 16.14 and otherwise provide, on a best efforts basis, such assistance
as is customarily and reasonably required or desirable to be provided by an
issuer to enable the successful placement of Replacement Notes, under the terms
and subject to the conditions set forth in Sections 13.2 and 13.3 and such
other terms and conditions as may be agreed upon between the Borrower and the
Lenders from time to time.

Section 13.2. Transaction Costs.

     All costs and expenses incurred in connection with the issuance of
Replacement Notes, including underwriting fees, commissions and the Borrower’s
and IMPSAT’s out-of-pocket costs associated with the issuance of the
Replacement Notes (including, without limitation, the reasonable fees and
expenses of its auditors and counsel) (collectively, “Transaction
Costs”), shall be borne by the lenders under the Financing Agreements, pro
rata according to the proportion which the sum of the respective lender’s loans
prepaid pursuant to Section 13.4 bears to the aggregate amount of all loans
prepaid under the Financing Agreements, provided, however, that
if the Net Proceeds of the Replacement Notes exceed the aggregate total of all
loans outstanding under the Financing Agreements, the Borrower and IMPSAT,
jointly and severally, shall bear a percentage of the Transaction Costs equal
to the percentage which the amount of the excess bears to the total amount of
such Net Proceeds; and provided further, that the Parties shall seek to
structure the transaction to minimize tax costs. Notwithstanding any other
provision herein to the contrary, if a transaction under this Section 13 is
cancelled by IMPSAT, the Borrower and IMPSAT jointly and severally shall be
responsible for any fee payable to any underwriter or other financial
intermediary as a result of such cancellation.

Section 13.3. Terms of Replacement Notes.

     The Replacement Notes shall be on terms approved by Nortel and consistent
with market practice in the relevant debt securities market. To the extent
political risk insurance is required by and consistent with relevant market
practice, all costs of such insurance shall be borne by the Borrower. To the
extent the rate of withholding tax applicable to Replacement Notes is
consistent with relevant market practice, the full rate of withholding tax
shall be borne by the Borrower.

Section 13.4. Application of Proceeds.

73

 

     The Net Proceeds of the Replacement Notes shall be applied to the
Prepayment of the Term Loans outstanding as of the date of IMPSAT’s receipt of
such Net Proceeds, the prepayment of the term loans outstanding as of such date
under the Nortel Brazil Financing Agreement and the prepayment of the term
loans outstanding as of such date under the Accounts Payable Financing
Agreement, pro rata according to the proportion which each such loan bears to
the aggregate total of loans outstanding as of such date under this Agreement,
the Nortel Brazil Financing Agreement and the Accounts Payable Financing
Agreement.

Section 13.5. Termination of Option.

     The right of the Administrative Agent provided in Section 13.1 shall
terminate upon the completion of the issuance of Replacement Notes and the
application of the Net Proceeds thereof in accordance with Section 13.4.

SECTION 14. Governing Law and Jurisdiction

Section 14.1. Governing Law.

     This Agreement and the Notes shall be governed by, and construed in
accordance with, the laws of the State of New York (not including such state’s
conflict of laws provisions).

Section 14.2. Waiver of Jury Trial.

     Each of the Lenders, the Agents and the Borrower hereby knowingly,
voluntarily, and intentionally waives any right it may have to a trial by jury
of any claim, demand, or cause of action under, or in connection with, this
Agreement, the Notes or any other financing document. This provision is a
material inducement for the Lenders to enter into this Agreement and the other
financing documents.

Section 14.3. Jurisdiction; Venue for Suit.

     Each of the Borrower, the Lenders and the Agents hereby expressly and
irrevocably (a) waives all right to object to jurisdiction or execution in any
legal action or proceeding relating to this Agreement, the Notes, or any other
Financing Document which such Person may now or hereafter have by reason of
such Person’s domicile or by reason of any subsequent or other domicile and
hereby irrevocably consents that any legal action, suit, or proceeding arising
out of, or relating to, any of the Financing Documents and any other document
or instrument required to be executed in relation thereto may be instituted in
or removed to the United States District Court of the Southern District of New
York and the courts of the State of New York sitting in New York, Borough of
Manhattan; (b) submits to and accepts and consents with regard to any such
action or proceeding for itself and in respect of its properties and assets,
generally and unconditionally, the non-exclusive jurisdiction of any such
court; and (c) waives any objection it may now or hereafter have to the laying
of the venue of any such action, suit, or proceeding, and further waives any
claim that any such action, suit, or proceeding brought in any of the aforesaid
courts has been brought in any inconvenient forum.

Section 14.4. Waiver of Immunity.

74

 

     To the extent that the Borrower or any of its Subsidiaries or any of their
respective assets has, or hereafter may acquire, any right to immunity from
suit, set-off, legal proceedings generally, attachment prior to judgment,
attachment in aid of execution, or other attachment or execution of judgment on
the grounds of sovereignty or otherwise, the Borrower for itself, and its
Subsidiaries hereby irrevocably waives such rights to immunity in respect of
Obligations. In addition, the Borrower hereby irrevocably waives, to the
fullest extent it may effectively do so, the right to demand that either Agent
or any Lender post a performance bond or guarantee (excepción de arraigo) in
any action or proceeding against the Borrower or its property in Argentina.

Section 14.5. Process Agent.

     The Borrower has appointed CT Corporation System with offices at 111
Eighth Avenue, New York, New York 10011 and its successors as the Borrower’s
designee, appointee, and agent to receive, accept and acknowledge, for and on
behalf of the Borrower, service of any and all legal process, summons, notices
and documents which may be served in such action, suit or proceeding relating
to this Agreement or the Notes or any other Financing Document in the case of
the courts of the United States District Court of the Southern District of New
York or of the courts of the State of New York sitting in New York, Borough of
Manhattan, which service may be made on any such designee, appointee, and agent
in accordance with legal procedures prescribed for such courts. So long as the
Borrower has any Obligations, the Borrower agrees to take any and all action
necessary to continue such designation in full force and effect and should such
designee, appointee, and agent become unavailable for this purpose for any
reason not attributable to the Borrower, the Borrower shall forthwith grant a
similar special irrevocable power of attorney to a new designee, appointee, and
agent with offices in New York, New York, which shall irrevocably agree to act
as such, with the powers and for purposes specified in this Section 14.5. The
Borrower further irrevocably consents and agrees to service of any and all
legal process, summons, notices, and documents out of any of the aforesaid
courts in any such action, suit or proceeding relating to this Agreement, the
Notes, or any other Financing Document delivered to the Borrower in accordance
with this Section 14.5 or to its then designee, appointee, or agent for
service. If service is made upon such designee, appointee, and agent, a copy of
such process, summons, notice or document shall also be provided to the
Borrower, by registered or certified mail, or overnight express air courier,
provided that failure to provide such copy to the Borrower shall not
impair or affect in any way the validity of such service or any judgment
rendered in such action or proceedings. The Borrower agrees that service upon
the Borrower or any such designee, appointee, and agent as provided for in this
Section 14.5 shall constitute valid and effective personal service upon the
Borrower with respect to matters contemplated in this Section 14.5 and that the
failure of any such designee, appointee, and agent to give any notice of such
service to the Borrower shall not impair or affect in any way the validity of
such service or any judgment rendered in any action or proceeding based
thereon. Nothing herein shall limit or be construed to limit the rights of the
Lenders to commence proceedings against the Borrower in any other venue where
assets of the Borrower may be found.

75

 

Section 14.6. Legal Process in Other Jurisdictions.

     Nothing in this Agreement shall affect the right of any Lender or Agent to
serve legal process in any other manner permitted by law or affect the right of
any Lender or the Administrative Agent to bring any action or proceeding
against the Borrower or its property in the courts of other competent
jurisdictions, including, without limitation, the courts sitting in the City of
Buenos Aires, Argentina.

SECTION 15. The Agents

Section 15.1. Authorization and Action.

     The Lenders hereby appoint and authorize the Administrative Agent and the
Collateral Agent to exercise such powers and discretion under this Agreement
and the other Financing Documents, as are delegated to them, respectively, by
the terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for in
the Financing Documents (including, without limitation, enforcement or
collection of the Notes), neither Agent shall be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders; provided, however,
that neither Agent shall be required to take any action that exposes it to
personal liability or that is contrary to this Agreement or Applicable Law.
Each Agent hereunder agrees to give to the Lenders prompt notice of each notice
given to it by the Borrower pursuant to the terms of this Agreement. The
Collateral Agent may hire a sub-agent with respect to the Collateral, in which
event such sub-agent shall be deemed an “Agent” under this Agreement, and shall
be entitled to the same rights and indemnities as the Collateral Agent.

Section 15.2. Agent’s Reliance.

     Neither Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with the Financing Documents, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, the Agents: (a) may treat the payee of any Note as the holder
thereof until the Administrative Agent receives and accepts an Assignment and
Assumption Agreement entered into by the payee of such Note, as assignor, and
an Eligible Assignee; (b) may consult with legal counsel (including counsel for
the Borrower), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (c) make no warranty or representation to the Lenders and shall not be
responsible to any Lender for any statements, warranties or representations
(whether written or oral) made in or in connection with this Agreement; (d)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement on
the part of the Borrower or to inspect the property (including the books and
records) of the Borrower; (e) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of, or the perfection or priority of any Lien created or purported to be
created under or in connection with, this Agreement or any other

76

 

 instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by facsimile,
electronic mail or telex) believed by it to be genuine and signed or sent by
the proper party or parties.

Section 15.3. Lender Credit Decision.

     Each Lender acknowledges that it has, independently and without reliance
upon either Agent and based on the financial statements referred to in Section
7.7 of this Agreement and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon any Agent and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.

Section 15.4. Lender Indemnification.

     The Lenders agree to indemnify each Agent ratably according to the
respective principal amount of the Notes then held by the Lenders from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against such
Agent in any way relating to or arising out of this Agreement, the Existing
Financing Agreement or any of the other Financing Documents or any action taken
or omitted by such Agent under this Agreement, the Existing Financing Agreement
or any of the other Financing Documents (to the extent not promptly reimbursed
by the Borrower); provided, however, that the Lenders shall not
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent’s gross negligence or willful misconduct. Without
limitation of the foregoing, the Lenders agree to reimburse each Agent promptly
upon demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrower under
Sections 11.1 and 11.2, to the extent that such Agent is not promptly
reimbursed for such costs and expenses by the Borrower.

Section 15.5. Successor Agents.

     Either Agent may resign at any time by giving written notice thereof to
the Lenders and the Borrower and may be removed at any time with or without
cause by the Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed, and shall have accepted such
appointment, within thirty (30) days after the retiring Agent’s giving of
notice of resignation or the Required Lenders’ removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial bank organized under the laws of the United
States or of any State thereof and having a combined capital and surplus of at
least one hundred million Dollars (US$100,000,000). Upon the acceptance of any
appointment as an Agent hereunder by a successor Agent and, in the case of a
successor Collateral Agent, upon the execution and filing or recording of such
instruments or

77

 

 notices, as may be necessary or desirable, or as the Required Lenders may
request, in order to continue the perfection of the security interests granted
or purported to be granted under the Security Documents, such successor Agent
shall succeed to and become vested with all the rights, powers, discretion,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent’s resignation or removal hereunder as an Agent, the provisions
of this Section 15 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was an Agent under this Agreement.

SECTION 16. General Provisions

Section 16.1. Notices.

     All communications and notices provided for hereunder shall be in writing
and shall be personally delivered, mailed by postage prepaid registered mail
(airmail if international), return receipt requested, or telefaxed (with a
confirmation copy by postage prepaid registered mail, return receipt
requested):

	 	 	 
	If to the Borrower:	 	
IMPSAT S.A.
	 	 	
Alférez Pareja 256
	 	 	
(1107) Buenos Aires, Argentina
	 	 	
Attention:
	 	 	
President
	 	 	
Fax No. 54 11 5170 6900
 
	If to IMPSAT:	 	
IMPSAT Fiber Networks, Inc.
	 	 	
c/o IMPSAT USA, Inc.
	 	 	
2040 North Dixie Highway
	 	 	
Wilton Manors, Florida 33305
	 	 	
Attention: President
	 	 	
Fax No. (954) 779-3766
 
	If to the Lenders:	 	
Nortel Networks Limited
	 	 	
c/o Nortel (CALA) Inc.
	 	 	
1500 Concord Terrace
	 	 	
Sunrise, FL 33323-2815
	 	 	
Attention: Vice President and General Counsel
	 	 	
Fax No. (954) 851-8900
 
	With a copy to:	 	
Piper Rudnick LLP
	 	 	
1200 Nineteenth Street, N.W.
	 	 	
Washington, D.C. 20036
	 	 	
Attention: Mitchell S. Marder, Esq.
	 	 	
Fax No. (202) 223-2085

78

 

	 	 	 
	 	 	
BBVA Banco Frances S.A.
	 	 	
Reconquista 199, 1st Floor
	 	 	
City of Buenos Aires
	 	 	
Argentina
	 	 	
Attention: Maria Gabriela Mancuso
	 	 	
and Frederico Maximo Kralj
	 	 	
Fax No. 5411 4346 4328/4346 0068
 
	With a copy to:	 	
Solomon, Zauderer, Ellenhorn, Frischer &
	 	 	
Sharp
	 	 	
Rockefeller Plaza
	 	 	
New York, New York, 10111
	 	 	
Attention: Harry Frischer and Dean Cho
	 	 	
Fax No. (212) 956-4068
 
	If to the Administrative Agent:	 	
Nortel Networks Limited
	 	 	
c/o Nortel (CALA) Inc.
	 	 	
1500 Concord Terrace
	 	 	
Sunrise, FL 33323-2815
	 	 	
Attention: Vice President and
	 	 	
General Counsel
	 	 	
Fax No. (954) 851-8900
 
	If to the Collateral Agent:	 	
Deutsche Bank Trust Company Americas
	 	 	
280 Park Avenue
	 	 	
Mail Stop: NYC03-0912
	 	 	
New York, NY 10017
	 	 	
Fax No. (212) 454-2226/7

Except as otherwise specified herein, all notices shall be deemed duly given on
the date of actual receipt.

Section 16.2. Severability of Provisions.

     If any one or more of the provisions contained in this Agreement or any
documents executed in connection herewith shall be invalid, illegal, or
unenforceable in any respect, the validity, legality, and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired.

Section 16.3. Binding Effect; Successors and Assigns.

     This Agreement shall be binding upon and shall inure to the benefit of
each Party and its respective successors and assigns, provided that the
Borrower shall not assign or transfer any of its rights or Obligations
hereunder except with the prior written consent of the Administrative Agent and
each Lender.

79

 

Section 16.4. Amendment; Waiver.

     Neither this Agreement nor any Financing Document may be amended, waived,
discharged, or terminated unless such change, waiver, discharge, or termination
is in writing signed by the Required Lenders, the Administrative Agent or the
Collateral Agent, as applicable, and the Borrower, provided,
however, that no such change, waiver, discharge or termination shall,
without the consent of each Lender affected thereby, (a) extend the final
maturity of any Loan or Note, or reduce the rate or extend the time of payment
of interest or fees thereon, or reduce the principal amount hereof, (b) release
any of the Collateral except as shall otherwise be provided in any of the
Financing Documents, (c) amend, modify or waive any provision of this Section
16.4 or Sections 3, 4, 5, 11, 12, 15.4 and 16.6, (d) reduce the percentages
specified in the definition of Required Lenders, or (e) consent to the
assignment of any of the rights and Obligations of the Borrower under this
Agreement or any Security Documents. The failure of any party to enforce at
any time any provision hereof or under any of the Notes or Security Documents
shall not be construed to be a waiver of such provisions or of the right of
such party thereafter to enforce any such provision or any other provision
hereof or thereof.

Section 16.5. Entire Agreement.

     This Agreement and the other Financing Documents constitute the entire
agreement and understanding of the Parties with respect to the subject matter
hereof, and supersede all prior agreements, discussions, and understandings
between the Lenders and the Borrower with respect to the subject matter hereof.

Section 16.6. No Novation.

     The obligations contained in this Agreement do not constitute a novation
of the obligations set forth in the Existing Financing Agreement. In the event
of any interpretation to the contrary the Lenders hereby expressly reserve in
accordance with Article 803 of the Argentine Civil Code and other Applicable
Law, any and all rights that they may have over the Collateral under the
Equipment Pledge Agreements and the Mortgage Deeds.

Section 16.7. Right of Set-Off.

     The Borrower’s Obligations shall be paid in full in accordance with their
respective terms, and may not be offset against any obligations that Nortel,
any Lender, or any of their respective Affiliates may owe to the Borrower under
any other agreement, including (without limitation) the Project Agreements.
Each of the Lenders shall, to the fullest extent permitted by Applicable Law,
have the right to apply any and all amounts on deposit or on account (general
or special, time or demand, matured or unmatured, in whatever currency) with it
or with any of its branches, Subsidiaries, or Affiliates in reduction of past
due Obligations (whether such Obligations became due at scheduled maturity, by
acceleration or otherwise) of the Borrower hereunder.

80

 

Section 16.8. Release and Waiver.

     The Borrower hereby releases the Lenders and the Agents and their
officers, attorneys, agents, and employees from any liability, suit, damage,
claim, loss or expense of any kind or nature whether known or unknown, at law
or in equity, whatsoever and howsoever arising up to and including the date
hereof that the Borrower or any of its Subsidiaries ever had or now has against
any of them arising out of or relating to any Lender’s or any Agent’s acts or
omissions with respect to the Existing Financing Agreement, the Project
Agreements or any other matters described or referred to herein or therein.
Without limiting the generality of the foregoing release, the Borrower hereby
acknowledges, confirms and agrees that it has no offsets, defenses or
counterclaims against any of the Lenders or the Agents with respect to any of
the Obligations or other obligations due and owing to any of the Lenders or the
Agents (including, without limitation, those arising under, pursuant to, or in
connection with, the Existing Financing Agreement and related documents), and
to the extent that the Borrower has or had any such offsets, defenses or
counterclaims, Borrower hereby specifically waives any and all rights to such
offsets, defenses and counterclaims and releases the Lenders, the Agents and
their officers, attorneys, agents, and employees from any liability arising on
account thereof.

Section 16.9. Further Assurances.

     The Borrower agrees upon the reasonable request of any Agent or Lender
promptly to take such actions as are necessary to carry out the intent of this
Agreement and the other Financing Documents.

Section 16.10. Term of Agreement; Survival.

     Each agreement, representation, warranty, and covenant contained in this
Agreement shall survive any investigation made at any time by or on behalf of
the Lenders. This Agreement shall continue to be in full force and effect and
binding upon the Parties until all of the Borrower’s Obligations have been
fully and indefeasibly paid and performed, whereupon this Agreement shall
terminate. Notwithstanding the foregoing, all the indemnification provisions in
this Agreement shall survive and all other provisions which by their terms
survive termination shall so survive.

Section 16.11. Headings.

     The various headings in this Agreement are intended for convenience only,
and shall not affect the meaning or interpretation of this Agreement.

Section 16.12. Counterparts.

     This Agreement may be executed in any number of counterparts (including
facsimile transmissions thereof), each of which when so executed shall be an
original but all of which together shall constitute one instrument.

Section 16.13. Confidentiality.

81

 

     Each of the Parties hereby agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates, directors, officers, employees and professional advisors,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of and will
agree to be bound by this confidentiality provision), (b) to the extent
requested by any regulatory authority, (c) to the extent required by Applicable
Law including in connection with a public offering of equity or debt securities
of the Borrower or IMPSAT or by any subpoena or similar legal process, (d) to
any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to the execution and
delivery of an agreement containing provisions substantially the same as those
of this Section 16.13, to any assignee of or participant in, or any prospective
assignee of or participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the other Parties, or (h) to the extent such
Information (1) becomes publicly available other than as a result of a breach
of this Section 16.13 or (2) becomes available to such party on a
non-confidential basis from a source other than the other Parties.

     For the purposes of this Section 16.13, “Information” means all
information received from any of the Parties relating to any of the Lenders,
Lucent Argentina or their respective businesses, other than any such
information that is available to the Parties on a non-confidential basis prior
to disclosure by any Party. Any Person required to maintain the
confidentiality of Information as provided in this Section 16.13 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential Information.

Section 16.14. Cooperation.

     The Borrower will cooperate (i) with Nortel, the Administrative Agent, if
applicable, and the lead agents for syndication (such lead agents and the
Administrative Agent being referred to collectively as the “Syndication
Agents”) in the syndication of the Term Loans undertaken by the Syndication
Agents, and (ii) with Nortel and any underwriter or placement agent for the
placement or distribution of the Replacement Notes (“Placement Agent”)
by: (a) upon reasonable notice making senior officers of the Borrower available
for a meeting with prospective assignees and the Syndication Agents, the
Placement Agent and their respective consultants; and (b) providing such other
assistance as may be reasonably requested by the Syndication Agents and the
Placement Agent, such as responding to questions from prospective assignees
with respect to the operations, business plans, results and other matters
relating to the Borrower, its Affiliates and IMPSAT.

[Signatures on following pages]

82

 

In Witness Whereof, the Parties have caused this Agreement to be duly executed
as of the date first written above.

BORROWER:

IMPSAT S.A.

By:______________________________

Name:____________________________

Its:______________________________

By:______________________________

Name:____________________________

Its:______________________________

[IMPSAT S.A. AMENDED AND RESTATED FINANCING AGREEMENT SIGNATURE PAGE]

 

 

LENDERS:

NORTEL NETWORKS LIMITED

By:______________________________

Name:____________________________

Its:______________________________

[IMPSAT S.A. AMENDED AND RESTATED FINANCING AGREEMENT SIGNATURE PAGE]

 

 

BBVA BANCO FRANCES S.A. (acting in its capacity as trustee to the Guaranty
Trust Agreement dated October 25, 2002, entered into among Sirti Argentina,
S.A., BBVA Banco Frances S.A. and Sirti S.p.A.)

By:______________________________

Name:____________________________

Its:    Attorney-In-Fact           
                
       
 

By:______________________________

Name:____________________________

Its:    Attorney-In-Fact           
                
       
 

[IMPSAT S.A. AMENDED AND RESTATED FINANCING AGREEMENT SIGNATURE PAGE]

 

 

ADMINISTRATIVE AGENT:

NORTEL NETWORKS LIMITED

By:______________________________

Name:____________________________

Its:______________________________

[IMPSAT S.A. AMENDED AND RESTATED FINANCING AGREEMENT SIGNATURE PAGE]

 

 

COLLATERAL AGENT:

DEUTSCHE BANK TRUST COMPANY AMERICAS

Not in its individual capacity but solely as Collateral Agent

By:______________________________

Name:____________________________

Its:______________________________

[IMPSAT S.A. AMENDED AND RESTATED FINANCING AGREEMENT SIGNATURE PAGE]

 

 

	 	 	 
	SCHEDULES	 	 
	 
	1.1	 	
Existing Indebtedness
	1.1(a)	 	
Existing Investments
	1.1(b)	 	
Permitted Disposals
	2.1	 	
Percentage of Term Loan Commitment
	2.2	 	
Term Loan Commitment
	7.1(a)	 	
Subsidiaries
	7.1(b)	 	
Assumed Names/Trade Names
	7.5	 	
Proceedings
	7.10	 	
Transactions with Affiliates
	7.11	 	
Indebtedness
	7.12(a)	 	
Existing Liens
	7.13	 	
Intellectual Property
	7.15	 	
Licenses
	8.1(q)	 	
Equipment
	8.1(s)	 	
Description of Mendoza Property
	10.1(f)	 	
“Section 10.1(f)” Existing Indebtedness
	 
	 
	EXHIBITS	 	 
	 
	A	 	
Form of Assignment and Assumption Agreement
	B	 	
IMPSAT Guarantee
	C	 	
Form of Intercompany Subordination Agreement
	D	 	
Form of Note
	E	 	
Claimed Amounts

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