Registration Statement of a Foreign Private Issuer for Securities Issued in a Business-Combination Transaction — Form F-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: F-4 Registration Statement of a Foreign Private Issuer 193 843K
for Securities Issued in a
Business-Combination Transaction
2: EX-3.1 Bylaws 140 479K
3: EX-4.1 Indenture Dated 12/16/03 130 434K
4: EX-4.2 Specimen Global Note 18 55K
5: EX-4.3 Form of Specimen Global Note 12 40K
6: EX-4.4 Registration Rights Agreement 22 91K
7: EX-9.1 Unanimous Shareholders Agreement 293 771K
8: EX-9.2 Joinder Agreement 2 14K
14: EX-10 Ex-10.6 Letter 7 34K
9: EX-10.1 Concession - Dated June 17, 1996 25 80K
10: EX-10.2 Amend. Datd December 19, 2002 29 131K
11: EX-10.3 Concession Dated October 7, 1998 19 69K
12: EX-10.4 Concession Dated April 1, 1998 18 62K
13: EX-10.5 Concession Dated June 4, 1998 17 63K
15: EX-10.7 Restructuring Agreement 179 568K
16: EX-10.8 Assignment & Assumption Agreement 9 34K
17: EX-10.9 Master Agreement 137 455K
18: EX-12.1 Ratio of Earnings to Fixed Charges 2± 16K
19: EX-12.2 Ratio of Earnings to Fixed Charges 2± 17K
20: EX-21.1 List of Subsidiaries of Axtel 1 9K
21: EX-23 Ex-23.3, Independent Auditors Consent 1 11K
22: EX-25.1 Form T-1 6 24K
23: EX-99.1 Form of Letter of Transmittal 14 58K
24: EX-99.2 Form of Notice of Guaranteed Delivery 5 22K
25: EX-99.3 Form of Instructions to Reg. Holder 2 14K
26: EX-99.4 Form of Exchange Agent Agreement 9 33K
Exhibit 10.7
RESTRUCTURING AGREEMENT
dated as of
March 20, 2003
by and among
AXTEL, S.A. DE C.V.,
as Borrower and Customer,
Nortel Networks Limited,
as Lender,
Nortel Networks Limited,
together with
Nortel Networks de Mexico, S.A. de C.V.,
as Supplier,
and
TORONTO DOMINION (TEXAS), INC.,
as Collateral Agent
Table of Contents
Page
1.01 Defined Terms........................................................2
1.02 Terms Generally......................................................9
Article II RESTRUCTURING......................................................9
2.01 Termination of the Supply Contracts..................................9
(a) Release of Customer.........................................9
(b) Release of Supplier........................................10
2.02 Restructure of the Amended and Restated Finance Agreement...........10
(a) Release of Borrower........................................11
(b) Release of Lender..........................................11
2.03 Cash Payment........................................................12
2.04 Continuation of Security Documents..................................12
2.05 Execution of New Supply Contracts...................................12
2.06 Share Subscription Transaction by Lender............................12
Article III REPRESENTATIONS AND WARRANTIES...................................14
3.01 Representations and Warranties of the Borrower......................14
(a) Organization; Powers.......................................14
(b) Authorization; Enforceability..............................14
(c) Governmental Approvals.....................................14
(d) No Conflicts...............................................14
(e) Compliance with Laws and Agreements........................15
(f) Collateral.................................................15
(g) Source of Funds; Cash Payment Transaction..................15
(h) Taxes......................................................15
(i) Litigation.................................................15
(j) Full Disclosure............................................16
3.02 Representations and Warranties of the Lender and the Supplier.......16
(a) Organization; Powers.......................................16
(b) Authorization; Enforceability..............................16
(c) Governmental Approvals.....................................16
(d) No Conflicts...............................................17
-i-
TABLE OF CONTENTS
(continued)
Page
(e) Compliance with Laws and Agreements........................17
(f) Litigation.................................................17
Article IV CONDITIONS PRECEDENT..............................................17
(a) Resolutions; Incumbency....................................18
(b) Officer's Certificate......................................18
(c) Transaction Documents......................................18
(d) Third-Party Financing Documentation........................19
(e) Cash Payment...............................................19
(f) Governmental Approval......................................19
(g) Release of All Performance Bonds...........................19
(h) Opinions of Counsel........................................19
(i) Payment of Fees and Expenses...............................19
(j) Amendment of Non-FWA Purchase and License Agreement........19
(a) Termination and Release....................................20
(b) Power of Attorney..........................................20
(c) Officer's Certificate......................................20
(d) Transaction Documents......................................20
(e) Release....................................................20
(f) Opinion of Counsel.........................................21
Article V COVENANTS.........................................................21
5.01 Governmental Approval...............................................21
5.02 Lease Financing.....................................................21
5.03 Public Disclosure...................................................21
Article VI MISCELLANEOUS.....................................................21
6.01 Notices.............................................................21
6.02 No Deemed Waivers; Remedies Cumulative..............................23
6.03 Expenses............................................................23
6.04 Survival............................................................24
6.05 Counterparts; Integration; Effectiveness............................24
ii
TABLE OF CONTENTS
(continued)
Page
6.06 Severability........................................................24
6.07 Governing Law.......................................................24
6.08 Venue for Suit; Waiver of Jury Trial................................24
6.09 Headings............................................................25
6.10 Confidentiality.....................................................25
6.11 Amendment...........................................................26
6.12 Successors and Assigns..............................................26
SCHEDULE 3.01(i) BORROWER LITIGATION.........................................2
SCHEDULE 3.02(j) LENDER LITIGATION...........................................3
SCHEDULE I SUPPLY CONTRACTS..................................................1
SCHEDULE II OTHER SECURED LENDERS PARTY TO THE INTERCREDITOR AGREEMENT.......2
SCHEDULE III SECURITY DOCUMENTS..............................................3
iii
EXHIBITS
Exhibit A Form of Restructured Amended and Restated Finance Agreement
Exhibit B-1 Form of FWA Purchase and License Agreement
Exhibit B-2 Form of Non-FWA Purchase and License Agreement
Exhibit B-3 Form of Agreement for the Provision of Technical Assistance Support
Services for FWA Equipment
Exhibit B-4 Form of Agreement for the Provision of Technical Assistance Support
Services for Non-FWA Equipment
Exhibit B-5 Form of FWA Technology License Agreement
Exhibit B-6 Form of Certification of Amendment to Bylaws
Exhibit B-7 Form of Incumbency Certificate
Exhibit B-8 Form of Borrower Officer's Certificate
Exhibit B-9 Form of Power of Attorney
Exhibit B-10 Form of Lender Officer's Certificate
Exhibit C-1 Form of Extraordinary Shareholders Meeting
Exhibit C-2 Form of Share Subscription Agreement
Exhibit D-1 Form of Joinder to the Shareholders Agreement
Exhibit D-2 Form of Supplemental Joinder Agreement
Exhibit E-1 Form of New York Legal Opinion
Exhibit E-2 Form of Mexican Legal Opinion
Exhibit E-3 Form of Mexican Tax Opinion
Exhibit F Form of Lender Opinion
Exhibit G CNIE Authorization
Exhibit H Form of Release of Borrower Shareholders
Exhibit I List of Additional Mortgages
Exhibit J Form of Amendment to the Civil Mortgage
Exhibit K Form of Amendment to Additional Mortgages
Exhibit L Form of Amendment to the Original Mortgage
Exhibit M Civil Mortgage
Exhibit N Original Mortgage
Exhibit O Form of Pledge on IC's Stock
Exhibit P Form of Pledge on IIR's Stock
Exhibit Q Form of Pledge on Servicios Axtel's Stock
Exhibit R Form of Confirmation of Guarnatee
iv
Restructuring AGREEMENT dated as of March 20, 2003 (this "Agreement"), by
and among AXTEL, S.A. DE C.V., a corporation organized under the laws of Mexico,
with its principal office at Boulevard Diaz Ordaz Km 3.33, Colonia Unidad San
Pedro, Garza Garcia, N.L., Mexico 66260, as borrower (the "Borrower") and as
customer (the "Customer"), NORTEL NETWORKS LIMITED (formerly known as NORTEL
NETWORKS CORPORATION), a company organized under the laws of Canada, with its
principal office at 8200 Dixie Road, Suite 100, Brampton, Ontario L6T 5P6,
Canada, as lender (the "Lender"), Nortel Networks de Mexico, S.A. de C.V., a
corporation organized under the laws of Mexico, with its principal office at
Insurgentes Sur No 1605, Piso 26 Torre Mural, Col. San Jose Insurgentes C.P.,
Mexico City, D.F. 03900, Mexico, as supplier (together with the Lender, the
"Supplier") and TORONTO DOMINION (TEXAS), INC., a corporation duly organized
under the laws of the State of Delaware, United States, with its principal
office at 900 Fannin Street, Houston, TX, 77010, United States, as collateral
agent (the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Supplier and the Customer are parties to certain supply
contracts pursuant to which among other things the Borrower agreed to purchase
telecommunications equipment and/or services manufactured or supplied by the
Supplier related to the design, procurement, installation, commissioning, and
operation of a wireless local loop telecommunications network providing national
coverage in Mexico, all as described more fully on Schedule I hereto
(collectively the "Supply Contracts");
WHEREAS, the Borrower, the Lender and the Collateral Agent are parties to
an Amended and Restated Finance Agreement dated as of June 18, 2001 (as amended
by the First Amendment to the Amended and Restated Finance Agreement dated as of
September 28, 2001, the Amendment and Conditional Waiver to Finance Agreement
dated as of December 31, 2001 and the Waiver and Extension to Finance Agreement
and MOU dated as of February 28, 2002 (the "Amended and Restated Finance
Agreement"));
WHEREAS, the Borrower and the Lender have determined that it would be in
their mutual best interest to restructure the current outstanding indebtedness
incurred by the Borrower under the Amended and Restated Finance Agreement
pursuant to terms and upon satisfaction of the conditions set forth herein;
WHEREAS, the Collateral Agent has no obligations and no responsibilities
under this Agreement, and enters into this Agreement at the request of the
Lender;
WHEREAS, the Customer and the Supplier have determined that it would be in
their mutual best interest to terminate the Supply Contracts and to enter into
the New Supply Contracts (as defined below) pursuant to terms and upon
satisfaction of the conditions precedent set forth in Article IV hereof (the
"Conditions Precedent").
1
AGREEMENT
NOW, THEREFORE, in consideration of the premises and to confirm or enter
into the agreements referred to herein, the parties agree as follows:
DEFINITIONS
1.01 Defined Terms. As used in this Agreement, the following terms have the
meanings specified below:
Additional Mortgages means each of the unilateral mortgages in first degree
created by the Borrower to the benefit of Nortel Networks Limited, HP and other
Original Creditors (which were represented thereunder by the Collateral Agent),
in the terms of the Mortgage, as effected and evidenced by each of the public
instruments described in Exhibit I to this Agreement
Affiliate means, with respect to any Person, any other Person that directly
or indirectly through one or more intermediaries Controls, or is Controlled by,
or is under common Control with, such Person.
Agreement has the meaning assigned to such term in the preamble of this
agreement.
Amended and Restated Finance Agreement has the meaning assigned to such
term in the Second Recital hereof.
Amended and Restated Shareholders Undertaking means the Amended and
Restated Shareholders Undertaking dated as of June 18, 2001 entered into by Bell
Canada International (Mexico Telecom) Limited, Bell Canada International Inc.,
Telinor Telefonia S. de. R.L. de C.V. ("Telinor"), and WorldTel Mexico Telecom
Ltd.
Amendment to Additional Mortgages means each of the public instruments that
certify all amendments made to each of the Additional Mortgages executed by the
Borrower, the Banorte, the Original Creditors and the Collateral Agent
substantially in the form attached hereto as Exhibit K, to guaranty, among other
obligations the full and timely payment of the principal of the Loan, and all
interests and charges thereon, and all other obligations of the Borrower under
this Agreement and the Restructured Note.
Amendment to the Civil Mortgage means the public instrument that certifies
the amendments to the Civil Mortgage executed by Impulsora e Inmobiliaria
Regional, S.A. de C.V., Banorte, the Original Creditors and the Collateral Agent
substantially in the form attached hereto as Exhibit J, to guaranty, among other
obligations the full and timely payment of the principal of the Loan, and all
interests and charges thereon, and all other obligations of the Borrower under
this Agreement and the Restructured Note.
2
Amendments to the Mortgages means, collectively, the Amendment to the Civil
Mortgage, the Amendment to the Original Mortgage and the Amendment to the
Additional Mortgages.
Amendment to the Original Mortgage means the public instrument that
certifies the amendment made to the Original Mortgage executed by the Borrower,
Banorte, the Original Creditors and the Collateral Agent substantially in the
form attached hereto as Exhibit L, to guaranty, among other obligations the full
and timely payment of the principal of the Loan, and all interests and charges
thereon, and all other obligations of the Borrower under this Agreement and the
Restructured Note.
Applicable Law means, at any time, any statute, law, regulation, ordinance,
rule, judgment, writ, rule of common law, common law duty, code, order, decree,
Governmental Approval, administrative order, directed duty, directive or
requirement of any Governmental Authority in effect (including any Environmental
Law), in each case applicable to and binding upon the relevant Person.
Authorized Officer means, with respect to any Person, each of (i) the Chief
Executive Officer (Director General), (ii) the Chief Operating Officer (Director
General Operativo), (iii) the Chief Financial Officer (Director de Finanzas), or
(iv) any two or more duly authorized officers of such Person acting jointly.
Banorte means Banco Mercantil del Norte, S.A., Institucion de Banca
Multiple, Grupo Financiero Banorte.
Borrower has the meaning assigned to such term in the preamble of this
Agreement.
Borrower Shareholders means the holders of any shares or other direct
equity interests in the Borrower.
Business Day means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City, New York, United States of America,
Mexico, D.F., Mexico or Monterrey, Nuevo Leon, Mexico are authorized or required
by law to remain closed.
Cash Payment has the meaning assigned to such term in Section 2.03.
Civil Mortgage means the unilateral mortgages in first degree created by
Impulsora e Inmobiliaria Regional S.A. de C.V. to the benefit of the Creditors
as proven with public instrument number 2,649 dated as of August 27, 2001,
granted before Jose Luis Farias Montemayor, Public Notary number 120 in
Monterrey, Nuevo Leon and recorded in the Public Registry of Real Property and
Commerce of Guadalajara, Jalisco under file number 20586, dated as of August 31,
2001 attached hereto as Exhibit M.
Closing Date means the date on which the conditions specified in Article IV
are satisfied or waived.
3
CNIE means the Federal Foreign Investments Commission of Mexico (Comision
Federal de Inversiones Extranjeras).
CNIE Authorization means the regulatory authorization or approval from the
CNIE attached hereto as Exhibit G.
COFECO means the Federal Commission of Competition of Mexico (Comision
Federal de Competencia).
COFECO Authorization means the regulatory authorization or approval from
the COFECO to be obtained by the Borrower, in accordance with all Applicable
Laws, pursuant to which the subscription by the Lender of up to 9.9% of the
Borrower's shares in connection with the Share Subscription Transaction will not
be considered a restricted concentration under applicable Mexican law.
COFETEL means the Federal Telecommunications Commission of Mexico (Comision
Federal de Telecomunicaciones).
Collateral means all property of the Borrower and all shares in and
property of the Subsidiaries of the Borrower that was or was intended to be
subject to any Lien that was created or purported to be created by any Security
Document.
Collateral Agent has the meaning assigned to such term in the preamble of
this Agreement.
Conditions Precedent has the meaning assigned to such term in the Fourth
Recital hereof.
Confirmation of Guarantee means the Confirmation of Guarantee dated as of
the date hereof executed by the Guarantors.
Control means, at any time, the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of equity interests (on a fully diluted
basis), by contract or otherwise, including the power to appoint a sole
administrator for, or to elect or designate for election a majority of the board
of directors of, such Person.
Creditors means, collectively, the Original Creditors and any Other Secured
Creditors.
Customer has the meaning assigned to such term in the preamble of this
Agreement.
Documentary Credit means a credit facility established by Banorte in the
principal amount of six million five hundred thousand Dollars (US$6,500,000.00).
Dollars and the sign US$ each mean the lawful money of the United States.
4
Environmental Law means any federal, state or local law (whether imposed by
statute, or by a Governmental Authority, administrative or judicial order, or
common law), now or hereafter enacted, governing health, safety, industrial
hygiene, the environment or natural resources, or Hazardous Materials, including
such laws governing or regulating the use, generation, storage, removal,
recovery, treatment, handling, transport, disposal, control, discharge of, or
exposure to, Hazardous Materials.
Extraordinary Shareholders Meeting has the meaning assigned to such term in
Section 2.06(a).
Governmental Approval(s) means any authorization, consent, approval,
license, franchise, grant, concession, identification number, lease, ruling,
permit, certificate, exemption, action, filing or registration by or with any
Governmental Authority including but not limited to the COFECO Authorization.
Governmental Authority means any nation or government, any state or other
political subdivision thereof (including those on the federal, national, state,
regional or local level), and any entity acting on behalf of any of them
exercising executive, legislative, judicial, regulatory or administrative
authority.
Guarantors means Impulsora e Inmobiliaria Regional S.A. DE C.V.,
Instalaciones y Contrataciones, S.A. DE C.V. and Servicios Axtel, S.A. DE C.V.,
each a business corporation duly organized, validly existing and in good
standing under the laws of Mexico.
HP means Hewlett-Packard Mexico, S. de R.L. de C.V. (fka Hewlett-Packard de
Mexico, S.A. de C.V.).
Information has the meaning assigned to such term in Section 6.10.
Intercreditor Agreement means that certain Intercreditor and Collateral
Agency Agreement dated as of June 1, 1999 by and among the Lender, the
Collateral Agent as Intercreditor Agent and as Collateral Agent, Hewlett Packard
de Mexico, S.A. de C.V. and other certain secured lenders which have become
party thereto pursuant to the terms thereof.
Joinder to the Shareholders Agreement means the Joinder Agreement dated as
of the date hereof, between the Borrower and Nortel Networks Limited, to the
Shareholders Agreement substantially in the form of Exhibit D-1.
Lender has the meaning assigned to such term in the preamble of this
Agreement.
Lien means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement or any lease in the nature thereof) and any agreement to give or
refrain from giving any lien, mortgage, pledge, security interest, charge or
other encumbrance of any kind.
Loan Documents means, collectively, the Restructured Finance Agreement, the
Restructured Note, the Security Documents and all other documents related
thereto.
5
Loan has the meaning assigned to such term in Section 2.02.
Material Adverse Effect means, (i) as to the Borrower, a material adverse
effect on (a) the business, assets, property, operations or condition, financial
or otherwise, of the Borrower or the Borrower and its subsidiaries taken as a
whole, (b) the ability of the Borrower to perform any of its obligations under
this Agreement or any of the other Transaction Documents to which it is a party,
(c) the validity or the enforceability of the Transaction Documents or (d) the
rights and benefits contemplated to be available to the Supplier or the Lender
under this Agreement or any of the other Transaction Documents to which the
Borrower is a party, and (ii) as to the Supplier and the Lender, a material
adverse effect on (a) the ability of the Supplier or the Lender to perform any
of its obligations under this Agreement or any of the other Transaction
Documents to which it is a party, (b) the validity or the enforceability of the
Transaction Documents under this Agreement or any of the other Transaction
Documents to which the Borrower is a party, and (c) the rights and benefits
contemplated to be available to the Borrower under this Agreement or any of the
other Transaction Documents to which the Borrower is a party.
Mexican GAAP means Mexican generally accepted accounting principles,
consistently applied.
Mexico means the United Mexican States.
Mortgages means, collectively, the Original Mortgage, the Civil Mortgage
and the Additional Mortgage and "Mortgage" means any of them.
New Supply Contracts has the meaning assigned to such term in Section 2.05.
Original Creditors means Nortel Networks, HP, Siemens and SR Telecom.
Original Mortgage means the unilateral mortgage in first degree created by
the Borrower to the benefit of Nortel, HP and other Original Creditors (as
represented thereunder by the Collateral Agent), pursuant to the provisions of
Articles 92 and 93 of the General Law on Communications Means of Mexico, as
proven with public instrument number 6,249, dated as of June 9, 1999 granted
before Daniel G. Morales, Public Notary number 26 in Monterrey, Nuevo Leon,
which was duly recorded in the Public Registry of Real Property and Commerce of
Monterrey, Nuevo Leon under number 522 , Volume 210-11, Book 4 Third Auxiliar
Various Contracts and Acts, Commerce Section, as of June 16, 1999 and under
number 595, volume 153, book 15, section II Liens-Mortgages, in the
Telecommunications Registry as proven with official communication
CFT/DOG/CGST/RT/0047/2000 and in the Mexican Institute of Industrial Property
attached hereto as Exhibit N.
Other Secured Lenders means the Persons listed in Schedule II hereto and
such other Persons that may form time to time become secured creditors under the
Intercreditor Agreement.
Performance Bond means any performance bond or letter of credit provided by
the Supplier for the benefit of the Customer under any Supply Contract.
6
Permitted Liens has the meaning assigned to such term in the Restructured
Finance Agreement.
Person means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
Pledge on IC's Stock means any pledge created by the Borrower and Impulsora
e Inmobiliaria Regional, S.A. de C.V., substantially in the form attached hereto
as Exhibit O, on all voting shares representing 100% of the capital stock of
Instalaciones y Contrataciones, S.A. de C.V., to guarantee, among other
obligations the full and timely payment of the principal of the Loan and all
interests and charges thereon, and all other obligations of the Borrower under
this Agreement and the Restructured Note.
Pledge on IIR's Stock means any pledge created by the Borrower and Telinor,
substantially in the form attached hereto as Exhibit P, on all voting shares
representing 100% of the capital stock of Impulsora e Inmobiliaria Regional,
S.A. de C.V., to guarantee, among other obligations the full and timely payment
of the principal of the Loan and all interests and charges thereon, and all
other obligations of the Borrower under this Agreement and the Restructured
Note.
Pledge on Servicios Axtel's Stock means any pledge created by the Borrower
and Impulsora e Inmobiliaria Regional, S.A. de C.V., substantially in the form
attached hereto as Exhibit Q, on all voting shares representing 100% of the
capital stock of Servicios Axtel, S.A. de C.V., to guarantee, among other
obligations the full and timely payment of the principal of the Loan and all
interests and charges thereon, and all other obligations of the Borrower under
this Agreement and the Restructured Note.
Pledges means, collectively, the Pledge on IIR's Stock, the Pledge on
Servicios Axtel's Stock, and the Pledge on IC's Stock, and the term "Pledge"
means any of them.
Restructured Finance Agreement means the Restructured Amended and Restated
Finance Agreement dated concurrently herewith, entered into among the Borrower,
Lender, the Supplier and the Collateral Agent.
Restructured Note has the meaning assigned to such term in Section 2.02.
Restructuring has the meaning assigned to such term in the introduction to
Article 2.
Secretary's Certificate means a certificate issued by the Secretary or the
Assistant Secretary of the Borrower attaching true and correct copies of the
entry in the Shareholders' Register of the Borrower evidencing the Lender as
owner of the Shares.
Security Amendment Documents means, collectively, the Amendments to
Mortgages, the Pledges and the Waiver and Amendment to the Intercreditor
Agreement, as set forth in Schedule III.
7
Security Documents means, collectively, the Statutory Mortgage Deeds, the
Subsidiary Mortgage Deeds, the Restricted Subsidiary Guarantees, the Restricted
Subsidiary Stock Pledge Agreements, and the other ancillary documents entered
into pursuant to the Amended and Restated Finance Agreement as set forth in
Schedule III attached hereto.
Share Certificates means the share certificates representing the Shares.
Share Subscription Agreement has the meaning assigned to such term in
Section 2.06(a).
Share Subscription Transaction means the transaction described in Section
2.06(a).
Shared Liens means any security interest in the Collateral granted to the
Other Secured Lenders.
Shareholders Agreement means the Unanimous Shareholders Agreement, as
amended, made as of October 6, 1997 among Bell Canada International (Mexico
Telecom) Limited, Bell Canada International Inc., Telinor Telefonia, S. de R.L.
de C.V. (formerly known as Telefonia, S.A. de C.V.), Worldtel Mexico Telecom
Ltd., entered into by and among the Borrower, the Lender, Bell Canada
International (Mexico Telecom) Limited, Bell Canada International Inc., Telinor
Telefonia, S. de R.L. de C.V. and Worldtel Mexico Telecom Ltd.
Shares has the meaning assigned to such term in Section 2.06(a).
SHCP means Secretaria de Hacienda y Credito Publico.
Siemens means Siemens Financial Services Inc.
SR Telecom means SR Telecom, Inc.
Subsidiary means, in relation to any Person, any other Person of which more
than fifty percent (50%) of the voting stock or other equity interests entitled
ordinarily to vote in the election of a majority of the board of directors or
other governing body is owned or controlled directly or indirectly by such
Person, or one or more of the Subsidiaries of such Person, or a combination
thereof.
Supplier has the meaning assigned to such term in the preamble of this
Agreement.
Supplemental Joinder Agreement means the Agreement by and among the Lender,
the Borrower and Telinor dated as of the date hereof which is supplemental to
the Joinder to the Shareholders Agreement, substantially in the form of Exhibit
D-2.
Supply Contracts has the meaning assigned to such term in the First Recital
hereof.
8
Taxes means any and all present or future taxes, levies, imposts, duties,
deductions, charges, prescribed employment and social taxes or withholdings
imposed by any Governmental Authority.
Third-Party Financing Documentation means all the documentation required by
the lender to the Third-Party Financing evidencing and governing the terms and
conditions of such financing.
Third-Party Financing means any financing, either secured or unsecured,
obtained by the Borrower on or prior to the Closing Date for the purpose of
funding a portion of the Cash Payment
Transaction Documents means, collectively, this Agreement (including all
exhibits and schedules hereto), the Loan Documents, the New Supply Contracts,
the Share Subscription Agreement, and the Joinder to the Shareholders Agreement.
United States means the United States of America (including any State and
the District of Columbia), its territories and possessions.
Waiver and Amendment to the Intercreditor Agreement means the Waiver and
Amendment to the Intercreditor Agreement dated the Closing Date by and among,
the Collateral Agent, the Lender, Siemens Financial Services Inc., HP and SR
Telecom.
1.02 Terms Generally. The definitions of terms herein shall apply equally
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. 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, (b) any reference to
any statute, decree, regulation or other applicable law shall be construed as a
reference to such statute, law, decree, regulation or other applicable law as
re-enacted, redesigned, amended, succeeded or extended from time to time, (c)
any reference herein to any Person (including any Person defined in Section
1.01) shall be construed to include such Person's successors and assigns and in
the case of any Governmental Authority, any Person succeeding to its functions
and capacities, (d) 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, (e) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement and (f)
the words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including, cash, securities, accounts and contract rights.
ARTICLE II
RESTRUCTURING
On the terms and subject to the conditions set forth in this Agreement, the
parties hereto agree to restructure certain of their rights and obligations, as
specified herein, by the following
9
actions to be taken by the applicable party or parties on or before the Closing
Date, except as otherwise permitted to be taken thereafter (the
"Restructuring"):
2.01 Termination of the Supply Contracts. The Customer and the Supplier
hereby agree to the termination of the Supply Contracts and the mutual release
of all obligations and liabilities under or arising out of the Supply Contracts,
as follows:
(a) Release of Customer. Effective as of the Closing Date, the Supplier,
for itself and on behalf of its predecessors and successors and its past and
present divisions and subsidiaries, hereby agrees that the Supply Contracts are
terminated and forever releases and discharges the Customer and its predecessors
and successors and its past and present divisions and subsidiaries and its and
their shareholders, directors, officers, employees, agents, representatives,
consultants, attorneys, Affiliates, and assigns, from any and all obligations,
liabilities, losses, claims, counterclaims, demands, expenses, attorney's fees,
rights, actions, causes of action or suits of any kind or nature, whether
accrued or unaccrued, asserted or unasserted, known or unknown, suspected or
unsuspected, absolute or contingent, in law, equity, bankruptcy or otherwise
(including, without limitation, any and all claims for avoidable preferences,
fraudulent conveyances or transfers and/or recoverable setoffs under the law of
any jurisdiction regarding insolvency or debtor/creditor rights or otherwise)
under or arising out of the Supply Contracts.
(b) Release of Supplier. Effective as of the Closing Date, the Customer,
for itself and on behalf of its predecessors and successors and its past and
present divisions and subsidiaries, hereby agrees that the Supply Contracts are
terminated and forever releases and discharges the Supplier and its predecessors
and successors and its past and present divisions and subsidiaries and its and
their shareholders, directors, officers, employees, agents, representatives,
consultants, attorneys, Affiliates, and assigns, from any and all obligations,
liabilities, losses, claims, counterclaims, demands, expenses, attorney's fees,
rights, actions, causes of action or suits of any kind or nature, whether
accrued or unaccrued, asserted or unasserted, known or unknown, suspected or
unsuspected, absolute or contingent, in law, equity, bankruptcy or otherwise
(including, without limitation, any and all claims for avoidable preferences,
fraudulent conveyances or transfers and/or recoverable setoffs under the law of
any jurisdiction regarding insolvency or debtor/creditor rights or otherwise)
under or arising out of the Supply Contracts.
(c) For the avoidance of doubt and without limiting the foregoing, the
parties intend by this Section 2.01 that the Supplier release its claims based
on accounts receivable from the Customer for delivered deliverables and that the
Customer release its claims based on its interest in undelivered deliverables
from the Supplier, that the parties cancel all purchase orders and acceptances
on which delivery has not been made, that the Supplier retain all undelivered
deliverables, that the Customer retain all delivered deliverables, on an "AS IS,
WHERE IS" basis, that the Customer release all warranty rights, that the parties
release all indemnification rights, and that this Section 2.01 be applied to the
earlier terminated ISRP Contract (as defined in Schedule I hereto) and the
Transmission Contract (as defined in Schedule I hereto), to obligations that
were earlier suspended, amended, or terminated, to obligations that would
otherwise survive termination of the Supply Contracts under Section 47 (Survival
of Obligations) thereof, and to both Nortel Networks Limited and Nortel Networks
de Mexico, S.A. de C.V. in each reference to Supplier.
10
(d) The Supplier and the Customer hereby agree to deliver any documents and
to take any actions to the extent and when reasonably required by, and in form
and substance reasonably satisfactory to, the other party, as the case may be,
for tax, customs and other governmental or accounting purposes in connection
with the terminations and releases effected by this Section 2.01.
2.02 Restructure of the Amended and Restated Finance Agreement. The
Borrower and the Lender hereby agree to restructure the Amended and Restated
Finance Agreement by executing and delivering on or before the Closing Date,
subject to the satisfaction of all Conditions Precedent, a Restructured Amended
and Restated Finance Agreement dated as of the date hereof, entered into among
the Borrower, the Lender, the Supplier and the Collateral Agent substantially in
the form of Exhibit A attached hereto, (the "Restructured Finance Agreement")
providing for a Loan in the original principal amount of US$24,200,000 to be
evidenced by a Note substantially in the form attached thereto (the
"Restructured Note"). Subject to the Lender's receipt of the Restructured Note,
the Cash Payment, the Share Certificates and the Secretary's Certificate and
satisfaction of all Conditions Precedent, the Customer and the Lender agree to
the mutual release of all obligations and liabilities under or arising out of
the Amended and Restated Finance Agreement, excluding obligations under or
arising out of the Restructured Finance Agreement, the Restructured Note, and
the Security Documents as applied to the Loan and the Restructured Note on and
after the Closing Date, as follows:
(a) Release of Borrower. Effective as of the Closing Date, the Lender, for
itself and on behalf of its predecessors and successors and its past and present
divisions and subsidiaries, hereby forever releases and discharges the Borrower
and its predecessors and successors and its past and present divisions and
subsidiaries and its and their shareholders, directors, officers, employees,
agents, representatives, consultants, attorneys, Affiliates, and assigns, from
any and all obligations, liabilities, losses, claims, counterclaims, demands,
expenses, attorney's fees, rights, actions, causes of action or suits of any
kind or nature, whether accrued or unaccrued, asserted or unasserted, known or
unknown, suspected or unsuspected, absolute or contingent, in law, equity,
bankruptcy or otherwise (including, without limitation, any and all claims for
avoidable preferences, fraudulent conveyances or transfers and/or recoverable
setoffs under the law of any jurisdiction regarding insolvency or
debtor/creditor rights or otherwise) under or arising out of the Amended and
Restated Finance Agreement, excluding obligations under or arising out of the
Restructured Finance Agreement, the Restructured Note, and the Security
Documents as applied to the Loan and the Restructured Note.
(b) Release of Lender. Effective as of the Closing Date, the Borrower, for
itself and on behalf of its predecessors and successors and its past and present
divisions and subsidiaries, hereby forever releases and discharges the Lender
and its predecessors and successors and its past and present divisions and
subsidiaries and its and their shareholders, directors, officers, employees,
agents, representatives, consultants, attorneys, Affiliates, and assigns, from
any and all obligations, liabilities, losses, claims, counterclaims, demands,
expenses, attorney's fees, rights, actions, causes of action or suits of any
kind or nature, whether accrued or unaccrued, asserted or unasserted, known or
unknown, suspected or unsuspected, absolute or contingent, in law, equity,
bankruptcy or otherwise (including, without limitation, any and all claims for
avoidable preferences, fraudulent conveyances or transfers and/or recoverable
setoffs under the
11
law of any jurisdiction regarding insolvency or debtor/creditor rights or
otherwise) under or arising out of the Amended and Restated Finance Agreement,
excluding obligations under or arising out of the Restructured Finance
Agreement, the Restructured Note, and the Security Documents as applied to the
Loan and the Restructured Note.
(c) For the avoidance of doubt and without limiting the foregoing, the
parties intend by this Section 2.02 that (i) an amount equal to fifty percent
(50%) of the aggregate outstanding principal amount of the existing loans under
the Amended and Restated Finance Agreement which remain unpaid or unsatisfied
after Lender's receipt of the Cash Payment and the Restructured Note shall be
capitalized in exchange for the Shares, and (ii) the Lender forgive all accrued
interest and release all existing loans under the Amended and Restated Finance
Agreement which remain unpaid or unsatisfied after Lender's receipt of the Cash
Payment, the Restructured Note and the Shares and the Secretary's Certificate.
2.03 Cash Payment.
On the Closing Date, subject to the satisfaction of all Conditions
Precedent, the Borrower shall pay to the Lender by wire transfer on or before
the Closing Date US$125,200,000.00 (One Hundred Twenty Five Million Two Hundred
Thousand Dollars) in immediately available funds at Citibank NA, New York,
Account Number: 3854-536-4, ABA#: 021000089, Swift Code: CITIUS33, Beneficiary:
Nortel Networks Limited, or such other account as the Lender may designate to
the Borrower in writing (the "Cash Payment").
2.04 Continuation of Security Documents.
(a) The parties acknowledge and agree that, subject to the terms of, and as
amended or otherwise modified by, the Security Amendment Documents, the Security
Documents shall continue and shall secure the Borrower's obligations under the
Restructured Finance Agreement and the Restructured Note.
(b) The Borrower shall promptly execute and deliver or cause to be executed
or delivered all such instruments, documents or assurances, and promptly do or
cause to be done all such other and further things and acts as the Lender may
reasonably request in furtherance of the rights, interests, powers, benefits and
privileges conferred upon the Lender by the Security Documents, including
without limitation, amendments to any of the Security Documents assuring
continuation of a first priority security interest, pari passu with the Other
Secured Lenders, in the Collateral securing Borrower's obligations to Lender
intended to be secured under this Agreement, the Restructured Finance Agreement,
or the Restructured Note.
2.05 Execution of New Supply Contracts.
On the Closing Date, subject to the satisfaction of all Conditions
Precedent, the Customer and the Supplier shall execute and deliver new supply
and services contracts substantially in the form of, respectively, Exhibit B-1
hereto, the FWA Purchase and License Agreement, Exhibit B-2 hereto, the Non-FWA
Purchase and License Agreement, Exhibit B-3 hereto, the Agreement for the
Provision of Technical Assistance Support Services for FWA Equipment, Exhibit
B-4 hereto, the Agreement for the Provision of Technical Assistance Support
Services for Non-FWA
12
Equipment, and Exhibit B-5 hereto, the FWA Technology License Agreement
(collectively the "New Supply Contracts").
2.06 Share Subscription Transaction by Lender.
(a) Subject to the terms and conditions of the Subscription Agreement, the
Borrower shall issue, and the Lender shall have the right to subscribe for
250,836,980 nominative, non-voting Series "N" shares of the capital stock of the
Borrower, equal to an aggregate of nine and nine-tenths percent (9.9%) equity
participation, on a fully diluted basis, in the Borrower (the "Shares") pursuant
to (X) an extraordinary shareholders meeting of the Borrower to be held on or
before the Closing Date, which shall approve (i) a capital stock increase by
means of a debt capitalization and (ii) the amendment of the by-laws (estatutos)
of the Borrower to the extent necessary to provide for the right of the Lender
to appoint one Director to the board of directors of the Borrower (the
"Extraordinary Shareholders Meeting") substantially in the form of Exhibit C-1
attached hereto and (Y) a share subscription agreement (the "Share Subscription
Agreement") substantially in the form of Exhibit C-2 attached hereto.
(b) On or before the Closing Date, the Borrower and the Lender shall enter
into the Share Subscription Agreement.
(c) The Borrower shall amend its bylaws (estatutos) as contemplated by the
Extraordinary Shareholders Meeting. The Borrower shall no later than fifteen
(15) Business Days after the holding of the Extraordinary Shareholders Meeting
deliver to the Lender (i) second testimony of a public instrument containing the
formalization of the Extraordinary Shareholders Meeting; (ii) satisfactory
evidence of registration before the Public Registry of Commerce in the domicile
of the Borrower of the first testimony of such public instrument; and (iii) a
compulsa of the by-laws of the Borrower.
(d) On or before the Closing Date, but subject to and concurrent with
entering into the Share Subscription Agreement by the Lender, the Borrower and
the Lender shall enter into the Joinder to the Shareholders Agreement and the
Borrower, the Lender and Telinor shall enter into the Supplemental Joinder
Agreement.
(e) The Borrower shall prepare, draft and submit before the COFECO, at its
sole cost and expense, all the necessary applications, forms and memoranda to
obtain all Governmental Approvals required to fully effect the subscription of
shares as contemplated by the Extraordinary Shareholders Meeting and the Share
Subscription Agreement, and the Lender shall provide to the Borrower all
information regarding or relating to the Lender, and execute all documents,
which are necessary for such applications, forms and memoranda.
(f) (i) The Borrower shall employ its reasonable best efforts to obtain the
COFECO Authorization no later than one hundred and twenty (120) days from the
Closing Date; (ii) the Lender shall provide such additional information as may
be required COFECO regarding or relating to the Lender with respect to the
COFECO Authorization; and (iii) the Borrower shall provide a written status
report to the Lender of the application submitted for such COFECO Authorization
every thirty (30) days from the Closing Date until such authorization is
obtained.
13
(g) Within thirty (30) days after the later to occur of (i) receipt of
payment in full of the US$60,000,000 capital increase, (ii) the expiration
without exercise of any and all pre-emptive purchase rights with respect to the
Shares, and (iii) receipt of all such Governmental Approvals, the Share
Certificates for the Shares and the Secretary's Certificate shall be delivered
to the Lender pursuant to the Extraordinary Shareholders Meeting and the Share
Subscription Agreement.
(h) The Borrower agrees to provide the Lender with all information
reasonably requested by the Lender to allow the Lender to comply with all tax
reporting requirements in connection with or as a result of its investment in
the Borrower as set out herein including, without restriction, to the extent
required for the Lender to satisfy its tax reporting obligations, financial
statements of the Borrower and all Affiliates of the Borrower, such
determination of the Borrower's income taking into account and otherwise based
upon the Income Tax Act (Canada) in relation to investments by Canadian
residents in "foreign affiliates" and "foreign investment entities" as those
terms are or may be defined, from time to time, for purposes of such Act, and
such statements of the business and undertaking and property and liabilities of
the Borrower and such Affiliates as may be required for such tax reporting.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Borrower. The Borrower hereby
represents and warrants to the Lender and the Supplier that, each of the
statements contained in this Section 3.01 of this Article III is true and
correct as of the date of this Agreement.
(a) Organization; Powers. The Borrower is duly organized, validly existing
and, under the laws of the jurisdiction of its organization, has all requisite
power and authority to carry on its business as now conducted and, except where
the failure to do so, individually or in the aggregate, would not be reasonably
likely to result in a Material Adverse Effect in respect of the Borrower, is
qualified to do business in every jurisdiction where such qualification is
required.
(b) Authorization; Enforceability. The transactions to be performed by the
Borrower are within the Borrower's corporate powers and have been duly
authorized by all necessary corporate and shareholder action. This Agreement has
been duly executed and delivered by the Borrower and constitutes, and each of
the other Transaction Documents to which it is a party when executed and
delivered by the Borrower will constitute, a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with its terms,
except as such enforceability may be limited by (a) bankruptcy, concurso
mercantil or quiebra, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
14
(c) Governmental Approvals. The transactions to be performed by the
Borrower (i) do not require any consent or approval of, registration or filing
with, or any other action by, any Governmental Authority (including COFETEL with
respect to the transactions), except for (A) the COFECO Authorization, (B) such
as have been obtained or made and are in full force and effect, (C) those that
the failure to have or obtain would not be reasonably likely to result in a
Material Adverse Effect in respect of the Borrower, (ii) will not violate any
applicable law or regulation (including regulations of COFETEL) or the charter,
estatutos, or other organizational documents of the Borrower or any order of any
Governmental Authority (including COFETEL) having jurisdiction, and (iii) will
not violate or result in a default under any indenture, agreement or other
instrument binding upon the Borrower or its assets.
(d) No Conflicts. There is no proceeding pending or, to the knowledge of
the Borrower or any of its Subsidiaries, threatened against the Borrower that
seeks to rescind, terminate, suspend, modify or otherwise materially affect any
Governmental Approvals, except with respect to those Governmental Approvals
which the failure to obtain or to have could not reasonably be expected, in the
aggregate, to have a Material Adverse Effect.
(e) Compliance with Laws and Agreements. (i) The Borrower and each of its
Subsidiaries is in compliance with all Applicable Laws, except to the extent of
any non-compliance which alone or in the aggregate with any other non-compliance
could not reasonably be expected to have a Material Adverse Effect; (ii) the
Borrower has not received, and none of its Subsidiaries has received, any notice
or other communications and none of them is otherwise aware of any claim from
any Governmental Authority alleging that the Borrower or any of its Subsidiaries
is not in compliance with any Applicable Laws, except with respect to
allegations of non-compliance which alone or in the aggregate with any other
non-compliance (or allegations of non-compliance) could not reasonably be
expected to have a Material Adverse Effect; and (iii) to the knowledge of the
Borrower and each of its Subsidiaries, there are no circumstances that may
prevent or interfere with compliance with Applicable Laws by the Borrower or its
Subsidiaries in the future, except to the extent of any non-compliance which
alone or in the aggregate with any other non-compliance could not reasonably be
expected to have a Material Adverse Effect.
(f) Collateral. The Borrower is the owner of all of the Collateral. Subject
only to Permitted Liens, the Collateral Agent (on behalf of the Lender) has an
effective, valid, legally binding and enforceable Lien on all of the Collateral,
which Lien is superior and prior to the Liens of all third parties (other than
the Permitted Liens).
(g) Source of Funds; Cash Payment Transaction. Of the Cash Payment no more
than US$75,000,000.00 (Seventy Five Million Dollars) is being paid from the
proceeds of the Third-Party Financing, and no part of the Cash Payment is being
paid from the proceeds of a disposition of any Collateral otherwise than in the
ordinary course of business.
(h) Taxes. The Borrower and each of its Subsidiaries has timely paid all
required Taxes and is current with all Tax returns required to be filed by it
except for the payment of such Taxes, if any, as are being contested in good
faith by appropriate proceedings and as to which (i) adequate reserves have been
established in accordance with Mexican GAAP on the books of the Borrower and its
Subsidiaries, or (ii) (A) the aggregate amount of such unpaid Taxes,
15
assessments and shares is less than US$500,000 (Five Hundred Thousand Dollars),
and (B) the non-payment of which Taxes could not reasonably be expected to have
a Material Adverse Effect under such circumstances.
(i) Litigation.
(i) Except as disclosed in Schedule 3.01(i), there is no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority pending, or, to the knowledge of the Borrower or any of its
Subsidiaries, threatened by or against the Borrower or any of its Subsidiaries
or against any of its or their respective properties or revenues which: (A)
purports to affect or pertain to this Agreement or any other Transaction
Document or any of the transactions contemplated hereby or thereby or (B) as to
which there is a reasonable possibility of an adverse determination and which,
if determined adversely, could reasonably be expected to have a Material Adverse
Effect.
(ii) No injunction, writ, temporary restraining order or any order of any
nature has been issued by any court or Governmental Authority (A) purporting to
enjoin or restrain the execution, delivery or performance of this Agreement or
any other Transaction Document by the Borrower, or (B) which could reasonably be
expected to have a Material Adverse Effect.
(j) Full Disclosure. The exhibits, reports, schedules and other information
furnished by or on behalf of the Borrower in connection with this Agreement,
taken as a whole, are true and correct in all material respects and do not
contain any untrue material statement or omit any fact necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading at the time when made, deemed made or delivered; provided
that, to the extent any such information has been based upon or constitutes a
forecast or projection by the Borrower, the Borrower represents only that it
acted in good faith and utilized reasonable assumptions in the light of
conditions existing at the time such forecasts or projections were prepared and
delivered. 3.02 Representations and Warranties of the Lender and the Supplier.
The Lender and the Supplier, in each case as to itself, represents and warrants,
individually and not jointly, as of the Closing Date to each other party hereto
as follows:
(a) Organization; Powers. Each of the Lender and the Supplier,
respectively, is duly organized, validly existing and, where applicable, in good
standing under the laws of the jurisdiction of its organization, and has all
requisite power and authority to carry on its business as now conducted
(b) Authorization; Enforceability. The Transactions to be performed by the
each of the Lender and the Supplier are within the corporate powers of each of
the Lender and the Supplier and have been duly authorized by all necessary
corporate and shareholder action. This Agreement has been duly executed and
delivered by the each of the Lender and the Supplier and constitutes, and each
of the other Transaction Documents to which it is a party when executed and
delivered by the each of the Supplier and the Lender will constitute, a legal,
valid and binding obligation of the Lender and the Supplier, enforceable against
the Lender and the Supplier in accordance with its terms, except as such
enforceability may be limited by
16
(i) bankruptcy, concurso mercantil or quiebra, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and (ii) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) Governmental Approvals. The transactions to be performed by each of the
Supplier and the Lender (i) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority
(including COFETEL with respect to such transactions) except for (A) the COFECO
Authorization and (B) such as have been obtained or made and are in full force
and effect, (ii) will not violate the charter, estatutos, or other
organizational documents of the Supplier or the Lender or any order of any
Governmental Authority (including COFETEL) having jurisdiction, and (iii) will
not violate or result in a default under any indenture, agreement or other
instrument binding upon either the Supplier or the Lender or their respective
assets.
(d) No Conflicts. There is no proceeding pending or, to the knowledge of
any of the Supplier or the Lender, threatened against either of the Supplier or
the Lender that seeks to rescind, terminate, suspend, modify or otherwise
materially affect the transactions to be performed by each of the Supplier and
the Lender.
(e) Compliance with Laws and Agreements. (i) Each of the Supplier and the
Lender is in compliance with all Applicable Laws, except to the extent of any
non-compliance which alone or in the aggregate with any other non-compliance
could not reasonably be expected to have a Material Adverse Effect; (ii) neither
the Supplier nor the Lender has received any notice or other communications and
none of them is otherwise aware of any claim from any Governmental Authority
alleging that either the Supplier or the Lender is not in compliance with any
Applicable Laws, except with respect to allegations of non-compliance which
alone or in the aggregate with any other non-compliance (or allegations of
non-compliance) could not reasonably be expected to have a Material Adverse
Effect; and (iii) to the knowledge of each of the Supplier and the Lender there
are no circumstances that may prevent or interfere with compliance with
Applicable Laws by each of the Supplier and the Lender in the future, except to
the extent of any non-compliance which alone or in the aggregate with any other
non-compliance could not reasonably be expected to have a Material Adverse
Effect.
(f) Litigation.
(i) Except as disclosed in Schedule 3.02(f), there is no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority pending, or, to the knowledge of the Supplier or the Lender or any of
their respective Subsidiaries, threatened by or against the Supplier or the
Lender or any of their respective Subsidiaries or against any of their
respective properties or revenues which purports to affect or pertain to this
Agreement or any other Transaction Document or any of the transactions
contemplated hereby or thereby.
(ii) No injunction, writ, temporary restraining order or any order of any
nature has been issued by any court or Governmental Authority purporting to
enjoin or restrain the execution, delivery or performance of this Agreement or
any other Transaction Document by the Lender or the Supplier.
17
ARTICLE IV
CONDITIONS PRECEDENT
The Lender's obligation to perform its obligations pursuant to this
Agreement is subject to the Borrower's satisfaction of each of the following
Conditions Precedent:
4.01 On or before the Closing Date, the Lender and the Supplier shall have
received all of the following:
(a) Resolutions; Incumbency. The Lender shall have received from the
Borrower: (i) copies of: (1) resolutions of its board of directors (or
shareholders' meeting) authorizing the transactions contemplated by the
Transaction Documents, (2) any amendments to its articles of incorporation and
by-laws (estatutos) from the date of execution of the Amended and Restated
Finance Agreement, and certified as of the Closing Date by its Authorized
Officer substantially in the form of Exhibit B-6; (ii) a certificate of its
Authorized Officer certifying the names and true signatures of its respective
officers authorized to execute and deliver the Transaction Documents
substantially in the form of Exhibit B-7.
(b) Officer's Certificate. The Lender shall have received a certificate,
substantially in the form of Exhibit B-8, dated as of the Closing Date, signed
by an Authorized Officer of the Borrower stating that, upon execution of the
Transaction Documents: (i) all of its representations and warranties contained
in Article III are true and correct in all material respects on and as of such
date, and (ii) since January 1, 2003, no Material Adverse Effect has occurred.
(c) Transaction Documents. The Lender and the Supplier shall have received
all of the following, each duly executed and delivered by an Authorized Officer
of the respective party or parties thereto dated the Closing Date or such other
date as agreed to by the Lender or the Supplier, in form and substance
satisfactory to the Lender and the Supplier:
(1) this Agreement;
(2) the Restructured Finance Agreement;
(3) the Restructured Note;
(4) the FWA Purchase and License Agreement;
(5) the Non-FWA Purchase and License Agreement;
(6) the Agreement for the Provision of Technical Assistance Support
Services for FWA Equipment;
(7) the Agreement for the Provision of Technical Assistance Support
Services for Non-FWA Equipment;
18
(8) the FWA Technology License Agreement;
(9) the Extraordinary Shareholders Meeting;
(10) the Amendment to the Bylaws;
(11) the Share Subscription Agreement;
(12) the Joinder to the Shareholders' Agreement;
(13) the Supplemental Joinder Agreement;
(14) the Amendments to Mortgages;
(15) the Pledges;
(16) the Waiver and Amendment to the Intercreditor Agreement;
(17) the Secretary's Certificate of the Borrower evidencing receipt of
US$60,000,000 accounted for as Paid in Capital and/or Contributions for Future
Capitalization; and
(18) the Confirmation of Guarantee.
(d) Third-Party Financing Documentation. The Lender shall have received
from the Borrower copies certified to the Lender's satisfaction of all the
Third-Party Financing Documentation, including any amendments thereto.
(e) Cash Payment. The Lender shall have received from the Borrower the Cash
Payment.
(f) Governmental Approval. The Lender shall have received from the Borrower
a sealed copy of the application submitted before COFECO.
(g) Release of All Performance Bonds. The Supplier shall have received from
the Borrower the originals of all Performance Bonds, marked cancelled, together
with a release thereof in the form required by the issuer thereof (Federal
Insurance Company).
(h) Opinions of Counsel. The Lender shall have received favorable written
legal opinions in form and substance satisfactory to the Lender (addressed to
the parties hereto and dated the Closing Date) of:
(i) Cahill Gordon & Reindel, New York counsel for the Borrower,
substantially in the form attached hereto as Exhibit E-1;
(ii) D&A Morales & Asociados, S.C., Mexican counsel for the Borrower,
substantially in the form attached hereto as Exhibit E-2;
19
(iii) Chevez, Ruiz, Zamarripa y Cia., S.C., tax counsel for the
Borrower, substantially in the form attached hereto as Exhibit E-3; and
(i) Payment of Fees and Expenses. The Lender shall have received payment of
all fees, disbursements and other charges of outside legal counsel to the
Supplier or the Lender in the United States and Mexico in connection with the
preparation, execution and delivery of this Agreement and other Transaction
Documents.
(j) Amendment of Non-FWA Purchase and License Agreement. The Supplier and
the Customer shall have mutually agreed on the terms and conditions of the lease
financing to be provided for under the Non-FWA Purchase and License Agreement.
4.02 On or before the Closing Date, the Borrower shall have received all of
the following:
(a) Termination and Release. The Borrower shall have received from the
Lender the originals, marked cancelled, of all Promissory Notes made by the
Borrower to the Lender supporting loans under the Amended and Restated Finance
Agreement.
(b) Power of Attorney. The Borrower shall have received from each of the
Supplier and the Lender a copy of a Power of Attorney evidencing the authority
of the Person named therein to execute and deliver the Transaction Documents
substantially in the form of Exhibit B-9.
(c) Officer's Certificate. The Borrower shall have received from each of
the Supplier and the Lender a certificate, substantially in the form of Exhibit
B-10 dated as of the Closing Date, signed by an Authorized Officer of each of
the Supplier and the Lender stating that, upon execution of the Transaction
Documents: (i) all of its representations and warranties contained in Article
III are true and correct in all material respects on and as of such date, and
(ii) since January 1, 2003, no Material Adverse Effect has occurred.
(d) Transaction Documents. The Borrower shall have received all of the
following, each duly executed and delivered by an Authorized Officer of the
respective party or parties thereto, dated the Closing Date or such other date
as agreed to by the Borrower, in form and substance satisfactory to the
Borrower:
(1) this Agreement;
(2) the Restructured Finance Agreement;
(3) the FWA Purchase and License Agreement;
(4) the Non-FWA Purchase and License Agreement;
(5) the Agreement for the Provision of Technical Assistance Support
Services for FWA Equipment;
20
(6) the Agreement for the Provision of Technical Assistance Support
Services for Non-FWA Equipment;
(7) the FWA Technology License Agreement;
(8) the Share Subscription Agreement; and
(9) the Joinder to the Shareholders Agreement.
(e) Release. A release by the Lender of all of the obligations of the
Borrower Shareholders under or arising out of the Amended and Restated Finance
Agreement and the Amended and Restated Shareholders Undertaking, substantially
in the form attached hereto as Exhibit H.
(f) Opinion of Counsel. The Borrower shall have received favorable written
legal opinions in form and substance satisfactory to the Borrower (addressed to
the parties hereto and dated the Closing Date) of counsel for the Lender,
substantially in the form attached hereto as Exhibit F.
Article V
COVENANTS
5.01 Governmental Approval. Thirty (30) days from the Closing Date and
every thirty (30) days thereafter, the Borrower shall provide a written status
report to the Lender regarding the status of, and actions taken with respect to,
the Governmental Approvals until such approvals are obtained.
5.02 Lease Financing. The Lender and the Borrower agree to work together in
good faith to negotiate definitive terms and conditions for lease financing to
be provided in accordance with Schedule F to the Non-FWA Purchase and License
Agreement.
5.03 Public Disclosure. Each of the parties hereto agrees to consult with
each other party and obtain each other party's consent (which shall not be
unreasonably withheld) before issuing any press release or otherwise making any
public disclosure with respect to any of the Transactions and shall not issue
any such press release or make any such public statement prior to such
consultation and consent, except as may be required by applicable laws or
regulations or any listing agreement with a national securities exchange;
provided that the consent of any party hereto that is a controlled subsidiary of
any other party hereto may be provided by such other party; and provided,
further, that the parties intend to agree prior to the Closing Date on releases
to be initially issued by such parties in respect of the Restructuring.
Article VI
MISCELLANEOUS
21
6.01 Notices. All notices and other communications provided for herein
shall be in writing and shall be delivered by hand, mail or overnight courier
service, or sent by fax, as follows:
(a) To Borrower:
Axtel, S.A. de C.V.
Boulevard Diaz Ordaz Km 333
Colonia Unidad San Pedro 400
Garza Garcia 66260
N.L., Mexico
Fax: 52 81 8114 1771
Phone:
Attention: Tomas Milmo-Santos/ Patricio Jimenez
With copies to:
D&A Morales y Asociados, S.C.
Vallarta 811 Sur Colonia Mirador
64070 Monterrey, N.L., Mexico
Attention: Alberto J. Morales
Fax No.: 52 81 8129 9220
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Roger Andrus, Esq.
Fax No.: (212) 269-5420
(b) To the Lender:
Nortel Networks Limited
8200 Dixie Road
Suite 100
Brampton, Ontario
L6T 5P6
Attention: Treasurer
Fax: (905) 863-8258
Phone: (905) 863-6613
With copy to:
Nortel Networks (CALA) Inc.
22
1500 Concord Terrace
Sunrise, Florida 33323-2815
Attention: Corporate Secretary
Fax: (954) 851-8900
Phone: (954) 851-8930
I To the Supplier:
Nortel Networks de Mexico S.A. de C.V.
Insurgentes Sur No 1605
Piso 26 Torre Mural
Col. San Jose Insurgentes C.P.
Mexico City, D.F. 03900
Mexico
Attention: President
Fax: 5255 5480 2977
Phone: 5255 5480 4448
With copy to:
Nortel Networks (CALA) Inc.
1500 Concord Terrace
Sunrise, Florida 33323-2815
Attention: Corporate Secretary
Fax: (954) 851-8900
Phone: (954) 851-8930
(d) To the Collateral Agent:
Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 77010
Houston, TX 77010
Attention: [Giovanny Pieternelle]
Fax: 1 713 951 0033
With copy to:
[______________]
[______________]
Attention: [___________]
Fax: [_____________]
Any party hereto may change its address or fax number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement
23
shall be effective upon receipt.
6.02 No Deemed Waivers; Remedies Cumulative. No failure or delay by any
party to this Agreement in exercising any right or power hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of each party hereunder are
cumulative and are not exclusive of any rights or remedies that it would
otherwise have.
6.03 Expenses. The Borrower acknowledges and agrees that all fees,
disbursements and other charges of outside legal counsel to the Supplier or the
Lender in the United States and Mexico in connection with the preparation,
execution and delivery of this Agreement and other Transaction Documents are for
the account of the Borrower.
6.04 Survival. All covenants, agreements, representations and warranties
made by each party herein and in the certificates or other instruments delivered
in connection with or pursuant to this Agreement shall be considered to have
been relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the Closing Date, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that such
other party may have had notice or knowledge of any breach or incorrect
representation or warranty as of the Closing Date.
6.05 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single agreement. Delivery of an executed
counterpart of a signature page to this Agreement by fax shall be effective as
delivery of an originally executed counterpart of this Agreement. The
Transaction Documents constitute the entire agreement between and among the
parties relating to the subject matter thereof and supersede any and all
previous agreements and understandings, oral or written, relating to the subject
matter thereof. This Agreement shall become effective when it shall have been
executed by all parties listed on the signature pages hereto and thereafter
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
6.06 Severability. 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.
6.07 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA (NOT
INCLUDING SUCH STATE'S CONFLICT OF LAWS PROVISIONS TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY).
6.08 Venue for Suit; Waiver of Jury Trial.
24
Each party to this Agreement irrevocably hereby expressly waives all right
to object to jurisdiction or execution in any legal action or proceeding
relating to this Agreement or any other Transaction Document which it may now or
hereafter have by reason of its 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 Transaction Documents and
any other document or instrument required to be executed in relation thereto may
be instituted in or (other than by the Borrower or the Customer as applied to
another Transaction Document that prohibits removal) 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, and by execution
and delivery of this Agreement, each of the parties to this Agreement 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
jurisdiction of any such court. Each party to this Agreement agrees that a
judgment in any such action, suit or proceeding may be enforced in any other
jurisdiction, including Mexico and Canada, by suit upon such judgment. Each
party to this Agreement hereby 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.
EACH PARTY TO THIS AGREEMENT 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
RESTRUCTURED NOTE OR ANY OTHER TRANSACTION DOCUMENTS. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDER AND SUPPLIER TO ENTER INTO THIS AGREEMENT AND
THE OTHER TRANSACTION DOCUMENTS.
6.09 Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and
shall not affect the construction of, or be taken into consideration in
interpreting, this Agreement.
6.10 Confidentiality. Each of the parties hereby agrees to maintain the
confidentiality of the Information (as defined below) for a period of three (3)
years from the Closing Date, 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 the shares of the Borrower permitted
hereunder 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 6.10, 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 6.10
25
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 6.10, "Information" means all information
received by any party from any other party to this Agreement or any other
Transaction Document relating to such other party or its business provided in
respect of the Transactions, 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 6.10 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.
6.11 Amendment. None of the terms or provisions of this Agreement may be
amended, supplemented or otherwise modified without the consent of each of the
parties hereto.
6.12 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors (whether by
merger, consolidation, exchange of securities, acquisition of assets or
otherwise). No party hereto may assign its rights and obligations hereunder, and
any such purported assignment in contravention of this Section 6.12 shall be
null and void, unless consented to in writing by the other parties hereto;
provided, however, that this provision shall not in any way limit (i) the right
of the Lender to dispose of its shares of stock in the Borrower in accordance
with the Joinder Agreement or (ii) the right of the Lender to assign the
Restructured Note and the Restructured Finance Agreement.
[the remainder of this page intentionally left blank]
26
IN WITNESS WHEREOF, the parties hereto have caused this Restructuring
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
AXTEL, S.A. DE C.V.
By: /S/ Patricio Jimenez
----------------------------
Name: Patricio Jimenez
Title:
By:
----------------------------
Name:
Title:
NORTEL NETWORKS LIMITED
By: /S/ Jorge H. Suarez
------------------------------
Name: Jorge H. Suarez
Title: Attorney-in-Fact
By:
-----------------------------
Name:
Title:
Nortel Networks de Mexico, S.A. de C.V.
By: /S/ Gabriel Garcia-Mosquera
-------------------------------
Name: Gabriel Garcia-Mosquera
Title: Attorney-in-Fact
TORONTO DOMINION (TEXAS), INC.
By: /S/ Warren Finlay
---------------------------------
Name: Warren Finlay
Title: President
By:
----------------------------------
Name:
Title:
SCHEDULE 3.01(i)
BORROWER LITIGATION
I.- Monterrey, N.L.
A.- Ordinary Mercantile Trial filed by METRONET, S.A. DE C.V.
("Metronet") against the Borrower, upon the 4th Civil Court in
Monterrey, N.L. In such lawsuit, Metronet claims are: i) early
termination of a Commitment Letter, ii) payment of services, and iii)
damages.
II.- Mexico, D.F.
A.- Ordinary Mercantile Trial filed by Spectrasite Communications
Mexico, S. de R.L. de C.V. against the Borrower, upon the 30th Civil
Court in Mexico, D.F. under proceeding record 203/02. In such action,
the plaintiff is seeking to recover the deposit made by Spectrasite
Communications Mexico, S. de R.L. de C.V. to Axtel. For this reason
Axtel sued Spectrasite Communications Mexico, S. de R.L. de C.V. and
Spectrasite Communications Inc. for breach of Contract.
B.- Ordinary Mercantile Trial filed by Operadora Mexicana de
Telefonia, S.A. de C.V. ("OMTEL") against the Borrower, upon the 47th
Civil Court in Mexico, D.F., under proceeding record 243/02. In such
action, the plaintiff is seeking an early termination of the
Telecommunications Service Contract executed between both parties.
C.- "Juicio de Amparo" filed by TELEFONOS DE MEXICO, S.A. DE C.V.
("Telmex") against several authorities, upon the 1st Federal District
Court in Mexico, D.F., under proceeding record number 620/2002-V.
Axtel, S.A. de C.V. was named a Third Aggrieved Party on this
petition.
SCHEDULE 3.02(j)
LENDER LITIGATION
None
SCHEDULE I
SUPPLY CONTRACTS
1. Supply and Services Contract (Transmission) dated as of December 2, 1998 (the
"Transmission Contract") between the Customer and the Supplier, as amended.
2. Supply and Services Contract (Switch) dated as of December 2, 1998 (the
"Switch Contract") between the Customer and the Supplier, as amended, and
expired as of December 2, 2001.
3. Supply and Services Contract (Internet Services Routing Platform) dated as of
September 24, 1999 (the "ISRP Contract") between the Customer and the Supplier,
as amended, and terminated as of July 11, 2001.
4. Supply and Services Contract (Last Mile SDH Fiber Optic Electronics
Equipment) dated as of December 1, 1999 (the "SDH Contract") between the
Customer and the Supplier, as amended.
5. Supply and Services Contract (Last Mile Point-to-Point Microwave Equipment)
dated as of December 1, 1999 (the "PTP Contract") between the Customer and the
Supplier, as amended.
6. Fiber Optic Materials Installation Contract dated as of December 1, 1999 (the
"OSP Contract") between the Customer and the Supplier, as amended.
7. Supply and Services Contract (PDMX) dated as of December 1, 1999 (the "PDMX
Contract") between the Customer and the Supplier, as amended.
8. Amended and Restated Supply and Services Contract (Fixed Wireless Access)
dated as of July 11, 2001 (the "FWA Contract") between the Customer and the
Supplier, as amended, which amended and restated the Supply and Services
Contract (Fixed Wireless Access) dated as of December 2, 1998.
9. General Agreement dated as of July 11, 2001 (the "General Agreement") between
the Customer and the Supplier, as amended, which terminated the ISRP Contract
and amended various of the other Supply Contracts.
10. Second General Agreement dated as of February 28, 2002 (the "Second General
Agreement") between the Customer and the Supplier, as amended, which
acknowledged expiration of the Switch Contract and amended various of the other
Supply Contracts.
SCHEDULE II
OTHER SECURED LENDERS PARTY TO THE INTERCREDITOR AGREEMENT
1. Hewlett-Packard Mexico, S. de R.L. de C.V. (fka Hewlett Packard de
Mexico, S.A. de C.V.).
2. Siemens Financial Services Inc., a corporation duly existing under
the laws of the state of Delaware, United States of America with
its principal offices at 200 Somerset Corporate Boulevard,
Bridgewater, New Jersey, 08807-2843.
3. SR Telecom, Inc., a corporation duly existing under the laws of
Canada with its principal offices at 8150 Trans Canada Highway,
St. Laurent, Quebec, H4F1M5, Canada.
SCHEDULE III
SECURITY DOCUMENTS
1. Statutory Mortgage incorporated into public deed number 6,249 dated June 9,
1999 made before Mr. Daniel C. Morales Notary Public by Axtel, S.A. de C.V.
in favor of Toronto Dominion (Texas), Inc. as Collateral Agent, pursuant to
which Axtel, S.A. de C.V. granted certain statutory telecommunications
mortgages in favor of the Collateral Agent for the benefit of the Lenders.
2. Subsidiary Mortgage Deeds means the security instruments granting a lien in
favor of the Lenders in respect of all material assets of certain of the
Borrower's Affiliates entered into pursuant to the Amended and Restated
Finance Agreement.
3. Restricted Subsidiary Stock Pledge Agreement dated as of June 11, 1999
among Telinor Telefonia S. de R.L. de C.V. (fka Telinor Telefonia, S.A. de
C.V.), Impulsora e Inmobiliaria Regional, S.A. de C.V., Nortel Networks
Corporation, and Toronto Dominion (Texas), Inc., as Collateral Agent for
the Lenders.
4. Restricted Subsidiary Stock Pledge Agreement dated as of June 11, 1999
among Impulsora e Inmobiliaria Regional, S.A. de C.V., Instalaciones y
Contrataciones, S.A. de C.V., Nortel Networks Corporation and Toronto
Dominion (Texas), Inc., as Collateral Agent for the Lenders.
SECURITY AMENDMENT DOCUMENTS
1. Amendment to the Additional Mortgages dated as of ________, 2003 by and
among Axtel, S.A. de C.V., Hewlett-Packard Mexico, S. de R.L. de C.V.,
Nortel Networks Limited, Siemens Financial Services Inc and Toronto
Dominion (Texas) Inc.
2. Amendment to the Civil Mortgage dated as of ________, 2003 by and among
Impulsora e Inmobiliaria Regional, S.A. de C.V., Banco Mercantil del
Nortel, S.A., Institucion de Banca Multiple, Grupo Financiero Banorte,
Hewlett-Packard Mexico, S. de R.L. de C.V., Nortel Networks Limited,
Siemens Financial Services Inc and Toronto Dominion (Texas) Inc.
3. Amendment to the Original Mortgage dated as of ________, 2003 by and among
Axtel, S.A. de C.V., Hewlett-Packard Mexico, S. de R.L. de C.V., Nortel
Networks Limited, Siemens Financial Services Inc and Toronto Dominion
(Texas) Inc.
4. Pledge on IC's Stock dated as of ___________ created by Axtel, S.A. de C.V.
and Impulsora e Inmobiliaria Regional, S.A. de C.V. on all voting shares
representing 100% of the capital stock of Instalaciones y Contrataciones,
S.A. de C.V.
5. Pledge on IIR's Stock dated as of _________ created by Axtel, S.A. de C.V.
and Telinor Telifonia S. de R.L. de C.V. on all voting shares representing
100% of the capital stock of Impulsora e Inmobiliaria Regional, S.A. de
C.V.
6. Pledge on Servicios Axtel's Stock dated as of ____________ created by
Axtel, S.A. de C.V. and Impulsora e Inmobiliaria Regional, S.A. de C.V. on
all voting shares representing 100% of the capital stock of Servicios
Axtel. S.A. de C.V.
7. Pledge on the Borrower's Stock dated as of ______________ created by
Telinor Telifonia S. de R.L. de C.V. on all of voting shares by Telinor
Telifonia S. de R.L. de C.V. of the capital stock of Axtel, S.A. de C.V.
8. Waiver and Amendment to the Intercreditor Agreement dated as of _______,
2003 by and among, the Collateral Agent, the Lender, Siemens Financial
Services Inc., Hewlett-Packard Mexico, S. de R.L. de C.V. and SR Telecom.
EXHIBIT A FORM OF RESTRUCTURED AMENDED AND RESTATED FINANCE AGREEMENT
Exhibit B-1
This Purchase and License Agreement for FWA Equipment (the "Agreement") is
entered by and among Nortel Networks Limited and Nortel Networks de Mexico, S.A.
de C.V. ("NN Mexico" and, collectively, "Nortel Networks"), and Axtel, S.A. de
C.V. (the "Customer" and, together with Nortel Networks, the "Parties"), is
effective from the Closing Date and shall continue in effect thereafter during
the Term. References to "days" shall mean calendar days, unless otherwise
specified.
1. Definitions
1.1 "Concession" means any concession, license, permit or the like (including
any additions or amendments thereto) granted and issued by the governmental
authorities of Mexico as of the Closing Date or during the Term in favor of
Customer that are legally required under applicable laws for operation of
the Products sold hereunder and Customer's networks in Mexico.
1.2 "Force Majeure Event" means the occurrence of fire, casualty, explosion,
lightning, accident, strike, lockout, labor unrest, labor dispute (whether
or not, in respect of the foregoing labor-related matters, the affected
party is in a position to settle the matter), war (declared or undeclared),
armed conflict, civil disturbance, riot, Act of God, delay of common
carrier, the enactment, issuance, or application of any law, local by-law,
regulation, or executive, administrative, or judicial order, acts
(including delay or failure to act) of any governmental authority, or any
other cause or causes (whether of the foregoing, nature or not), or any
other similar or different occurrence, which cause or occurrence is beyond
the reasonable control of the affected party and whether or not foreseeable
by such party.
1.3 "Furnish-only" means Products which Customer is responsible for installing.
1.4 "FWA Business" means, among other things, the know-how and licenses that
would allow a third party to manufacture and support base station
equipment, customer premises equipment, remote element manager, system
software and installation toolsets, that combined provide a fixed wireless
access solution operating in the 3.5 GHz spectrum using TDMA technology.
1.5 "Hardware" means a Nortel Networks machine, equipment or component, but not
including the software.
1.6 "Local Nortel Networks Affiliate" means any person or entity established
prior to or during the Term in Mexico, more than fifty percent (50%) of
whose voting shares or outstanding capital stock is owned or controlled
(directly or indirectly) by Nortel Networks or an affiliate of Nortel
Networks.
1.7 "Nortel Networks Finance Agreement" means the Restructured Amended and
Restated Finance Agreement, dated as of _____________ __, 2003, entered
into by and between Nortel Networks Limited as Lender and Axtel, S.A. de
C.V. as Borrower.
1.8 "Products" means any Hardware, Software or Third Party Vendor Items
provided under this Agreement, which are further described in Annex C
hereto.
1.9 "Replacement Agreements" means, collectively: (i) this Agreement, (ii) the
Technical Assistance Services Agreement for FWA Equipment, dated as of the
date hereof and entered into between Customer and NN Mexico (the "FWA TAS
Agreement"), (iii) the Purchase and License Agreement for Non-FWA
Equipment, dated as of the date hereof and entered into between the Parties
hereto, and (iv) the Technical Assistance Services Agreement for Non-FWA
Equipment, dated as of the date hereof and entered into between Customer
and NN Mexico.
1.9.1 "Restructuring Agreement" means the Restructuring Agreement, dated as of
__________ __, 2003, entered into among the Parties hereto.
1.10 "Senior Note" means that certain promissory note dated ____________ __,
2003, executed by Customer and payable to Nortel Networks as per the Nortel
Networks Finance Agreement.
1.11 "Services" means the activities which may be undertaken by Nortel Networks
pursuant to an Order, including but not limited to, consulting, business
planning, network planning and analysis.
1.12 "Site" means a location designated by Customer at which the Products are to
be installed and the Services are to be performed.
1.13 "Software" means computer programs in object code form or firmware which is
owned or licensed by Nortel Networks, its parent or one of its subsidiaries
or affiliates, and is copyrighted and licensed, not sold. Software consists
of machine-readable instructions, its components, data, audio-visual
content (such as images, text, recordings or pictures) and related licensed
materials including all whole or partial copies.
1.14 "Software Scripts" means the high level overlay of the Radio Element
Manager (REM) software that is either run on demand or scheduled and
typically collects, post processes or interprets data for operational,
installation, commissioning and maintenance purposes. The Software Scripts
do not include REM daemons or REM Graphical User Interface screens (GUI).
1.15 "Specifications" means, with respect to Products and/or Services, the
technical specifications set forth in Annex D hereto, which describe or
explain the standard functional capabilities and/or requirements for such
Products and/or Services.
1.16 "Taxes" means all federal, state, provincial, local, foreign, gross income,
gross receipts, sales, use, value added, stamp, levies, customs duties,
franchise, withholding, excise, real or personal property taxes,
registration charges and all other similar taxes.
1.17 "Term" means five (5) years, commencing on the Closing Date (as defined in
the Restructuring Agreement), provided that the Term may be extended for
subsequent one (1) year periods, subject to the Parties agreeing on
mutually acceptable commercially reasonable terms and conditions, where
"commercially reasonable" shall mean terms and conditions which would be
expected to be found in a comparable contractual arrangement between arms'
length parties, acting without other economic constraint or influence, of
similar size and financial situation for products and/or services similar
or comparable to those under this Agreement, including, without limitation,
price and gross margins, minimum orders, volume commitments and delivery
lead times, capital investment required and credit quality of the buyer;
and provided, further, that, solely for the period prior to any sale of the
FWA Business by Nortel Networks to an unrelated third party, (i) twelve
(12) months prior to the end of the Term as then in effect, the Parties
shall enter into negotiations to determine such mutually acceptable
commercially reasonable terms and conditions, (ii) if agreement on such
terms and conditions is not reached by the date that is nine (9) months
prior to the end of such Term, such determination shall be submitted to
arbitration pursuant to the Rules of Conciliation and Arbitration of the
International Chamber of Commerce then in force, such proceedings to take
place in the English language in the City of Miami, Florida, before a panel
of three (3) arbitrators appointed in accordance with the aforementioned
rules, (iii) if such arbitration has not resulted in a determination on or
before the end of the Term as then in effect, the terms and conditions of
this Agreement as in effect during such Term shall be deemed to continue in
effect until such a determination is reached, at which time such
determination shall be applied retroactively to the end of such Term, (iv)
if the terms and conditions determined by such arbitration are acceptable
to Customer but are not accepted by Nortel Networks, then the arbitrators
shall determine the price at which they believe the FWA business would be
sold in an arms length transaction by parties acting without other economic
constraint or influence, (v) Customer shall have the right to purchase the
FWA Business at such price, and (vi) if the Customer elects not to purchase
the FWA Business at such price, then Nortel Networks shall have no
continuing obligation to Customer beyond the terms of this Agreement as
then in effect.
Page 2
1.18 "Third Party Vendor Items" includes "Third Party Hardware" and "Third Party
Software" and means any non-Nortel Networks hardware and/or software
supplied to Customer under this Agreement.
2. Orders; Initial Order; Change Orders and Delivery Times
2.1 Customer may acquire Products or Services by: (i) issuing a written
purchase order, signed by an authorized representative, or (ii) if Customer
is enrolled in any then current Nortel Networks electronic commerce
program, by submitting electronic orders (collectively, "Orders").
2.2 All Orders shall reference this Agreement and shall comply with the Order
Procedure attached as Annex E hereto. Orders are totally binding and
non-cancelable.
2.3 All Orders will be governed by and cannot alter the terms and conditions of
this Agreement. In order to be valid, all Orders must be accepted by Nortel
Networks through a written or electronic communication. Nortel Networks
shall accept such Order within the next ten (10) business days after
delivery thereof, if such Order (i) is in compliance with this Agreement
(prices and descriptions) and no additional terms and conditions have been
imposed; (ii) Nortel Networks has received the applicable payment in
accordance with Section 5 hereof; and (iii) Customer has provided the
applicable letter of credit or other form of payment guarantee in
accordance with Section 5 hereof. For the avoidance of doubt, the Parties
agree that Nortel Networks shall not be obligated to start performing under
any Order until Customer complies with the provisions of this Section 2.3.
In the event Nortel Networks does not accept an Order in accordance with
this Section 2.3, it shall promptly return to Customer any payments made
and/or letters of credit provided by Customer under this Section 2.3.
2.4 The implementation schedule, responsibility matrix and any other items
which may be necessary for the performance of Nortel Networks' obligations
hereunder shall be mutually agreed upon between the Parties and included as
exhibits to the Order. Such exhibits shall be deemed incorporated into this
Agreement by this reference.
2.5 Attached hereto as Annex A is the initial Order, which Customer hereby
delivers and shall be subject to Section 5.21 below.
2.6 The prices set forth in Annex F and reflected in each Order are based on
anticipated delivery and performance schedules and specifications
incorporated in such Order.
2.7 Any changes to this Agreement or an Order initiated by Customer or Nortel
Networks after the Closing Date resulting in adjustments to process, job
schedule, contract price or other requirements thereof may be cause for
adjustment by Nortel Networks to the prices and to the relevant delivery
and performance schedules set forth therein. Any such adjustment shall be
detailed in a change order, a form of which is attached hereto as Annex B
("Change Order"). If the Change Order affects any Products for which Nortel
Networks has commenced manufacturing or has shipped or any Services for
which Nortel Networks has commenced performance, the adjustment of the
price shall include reasonable, documented charges incurred by Nortel
Networks related thereto. No such changes shall be performed until a Change
Order has been executed by authorized representatives of the Parties. A
Change Order may only be used to increase the amount of Products and/or
Services ordered and in no event may the amount of Products and/or Services
in an Order be cancelled or decreased, whether through a Change Order or
otherwise.
2.8 Nortel Networks shall deliver the Products in accordance with the timing
set forth in Annex J of this Agreement. The delivery times shall commence
after Order acceptance as specified in Section 2.3 of this Agreement.
Nortel Networks shall deliver the Products at the applicable Nortel
Networks' factory, except for RSS equipment, which shall be delivered at
Nortel Networks' North American consolidation warehouse for Mexico
(currently in Texas, USA).
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3. Electronic Commerce Programs
3.1 By enrolling in any Nortel Networks' electronic commerce program, Customer
agrees to comply with the terms of such program. Customer agrees that all
electronic Orders issued are equivalent to a written Order, are governed by
the terms and conditions of this Agreement and that in the event of any
conflict between this Agreement and the information contained in Customer's
or Nortel Networks' electronic commerce website, this Agreement governs.
Customer is responsible for the use and protection of all electronic
commerce passcodes provided by Nortel Networks and agrees that all Orders
submitted using such passcodes are valid and binding Orders authorized by
Customer. Nortel Networks shall have no liability to Customer due to
Customer's failure to access Customer's or Nortel Networks' electronic
commerce website or errors or failures relating to its operation.
4. Licensed Use of Software
4.1 Nortel Networks grants Customer a nonexclusive and perpetual (subject to
Nortel Networks termination rights set forth in section 4.5 below) license
to use a copy of the Software with the Products to the extent of the
activation or authorized usage level.
4.2 To the extent Software is furnished for use with designated Products or
Customer-furnished equipment ("CFE"), Customer is granted a nonexclusive
and perpetual (subject to Nortel Networks termination rights set forth in
section 4.5 below) license to use the Software only on such Products or
CFE, as applicable.
4.3 Software contains trade secrets and Customer agrees to treat Software as
Information (as defined in Section 10). Customer will ensure that anyone
who uses the Software does so only in compliance with the terms of this
Agreement.
4.4 Customer shall not: (a) use, copy, modify, transfer or distribute the
Software except as expressly authorized, provided, however, that, Customer
is hereby authorized to generate new Software Scripts or modify the
existing ones; and provided, further, that Nortel Networks shall not be
obligated to support such modified Software Scripts, nor shall it be
responsible for any performance issues resulting from such modified
Software Scripts; (b) reverse assemble, reverse compile, reverse engineer
or otherwise translate the Software; (c) create derivative works or
modifications unless expressly authorized; or (d) sublicense, rent or lease
the Software. Licensors of intellectual property to Nortel Networks are
beneficiaries of this provision.
4.5 Upon breach of the Software license by Customer as set forth in this
Agreement or in the event the designated Product or CFE is no longer in
use, this license terminates and Customer will promptly return the Software
to Nortel Networks or certify its destruction.
4.6 Nortel Networks may audit by remote polling or other reasonable means to
determine Customer's Software activation or usage levels.
4.7 With respect to Third Party Software, Customer agrees to abide by the terms
provided by Nortel Networks with respect to any such software. Customer
further agrees that the terms contained in any Nortel Networks or third
party "shrink wrap" or "click" licenses shall govern the use of such
software.
4.8 If Nortel Networks and Customer agree that delivery of Software is to be
made electronically via File Transfer Protocol, then delivery of such
Software by Nortel Networks shall be deemed to have taken place at such
time as the Software is loaded onto a network server, as designated by
Nortel Networks, and Customer has been provided with appropriate
instructions and passwords to enable Customer to begin use of such
Software. Notwithstanding the foregoing, the Parties shall comply with all
regulations applicable to importation of Software pursuant to applicable
law.
Page 4
4.9 Customer is allowed to make copies of the Software, as may be reasonably
necessary for back up, execution or archival purposes only.
5. Charges, Payment and Taxes
5.1 The contract price for the Products (including software) and Services is
set forth in Annex F hereto. Unless otherwise agreed by the Parties in an
Order, all prices are in U.S. dollars, exclusive of Taxes. All prices are
applicable solely in Mexico.
5.2 In accordance with the terms of Annex "E", within the next five (05)
business days after the delivery of the Order in accordance with the terms
set forth in Sections 5.3 and 5.21 below, Nortel Networks shall deliver to
Customer an invoice for one hundred percent (100%) of the purchase price of
such Order.
5.3 Except for the Orders for RSSs mentioned in Section 5.21 below, all Orders
for Products shall be accompanied by: (i) payment of seventy percent (70%)
of the purchase price thereof upon delivery of the Order through a wire
transfer of immediately available funds or by a letter of credit or by any
other mutually agreed means; and (ii) within the next five (5) days after
delivery of the respective invoice as per Section 5.2 above, a letter of
credit or other form of payment guarantee consistent with Section 5.17
hereof for the remaining thirty percent (30%) of the purchase price of the
relevant Order.
5.4 Payment of this thirty percent (30%) shall be made by Customer ten (10)
days after Delivery Date (as defined in Annex E of this Agreement) of the
Products; provided that Customer may notify Nortel Networks in writing
within such 10-day period if some or all of the Products delivered are not
in compliance with the terms of the Order (the "Non-Compliant Products"),
in which case Nortel Networks shall take, within thirty days of the date of
Customer's notice, corrective action to resolve such Non-Compliant
Products. Customer shall not be obligated to pay, and Nortel Networks shall
not be entitled to draw on the letter of credit or other form of payment
guarantee, the purchase price of the Non-Compliant Products until Nortel
Networks corrects such non-compliance, provided, however, that prior to
such resolution Nortel Networks shall issue a revised invoice relating to
the portion of Products received by Customer that is in compliance with the
terms of the Order. Partial shipments shall be allowed under this
Agreement, subject to the terms set forth in Annex "J" of this Agreement.
For the avoidance of doubt, the Parties agree that the purchase price of
the compliant Products shall be paid by Customer as provided in this
Section 5.4.
5.5 All Orders for Services shall be accompanied by a letter of credit or other
form of payment guarantee consistent with Section 5.17 hereof for one
hundred percent (100%) of the price of such Services. Nortel Networks shall
invoice Customer one hundred percent (100%) of the price of Services upon
completion, unless the Service continues beyond thirty days, in which case
Nortel Networks shall invoice Customer at the end of each month for the
Services performed in that month.
5.6 With respect to Services, amounts are due upon receipt of invoice and shall
be paid by Customer within thirty (30) days of the invoice date.
5.7 Customer shall pay interest on any late payments at the rate of eighteen
percent (18%) per annum (11/2% per month).
5.8 Charges for Software may be based on extent of use authorized as specified
in this Agreement. Customer agrees to pay the charges applicable for any
activation or usage beyond the authorized level.
5.9 Customer is liable and responsible for any Taxes relating to the Products
or Services furnished by Nortel Networks or its subcontractors pursuant to
this Agreement (whether incurred directly
Page 5
or indirectly by Nortel Networks) and shall, at Nortel Networks' direction,
promptly pay to Nortel Networks or pay directly to the applicable
government or taxing authority, if requested by Nortel Networks, all such
Taxes; provided, however, that in no event shall Customer be liable for
Taxes computed upon the income or gross revenues of Nortel Networks or its
subcontractors.
5.10 Customer shall be responsible for payment of personal property taxes for
Products and materials from the date of shipment by Nortel Networks.
Customer's obligations pursuant to this Section shall survive any
termination of this Agreement.
5.11 Customer shall, within thirty (30) days of the tax payment on behalf of
Nortel Networks, furnish to Nortel Networks all original tax receipts or
certified copies in Nortel Networks' name showing payment of the Tax and
such other documentation relating to the tax payment which Nortel Networks
may reasonably request.
5.12 If Customer shall claim to be exempt from any Taxes, Customer shall furnish
to Nortel Networks a tax exemption certificate from the relevant taxing
authority in the form required by law or otherwise reasonably acceptable to
Nortel Networks. If Customer shall claim any such tax exemption and
provides Nortel Networks the required tax exemption certificate and Nortel
Networks does not collect the Taxes in reliance thereupon, Customer shall
hold Nortel Networks harmless from and against any and all assessments for
such Taxes levied on Nortel Networks, including all interest, penalties and
late charges upon any such Taxes and the cost of professional consulting
fees incurred by Nortel Networks to settle the applicable tax matter with
the relevant tax authorities.
5.13 If withholding of any Tax is required in respect of any payment by Customer
to Nortel Networks hereunder, Customer shall: (i) withhold the appropriate
amount from such payment, (ii) pay such amount to the relevant authorities
in accordance with applicable law, and (iii) pay Nortel Networks an
additional amount such that the net amount received by Nortel Networks is
the amount Nortel Networks would have received in the absence of such
withholding.
5.14 Customer shall pay all applicable customs fees, import duties, and similar
charges directly to the appropriate governmental authorities. Each party
agrees to ensure that it is in good standing and is appropriately
registered, including without limitation, with respect to Taxes, in any
country, state or other jurisdiction where legally required.
5.15 Nortel Networks reserves the right to import services or subcontractors
when and where necessary to complete services related to this Agreement. To
the extent the Local Nortel Networks Affiliate must import services or
subcontractors in support of this Agreement, Nortel Networks reserves the
right to have the Local Nortel Networks Affiliate invoice Customer an
additional amount such that the cost of the withholding taxes for such
imported Services are borne by Customer.
5.16 Customer consents without qualification to the sale and/or assignment of
receivables, in whole or in part, including all or any part of any
associated rights, remedies, and obligations, by Nortel Networks subject to
a 30-day prior written notice, and authorizes the disclosure of this
Agreement as necessary to facilitate such sale. Any tax impact to Customer
resulting from such sale and/or assignment shall be borne by Nortel
Networks.
5.17 The payments referred to in Sections 5.3(ii), 5.5 above and 5.21 below
shall be secured by: (i) an irrevocable and unconditional letter of credit
in favor of Nortel Networks, confirmed by a United States bank acceptable
to Nortel Networks, or (ii) another form of payment guarantee acceptable to
Nortel Networks in its sole discretion.
5.18 If Nortel Networks is prevented from making a shipment of Products,
installing such Products or performing the Services due to any Force
Majeure Event or for any other reason attributable, in whole or in part, to
Customer, the Customer shall accordingly arrange an
Page 6
extension of such letter of credit and reimburse Nortel Networks for any
additional expenses arising out of any such delay; provided, however, that
this reimbursement obligation shall apply only to the extent that the delay
was attributable to Customer; and provided, further, that Customer shall
promptly reimburse Nortel Networks for any such additional expenses, and
Nortel Networks shall subsequently return to Customer any monies which
Customer may have paid in excess once the Parties have reached an agreement
on the actual extent of Customer's reimbursement obligation.
5.19 Nortel Networks reserves the right to reject an Order at Nortel Networks'
sole discretion, or to withhold shipment of the Products or performance of
the Services, or any portion thereof, if: (i) Customer is in default of its
payment obligations hereunder, (ii) Customer is in breach of its
obligations under this Agreement, or (iii) Customer falls under any of the
situations described in Sections 16.1 (i) through (iv) hereof, and all
relevant dates for completion shall be adjusted accordingly.
5.20 Customer hereby irrevocably waives, to the fullest extent permitted by law,
the right to dispute any invoice submitted by Nortel Networks hereunder, if
such invoice is not disputed within twenty one (21) days from invoice
receipt. Such dispute must be resolved within ninety (90) days from the
invoice date. Payment of any disputed amounts is due and payable upon
resolution. All other amounts remain due as per this Section 5.
5.21 Notwithstanding any other provision of this Section 5 to the contrary, in
the case of Orders for the annual minimum order amounts referred to in
Section 19 below, Customer shall submit, on or before December 15 of each
year, and dated as of the date of such submission, separate Orders relating
to the minimum order commitments for the succeeding calendar year, as
follows: (a) In the case of RSS's, the Customer shall submit four (4)
separate Orders, each one for one fourth (1/4) of the Baseline Annual
Minimum Commitment of RSS units set forth in Section 1(a) of Annex H of
this Agreement, relating to the four calendar quarters of the succeeding
calendar year, provided that the Orders for the Additional Annual Minimum
Commitment of RSS Units set forth in such Annex H, shall be placed by
Customer during the calendar year to which such Additional Annual Minimum
Commitment applies, and (b) In the case of base stations, the Customer
shall submit one (1) Order for the total annual minimum commitment for such
calendar year. Nortel Networks shall accept such Orders within ten (10)
business days (in the place where Nortel Networks' office which receives
such Orders is located) after delivery thereof if such Orders are in
compliance with this Agreement (prices and descriptions) and no additional
terms and conditions have been imposed. In the case of Orders for RSSs, (i)
payment of the initial seventy percent (70%) of the purchase price for the
Order corresponding to the first calendar quarter of each calendar year
shall be made on or before January 15th of such calendar year, together
with a letter of credit or other form of payment guaranty consistent with
the requirements of Section 5.17 hereof for the remaining thirty percent
(30%) of the purchase price; and (ii) payment of the initial seventy
percent (70%) of the purchase price for the respective Orders corresponding
to each of the three remaining calendar quarters of such calendar year
shall be made on or before the 15th calendar day of the month immediately
preceding the calendar quarter to which such Order relates, together with a
letter of credit or other form of payment guaranty consistent with the
requirements of Section 5.17 hereof for the remaining thirty percent (30%)
of the purchase price. Delivery of Products under each such Order shall be
in accordance with Annex "J" and shall commence after the initial payment
and that payment of the remaining thirty percent (30%) of the purchase
price for each Order will be due ten (10) days after Product delivery,
subject to the terms set forth in Section 5.4 for non-complying delivery.
5.22 Customer has the right to engage a third party financial institution to
provide financing for the Products and/or Services supplied by Nortel
Networks under this Agreement (provided that Customer is in compliance with
the financial covenants set forth in the Nortel Networks Finance
Agreement), in which case such third party financial institution will make
the payments as provided under this Agreement; provided, however, that
Customer shall continue to be obligated to comply with all its obligations
hereunder.
Page 7
6. Warranty
6.1 Nortel Networks warrants that the Hardware: (i) is free from defects in
materials and workmanship, and (ii) substantially conforms to its
Specifications. If Hardware does not function as warranted during the
warranty period, Nortel Networks will determine to either: (i) make it do
so, or (ii) replace it with substantially equivalent Hardware.
6.2 Nortel Networks provides the Software on an "AS IS" BASIS WITHOUT
WARRANTIES OF ANY KIND.
6.3 Nortel Networks warrants that Services will be performed in a professional
and workmanlike manner. If Services are not performed as warranted and
Nortel Networks is notified in writing by Customer within sixty (60) days
of the date of the non-conforming Services, Nortel Networks will re-perform
the non-conforming Services.
6.4 The warranty period for Hardware shall be twelve (12) months from the date
of delivery to Customer as per the terms of this Agreement. In the event
Nortel Networks determines that repair or replacement as set forth in this
Section 6 cannot be made using commercially reasonable efforts (which
determination shall be made within thirty (30) days after Nortel Networks
receives written notice from Customer) Nortel Networks will give Customer a
credit equal to the purchase price paid by Customer for the Hardware,
provided that Customer has returned such Hardware to Nortel Networks.
6.5 No warranty is provided for: (i) supply items normally consumed during
Product operation; (ii) failures caused by non-Nortel Networks products;
(iii) failures caused by a Product's inability to operate in conjunction
with other Customer hardware or software different from the Third Party
Vendor Items provided by Nortel Networks under this Agreement; or (iv)
performance failures resulting from improper installation and maintenance
or Customer's use of unauthorized parts or components. Warranty will be
voided by misuse, accident, damage, alteration or modification, failure to
maintain proper physical or operating environment, use of unauthorized
parts or components or improper Customer maintenance. The performance by
Customer, directly or indirectly, of the installation, engineering,
commissioning, network design, support and maintenance of FWA Products by
skilled personnel in accordance with the Nortel Procedures shall not
invalidate the warranty provided hereunder.
6.6 Nortel Networks provides Third Party Vendor Items on an "AS IS" BASIS
WITHOUT WARRANTIES OF ANY KIND, unless Nortel Networks specifies otherwise.
However, such Third Party Vendor Items may carry their own warranties and
Nortel Networks shall pass through to Customer any such warranties to the
extent authorized. Nortel Networks shall provide to Customer the necessary
contact information and applicable documentation, if available, for those
third party vendors. Furthermore, Nortel Networks shall provide reasonable
assistance to Customer so that Customer may avail itself of any such
warranties, but only to the extent such assistance does not cause Nortel
Networks to incur any out-of-pocket expenses or material additional costs.
6.7 Nortel Networks warrants that all Nortel Networks Products supplied
hereunder shall have been tested at the factory to ensure that they conform
to their Specifications and that they shall have successfully passed those
tests.
6.8 THESE WARRANTIES AND LIMITATIONS ARE CUSTOMER'S EXCLUSIVE WARRANTIES AND
SOLE REMEDIES, AND REPLACE ALL OTHER WARRANTIES OR CONDITIONS, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR
CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
7. Services
Page 8
7.1 Warranty Services: During the warranty period, Nortel Networks provides
warranty Services without charge for Nortel Networks Hardware supplied
under this Agreement to correct Hardware defects or to bring it up to
conformance with the Specifications set forth in this Agreement. Warranty
Services to be provided by Nortel Networks are further described in Annex
"G" hereof.
7.2 Customer shall notify Nortel Networks prior to returning any Hardware and
must reference a return material authorization number issued by Nortel
Networks on documentation accompanying such returned Hardware. When
Customer is required to return Hardware to Nortel Networks for warranty
service, Customer agrees to ship it prepaid and suitably packaged to a
location Nortel Networks designates. Nortel Networks will return the
Hardware to Customer at Nortel Networks' expense. Nortel Networks is
responsible for loss of, or damage to, Hardware while it is: (i) in Nortel
Networks' possession, or (ii) in transit back to Customer. Any exchanged
Hardware becomes Nortel Networks' property and, subject to Section 8 -
Title and Risk of Loss, its replacement becomes the Customer's property.
The replacement Hardware may not be new but will be in working order and
equivalent to the item exchanged. The warranty period for the repaired or
exchanged Hardware shall be the greater of ninety (90) days from the date
of delivery of the Hardware back to Customer, or the remaining Hardware
warranty period. Customer agrees to ensure that exchanged Hardware is free
of any legal obligations or restrictions that prevent its exchange and
represents that all returned items are genuine and unaltered. Relocation of
Products under warranty Services may result in adjustments to the price and
response times.
7.3 Where applicable, before Nortel Networks provides warranty services,
Customer agrees to: (i) follow the problem determination, problem analysis,
and warranty services request procedures that Nortel Networks provides;
(ii) secure all program and data contained in Hardware; and (iii) inform
Nortel Networks of changes in the Hardware's location.
7.4 Post-warranty and other Services to supplement the warranty Services,
including advanced shipment of replacement parts, may be available at
prices and policies to be negotiated in good faith and agreed between the
Parties. The warranty service terms and exclusions in Section 6 above shall
apply to post- and supplemental warranty Services.
7.5 Services in General: Customer agrees to reasonably cooperate with Nortel
Networks in the performance by Nortel Networks of the Services, including,
without limitation, providing Nortel Networks with sufficient and timely
access free of charge to facilities, data, information and personnel of
Customer in accordance with the then-current Customer policies, and a
suitable physical environment meeting Nortel Networks' specified
requirements to permit the timely delivery and installation of Products
and/or performance of Services, including the recovery by Nortel Networks
of any tools, diagnostic or test equipment, documentation or other items
used by Nortel Networks in the performance of the Services.
7.6 In addition, Customer shall be responsible for the accuracy and
completeness of all data and information that it provides or causes to be
provided to Nortel Networks. In the event that there are any delays by
Customer in fulfilling its responsibilities as stated above, there is a
disagreement between the parties as to the cooperation required from
Customer, or there are errors or inaccuracies in the information provided,
Nortel Networks shall be entitled to appropriate schedule and pricing
adjustments, including storage fees. It is understood and agreed that the
Services provided by Nortel Networks may include the advice and
recommendations of Nortel Networks, but all decisions in connection with
the implementation of such advice and recommendations shall be the sole
responsibility of, and made by, Customer, unless such advice and
recommendations are part of consulting services purchased by Customer.
7.7 Service Personnel: Nortel Networks and Customer are each responsible for
the supervision, direction, compensation and control of their own employees
and subcontractors. Nortel Networks may subcontract any portion or all of
the Services to subcontractors selected by
Page 9
Nortel Networks. Neither Party shall knowingly solicit to hire employees of
the other Party with whom it had contact as a result of the performance of
the Services for a period ending twelve (12) months after completion of the
Services. Neither Party shall be precluded from conducting generalized
searches for employees (and hiring those employees who respond to
generalized searches) either through the use of search firms or
advertisements in the media, provided that searches are not specifically
targeted to employees providing Services.
7.8 Intellectual Property Rights: Nortel Networks, on behalf of itself and its
subcontractors, reserves all proprietary rights in and to: (i) all
methodologies, designs, engineering details, and other data pertaining to
the Services and designs, documentation and other work product prepared by
Nortel Networks and delivered to Customer, (ii) all original works,
computer programs and updates developed in the course of providing the
Services (except Customer's developed programs) or as otherwise agreed in
writing by the Parties, (iii) discoveries, inventions, patents, know-how
and techniques arising out of the Services, and (iv) any and all products
(including software and equipment) developed as a result of the Services.
The performance by Nortel Networks of Services shall not be deemed work for
hire. Nortel Networks grants to Customer a perpetual, non-exclusive,
world-wide, paid up license to use, copy and modify the designs,
documentation and other work product prepared by Nortel Networks and
delivered to Customer in the performance of Services solely for Customer's
internal business purposes. It is understood between the Parties that
Nortel Networks will employ its know-how, techniques, concepts, experience
and expertise, as well as all other intellectual property, including that
to which it reserves its rights hereunder, to perform services for others
which are the same as or similar to the Services.
8. Title and Risk of Loss
8.1 Title and risk of loss for ordered Hardware and Third Party Hardware shall
pass from Nortel Networks to Customer upon its delivery to Customer.
9. Installation and Commissioning
9.1 Customer shall perform all installation, commissioning and software loading
services with respect to the FWA Products, using skilled personnel and in
accordance with the Nortel Procedures, with the exception of REM software
upgrades, which shall be installed by Nortel Networks pursuant to the FWA
TAS Agreement.
10. Confidential Information
10.1 Confidential information ("Information") means: (i) Software and Third
Party Software; and (ii) all business, technical, marketing and financial
information and data that is clearly marked with a restrictive legend of
the disclosing party ("Discloser").
10.2 The party receiving Information ("Recipient") will use the same care and
discretion to avoid disclosure, publication or dissemination of Information
as it uses with its own similar information that it does not wish to
disclose, publish or disseminate. The Recipient may disclose Information
only to: (i) its employees and employees of its parent, subsidiary
affiliated companies or subcontractors who have a need to know for purposes
of carrying out this Agreement; and (ii) any other party with the
Discloser's prior written consent. Before disclosure to any of the above
parties, the Recipient will have a written agreement with such party
sufficient to require that party to treat Information in accordance with
this Agreement.
10.3 The Recipient may disclose Information to the extent required by law.
However, the Recipient must give the Discloser prompt notice and make a
reasonable effort to obtain a protective order.
10.4 No obligation of confidentiality applies to any Information that the
Recipient: (i) already possesses without obligation of confidentiality;
(ii) develops independently; or (iii) rightfully
Page 10
receives without obligations of confidentiality from a third party. No
obligation of confidentiality applies to any Information that is, or
becomes, publicly available without breach of this Agreement.
10.5 Each party's obligations hereunder shall survive for a period of five (5)
years after receipt of Information hereunder from the Discloser, except as
otherwise mutually agreed upon by the parties.
10.6 The Discloser makes no representations or warranties of any nature
whatsoever with respect to any Information furnished to the recipient,
including, without limitation, any warranties of merchantability or fitness
for a particular purpose or against infringement, EXCEPT FOR THOSE SET
FORTH IN SECTION 6 HEREOF.
10.7 The release of any advertising or other publicity relating to this
Agreement requires the prior approval of both Parties.
11. Patents and Copyrights
11.1 Nortel Networks shall indemnify and hold harmless Customer, its officers,
directors, representatives, agents, employees, contractors, subcontractors,
subsidiaries and affiliates against any actual direct loss, damage,
liability, cost, expense, action or claim, including reasonable attorneys'
fees, litigation costs and expenses and amounts paid in settlement, subject
to the limitations set forth in the following paragraphs, arising out of or
in connection with any infringement or alleged infringement of patents,
copyrights, trademarks, trade secrets, or any other intellectual property
right of a third party. Therefore, if a third party claims that Nortel
Networks Hardware or Software provided to Customer under this Agreement
infringes such third party's patent or copyright, Nortel Networks will
defend Customer against that claim at Nortel Networks' expense and pay all
costs and damages that a court finally awards or are agreed in settlement,
provided that Customer: (a) promptly notifies Nortel Networks in writing of
the claim, and (b) allows Nortel Networks to control, and cooperates with
Nortel Networks at Nortel Networks' expense in, the defense and any related
settlement negotiations. If such a claim is made or appears likely to be
made, Nortel Networks agrees to secure the right for Customer to continue
to use the Hardware or Software, or to modify it, or to replace it with
equivalent Hardware or Software. If Nortel Networks determines that none of
these options is reasonably available, Customer agrees to return the
Hardware or Software to Nortel Networks on Nortel Networks' written
request. Nortel Networks will then give Customer a credit equal to the
purchase price paid by Customer for the Hardware or Software. Any such
claims against the Customer or liability for infringement arising from use
of the Hardware or Software following a request for return by Nortel
Networks are the sole responsibility of Customer. This represents
Customer's sole and exclusive remedy regarding any claim of infringement.
11.2 Nortel Networks has no obligation regarding any claim based on any of the
following: (a) anything Customer provides which is incorporated into the
Hardware or Software; (b) compliance by Nortel Networks with the Customer's
specifications, designs or instructions; (c) the amount of revenues or
profits earned or other value obtained by the use of a Product by Customer;
(d) Customer's modification of Hardware or Software (subject to Section
4.4(a) hereof); (e) the combination, operation, or use of Hardware or
Software with other products not provided by Nortel Networks as a system,
or the combination, operation, or use of Hardware or Software with any
product, data, or apparatus that Nortel Networks did not provide; (f) the
Customer's failure to install or have installed changes, revisions or
updates as instructed by Nortel Networks; or (g) infringement by a Third
Party Vendor Item alone, as opposed to its combination with Products Nortel
Networks provides to Customer as a system.
11.3 In case of any infringement caused by any Third Party Vendor Item, Nortel
Networks shall reasonably cooperate with Customer and hereby assigns to
Customer any of its rights to request the proper defense and
indemnification for such claim to such Third Party Vendor.
Page 11
Nortel Networks shall provide Customer with all necessary contact
information and applicable documentation, if available, for those third
party vendors. Furthermore, Nortel Networks shall use its best efforts to
provide reasonable assistance to Customer for Customer to be able to obtain
from the Third Party Vendor the applicable defense and indemnification for
such Third Party Vendor Item infringement, but only to the extent such
assistance does not cause Nortel Networks to incur any out-of-pocket
expenses or material additional costs.
12. Limitation of Liability
12.1 In no event shall Nortel Networks or its agents or suppliers be liable to
Customer for more than the amount of any actual direct damages up to the
greater of U.S. $100,000 (or equivalent in local currency) or the charges
for the Product or Services that are the subject of the claim, regardless
of the cause and whether arising in contract, tort or otherwise. This
limitation will not apply to claims for damages for bodily injury
(including death) and damage to real property and tangible personal
property for which Nortel Networks is legally liable and payments as set
forth in Section 11 - Patents and Copyrights.
12.2 IN NO EVENT SHALL NORTEL NETWORKS OR ITS AGENTS OR SUPPLIERS BE LIABLE FOR
ANY OF THE FOLLOWING: I) DAMAGES BASED ON ANY THIRD PARTY CLAIM, EXCEPT AS
EXPRESSLY PROVIDED FOR HEREIN; II) LOSS OF, OR DAMAGE TO, CUSTOMER'S
RECORDS, FILES OR DATA; OR III) INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS OR LOST SAVINGS), EVEN IF
NORTEL NETWORKS IS INFORMED OF THEIR POSSIBILITY.
13. Concessions
13.1 Customer hereby warrants and represents that it and its affiliates in
Mexico have obtained the Concessions which will permit each of them to
legally operate all or a portion of the Products in Mexico. The Parties
agree that Nortel Networks shall not deliver or install any Products,
perform any Services or accept any Orders hereunder unless Customer or its
affiliates (if applicable) have been granted a Concession in Mexico for the
use of such Products.
14. Changes or Substitution of Products
14.1 At any time, Nortel Networks may implement changes to the Products, modify
the Products' designs and Specifications or substitute the Products with
ones of similar or more recent design. The Parties shall mutually agree on
the Price of such changed or substituted Products. Such a change to or
substitution of the Products provided under this Agreement shall be subject
to the following requirements: (i) shall not adversely affect the physical
or functional interchangeability or the performance Specifications of the
Products, except as otherwise agreed in writing by Customer; (ii) the price
for equivalent performance shall be the same or lower than the price agreed
hereunder, except as otherwise agreed in writing by Customer; (iii) any
change or substitution of the Products shall be functionally equivalent and
compatible with the changed or substituted Product, without the need for
any other adaptations; and (iv) shall under no circumstances either reduce
or decrease Nortel Networks' warranty obligations set forth in this
Agreement.
15. Delayed Shipment of the Products or the Performance of the Services
15.1 If Customer notifies Nortel Networks less than thirty (30) days prior to
the scheduled delivery date of the Products (or if the Products have been
manufactured per the agreed upon schedule) that Customer does not wish to
take delivery thereof at the scheduled time or that a site is not available
to receive such Products, or if Customer fails to take delivery of such
Products upon their arrival at the applicable site, Nortel Networks shall
have the right to place the Products in storage and Customer shall bear all
costs of demurrage, restocking, warehousing, reloading, transporting,
off-loading, and other associated costs incurred by Nortel Networks. All
such costs shall be paid in full within thirty (30) days of Customer's
receipt
Page 12
of Nortel Networks' commercial invoice therefor. Customer may delay
delivery or fail to take delivery of the Products for not more than thirty
(30) days. Once such thirty-day term elapses, Customer shall immediately
pay to Nortel Networks the outstanding balance of the purchase price of the
Products, if any, and the warranty period for the affected Products shall
be deemed to start upon expiration of such 30-day term.
15.2 If Customer notifies Nortel Networks less than thirty (30) days prior to
the scheduled performance date of the Services that Customer does not wish
Nortel Networks to perform such Services at the scheduled time or that the
Site is not available for the performance of such Services, Nortel Networks
shall have the right to delay the performance of the Services and Customer
shall bear all associated and documented out of pocket travel and expense
costs incurred by Nortel Networks. All such costs shall be paid in full
within thirty (30) days of Customer's receipt of Nortel Networks'
commercial invoice therefor.
15.3 Site facilities and physical specifications of equipment (including
shelters, fiber cabling, power, etc.) provided by Customer for use with the
Products sold hereunder must meet Nortel Networks' installation and
environmental Specifications. Any testing required to verify the condition
of Site facilities and any required upgrades will be at Customer's expense.
16. Termination; Survival
16.1 Without prejudice to any rights and remedies provided for hereunder, either
Party hereto may terminate this Agreement, effective immediately, upon
written notice to any other Party, upon the occurrence of any of the
following events or conditions (each, an "Event of Default"):
(i) the other Party applies for or consents to the appointment of, or the
taking of possession by a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property,
(ii) the other Party makes a general assignment for the benefit of its
creditors,
(iii) the other Party commences a voluntary proceeding under the
bankruptcy, insolvency or similar laws relating to relief from
creditors generally,
(iv) the other Party fails to contest in a timely or appropriate manner, or
acquiesces in writing to, any petition filed against it in an
involuntary proceeding under the bankruptcy, insolvency or similar
laws relating to relief from creditors generally, or any application
for the appointment of a receiver, custodian, trustee, or liquidator
of itself or of all or a substantial part of its property or its
liquidation, reorganization, dissolution or winding-up, or
(v) the other Party materially fails to perform any term or condition
under this Agreement or any of its Annexes, which failure continues
for a period of thirty (30) days after written notice has been given
to the breaching Party; provided, however, that if any Party exercises
its termination rights as provided in this Section 16.1 (v) after any
sale of the FWA Business by Nortel Networks, the FWA TAS Agreement,
shall automatically be terminated concurrently therewith; and
provided, further, that if any Party exercises its termination rights
as provided in this Section 16.1 (v) prior to any sale of the FWA
Business by Nortel Networks, the three other Replacement Agreements
shall automatically be terminated concurrently therewith. For the
avoidance of doubt, the Parties agree that any failure by Customer to
comply with the purchase commitment set forth in Section 19 hereof
shall be deemed material.
16.2 In addition, and without prejudice to any rights and remedies provided for
hereunder, Nortel Networks may terminate all four Replacement Agreements,
effective immediately, upon written notice to the other Party, upon the
occurrence of any of the following events or conditions:
Page 13
(i) Customer fails to make payment in accordance with the terms and
conditions hereof, which failure continues for a period of ten (10)
business days (in Mexico) after written notice to Customer,
(ii) within eighteen (18) months from the date hereof, the identity of
Customer's business materially changes by sale of its business,
transfer of control of its capital stock, merger or otherwise, unless
prior written consent therefor has been obtained from Nortel Networks;
or
(iii) the occurrence of an Event of Default under any one of the Senior
Note or the other Replacement Agreements which by the terms of such
agreements would allow Nortel Networks to declare such Senior Note due
and payable or to terminate such Replacement Agreement, as the case
may be.
16.3 The respective obligations of each Party pursuant to Sections 1, 4, 5, 6,
7, 10, 11, 12, 16 and 18 hereof, and any other obligations of each Party
pursuant to this Agreement that by their nature would continue beyond the
termination, cancellation, or expiration hereof, shall survive such
termination, cancellation, or expiration; provided, however, that if
Customer fails to make payment in accordance with the terms and conditions
hereof (subject to the cure period provided in Section 16.2 above), the
Parties expressly agree that the following Sections hereof shall not
survive such termination, cancellation, or expiration: Sections 6 and 7;
and provided, further, that Section 4 hereof shall survive such
termination, cancellation, or expiration only to the extent that Customer
is not in default of the payment of the applicable Software license fees,
if any.
17. Nortel Procedures
17.1 "Nortel Procedures" will consist of documents which describe in detail the
engineering, installation, commissioning, maintenance, troubleshooting and
operation of Product(s). The Nortel Procedures shall be provided in the
English language. Nortel Networks shall provide the Nortel Procedures in
Spanish if so published. Nortel Networks shall ship electronic
documentation containing the applicable Nortel Procedures to Customer with
the initial delivery of a system release to Customer. During the Term,
Nortel Networks shall, at no additional charge to Customer, deliver to
Customer, one set of electronic files with updates, revisions and/or
corrections of such Nortel Procedures as they become available. Customer
may order additional copies of the Nortel Procedures at Nortel Networks'
then applicable prices. Customer may use and reproduce the Nortel
Procedures in paper format for the purposes of engineering, installing,
commissioning, maintaining, troubleshooting and operating the Products,
subject to the limitations regarding Information set forth in Section 10.
Reproduction shall include the copyright or similar proprietary notices.
Customer is responsible for ensuring proper versions of the Nortel
Procedures are printed and distributed.
18. General
18.1 Customer agrees that it will not export Products procured hereunder from
Mexico without Nortel Networks' prior written consent. Nortel Networks
reserves the right to assign any portion of an Order accepted under this
Agreement, in whole or in part, provided that such assignment shall be in
compliance with the provisions of Section 20 below if such assignment falls
under the situation provided for in Section 20 of this Agreement. Customer
represents and warrants that it is buying Products and/or Services for its
own internal use and not for resale.
18.2 Customer agrees to comply with all laws applicable to it, including all
applicable export and import laws and regulations. In the event that any
provision of this Agreement or portions thereof are held to be invalid or
unenforceable, the remainder of this Agreement will remain in full force
and effect.
Page 14
18.3 The terms and conditions of this Agreement, together with the other three
Replacement Agreements and any other agreements contemplated by the Term
Sheet entered into between Customer and Nortel Networks Limited on October
12, 2002, form the complete and exclusive agreement between Customer and
Nortel Networks and replaces any prior oral or written communications and
agreements regarding the subject matter thereof.
18.4 Any changes to this Agreement must be made by mutual agreement in writing.
All Customer's rights and all of Nortel Networks' obligations are valid
only in Mexico.
18.5 The laws of the State of New York, United States of America govern this
Agreement, exclusive of its conflict of laws provisions; and nothing in
this Agreement affects any statutory rights of consumers that cannot be
waived or limited by contract. The United Nations Convention on the
International Sale of Goods shall not apply.
18.6 If, within thirty (30) days from the date of any notice of dispute from a
Party to any other Party, such Parties are unable to resolve the issue,
then either Party may initiate the binding arbitration to resolve such
dispute by written notice to such other Party upon expiration of such
thirty (30) day period. Any dispute between the Parties arising in
connection with this Agreement shall be exclusively resolved by arbitration
pursuant to the Rules of Conciliation and Arbitration of the International
Chamber of Commerce then in force. The arbitration proceedings pursuant to
this Section 18(c) shall take place in the English language in the City of
Miami, State of Florida, before a panel of three (3) arbitrators appointed
in accordance with the aforementioned rules. The decision of the
arbitrators shall be final and binding upon the Parties and their
respective successors and assigns. The decision and award rendered by the
arbitrators may be entered in any court of competent jurisdiction and any
such court may order the enforcement of such award against the Parties and
their respective successors and assigns.
18.7 EACH PARTY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF, OR RELATING TO, THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING ANY ORDER ISSUED AND ACCEPTED
HEREUNDER.
18.8 The following Annexes are part of this Agreement:
Annex A - Initial Order
Annex B - Change Order Procedures and Form of Change Order
Annex C - Description of Products
Annex D - Product Specifications
Annex E - Order Procedure
Annex F - Prices
Annex G - Warranty Services
Annex H - Purchase Commitment
Annex I - Intentionally Left in Blank
Annex J - Delivery Times
In the event of any conflict or inconsistency between the provisions of the
body of this Agreement and its Annexes, the body of this Agreement shall
prevail.
18.9 Notwithstanding anything in this Agreement to the contrary, if the supply
of the Products or the performance of the Services by Nortel Networks, or
any portion thereof, or the performance of any other obligation hereunder
by any party is prevented, delayed, interfered with, or interrupted by
reason of a Force Majeure Event, such prevention, delay, interference, or
interruption shall be deemed not to be a default pursuant to this Agreement
and the time or times for such performance or supply hereunder shall be
extended by the period or periods same is so prevented, delayed, interfered
with, or interrupted. The foregoing shall apply even though any such cause
exists or is foreseeable as of the date hereof. Neither Party shall be
Page 15
required to change its usual business practices or methods or to assume or
incur other than its usual costs or expenses in order to mitigate, avoid,
or eliminate any Force Majeure Event or to reduce the period of any
resulting delay. Each Party shall notify the other Parties of any delay or
failure excused by this Section 18(f) and shall specify the revised
performance date as soon as practicable. Nothing contained in this Section
18(f) shall affect any obligation of Customer to make any payment when due
in accordance with this Agreement.
18.10 All notices pursuant to this Agreement will be in writing and deemed given
when delivered in person, by certified mail or courier service, or by
facsimile. Notices to Customer shall be sent to:
Boulevard Gustavo Diaz Ordaz Km. 3.33 L-1
Colonia Unidad San Pedro
San Pedro Garza Garcia
Nuevo Leon, Mexico
Attention: Director de Negociaciones Estrategicas
with a copy to the Corporate Counsel.
Notices to Nortel Networks shall be sent to:
Nortel Networks (CALA) Inc.
1500 Concord Terrace
Sunrise, Florida 33323-2815,
Attention: Senior Counsel
with a copy to:
Nortel Networks de Mexico, S.A. de C.V.
Insurgentes Sur 1605, Piso 30
Col. San Jose Insurgentes
03900 Mexico, D.F.
Attn.: President
Notices from Customer to Nortel Networks pursuant to Section 5.20,
shall be sent to:
Nortel Networks de Mexico, S.A. de C.V.
Insurgentes Sur 1605, Piso 30
Col. San Jose Insurgentes
03900 Mexico, D.F.
Attn.: Contract Management - Axtel Project
19. Purchase Commitment
19.1 Customer hereby irrevocably agrees to purchase from Nortel Networks the
minimum annual amounts of Products as further described in Annex H hereof.
20. Assignment; Right of First Refusal
20.1 Each Party agrees not to assign or otherwise transfer this Agreement or its
rights under it, or delegate its obligations, without the other Party's
prior written consent, and any attempt to do so is void. Notwithstanding
the foregoing, Nortel Networks may assign or otherwise transfer this
Agreement or its rights under it, or delegate its obligations, to any of
its affiliates. Nortel Networks may also assign or otherwise transfer this
Agreement or its rights under it, or delegate its obligations, to any
purchaser of the FWA Business without the Customer's prior written consent;
provided that:
Page 16
(i) Nortel Networks shall provide to Customer the soliciting or offering
material used in connection with any contemplated sale of the FWA
Business (the "FWA Information") at the same time any such FWA
Information is provided to any third party potential purchaser (the
"Potential Purchasers"), subject to execution by the Parties of a
non-disclosure agreement in a form and substance reasonably
satisfactory to Nortel Networks, but no less restrictive on Customer
than the non-disclosure agreement executed with the Potential
Purchasers; and provided, however, that Nortel Networks may not offer,
solicit interest in or sell the FWA Business to any company which is a
direct competitor of Customer or does not have the necessary resources
(human and/or technical), at Nortel Networks' reasonable judgment, to
manufacture the Products and/or to provide the technical support
required by Customer, including without limitation, Telefonos de
Mexico, S.A. de C.V. or any of its affiliates (the "Restricted
Companies");
(ii) Nortel Networks hereby grants to Customer a right of first refusal
("RFR") with respect to any offer received by Nortel Networks from any
third party which Nortel Networks proposes to accept (including any
revised offers), allowing Customer to purchase the FWA Business on
terms not less favorable than such offer, subject to Customer having
made, within fourteen (14) days after Nortel Networks shall have
delivered written notice to Customer of such offer or revised offer
(the "Vendor's Notice"), a single deposit of US$4,500,000.00 (four
million five hundred thousand United States dollars) (the "Deposit")
into an interest bearing escrow account. Once Nortel Networks has
received the Deposit, Customer shall have the right to perform a due
diligence investigation of the FWA Business, and Nortel Networks shall
be obligated to promptly provide all the information and access that
Customer reasonably requires for the evaluation of the FWA Business;
and
(iii) in the event of any such sale to a purchaser other than Customer,
such new vendor shall assume all of Nortel Networks' obligations under
this Agreement.
20.2 If Customer exercises its RFR, Nortel Networks and Customer shall have
sixty (60) days from payment of the Deposit to negotiate in good faith and
enter into a purchase agreement pursuant to which Nortel Networks will sell
the FWA Business to Customer, unless a longer period of time is stated in
the offer received from the Potential Purchaser, in which case such longer
period shall prevail (the "Offer Period"). If the Parties have entered into
such an agreement by the end of the Offer Period, the Deposit shall be
credited towards the purchase price of the FWA Business. If the Parties
have not entered into such an agreement by the end of the Offer Period,
Customer shall forfeit in favor of Nortel Networks the Deposit, and Nortel
Networks shall have the right to sell the FWA Business to any Potential
Purchaser other than a Restricted Company, subject to the terms and
conditions of Section 20.3 below; provided, however, that if the terms of
the proposed sale are more favorable to such Potential Purchaser than the
best offer (from Nortel Networks' perspective) presented by Customer to
Nortel Networks during the Offer Period, then the RFR shall again apply to
such sale, but Customer shall not be obligated to provide any additional
Deposit.
20.3 If Customer shall decline in any instance to exercise its RFR or the
Parties fail to enter into the purchase agreement as described in Section
20.2, Nortel Networks shall have the right for a period of one year from
the date of such declination or failure, to sell the FWA Business to a
Potential Purchaser (except if such Potential Purchaser is a Restricted
Company) without prior notice to Customer, on terms which are not more
beneficial to such Potential Purchaser than those set forth in Vendor's
Notice. If the foregoing conditions are not met, the RFR shall again apply
to such sale; provided, however, that the 60-day term provided in Section
20.2 above shall be reduced to thirty (30) days and Customer shall not be
obligated to provide any additional Deposit.
Page 17
The Parties hereto have executed this Purchase and License Agreement for FWA
Equipment as of February __, 2003 and it shall become effective on the Closing
Date.
AXTEL, S.A. DE C.V.
By: _______________________________
Name: _____________________________
Title: ______________________________
NORTEL NETWORKS LIMITED
By: _______________________________
Name: _____________________________
Title: Attorney-in-Fact
NORTEL NETWORKS DE MEXICO, S.A. DE C.V.
By: _________________________________
Name: _______________________________
Title: Attorney-in-Fact
Page 18
Exhibit B-2
Purchase and License Agreement for Non - FWA Equipment
--------------------------------------------------------------------------------
This Purchase and License Agreement for Non - FWA Equipment ("Agreement") is
entered by and among Nortel Networks Limited and Nortel Networks de Mexico, S.A.
de C.V. ("NN Mexico" and, collectively, "Nortel Networks"), and Axtel, S.A. de
C.V. ("Customer" and, together with Nortel Networks, the "Parties"), is
effective from the Closing Date and shall continue in effect thereafter during
the Term. References to "days" shall mean calendar days, unless otherwise
specified.
1. Definitions
a) "Acceptance" has the meaning set forth in Section 9.
b) "Acceptance Tests" means Nortel Networks' applicable standard test and
verification procedures for the Products or the Services (or any portion
thereof) and set forth in Annex "I" hereto.
c) "Concession" means any concession, license, permit or the like (including
any additions or amendments thereto) granted and issued by the governmental
authorities of Mexico as of the Closing Date or during the Term in favor of
Customer that are legally required under applicable laws for operation of
the Products sold hereunder and Customer's networks in Mexico.
d) "Force Majeure Event" means the occurrence of fire, casualty, explosion,
lightning, accident, strike, lockout, labor unrest, labor dispute (whether
or not, in respect of the foregoing labor-related matters, the affected
party is in a position to settle the matter), war (declared or undeclared),
armed conflict, civil disturbance, riot, Act of God, delay of common
carrier, the enactment, issuance, or application of any law, local by-law,
regulation, or executive, administrative, or judicial order, acts
(including delay or failure to act) of any governmental authority, or any
other cause or causes (whether of the foregoing, nature or not), or any
other similar or different occurrence, which cause or occurrence is beyond
the reasonable control of the affected party and whether or not foreseeable
by such party.
e) "Furnish-only" means Products which Customer is responsible for installing.
f) "FWA Business" means, among other things, the know-how and licenses that
would allow a third party to manufacture and support base station
equipment, customer premises equipment, remote element manager, system
software and installation toolsets, that combined provide a fixed wireless
access solution operating in the 3.5 GHz spectrum using TDMA technology.
g) "Hardware" means a Nortel Networks machine, equipment or component, but not
including the Software.
h) "In-Service" means the date on which the earlier of the following
conditions occurs: (i) the Products are providing communications services
to Customer, (ii) Customer places the Products into commercial service
notwithstanding that there are service affecting deficiencies, or (iii) all
deficiencies, other than non-service affecting deficiencies, have been
cured.
i) "Local Nortel Networks Affiliate" means any person or entity established
prior to or during the Term in Mexico, more than fifty percent (50%) of
whose voting shares or outstanding capital stock is owned or controlled
(directly or indirectly) by Nortel Networks or an affiliate of Nortel
Networks.
Hj) "Nortel Networks Finance Agreement" means the Restructured Amended and
Restated Finance Agreement, dated as of __________________, entered
into by and between Nortel Networks Limited as Lender and Axtel, S.A.
de C.V. as Borrower.
k) "Products" means any Hardware, Software or Third Party Vendor Items
provided under this Agreement, which are further described in Annex "D"
hereto.
Page 1
l) "Replacement Agreements" means, collectively: (i) this Agreement, (ii) the
Technical Assistance Services Agreement for Non-FWA Equipment, dated as of
the date hereof and entered into between Customer and NN Mexico (the
"Non-FWA TAS Agreement"), (iii) the Purchase and License Agreement for FWA
Equipment, dated as of the date hereof and entered into between the Parties
hereto, and (iv) the Technical Assistance Services Agreement for FWA
Equipment, dated as of the date hereof and entered into between Customer
and NN Mexico.
m) "Restructuring Agreement" means the Restructuring Agreement, dated as of
________________________, entered into among the Parties hereto.
n) "Senior Note" means that certain promissory note dated __________________,
made by Customer and payable to Nortel Networks as per the Nortel Networks
Finance Agreement.
o) "Services" means the activities which may be undertaken by Nortel Networks
pursuant to an Order, including but not limited to, engineering,
maintenance, installation, implementation, design, consulting, business
planning, network planning and analysis, which are further described in
Annex "C" hereto.
p) "Site" means a location designated by Customer at which the Products are to
be installed and the Services are to be performed.
q) "Software" means computer programs in object code form or firmware which is
owned or licensed by Nortel Networks, its parent or one of its subsidiaries
or affiliates, and is copyrighted and licensed, not sold. Software consists
of machine-readable instructions, its components, data, audio-visual
content (such as images, text, recordings or pictures) and related licensed
materials including all whole or partial copies.
r) "Specifications" means, with respect to Products and/or Services, the
technical specifications set forth in Annex "D" hereto, which describe or
explain the standard functional capabilities and/or requirements for such
Products and/or Services.
s) "Taxes" means all federal, state, provincial, local, foreign, gross income,
gross receipts, sales, use, value added, stamp, levies, customs duties,
franchise, withholding, excise, real or personal property taxes,
registration charges and all other similar taxes.
t) "Term" means five (5) years, commencing on the Closing Date (as defined in
the Restructuring Agreement), provided that the Term may be extended for
subsequent one (1) year periods, subject to the Parties agreeing on
mutually acceptable commercially reasonable terms and conditions. The
Closing Date may be changed by mutual agreement of the Parties.
u) "Third Party Vendor Items" includes "Third Party Hardware" and "Third Party
Software" and means any non-Nortel Networks hardware and/or software
supplied to Customer under this Agreement.
2. Orders; Initial Order; Change Orders and Delivery Times
2.1 Customer may acquire Products or Services by: (i) issuing a written
purchase order, signed by an authorized representative, or (ii) if Customer
is enrolled in any then current Nortel Networks electronic commerce
program, by submitting electronic orders (collectively, "Orders").
2.2 All Orders shall reference this Agreement and shall comply with the Order
Procedure attached as Annex E hereto. Orders are totally binding and
non-cancelable.
2.3 All Orders will be governed by and cannot alter the terms and conditions of
this Agreement. In order to be valid, all Orders must be accepted by Nortel
Networks through a written or
Page 2
electronic communication. Nortel Networks shall accept such Order within
the next ten (10) business days after delivery thereof, if such Order (i)
is in compliance with this Agreement (prices and descriptions) and no
additional terms and conditions have been imposed, (ii) Nortel Networks has
received the applicable payment, in accordance with section 5 hereof, and
(iii) Customer has provided the applicable letter of credit or other form
of payment guarantee in accordance with Section 5 hereof. For the avoidance
of doubt, the Parties agree that Nortel Networks shall not be obligated to
start performing under any Order until Customer complies with the
provisions of this Section 2.3. In the event Nortel Networks does not
accept an Order in accordance with this Section 2.3, it shall promptly
return to Customer any payments made and/or letters of credit provided by
Customer under this Section 2.3.
2.4 The implementation schedule, responsibility matrix and any other items
which may be necessary for the performance of Nortel Networks' obligations
hereunder shall be mutually agreed upon between the Parties and included as
exhibits to the Order. Such exhibits shall be deemed incorporated into this
Agreement by this reference.
2.5 Intentionally Left in Blank.
2.6 The prices set forth in Annex F and reflected in each Order are based on
anticipated delivery and performance schedules and specifications
incorporated in such Order.
2.7 Any changes to this Agreement or an Order initiated by Customer or Nortel
Networks after the Closing Date resulting in adjustments to process, job
schedule, contract price or other requirements thereof may be cause for
adjustment by Nortel Networks to the prices and to the relevant delivery
and performance schedules set forth therein. Any such adjustment shall be
detailed in a change order, a form of which is attached hereto as Annex B
("Change Order"). If the Change Order affects any Products for which Nortel
Networks has commenced manufacturing or has shipped or any Services for
which Nortel Networks has commenced performance, the adjustment of the
price shall include reasonable, documented charges incurred by Nortel
Networks related thereto. No such changes shall be performed until a Change
Order has been executed by authorized representatives of the Parties. A
Change Order may only be used to increase the amount of Products and/or
Services ordered and in no event may the amount of Products and/or Services
in an Order be cancelled or decreased, whether through a Change Order or
otherwise.
2.8 Nortel Networks shall deliver the Products in accordance with the timing
set forth in Annex "J" of this Agreement. The delivery times shall commence
after Order acceptance as specified in Section 2.3 of this Agreement.
Nortel Networks shall deliver the Products Ex-Works, Incoterms 2000, at the
applicable Nortel Networks' factory.
3. Electronic Commerce Programs
3.1 By enrolling in any Nortel Networks' electronic commerce program, Customer
agrees to comply with the terms of such program. Customer agrees that all
electronic Orders issued are equivalent to a written Order, are governed by
the terms and conditions of this Agreement and that in the event of any
conflict between this Agreement and the information contained in Customer's
or Nortel Networks' electronic commerce website, this Agreement governs.
Customer is responsible for the use and protection of all electronic
commerce passcodes provided by Nortel Networks and agrees that all Orders
submitted using such passcodes are valid and binding Orders authorized by
Customer. Nortel Networks shall have no liability to Customer due to
Customer's failure to access Customer's or Nortel Networks' electronic
commerce website or errors or failures relating to its operation.
4. Licensed Use of Software
Page 3
4.1 Nortel Networks grants Customer a nonexclusive and perpetual (subject to
Nortel Networks termination rights set forth in section 4.5 below) license
to use a copy of the Software with the Products to the extent of the
activation or authorized usage level.
4.2 To the extent Software is furnished for use with designated Products or
Customer-furnished Equipment ("CFE"), Customer is granted a nonexclusive
and perpetual (subject to Nortel Networks termination rights set forth in
section 4.5 below) license to use Software only on such Products or CFE, as
applicable.
4.3 Software contains trade secrets and Customer agrees to treat Software as
Information (as defined in Section 10). Customer will ensure that anyone
who uses the Software does so only in compliance with the terms of this
Agreement.
4.4 Customer shall not: (a) use, copy, modify, transfer or distribute the
Software except as expressly authorized, (b) reverse assemble, reverse
compile, reverse engineer or otherwise translate the Software; (c) create
derivative works or modifications unless expressly authorized; or (d)
sublicense, rent or lease the Software. Licensors of intellectual property
to Nortel Networks are beneficiaries of this provision.
4.5 Upon breach of the Software license by Customer in accordance with the term
of this Agreement or in the event the designated Product or CFE is no
longer in use, this license terminates and Customer will promptly return
the Software to Nortel Networks or certify its destruction.
4.6 Nortel Networks may audit by remote polling or other reasonable means to
determine Customer's Software activation or usage levels.
4.7 With respect to Third Party Software, Customer agrees to abide by the terms
provided by Nortel Networks with respect to any such software. Customer
further agrees that the terms contained in any Nortel Networks or third
party "shrink wrap" or "click" licenses shall govern the use of such
software.
4.8 If Nortel Networks and Customer agree that delivery of Software is to be
made electronically via File Transfer Protocol, then delivery of such
Software by Nortel Networks shall be deemed to have taken place at such
time as the Software is loaded onto a network server, as designated by
Nortel Networks, and Customer has been provided with appropriate
instructions and passwords to enable Customer to begin use of such
Software. Notwithstanding the foregoing, the Parties shall comply with all
regulations applicable to importation of Software pursuant to applicable
law.
5. Charges, Payment and Taxes
5.1 The contract price for the Products (including software) and Services is
set forth in Annex F hereto. Unless otherwise agreed by the Parties in an
Order, all prices are in U.S. dollars, exclusive of Taxes. All prices are
applicable solely in Mexico.
5.2 In accordance with the terms of Annex "E", within the next five (5)
business days after the delivery of the Order in accordance with the terms
set forth in Section 5.3 below, Nortel Networks shall deliver to Customer
an invoice for one hundred percent (100%) of the purchase price of such
Order.
5.3 All Orders for Products shall be accompanied by: (i) payment of fifteen
percent (15%) of the purchase price thereof upon delivery of the Order
through a wire transfer of immediately available funds or by a letter of
credit or by any other mutually agreed means; and (ii) within the next five
(5) days after delivery of the respective invoice as per Section 5.2 above,
a letter
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of credit or other form of payment guarantee consistent with Section 5.17
hereof for the remaining eighty five percent (85%) of the purchase price of
the relevant Order.
5.4 Payment of this eighty five percent (85%) shall be made by Customer five
(5) business days after Delivery Date (as defined in Annex E of this
Agreement) of the Products; provided that Customer may notify Nortel
Networks in writing within such 5-business day period, if some or all of
the Products delivered are not in compliance with the terms of the Order
(the "Non Compliant Products"), in which case Nortel Networks shall take,
within thirty days of the date of Customer's notice, corrective action to
resolve such Non-Compliant Products. Customer shall not be obligated to
pay, and Nortel Networks shall not be entitled to draw on the letter of
credit or other form of payment guarantee, the purchase price of the
Non-Compliant Products until Nortel Networks corrects such non-compliance,
provided, however, that prior to such resolution Nortel Networks shall
issue a revised invoice relating to the portion of Products received by
Customer that is in compliance with the terms of the Order. Partial
shipments shall be allowed under this Agreement, subject to the terms set
forth in Annex "J" of this Agreement. For the avoidance of doubt, the
Parties agree that the purchase price of the compliant Products shall be
paid by Customer as provided in this Section 5.4. If during the thirty-day
period mentioned herein, Nortel Networks has not corrected the Non
Compliant Products, Nortel Networks shall immediately reimburse Customer,
at its request, all amounts paid for such Non Compliant Products.
5.5 All Orders for Services shall be accompanied by a letter of credit or other
form of payment guarantee consistent with Section 5.17 hereof for one
hundred percent (100%) of the price of such Services. Nortel Networks shall
invoice Customer one hundred percent (100%) of the price of Services upon
completion, unless the Service continues beyond thirty days, in which case
Nortel Networks shall invoice Customer at the end of each month for the
Services performed in that month.
5.6 With respect to Services, amounts are due upon receipt of invoice and shall
be paid by Customer within thirty (30) days of the invoice date.
5.7 Customer shall pay interest on any late payments at the rate of eighteen
percent (18%) per annum (11/2% per month).
5.8 Charges for Software may be based on extent of use authorized as specified
in this Agreement. Customer agrees to pay the charges applicable for any
activation or usage beyond the authorized level.
5.9 Customer is liable and responsible for any Taxes relating to the Products
or Services furnished by Nortel Networks or its subcontractors pursuant to
this Agreement (whether incurred directly or indirectly by Nortel Networks)
and shall, at Nortel Networks' direction, promptly pay to Nortel Networks
or pay directly to the applicable government or taxing authority, if
requested by Nortel Networks, all such Taxes; provided, however, that in no
event shall Customer be liable for Taxes computed upon the income or gross
revenues of Nortel Networks or its subcontractors.
5.10 Customer shall be responsible for payment of personal property taxes for
Products and materials from the date of shipment by Nortel Networks.
Customer's obligations pursuant to this Section shall survive any
termination of this Agreement.
5.11 Customer shall, within thirty (30) days of the tax payment on behalf of
Nortel Networks, furnish to Nortel Networks all original tax receipts or
certified copies in Nortel Networks' name showing payment of the Tax and
such other documentation relating to the tax payment which Nortel Networks
may reasonably request.
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5.12 If Customer shall claim to be exempt from any Taxes, Customer shall furnish
to Nortel Networks a tax exemption certificate from the relevant taxing
authority in the form required by law or otherwise reasonably acceptable to
Nortel Networks. If Customer shall claim any such tax exemption and
provides Nortel Networks the required tax exemption certificate and Nortel
Networks does not collect the Taxes in reliance thereupon, Customer shall
hold Nortel Networks harmless from and against any and all assessments for
such Taxes levied on Nortel Networks, including all interest, penalties and
late charges upon any such Taxes and the cost of professional consulting
fees incurred by Nortel Networks to settle the applicable tax matter with
the relevant tax authorities.
5.13 If withholding of any Tax is required in respect of any payment by Customer
to Nortel Networks hereunder, Customer shall: (i) withhold the appropriate
amount from such payment, (ii) pay such amount to the relevant authorities
in accordance with applicable law, and (iii) pay Nortel Networks an
additional amount such that the net amount received by Nortel Networks is
the amount Nortel Networks would have received in the absence of such
withholding.
5.14 Customer shall pay all applicable customs fees, import duties, and similar
charges directly to the appropriate governmental authorities. Each party
agrees to ensure that it is in good standing and is appropriately
registered, including without limitation, with respect to Taxes, in any
country, state or other jurisdiction where legally required.
5.15 Nortel Networks reserves the right to import services or subcontractors
when and where necessary to complete services related to this Agreement. To
the extent the Local Nortel Networks Affiliate must import services or
subcontractors in support of this Agreement, Nortel Networks reserves the
right to have the Local Nortel Networks Affiliate invoice Customer an
additional amount such that the cost of the withholding taxes for such
imported Services are borne by Customer.
5.16 Customer consents without qualification to the sale and/or assignment of
receivables, in whole or in part, including all or any part of any
associated rights, remedies, and obligations, by Nortel Networks subject to
a 30-day prior written notice, and authorizes the disclosure of this
Agreement as necessary to facilitate such sale. Any tax impact to Customer
resulting from such sale and/or assignment shall be borne by Nortel
Networks.
5.17 The payments referred to in Sections 5.4 and 5.5 above shall be secured by:
(i) an irrevocable and unconditional letter of credit in favor of Nortel
Networks, confirmed by a United States bank acceptable to Nortel Networks,
or (ii) another form of payment guarantee acceptable to Nortel Networks in
its sole discretion.
5.18 If Nortel Networks is prevented from making a shipment of Products,
installing such Products or performing the Services due to any Force
Majeure Event or for any other reason attributable, in whole or in part, to
Customer, the Customer shall accordingly arrange an extension of such
letter of credit and reimburse Nortel Networks for any additional expenses
arising out of any such delay; provided, however, that this reimbursement
obligation shall apply only to the extent that the delay was attributable
to Customer; and provided, further, that Customer shall promptly reimburse
Nortel Networks for any such additional expenses, and Nortel Networks shall
subsequently return to Customer any monies which Customer may have paid in
excess once the Parties have reached an agreement on the actual extent of
Customer's reimbursement obligation.
5.19 Nortel Networks reserves the right to reject an Order at Nortel Networks'
sole discretion, or to withhold shipment of the Products or performance of
the Services, or any portion thereof, if: (i) Customer is in default of its
payment obligations hereunder, (ii) Customer is in breach of its
obligations under this Agreement, or (iii) Customer falls under any of the
situations described in Sections 16.1 (i) through (iv) hereof, and all
relevant dates for completion shall be adjusted accordingly.
Page 6
5.20 Customer hereby irrevocably waives, to the fullest extent permitted by law,
the right to dispute any invoice submitted by Nortel Networks hereunder, if
such invoice is not disputed within twenty one (21) days from invoice
receipt. Such dispute must be resolved within ninety (90) days from the
invoice date. Payment of any disputed amounts is due and payable upon
resolution. All other amounts remain due as per this Section 5.
5.21 Customer has the right to engage a third party financial institution to
provide financing for the Products and/or Services supplied by Nortel
Networks under this Agreement (provided that Customer is in compliance with
the financial covenants set forth in the Nortel Networks Finance
Agreement), in which case such third party financial institution will make
the payments as provided under this Agreement; provided, however, that
Customer shall continue to be obligated to comply with all its obligations
hereunder.
6. Warranty
6.1 Nortel Networks warrants that the Hardware: (i) is free from defects in
materials and workmanship, and (ii) substantially conforms to its
Specifications. If Hardware does not function as warranted during the
warranty period, Nortel Networks will determine to either: (i) make it do
so, or (ii) replace it with substantially equivalent Hardware.
6.2 Nortel Networks warrants that when Software is used in the specified
operating environment it will substantially conform to its Specifications.
If Software does not function as warranted during the warranty period,
Nortel Networks will provide a suitable fix or workaround or will replace
the Software; provided Software is within one software release level of the
then current software.
6.3 Nortel Networks warrants that Services will be performed in a professional
and workmanlike manner. If Services are not performed as warranted and
Nortel Networks is notified in writing by Customer within sixty (60) days
of the date of the non-conforming Services, Nortel Networks will re-perform
the non-conforming Services.
6.4 The warranty period for Hardware and Software shall be the warranty period
identified in the Warranty Matrix attached in the Annex "G" in effect at
the time of Customer's Order, provided that Nortel Networks shall not be
allowed to reduce the warranty periods set forth in the Warranty Matrix
attached hereto in the Annex "G", except in the cases that such reduction
applies generally to its customers worldwide. In the event Nortel Networks
determines that repair or replacement as set forth in this Section 6 cannot
be made using commercially reasonable efforts (which determination shall be
made within thirty (30) days after Nortel Networks receives written notice
from Customer) Nortel Networks will give Customer a credit equal to the
purchase price paid by Customer for the Hardware, provided that Customer
has returned such Hardware to Nortel Networks.
6.5 No warranty is provided for: (i) supply items normally consumed during
Product operation; (ii) failures caused by non-Nortel Networks products;
(iii) failures caused by a Product's inability to operate in conjunction
with other Customer hardware or software different from the Third Party
Vendor Items provided by Nortel Networks under this Agreement; or (iv)
performance failures resulting from improper installation and maintenance
or Customer's use of unauthorized parts or components. Warranty will be
voided by misuse, accident, damage, alteration or modification, failure to
maintain proper physical or operating environment, use of unauthorized
parts or components or improper Customer maintenance.
6.6 Nortel Networks provides Third Party Vendor Items on an "AS IS" BASIS
WITHOUT WARRANTIES OF ANY KIND, unless Nortel Networks specifies otherwise.
However, such Third Party Vendor Items may carry their own warranties and
Nortel Networks shall pass through to Customer any such warranties to the
extent authorized. Nortel Networks shall
Page 7
provide to Customer the necessary contact information and applicable
documentation, if available, for those third party vendors. Furthermore,
Nortel Networks shall provide reasonable assistance to Customer so that
Customer may avail itself of any such warranties, but only to the extent
such assistance does not cause Nortel Networks to incur any out-of-pocket
expenses or material additional costs.
6.7 Nortel Networks warrants that all Nortel Networks Products supplied
hereunder shall have been tested at the factory to ensure that they conform
to their Specifications and that they shall have successfully passed those
tests.
6.8 THESE WARRANTIES AND LIMITATIONS ARE CUSTOMER'S EXCLUSIVE WARRANTIES AND
SOLE REMEDIES, AND REPLACE ALL OTHER WARRANTIES OR CONDITIONS, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR
CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
7. Services
7.1 Warranty Services: During the warranty period, Nortel Networks provides
warranty Services without charge for Nortel Networks Hardware supplied
under this Agreement to correct Hardware defects or to bring it up to
conformance with the Specifications set forth in this Agreement. Warranty
Services to be provided by Nortel Networks are further described in Annex
"G" hereof.
7.2 Customer shall notify Nortel Networks prior to returning any Hardware and
must reference a return material authorization number issued by Nortel
Networks on documentation accompanying such returned Hardware. When
Customer is required to return Hardware to Nortel Networks for warranty
service, Customer agrees to ship it prepaid and suitably packaged to a
location Nortel Networks designates. Nortel Networks will return the
Hardware to Customer at Nortel Networks' expense. Nortel Networks is
responsible for loss of, or damage to, Hardware while it is: (i) in Nortel
Networks' possession, or (ii) in transit back to Customer. Any exchanged
Hardware becomes Nortel Networks' property and, subject to Section 8 -
Title and Risk of Loss, its replacement becomes the Customer's property.
The replacement Hardware may not be new but will be in working order and
equivalent to the item exchanged. The warranty period for the repaired or
exchanged Hardware shall be the greater of ninety (90) days from the date
of delivery of the Hardware back to Customer, or the remaining Hardware
warranty period. Customer agrees to ensure that exchanged Hardware is free
of any legal obligations or restrictions that prevent its exchange and
represents that all returned items are genuine and unaltered. Relocation of
Products under warranty Services may result in adjustments to the price and
response times.
7.3 Where applicable, before Nortel Networks provides warranty services,
Customer agrees to: (i) follow the problem determination, problem analysis,
and warranty services request procedures that Nortel Networks provides;
(ii) secure all program and data contained in Hardware; and (iii) inform
Nortel Networks of changes in the Hardware's location.
7.4 Post-warranty and other Services to supplement the warranty Services,
including advanced shipment of replacement parts, may be available at
prices and policies to be negotiated in good faith and agreed between the
Parties. The warranty service terms and exclusions in Section 6 above shall
apply to post- and supplemental warranty Services.
7.5 Services in General: Customer agrees to reasonably cooperate with Nortel
Networks in the performance by Nortel Networks of the Services, including,
without limitation, providing Nortel Networks with sufficient and timely
access free of charge to facilities, data, information and personnel of
Customer in accordance with the then-current Customer policies, and a
suitable physical environment meeting Nortel Networks' specified
requirements to permit the timely delivery and installation of Products
and/or performance of Services, including the recovery by
Page 8
Nortel Networks of any tools, diagnostic or test equipment, documentation
or other items used by Nortel Networks in the performance of the Services.
7.6 In addition, Customer shall be responsible for the accuracy and
completeness of all data and information that it provides or causes to be
provided to Nortel Networks. In the event that there are any delays by
Customer in fulfilling its responsibilities as stated above, there is a
disagreement between the parties as to the cooperation required from
Customer, or there are errors or inaccuracies in the information provided,
Nortel Networks shall be entitled to appropriate schedule and pricing
adjustments, including storage fees. It is understood and agreed that the
Services provided by Nortel Networks may include the advice and
recommendations of Nortel Networks, but all decisions in connection with
the implementation of such advice and recommendations shall be the sole
responsibility of, and made by, Customer, unless such advice and
recommendations are part of consulting services purchased by Customer.
7.7 Service Personnel: Nortel Networks and Customer are each responsible for
the supervision, direction, compensation and control of their own employees
and subcontractors. Nortel Networks may subcontract any portion or all of
the Services to subcontractors selected by Nortel Networks. Neither Party
shall knowingly solicit to hire employees of the other Party with whom it
had contact as a result of the performance of the Services for a period
ending twelve (12) months after completion of the Services. Neither Party
shall be precluded from conducting generalized searches for employees (and
hiring those employees who respond to generalized searches) either through
the use of search firms or advertisements in the media, provided that
searches are not specifically targeted to employees providing Services.
7.8 Intellectual Property Rights: Nortel Networks, on behalf of itself and its
subcontractors, reserves all proprietary rights in and to: (i) all
methodologies, designs, engineering details, and other data pertaining to
the Services and designs, documentation and other work product prepared by
Nortel Networks and delivered to Customer, (ii) all original works,
computer programs and updates developed in the course of providing the
Services (except Customer's developed programs) or as otherwise agreed in
writing by the Parties, (iii) discoveries, inventions, patents, know-how
and techniques arising out of the Services, and (iv) any and all products
(including software and equipment) developed as a result of the Services.
The performance by Nortel Networks of Services shall not be deemed work for
hire. Nortel Networks grants to Customer a perpetual, non-exclusive,
world-wide, paid up license to use, copy and modify the designs,
documentation and other work product prepared by Nortel Networks and
delivered to Customer in the performance of Services solely for Customer's
internal business purposes. It is understood between the Parties that
Nortel Networks will employ its know-how, techniques, concepts, experience
and expertise, as well as all other intellectual property, including that
to which it reserves its rights hereunder, to perform services for others
which are the same as or similar to the Services.
8. Title and Risk of Loss
8.1 Title and risk of loss for ordered Hardware and Third Party Hardware shall
pass from Nortel Networks to Customer upon its delivery to Customer.
9. Installation and Commissioning
9.1 Nortel Networks shall provide Customer with a written general chronological
schedule of the Acceptance Tests to be carried out with respect to the
Products and the Services. Nortel Networks will notify Customer at least
fifteen (15) days in advance of the date on which each portion of the
Products and the Services will be ready for the commencement of the
Acceptance Tests to be performed with respect thereto. Customer and its
representatives shall have the option to witness and have unrestricted
access to the Acceptance Tests. In the case that Customer chooses not to
witness the Acceptance Tests, Nortel Networks will perform said
Page 9
tests in Customer's absence. Customer's failure to appear at the appointed
time and place of performance of the Acceptance Tests pursuant to this
Section 9.1 shall not preclude Nortel Networks from performing such
Acceptance Tests and issuing the applicable Acceptance Certificate (as
defined below), upon successful completion thereof. Customer may request
additional tests, or a repetition of the tests, at its sole cost and
expense. Customer is responsible for: (i) the results obtained from the use
of Products and Services; (ii) integration and interconnection with and
configuration of Customer's hardware and/or third party hardware and/or
systems; and (iii) installation of Furnish-only Products. All configuration
assistance provided by Nortel Networks is without warranty or guarantee of
any kind.
9.2 For purposes of this Agreement, a "Punch List" shall mean each list
prepared in conjunction with one or more Acceptance Tests for the Products
and included in the related acceptance certificate ("Acceptance
Certificate"), which sets forth one or more non service-affecting items
which have not been fully completed or performed by Nortel Networks as of
the date of completion of the related Acceptance Test or, subject to
Customer's reasonable approval in each case, service-affecting items that
may require detailed analysis as to the appropriate remedy.
9.3 Upon successful completion of the Acceptance Tests, Nortel Networks shall
submit to Customer an acceptance report ("Acceptance Report") comprising:
(i) a certification by Nortel Networks that such Acceptance Tests have been
successfully completed,
(ii) a Punch List with respect to such Acceptance Test, and
(iii) copies of all Acceptance Test results as recorded during the
execution of such Acceptance Test.
Customer will acknowledge such certification by delivering to Nortel
Networks the appropriate Acceptance Certificate with respect to such
Products and/or Services within ten (10) business days after receipt of the
respective Acceptance Report.
9.4 Acceptance by Customer shall occur upon the earlier of either: (i) the date
on which the Products is placed In-Service; (ii) one hundred and twenty
(120) days from shipment of the Products; or (iii) if Customer does not
issue the Acceptance Certificate, on the eleventh (11th ) day after
Customer's receipt of the respective Acceptance Report.
9.5 Customer shall not unreasonably withhold acceptance of any Product or
Service and acceptance shall not be withheld or postponed due to: (i)
deficiencies or nonconformities of a Product or Service resulting from
causes not attributable to Nortel Networks such as, but not limited to, a
material change or inaccuracy of information provided by Customer,
inadequacy or deficiencies of any materials, facilities, or services
provided directly or indirectly by Customer, or other conditions external
to the Products or Services that are beyond the limits specified in the
Nortel Networks Specifications; or (ii) deficiencies or shortages with
respect to the Products or Services that are attributable to Nortel
Networks but are of a nature that do not prevent operation of the Products
in a live, commercial environment ("Punch List Items") provided that Nortel
Networks, at its expense, agrees to correct such Punch List Items within
(30) days (or other mutually agreed upon time period) after Customer has
accepted such Products or Services.
10. Confidential Information
10.1 Confidential information ("Information") means: (i) Software and Third
Party Software; and (ii) all business, technical, marketing and financial
information and data that is clearly marked with a restrictive legend of
the disclosing party ("Discloser").
Page 10
10.2 The party receiving Information ("Recipient") will use the same care and
discretion to avoid disclosure, publication or dissemination of Information
as it uses with its own similar information that it does not wish to
disclose, publish or disseminate. The Recipient may disclose Information
only to: (i) its employees and employees of its parent, subsidiary
affiliated companies or subcontractors who have a need to know for purposes
of carrying out this Agreement; and (ii) any other party with the
Discloser's prior written consent. Before disclosure to any of the above
parties, the Recipient will have a written agreement with such party
sufficient to require that party to treat Information in accordance with
this Agreement.
10.3 The Recipient may disclose Information to the extent required by law.
However, the Recipient must give the Discloser prompt notice and make a
reasonable effort to obtain a protective order.
10.4 No obligation of confidentiality applies to any Information that the
Recipient: (i) already possesses without obligation of confidentiality;
(ii) develops independently; or (iii) rightfully receives without
obligations of confidentiality from a third party. No obligation of
confidentiality applies to any Information that is, or becomes, publicly
available without breach of this Agreement.
10.5 Each party's obligations hereunder shall survive for a period of five (5)
years after receipt of Information hereunder from the Discloser, except as
otherwise mutually agreed upon by the parties.
10.6 The Discloser makes no representations or warranties of any nature
whatsoever with respect to any Information furnished to the recipient,
including, without limitation, any warranties of merchantability or fitness
for a particular purpose or against infringement, EXCEPT FOR THOSE SET
FORTH IN SECTION 6 HEREOF.
10.7 The release of any advertising or other publicity relating to this
Agreement requires the prior approval of both Parties.
11. Patents and Copyrights
11.1 Nortel Networks shall indemnify and hold harmless Customer, its officers,
directors, representatives, agents, employees, contractors, subcontractors,
subsidiaries and affiliates against any actual direct loss, damage,
liability, cost, expense, action or claim, including reasonable attorneys'
fees, litigation costs and expenses and amounts paid in settlement, subject
to the limitations set forth in the following paragraphs, arising out of or
in connection with any infringement or alleged infringement of patents,
copyrights, trademarks, trade secrets, or any other intellectual property
right of a third party. Therefore, if a third party claims that Nortel
Networks Hardware or Software provided to Customer under this Agreement
infringes such third party's patent or copyright, Nortel Networks will
defend Customer against that claim at Nortel Networks' expense and pay all
costs and damages that a court finally awards or are agreed in settlement,
provided that Customer: (a) promptly notifies Nortel Networks in writing of
the claim, and (b) allows Nortel Networks to control, and cooperates with
Nortel Networks at Nortel Networks' expense in, the defense and any related
settlement negotiations. If such a claim is made or appears likely to be
made, Nortel Networks agrees to secure the right for Customer to continue
to use the Hardware or Software, or to modify it, or to replace it with
equivalent Hardware or Software. If Nortel Networks determines that none of
these options is reasonably available, Customer agrees to return the
Hardware or Software to Nortel Networks on Nortel Networks' written
request. Nortel Networks will then give Customer a credit equal to the
purchase price paid by Customer for the Hardware or Software. Any such
claims against the Customer or liability for infringement arising from use
of the Hardware or Software following a request for return by Nortel
Networks are the sole responsibility of Customer. This represents
Customer's sole and exclusive remedy regarding any claim of infringement.
Page 11
11.2 Nortel Networks has no obligation regarding any claim based on any of the
following: (a) anything Customer provides which is incorporated into the
Hardware or Software; (b) compliance by Nortel Networks with the Customer's
specifications, designs or instructions; (c) the amount of revenues or
profits earned or other value obtained by the use of a Product by Customer;
(d) Customer's modification of Hardware or Software; (e) the combination,
operation, or use of Hardware or Software with other products not provided
by Nortel Networks as a system, or the combination, operation, or use of
Hardware or Software with any product, data, or apparatus that Nortel
Networks did not provide; (f) the Customer's failure to install or have
installed changes, revisions or updates as instructed by Nortel Networks;
or (g) infringement by a Third Party Vendor Item alone, as opposed to its
combination with Products Nortel Networks provides to Customer as a system.
11.3 In case of any infringement caused by any Third Party Vendor Item, Nortel
Networks shall reasonably cooperate with Customer and hereby assigns to
Customer any of its rights to request the proper defense and
indemnification for such claim to such Third Party Vendor. Nortel Networks
shall provide Customer with all necessary contact information and
applicable documentation, if available, for those third party vendors.
Furthermore, Nortel Networks shall use its best efforts to provide
reasonable assistance to Customer for Customer to be able to obtain from
the Third Party Vendor the applicable defense and indemnification for such
Third Party Vendor Item infringement, but only to the extent such
assistance does not cause Nortel Networks to incur any out-of-pocket
expenses or material additional costs.
12. Limitation of Liability
12.1 In no event shall Nortel Networks or its agents or suppliers be liable to
Customer for more than the amount of any actual direct damages up to the
greater of U.S. $100,000 (or equivalent in local currency) or the charges
for the Product or Services that are the subject of the claim, regardless
of the cause and whether arising in contract, tort or otherwise. This
limitation will not apply to claims for damages for bodily injury
(including death) and damage to real property and tangible personal
property for which Nortel Networks is legally liable and payments as set
forth in Section 11 - Patents and Copyrights.
12.2 IN NO EVENT SHALL NORTEL NETWORKS OR ITS AGENTS OR SUPPLIERS BE LIABLE FOR
ANY OF THE FOLLOWING: I) DAMAGES BASED ON ANY THIRD PARTY CLAIM, EXCEPT AS
EXPRESSLY PROVIDED FOR HEREIN; II) LOSS OF, OR DAMAGE TO, CUSTOMER'S
RECORDS, FILES OR DATA; OR III) INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS OR LOST SAVINGS), EVEN IF
NORTEL NETWORKS IS INFORMED OF THEIR POSSIBILITY.
13. Concessions
13.1 Customer hereby warrants and represents that it and its affiliates in
Mexico have obtained the Concessions which will permit each of them to
legally operate all or a portion of the Products in Mexico. The Parties
agree that Nortel Networks shall not deliver or install any Products,
perform any Services or accept any Orders hereunder unless Customer or its
affiliates (if applicable) have been granted a Concession in Mexico for the
use of such Products.
14. Changes or Substitution of Products
14.1 At any time, Nortel Networks may implement changes to the Products, modify
the Products' designs and Specifications or substitute the Products with
ones of similar or more recent design. The Parties shall mutually agree on
the Price of such changed or substituted Products. Such a change to or
substitution of the Products provided under this Agreement shall be subject
to the following requirements: (i) shall not adversely affect the physical
or functional interchangeability or the performance Specifications of the
Products, except as otherwise
Page 12
agreed in writing by Customer; (ii) the price for equivalent performance
shall be the same or lower than the price agreed hereunder, except as
otherwise agreed in writing by Customer; (iii) any change or substitution
of the Products shall be functionally equivalent and compatible with the
changed or substituted Product, without the need for any other adaptations;
and (iv) shall under no circumstances either reduce or decrease Nortel
Networks' warranty obligations set forth in this Agreement.
14.2 Nortel Networks shall give Customer three (3) months prior written notice
in the event that Nortel Networks discontinues the manufacturing of any
Products sold hereunder. For such discontinued Products, Nortel Networks
undertakes to continue providing spare parts, technical support, including
repair of any Products (or part thereof) which is sent to Nortel Networks
for that purpose, for a period of three (3) years after such
discontinuance.
15. Delayed Shipment of the Products or the Performance of the Services
15.1 If Customer notifies Nortel Networks less than thirty (30) days prior to
the scheduled delivery date of the Products (or if the Products have been
manufactured per the agreed upon schedule) that Customer does not wish to
take delivery thereof at the scheduled time or that a site is not available
to receive such Products, or if Customer fails to take delivery of such
Products upon their arrival at the applicable site, Nortel Networks shall
have the right to place the Products in storage and Customer shall bear all
costs of demurrage, restocking, warehousing, reloading, transporting,
off-loading, and other associated costs incurred by Nortel Networks. All
such costs shall be paid in full within thirty (30) days of Customer's
receipt of Nortel Networks' commercial invoice therefor. Customer may delay
delivery or fail to take delivery of the Products for not more than thirty
(30) days. Once such thirty-day term elapses, Customer shall immediately
pay to Nortel Networks the outstanding balance of the purchase price of the
Products, if any, and the warranty period for the affected Products shall
be deemed to start upon expiration of such 30-day term.
15.2 If Customer notifies Nortel Networks less than thirty (30) days prior to
the scheduled performance date of the Services that Customer does not wish
Nortel Networks to perform such Services at the scheduled time or that the
Site is not available for the performance of such Services, Nortel Networks
shall have the right to delay the performance of the Services and Customer
shall bear all associated and documented out of pocket travel and expense
costs incurred by Nortel Networks. All such costs shall be paid in full
within thirty (30) days of Customer's receipt of Nortel Networks'
commercial invoice therefor.
15.3 Site facilities and physical specifications of equipment (including
shelters, fiber cabling, power, etc.) provided by Customer for use with the
Products sold hereunder must meet Nortel Networks' installation and
environmental Specifications. Any testing required to verify the condition
of Site facilities and any required upgrades will be at Customer's expense.
16. Termination; Survival
16.1 Without prejudice to any rights and remedies provided for hereunder, either
Party hereto may terminate this Agreement, effective immediately, upon
written notice to any other Party, upon the occurrence of any of the
following events or conditions (the "Event of Default"):
(i) the other Party applies for or consents to the appointment of, or the
taking of possession by a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property,
(ii) the other Party makes a general assignment for the benefit of its
creditors,
(iii) the other Party commences a voluntary proceeding under the
bankruptcy, insolvency or similar laws relating to relief from
creditors generally,
Page 13
(iv) the other Party fails to contest in a timely or appropriate manner, or
acquiesces in writing to, any petition filed against it in an
involuntary proceeding under the bankruptcy, insolvency or similar
laws relating to relief from creditors generally, or any application
for the appointment of a receiver, custodian, trustee, or liquidator
of itself or of all or a substantial part of its property or its
liquidation, reorganization, dissolution or winding-up, or
(v) the other Party materially fails to perform any term or condition
under this Agreement or any of its Annexes, which failure continues
for a period of thirty (30) days after written notice has been given
to the breaching Party; provided, however, that if any Party exercises
its termination rights as provided in this Section 16.1 (v) after any
sale of the FWA Business by Nortel Networks, the Non-FWA TAS Agreement
shall automatically be terminated concurrently therewith; and
provided, further, that if any Party exercises its termination rights
as provided in this Section 16.1 (v) prior to any sale of the FWA
Business by Nortel Networks, the three other Replacement Agreements
shall automatically be terminated concurrently therewith. For the
avoidance of doubt, the Parties agree that any failure by Customer to
comply with the purchase commitment set forth in Section 19 hereof
shall be deemed material.
16.2 In addition, and without prejudice to any rights and remedies provided for
hereunder, Nortel Networks may terminate all four Replacement Agreements,
effective immediately, upon written notice to the other Party, upon the
occurrence of any of the following events or conditions:
(i) Customer fails to make payment in accordance with the terms and
conditions hereof, which failure continues for a period of ten (10)
business days (in Mexico) after written notice to Customer,
(ii) within eighteen (18) months from the date hereof, the identity of
Customer's business materially changes by sale of its business,
transfer of control of its capital stock, merger or otherwise, unless
prior written consent therefor has been obtained from Nortel Networks;
or
(iii) the occurrence of a Event of Default under any one of the Senior Note
or the other Replacement Agreements which by the terms of such
agreements would allow Nortel Networks to declare such Senior Note due
and payable or to terminate such Replacement Agreement, as the case
may be.
16.3 The respective obligations of each Party pursuant to Sections 1, 4, 5, 6,
7, 10, 11, 12, 16 and 18 hereof, and any other obligations of each Party
pursuant to this Agreement that by their nature would continue beyond the
termination, cancellation, or expiration hereof, shall survive such
termination, cancellation, or expiration; provided, however, that if
Customer fails to make payment in accordance with the terms and conditions
hereof (subject to the cure period provided in Section 16.2 above), the
Parties expressly agree that the following Sections hereof shall not
survive such termination, cancellation, or expiration: Sections 6, and 7;
and provided, further, that Section 4 hereof shall survive such
termination, cancellation, or expiration only to the extent that Customer
is not in default of the payment of the applicable Software license fees,
if any.
17. Manuals and Documentation
17.1 "Manuals and Documentation" will consist of documents which describe in
detail the engineering, installation, maintenance, repair and operation of
Product(s). Manuals and Documentation shall be provided in the English
language. Nortel Networks shall provide the Manuals and Documentation in
Spanish if published. Nortel Networks shall ship electronic documentation
containing the applicable Manuals and Documentation to Customer with the
Page 14
initial delivery of a system of Products delivered to Customer. Customer
may order additional copies of applicable Documentation at Nortel Networks'
then available price. Customer may use and reproduce the Manuals and
Documentation in paper format for the purposes of engineering, installing,
maintaining, repairing and operating the Products, subject to the
limitations regarding Information, as set forth in Section 10. Reproduction
shall include the copyright or similar proprietary notices. Customer is
responsible for ensuring proper versions of documentation are printed and
distributed. During the Term, Nortel Networks shall, at no additional
charge to Customer, make available to Customer upon request, electronic
files with updates, revisions and corrections of such Manuals and
Documentation.
18. General
18.1 Customer agrees that it will not export Products procured hereunder from
Mexico without Nortel Networks' prior written consent. Nortel Networks
reserves the right to assign any portion of an Order accepted under this
Agreement, in whole or in part. Customer represents and warrants that it is
buying Products and/or Services for its own internal use and not for resale
18.2 Customer agrees to comply with all laws applicable to it, including all
applicable export and import laws and regulations. In the event that any
provision of this Agreement or portions thereof are held to be invalid or
unenforceable, the remainder of this Agreement will remain in full force
and effect.
18.3 The terms and conditions of this Agreement, together with the other three
Replacement Agreements and any other agreements contemplated by the Term
Sheet entered into between Customer and Nortel Networks Limited on October
12, 2002, form the complete and exclusive agreement between Customer and
Nortel Networks and replaces any prior oral or written communications and
agreements regarding the subject matter thereof.
18.4 Any changes to this Agreement must be made by mutual agreement in writing.
All Customer's rights and all of Nortel Networks' obligations are valid
only in Mexico.
18.5 The laws of the State of New York govern this Agreement, exclusive of its
conflict of laws provisions; and nothing in this Agreement affects any
statutory rights of consumers that cannot be waived or limited by contract.
The United Nations Convention on the International Sale of Goods shall not
apply.
18.6 If, within thirty (30) days from the date of any notice of dispute from a
Party to any other Party, such Parties are unable to resolve the issue,
then either Party may initiate the binding arbitration to resolve such
dispute by written notice to such other Party upon expiration of such
thirty (30) day period. Any dispute between the Parties arising in
connection with this Agreement shall be exclusively resolved by arbitration
pursuant to the Rules of Conciliation and Arbitration of the International
Chamber of Commerce then in force. The arbitration proceedings pursuant to
this Section 18(c) shall take place in the English language in the City of
Miami, State of Florida, before a panel of three (3) arbitrators appointed
in accordance with the aforementioned rules. The decision of the
arbitrators shall be final and binding upon the Parties and their
respective successors and assigns. The decision and award rendered by the
arbitrators may be entered in any court of competent jurisdiction and any
such court may order the enforcement of such award against the Parties and
their respective successors and assigns.
18.7 EACH PARTY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF, OR RELATING TO, THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING ANY ORDER ISSUED AND ACCEPTED
HEREUNDER.
18.8 The following Annexes are part of this Agreement:
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Annex A - Intentionally Left in Blank
Annex B - Change Order Procedures and Form of Change Order
Annex C - Description of Services
Annex D - Description and Specification of Products
Annex E - Order Procedure
Annex F - Prices
Annex G - Warranty Services and Warranty Periods
Annex H - Intentionally Left in Blank
Annex I - Acceptance Procedures and Protocols
Annex J - Delivery Times
In the event of any conflict or inconsistency between the provisions of the
body of this Agreement and its Annexes, the body of this Agreement shall
prevail.
18.9 Notwithstanding anything in this Agreement to the contrary, if the supply
of the Products or the performance of the Services by Nortel Networks, or
any portion thereof, or the performance of any other obligation hereunder
by any party is prevented, delayed, interfered with, or interrupted by
reason of a Force Majeure Event, such prevention, delay, interference, or
interruption shall be deemed not to be a default pursuant to this Agreement
and the time or times for such performance or supply hereunder shall be
extended by the period or periods same is so prevented, delayed, interfered
with, or interrupted. The foregoing shall apply even though any such cause
exists or is foreseeable as of the date hereof. Neither Party shall be
required to change its usual business practices or methods or to assume or
incur other than its usual costs or expenses in order to mitigate, avoid,
or eliminate any Force Majeure Event or to reduce the period of any
resulting delay. Each Party shall notify the other Parties of any delay or
failure excused by this Section 18(f) and shall specify the revised
performance date as soon as practicable. Nothing contained in this Section
18(f) shall affect any obligation of Customer to make any payment when due
in accordance with this Agreement.
18.10 All notices pursuant to this Agreement will be in writing and deemed given
when delivered in person, by certified mail or courier service, or by
facsimile. Notices to Customer shall be sent to:
Boulevard Gustavo Diaz Ordaz Km. 3.33 L-1
Colonia Unidad San Pedro
San Pedro Garza Garcia
Nuevo Leon, Mexico
Attention: Director de Negociaciones Estrategicas
with a copy to the Corporate Counsel.
Notices to Nortel Networks shall be sent to:
Nortel Networks (CALA) Inc.
1500 Concord Terrace
Sunrise, Florida 33323-2815
Attention: Senior Counsel
with a copy to:
Nortel Networks de Mexico, S.A. de C.V.
Insurgentes Sur 1605, Piso 30
Col. San Jose Insurgentes
03900 Mexico, D.F.
Attn.: President
Page 16
Notices from Customer to Nortel Networks pursuant to Section 5.20,
shall be sent to:
Nortel Networks de Mexico, S.A. de C.V.
Insurgentes Sur 1605, Piso 30
Col. San Jose Insurgentes
03900 Mexico, D.F.
Attn.: Contract Management - Axtel Project
19. Purchase Commitment
19.1 Customer hereby irrevocably agrees to purchase from Nortel Networks the
following minimum annual amounts of Products:
Year Minimum Annual Purchase Commitment
2003 US$600,000.00
2004 US$2,100,000.00
2005 US$2,100,000.00
2006 US$2,100,000.00
2007 US$2,100,000.00
19.2 If in any year commencing from year 2003, Axtel has purchased Products from
Nortel Networks for an amount greater than the "Minimum Annual Purchase
Commitment" set forth in the table above, the difference between the
Minimum Annual Purchase Commitment of such year and Axtel's total purchases
of such year, will be applied and will reduce automatically Axtel's
"Minimum Annual Purchase Commitment" set forth in the table above,
beginning with the last year of the commitment (2007) and continuing with
the previous years (2006 and so on).
The Parties hereto have executed this Purchase and License Agreement for Non -
FWA Equipment as of February __, 2003 and it shall become effective on the
Closing Date.
AXTEL, S.A. DE C.V.
By: _______________________________
Name: _____________________________
Title: ______________________________
Address: ___________________________
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NORTEL NETWORKS LIMITED
By: _______________________________
Name: _____________________________
Title: ______________________________
NORTEL NETWORKS DE MEXICO, S.A. DE C.V.
By: _________________________________
Name: _______________________________
Title: ________________________________
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Exhibit B-3
Technical Assistance Support
Services Agreement for FWA Equipment
This Technical Assistance Support Services Agreement for FWA Equipment (the
"Agreement"), dated as of February __, 2003, is entered into between Axtel, S.A.
de C.V. a Mexican corporation, ("Customer") and Nortel Networks UK Limited, an
English corporation ("Nortel Networks").
The parties hereto agree to the following terms and conditions:
1. Scope
1.1 Nortel Networks will provide the technical assistance support services (the
"TAS Services") and other FWA services (the "Other Services"), as described
in the Exhibit "B" of this Agreement (collectively the "Services") at the
prices set forth in Exhibit "A".
1.2 As part of the Services described in this Agreement, each year during the
Term of this Agreement, Nortel Networks will provide an annual software
release designed to enhance the functionality of the FWA System (the
"Software Enhancement Release"), as well as its first market application
("FMA"), and when appropriate, it will include solutions to issues raised
by Customer through the Technical Support process, as detailed in Exhibit
"B", Exhibit "C" and Exhibit "D" of this Agreement. The prices for this
Software Enhancement Release and related services, are described in Exhibit
"A" of this Agreement. The content and scope of the 2003 Software
Enhancement Release are described in Exhibit "C" of this Agreement. The
content and scope of subsequent years' of the Software Enhancement Releases
shall be agreed via the bi-monthly Product Enhancement Conferences and by
the end of September of the previous year.
1.3 The scope of Services is described in the following Exhibits attached
hereto and made an integral part of this Agreement:
o Exhibit A: Price Summary
o Exhibit B: Description of the Technical Assistance Support Services
("TAS" or the "Services")
o Exhibit C: Content and Scope of the First Software Enhancement
Release.
o Exhibit D: "First Market Application Process For Annual FWA Software
Enhancement Release".
2. Price
2.1 The price for the Services to be rendered by Nortel and for the provision
of the Software Enhancement Release and related services are indicated in
Exhibit A. All amounts have
Page 1
been expressed in US Dollars and do not include any taxes that may be
levied by any governmental authority for the sale of the Services.
2.2 If any payment hereunder is to be made in Mexican pesos, the prices in
Exhibit A shall be converted to Mexican pesos at the exchange rate
published in the Diario Oficial de la Federacion on the date of payment;
provided, however, that payment may only be made in Mexican pesos as long
as the Services are being provided by a Mexican legal entity.
2.3 Each party shall be responsible for the payment of its own income taxes as
they relate to this Agreement. If any authority imposes a tax, duty, levy
or fee, excluding those based on Nortel Networks' net income, in connection
with the Services supplied by Nortel Networks under this Agreement,
Customer agrees to pay that amount as specified in the invoice, or provide
exemption documentation.
2.4 If Customer is compelled by law to deduct or withhold any amounts from any
payment, then Customer shall pay to Nortel Networks such additional amounts
as may be necessary to ensure that Nortel Networks receives a net amount
equal to the full amount which would have been received had the payment not
been subject to such deduction or withholding.
2.5 Customer consents without qualification to the sale of receivables by
Nortel Networks, subject to a 30-day prior written notice, and authorizes
the disclosure of this Agreement and any attachments or associated
documents as necessary to facilitate such sale. Any tax impact to Customer
resulting from such sale and/or assignment shall be borne by Nortel
Networks.
3. Payment Terms
3.1 Nortel Networks shall invoice Customer for the TAS Services every three (3)
months, 30 days in advance of the invoice due date, for TAS Services to be
provided within such 3-month period.
3.2 Nortel Networks shall invoice Customer one hundred percent (100%) of the
price of Other Services upon completion, unless the Other Service continues
beyond thirty days, in which case Nortel Networks shall invoice Customer at
the end of each month for the Other Services performed in that month.
3.3 Payment for the Services rendered by Nortel Networks shall be within thirty
(30) days from the date of invoice is received by Customer.
3.4 All payments shall be made in accordance with the payment instructions
contained in the applicable invoice if they are not in conflict with the
provisions of this Agreement.
3.5 Customer shall pay interest on any late payments at the rate of 18% per
annum (11/2% per month).
Page 2
4. Term
4.1 The term ("Term") of this Agreement shall start on the Closing Date (as
such term is defined in the Restructuring Agreement) and shall continue for
the same term as the Purchase and License Agreement for FWA Equipment of
even date herewith, entered into among Nortel Networks Limited, Nortel
Networks de Mexico, S.A. de C.V. and Customer (the "FWA Supply Contract").
5. Customer Responsibilities
5.1 Customer agrees to reasonably cooperate with Nortel Networks in the
performance by Nortel Networks of the Services, including, without
limitation, providing Nortel Networks with sufficient and timely access
free of charge to facilities, data, information and personnel of Customer
in accordance with Customer's then-current access internal policies,
including the recovery by Nortel Networks of any diagnostic or test
equipment, documentation or other items used by Nortel Networks in the
performance of the Services.
5.2 In addition, Customer shall be responsible for the accuracy and
completeness of all data and information that it provides or causes to be
provided to Nortel Networks. In the event that there are any delays by
Customer in fulfilling its responsibilities as stated above, there is a
disagreement between the parties as to the cooperation required from
Customer, or there are errors or inaccuracies in the information provided,
Nortel Networks shall be entitled to appropriate schedule and pricing
adjustments.
6. Personnel
6.1 Nortel Networks and Customer are each responsible for the supervision,
direction, compensation and control of their own employees and
subcontractors. Nortel Networks may subcontract any portion or all of the
Services to subcontractors selected by Nortel Networks.
6.2 Neither party shall knowingly hire, engage as independent contractors or
solicit employees of the other party with whom it had contact as a result
of the performance of the Services for a period ending one year after
completion of the Services. Neither party shall be precluded from
conducting generalized searches for employees (and hiring those employees
who respond to generalized searches), through the use of advertisements in
the media or through the use of search firms, provided that searches are
not specifically targeted on employees providing Services.
7. Patents and Copyrights
7.1 Nortel shall indemnify and hold harmless Customer, its officers, directors,
representatives, agents, employees, contractors, subcontractors,
subsidiaries and affiliates against any actual direct loss, damage,
liability, cost, expense, action or claim, including reasonable attorneys'
fees, litigation costs and expenses and amounts paid in settlement, subject
to the limitations set forth in the following paragraphs, arising out of or
in connection with
Page 3
any infringement or alleged infringement of patents, copyrights,
trademarks, trade secrets, or any other intellectual property right of a
third party. Therefore, if a third party claims that any materials
manufactured by Nortel Networks and provided to Customer in the performance
of the Services infringe that party's patent or copyright, Nortel Networks
will defend Customer against that claim at Nortel Networks' expense and pay
all costs and damages that a court finally awards or are agreed to in
settlement, provided that Customer (a) promptly notifies Nortel Networks in
writing of the claim; and (b) allows Nortel Networks to control, and
cooperates with Nortel Networks at Nortel Networks' expense in, the defense
and any related settlement negotiations. If such a claim is made or appears
likely to be made, Nortel Networks agrees to secure the right for Customer
to continue to use the materials, or to modify them, or to replace them
with materials that are functionally equivalent. If Nortel Networks
determines that none of these alternatives is reasonably available,
Customer agrees to return the materials upon Nortel Networks' written
request. Nortel Networks will give Customer a credit equal to the amount
paid by Customer to Nortel Networks for the infringing materials returned.
Any such claims against the Customer or liability for infringement arising
from use of the materials following a request for return by Nortel Networks
are the sole responsibility of Customer. This represents Customer's sole
and exclusive remedy regarding any claim of infringement.
7.2 Nortel Networks has no obligation regarding any claim based on any of the
following: (a) anything Customer provides which is incorporated into the
materials; (b) compliance by Nortel Networks with the Customer's
specifications, designs or instructions; (c) the amount of revenues or
profits earned or other value obtained by the use of a product by Customer;
(d) Customer's modification of the materials or products, provided that
Customer is hereby authorized to generate new Software Scripts or modify
the existing ones; provided, however, that Nortel Networks shall not be
obligated to support such modified Software Scripts; and provided, further,
that Nortel Networks shall not be responsible for any performance issues
resulting from such modified Software Scripts; or (e) Customer's failure to
install or have installed changes, revisions or updates as instructed by
Nortel Networks.
7.3 In case of any infringement caused by any Third Party Vendor Item, Nortel
Networks shall reasonably cooperate with Customer and hereby assigns to
Customer any of its rights to request the proper defense and
indemnification for such claim to such Third Party Vendor. Nortel Networks
shall provide Customer with all necessary contact information and
applicable documentation, if available, for those third party vendors.
Furthermore, Nortel Networks shall use its best efforts to provide
reasonable assistance to Customer for Customer to be able to obtain from
the Third Party Vendor the applicable defense and indemnification for such
Third Party Vendor Item infringement, but only to the extent such
assistance does not cause Nortel Networks to incur any out-of-pocket
expenses or material additional costs.
8. Intellectual Property
Page 4
8.1 Nortel Networks, on behalf of itself and its subcontractors, reserves all
proprietary rights in and to (i) all methodologies, designs, engineering
details, and other data pertaining to the Services and designs,
documentation and other work product prepared by Nortel Networks and
delivered to Customer, (ii) all original works, computer programs and
updates developed in the course of providing the Services (except
Customer's developed programs) or as otherwise agreed in writing between
the parties, (iii) discoveries, inventions, patents, know-how and
techniques arising out of the Services, and (iv) any and all products
(including software and equipment) developed as a result of the Services.
The performance by Nortel Networks of Services shall not be deemed work for
hire. Nortel Networks grants to Customer a perpetual, non-exclusive,
world-wide, paid up license to use, copy and modify the designs,
documentation and other work product prepared by Nortel Networks and
delivered to Customer in the performance of Services solely for Customer's
internal business purposes.
8.2 It is understood between the parties that Nortel Networks will employ its
know-how, techniques, concepts, experience and expertise, as well as all
other intellectual property to which it reserves its rights, to perform
services the same as or similar to the Services for others.
9. Warranty and Disclaimer
9.1 Nortel Networks will perform the Services in a professional and workmanlike
manner. Customer shall notify Nortel Networks in writing of any
non-conformance within sixty (60) days of the date on which the Services
are completed. Provided Customer gives written notice to Nortel Networks of
any non-conforming Services within the above 60-day period, Nortel Networks
will re-perform the non-conforming Services.
9.2 THIS WARRANTY IS CUSTOMER'S EXCLUSIVE WARRANTY. NORTEL NETWORKS HEREBY
DISCLAIMS ALL OTHER WARRANTIES AND CONDITIONS, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES AND/OR CONDITIONS OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
10. Limitation on Liability
10.1 In no event shall Nortel Networks or its agents or subcontractors be liable
to Customer for more than the greater of the amount of any actual direct
damages or the fees paid for Services that are the subject of the claim,
regardless of the cause and whether arising in contract, tort (including
negligence) or otherwise. This limitation will not apply to claims for
damages for bodily injury (including death) and damage to real property and
tangible personal property for which Nortel Networks is legally liable and
payments as set forth in Section 7 - Patents and Copyrights.
10.2 IN NO EVENT SHALL NORTEL NETWORKS OR ITS AGENTS OR SUPPLIERS BE LIABLE FOR
ANY OF THE FOLLOWING: A) DAMAGES BASED ON ANY THIRD PARTY CLAIM EXCEPT AS
EXPRESSLY PROVIDED FOR HEREIN AND IN
Page 5
SECTION 7; B) LOSS OF, OR DAMAGE TO, CUSTOMER'S RECORDS, FILES OR DATA; OR
C) INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS OR LOST SAVINGS), EVEN IF NORTEL NETWORKS IS
INFORMED OF THEIR POSSIBILITY.
11. Force Majeure
11.1 Neither party shall be liable for delays or nonperformance of this
Agreement occasioned by fire, casualty, explosion, lightning, accident,
strike, lockout, labor unrest, labor dispute (whether or not, in respect of
the foregoing labor-related matters, the affected party is in a position to
settle the matter), war (declared or undeclared), armed conflict, civil
disturbance, riot, Act of God, delay of common carrier, the enactment,
issuance, or application of any law, local by-law, regulation, or
executive, administrative, or judicial order, acts (including delay or
failure to act) of any governmental authority, or any other cause or causes
(whether of the foregoing, nature or not), or any other similar or
different occurrence, which cause or occurrence is beyond the reasonable
control of the affected party and whether or not foreseeable by such party
("Force Majeure"). However, if the delay or non-performance due to Force
Majeure exceeds 3 (three) months, the party not affected by Force Majeure
may terminate this Agreement provided written notice has been given to the
other party.
12. Independent Contractors
12.1 The parties herein are independent contracting entities. Nothing herein
shall be construed to create a relationship of employer and employee, joint
venture, partnership or association between Customer and Nortel Networks.
Except as expressly provided herein, neither party shall have the right to
bind or obligate the other party in any manner without the written consent
of the other party.
13. Termination; Survival
13.1 Without prejudice to any rights and remedies provided for hereunder, either
party hereto may terminate this Agreement, effective immediately, upon
written notice to any other party, upon the occurrence of any of the
following events or conditions (each, an "Event of Default"):
(i) the other party applies for or consents to the appointment of, or the
taking of possession by a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property,
(ii) the other party makes a general assignment for the benefit of its
creditors,
(iii) the other party commences a voluntary proceeding under the
bankruptcy, insolvency or similar laws relating to relief from
creditors generally,
Page 6
(iv) the other party fails to contest in a timely or appropriate manner, or
acquiesces in writing to, any petition filed against it in an
involuntary proceeding under the bankruptcy, insolvency or similar
laws relating to relief from creditors generally, or any application
for the appointment of a receiver, custodian, trustee, or liquidator
of itself or of all or a substantial part of its property or its
liquidation, reorganization, dissolution or winding-up; or
(v) the other party materially fails to perform any term or condition
under this Agreement or any of its Annexes, which failure continues
for a period of thirty (30) days after written notice has been given
to the breaching party; provided, however, that if any party exercises
its termination rights as provided in this Section 13.1 after the sale
of the FWA Business by any affiliate of Nortel Networks, the FWA
Supply Contract shall automatically be terminated concurrently
therewith; and provided, further, that if any party exercises its
termination rights as provided in this Section 13.1 prior to the sale
of the FWA Business by any affiliate of Nortel Networks, the three
other Replacement Agreements shall automatically be terminated
concurrently therewith.
13.2 In addition, without prejudice to any other rights and remedies provided
for hereunder, Nortel Networks may terminate all four Replacement
Agreements, effective immediately, upon written notice to Customer, upon
the occurrence of any of the following events or conditions:
(i) Customer fails to make payment in accordance with the terms and
conditions hereof, which failure continues for a period of ten (10)
business days (in Mexico) after written notice to Customer,
(ii) within eighteen (18) months from the date hereof, the identity of
Customer's business materially changes by sale of its business,
transfer of control of its capital stock, merger or otherwise, unless
prior written consent therefore has been received from Nortel
Networks; or
(iii) the occurrence of an Event of Default under any one of the Senior
Note or the other Replacement Agreements which by the terms of such
agreements would allow Nortel Networks to declare such Senior Note due
and payable or to terminate such Replacement Agreement, as the case
may be.
13.3 The respective obligations of each party pursuant to Sections 2, 3, 6, 7,
8, 9, 10, 12, 13, 14 and 15 hereof, and any other obligations of each party
pursuant to this Agreement that by their nature would continue beyond the
termination, cancellation, or expiration hereof shall survive such
termination, cancellation, or expiration; provided, however, that if
Customer fails to make payment in accordance with the terms and conditions
hereof (subject to the cure period provided in Section 13.2 above), the
parties expressly agree that Section 9.1 hereof shall not survive such
termination, cancellation, or expiration.
14. Confidential Information
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14.1 Confidential information ("Information") means: (i) software; and (ii) all
business, technical, marketing and financial information and data that is
clearly marked with a restrictive legend of the disclosing party
("Discloser").
14.2 The party receiving Information ("Recipient") will use the same care and
discretion to avoid disclosure, publication or dissemination of Information
as it uses with its own similar information that it does not wish to
disclose, publish or disseminate. The Recipient may disclose Information
only to: (i) its employees and employees of its parent, subsidiary or
affiliated companies or subcontractors who have a need to know for purposes
of carrying out this Agreement; and (ii) any other party with the
Discloser's prior written consent. Before disclosure to any of the above
parties, the Recipient will have a written agreement with such party
sufficient to require that party to treat Information in accordance with
this Agreement.
14.3 The Recipient may disclose Information to the extent required by law.
However, the Recipient must give the Discloser prompt notice and make a
reasonable effort to obtain a protective order.
14.4 No obligation of confidentiality applies to any Information that the
Recipient: (i) already possesses without obligation of confidentiality;
(ii) develops independently; or (iii) rightfully receives without
obligations of confidentiality from a third party. No obligation of
confidentiality applies to any Information that is, or becomes, publicly
available without breach of this Agreement.
14.5 Each party's obligations hereunder shall survive for a period of five (5)
years after receipt of Information hereunder from the Discloser, except as
otherwise mutually agreed upon by the parties.
14.6 The Discloser makes no representations or warranties of any nature
whatsoever with respect to any Information furnished to the recipient,
including, without limitation, any warranties of merchantability or fitness
for a particular purpose or against infringement.
15. General Provisions
15.1 This Agreement will be governed by and construed in accordance with the
laws of the State of New York, United States of America, with the
exclusions of its conflicts of law provisions.
15.2 If, within thirty (30) days from the date of any notice of dispute from a
Party to any other Party, such Parties are unable to resolve the issue,
then either Party may initiate the binding arbitration to resolve such
dispute by written notice to such other Party upon expiration of such
thirty (30) day period. Any dispute between the Parties arising in
connection with this Agreement shall be exclusively resolved by arbitration
pursuant to
Page 8
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce then in force. The arbitration proceedings pursuant to this
Section 18(c) shall take place in the English language in the City of
Miami, State of Florida, before a panel of three (3) arbitrators appointed
in accordance with the aforementioned rules. The decision of the
arbitrators shall be final and binding upon the Parties and their
respective successors and assigns. The decision and award rendered by the
arbitrators may be entered in any court of competent jurisdiction and any
such court may order the enforcement of such award against the Parties and
their respective successors and assigns.
15.3 EACH PARTY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF, OR RELATING TO, THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING ANY ORDER ISSUED AND ACCEPTED
HEREUNDER.
15.4 The terms and conditions stated herein, together with its Exhibits A, B,
and C attached hereto, are the complete and exclusive statement of the
agreement between the parties with respect to the Services (including the
provision of the Software Enhancement Release and its related services)
described herein. There are no representations, warranties, promises,
covenants or undertakings between the parties except as described in this
Agreement.
15.5 If any of the provisions of this Agreement are found to be invalid under an
applicable statute or rule of law, they are to be enforced to the maximum
extent permitted by law and beyond such extent are to be deemed omitted
from this Agreement, without affecting the validity of any other provision
of this Agreement.
15.6 The headings and captions in this Agreement are for convenience only and
shall not be used to construe the meaning of this Agreement.
15.7 Customer agrees not to assign or otherwise transfer this Agreement or
Customer's rights under it, or delegate Customer's obligations, without
Nortel Networks' prior written consent, and any attempt to do so is void.
Notwithstanding the foregoing, Nortel Networks may assign or otherwise
transfer this Agreement or its rights under it, or delegate its
obligations, to any of its affiliates or to any purchaser of the FWA
Business, under the terms set forth in Section 20 of the FWA Supply
Contract.
15.8 Any changes to this Agreement must be made by mutual agreement and in
writing.
15.9 Capitalized terms used in this Agreement without definition shall have the
meaning assigned to those terms in the FWA Supply Contract.
16. Notices
16.1 The Parties expressly agree that any notices, communications or requests
which must be made under this Contract shall be given in person, by express
or overnight courier or telefax (in which case hard copy by express courier
must follow) at the following
Page 9
addresses (or in such other address or telefax number that the Parties may
designate by notice to the other party under the terms set forth herein):
If to Customer: Axtel, S.A. de C.V.
Blvd.. Gustavo Diaz Ordaz Km. 333
Piso 2
Col. Unidad San Pedro
San Pedro Garza Garcia, 66215 N.L.
Attention: Alberto de Villasante Herbert
Tel: (52-81) 8114-1131
Fax: (52-81) 8114-1771
With a copy to: Axtel, S.A. de C.V.
Blvd.. Gustavo Diaz Ordaz Km. 333
Piso 2
Col. Unidad San Pedro
San Pedro Garza Garcia, 66215 N.L.
Attention: Corporate Counsel
Tel: (52-81) 8129-8137
Fax: (52-81) 8114-1762
If to Nortel Networks: Nortel Networks UK Limited
c/o Nortel Networks (CALA) Inc.
1500 Concord Terrace
Sunrise, FL 33323-2815
U.S.A.
Attention: Senior Counsel
With a copy to Tel: 954-858-7158
Fax: 954-851-8817
Nortel Networks de Mexico, S.A. de C.V.
Insurgentes Sur No. 1605, Piso 30
Col. San Jose Insurgentes
03900 Mexico, D.F.
Attention: President and General Manager
Tel: (52-55) 5480-2100
Fax: (52-55) 5480-2977
Any notices to be given under this Agreement shall be made in writing and
shall be effective upon receipt at the address or telefax number specified
herein, or shall be given
Page 10
in any other way that the Parties may agree, which may prove that the
notice was effectively given.
IN WITNESS WHEREOF, the parties have executed this Agreement through their duly
authorized representatives.
NORTEL NETWORKS UK LIMITED AXTEL, S.A. DE C.V.
By: ________________________ By: ________________________
Name: ______________________ Name: ______________________
Title: _______________________ Title: _______________________
Page 11
Exhibit B-4
Technical Assistance Support Services
Agreement for Non-FWA Equipment
This Technical Assistance Support Services Agreement for Non-FWA Equipment (the
"Agreement"), dated as of February __, 2003, is entered into between Axtel, S.A.
de C.V. ("Customer") and Nortel Networks de Mexico, S.A. de C.V. ("Nortel
Networks").
The parties hereto agree to the following terms and conditions:
1. Scope
1.1 Nortel Networks will provide the technical assistance support services
described in Exhibit "B" of this Agreement (the "Services") at the prices
set forth in Exhibit "A".
1.2 The scope of Services is described in the following Exhibits attached
hereto and made an integral part of this Agreement:
o Exhibit A: Price Summary
o Exhibit B: Description of the Technical Assistance Support Services
("TAS" or the "Services")
2. Price
2.1 The price for the Services to be rendered by Nortel is indicated in Exhibit
A. All amounts have been expressed in US Dollars and do not include any
taxes that may be levied by any governmental authority for the sale of the
Services.
2.2 If any payment hereunder is to be made in Mexican pesos, the prices in
Exhibit A shall be converted to Mexican pesos at the exchange rate
published in the Diario Oficial de la Federacion on the date of payment;
provided, however, that payment may only be made in Mexican pesos as long
as the Services are being provided by a Mexican legal entity.
2.3 Each party shall be responsible for the payment of its own income taxes as
they relate to this Agreement. If any authority imposes a tax, duty, levy
or fee, excluding those based on Nortel Networks' net income, in connection
with the Services supplied by Nortel Networks under this Agreement,
Customer agrees to pay that amount as specified in the invoice, or provide
exemption documentation.
2.4 If Customer is compelled by law to deduct or withhold any amounts from any
payment, then Customer shall pay to Nortel Networks such additional amounts
Page 1
as may be necessary to ensure that Nortel Networks receives a net amount
equal to the full amount which would have been received had the payment not
been subject to such deduction or withholding.
2.5 Customer consents without qualification to the sale of receivables by
Nortel Networks, subject to a 30-day prior written notice, and authorizes
the disclosure of this Agreement and any attachments or associated
documents as necessary to facilitate such sale. Any tax impact to Customer
resulting from such sale and/or assignment shall be borne by Nortel
Networks.
3. Payment Terms
3.1 Nortel Networks shall invoice Customer for the Services every three (3)
months, 30 days in advance of the invoice due date, for Services to be
provided within such 3-month period.
3.2 Payment for the Services rendered by Nortel Networks shall be within thirty
(30) days from the date of invoice is received by Customer.
3.3 All payments shall be made in accordance with the payment instructions
contained in the applicable invoice if they are not in conflict with the
provisions of this Agreement.
3.4 Customer shall pay interest on any late payments at the rate of 18% per
annum (11/2% per month).
4. Term
4.1 The term ("Term") of this Agreement is one (1) year starting on the Closing
Date (as such term is defined in the Restructuring Agreement),
automatically renewed for four (4) subsequent one-year periods, unless one
of the parties notifies the other in writing at least sixty (60) days
before the end of the then-current Term of its intention not to renew this
Agreement.
5. Customer Responsibilities
5.1 Customer agrees to reasonably cooperate with Nortel Networks in the
performance by Nortel Networks of the Services, including, without
limitation, providing Nortel Networks with sufficient and timely access
free of charge to facilities, data, information and personnel of Customer
in accordance with its then-current access internal policies, including the
recovery by Nortel Networks of any diagnostic or test equipment,
documentation or other items used by Nortel Networks in the performance of
the Services.
5.2 In addition, Customer shall be responsible for the accuracy and
completeness of all data and information that it provides or causes to be
provided to Nortel
Page 2
Networks. In the event that there are any delays by Customer in fulfilling
its responsibilities as stated above, there is a disagreement between the
parties as to the cooperation required from Customer, or there are errors
or inaccuracies in the information provided, Nortel Networks shall be
entitled to appropriate schedule and pricing adjustments.
6. Personnel
6.1 Nortel Networks and Customer are each responsible for the supervision,
direction, compensation and control of their own employees and
subcontractors. Nortel Networks may subcontract any portion or all of the
Services to subcontractors selected by Nortel Networks.
6.2 Neither party shall knowingly hire, engage as independent contractors or
solicit employees of the other party with whom it had contact as a result
of the performance of the Services for a period ending one year after
completion of the Services. Neither party shall be precluded from
conducting generalized searches for employees (and hiring those employees
who respond to generalized searches), through the use of advertisements in
the media or through the use of search firms, provided that searches are
not specifically targeted on employees providing Services.
7. Patents and Copyrights
7.1 Nortel shall indemnify and hold harmless Customer, its officers, directors,
representatives, agents, employees, contractors, subcontractors,
subsidiaries and affiliates against any actual direct loss, damage,
liability, cost, expense, action or claim, including reasonable attorneys'
fees, litigation costs and expenses and amounts paid in settlement, subject
to the limitations set forth in the following paragraphs, arising out of or
in connection with any infringement or alleged infringement of patents,
copyrights, trademarks, trade secrets, or any other intellectual property
right of a third party. Therefore, if a third party claims that any
materials manufactured by Nortel Networks and provided to Customer in the
performance of the Services infringe that party's patent or copyright,
Nortel Networks will defend Customer against that claim at Nortel Networks'
expense and pay all costs and damages that a court finally awards or are
agreed to in settlement, provided that Customer (a) promptly notifies
Nortel Networks in writing of the claim; and (b) allows Nortel Networks to
control, and cooperates with Nortel Networks at Nortel Networks' expense
in, the defense and any related settlement negotiations. If such a claim is
made or appears likely to be made, Nortel Networks agrees to secure the
right for Customer to continue to use the materials, or to modify them, or
to replace them with materials that are functionally equivalent. If Nortel
Networks determines that none of these alternatives is reasonably
available, Customer agrees to return the materials upon Nortel Networks'
written request. Nortel Networks will give Customer a credit equal to the
amount paid by Customer to
Page 3
Nortel Networks for the infringing materials returned. Any such claims
against the Customer or liability for infringement arising from use of the
materials following a request for return by Nortel Networks are the sole
responsibility of Customer. This represents Customer's sole and exclusive
remedy regarding any claim of infringement.
7.2 Nortel Networks has no obligation regarding any claim based on any of the
following: (a) anything Customer provides which is incorporated into the
materials; (b) compliance by Nortel Networks with the Customer's
specifications, designs or instructions; (c) the amount of revenues or
profits earned or other value obtained by the use of a product by Customer;
(d) Customer's modification of the materials; or (e) Customer's failure to
install or have installed changes, revisions or updates as instructed by
Nortel Networks.
7.3 In case of any infringement caused by any Third Party Vendor Item, Nortel
Networks shall reasonably cooperate with Customer and hereby assigns to
Customer any of its rights to request the proper defense and
indemnification for such claim to such Third Party Vendor. Nortel Networks
shall provide Customer with all necessary contact information and
applicable documentation, if available, for those third party vendors.
Furthermore, Nortel Networks shall use its best efforts to provide
reasonable assistance to Customer for Customer to be able to obtain from
the Third Party Vendor the applicable defense and indemnification for such
Third Party Vendor Item infringement, but only to the extent such
assistance does not cause Nortel Networks to incur any out-of-pocket
expenses or material additional costs.
8. Intellectual Property
8.1 Nortel Networks, on behalf of itself and its subcontractors, reserves all
proprietary rights in and to (i) all methodologies, designs, engineering
details, and other data pertaining to the Services and designs,
documentation and other work product prepared by Nortel Networks and
delivered to Customer, (ii) all original works, computer programs and
updates developed in the course of providing the Services (except
Customer's developed programs) or as otherwise agreed in writing between
the parties, (iii) discoveries, inventions, patents, know-how and
techniques arising out of the Services, and (iv) any and all products
(including software and equipment) developed as a result of the Services.
The performance by Nortel Networks of Services shall not be deemed work for
hire. Nortel Networks grants to Customer a perpetual, non-exclusive,
world-wide, paid up license to use, copy and modify the designs,
documentation and other work product prepared by Nortel Networks and
delivered to Customer in the performance of Services solely for Customer's
internal business purposes.
Page 4
8.2 It is understood between the parties that Nortel Networks will employ its
know-how, techniques, concepts, experience and expertise, as well as all
other intellectual property to which it reserves its rights, to perform
services the same as or similar to the Services for others.
9. Warranty and Disclaimer
9.1 Nortel Networks will perform the Services in a professional and workmanlike
manner. Customer shall notify Nortel Networks in writing of any
non-conformance within sixty (60) days of the date on which the Services
are completed. Provided Customer gives written notice to Nortel Networks of
any non-conforming Services within the above 60-day period, Nortel Networks
will re-perform the non-conforming Services.
9.2 THIS WARRANTY IS CUSTOMER'S EXCLUSIVE WARRANTY. NORTEL NETWORKS HEREBY
DISCLAIMS ALL OTHER WARRANTIES AND CONDITIONS, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES AND/OR CONDITIONS OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
10. Limitation on Liability
10.1 In no event shall Nortel Networks or its agents or subcontractors be liable
to Customer for more than the greater of the amount of any actual direct
damages or the fees paid for Services that are the subject of the claim,
regardless of the cause and whether arising in contract, tort (including
negligence) or otherwise. This limitation will not apply to claims for
damages for bodily injury (including death) and damage to real property and
tangible personal property for which Nortel Networks is legally liable and
payments as set forth in Section 7 - Patents and Copyrights.
10.2 IN NO EVENT SHALL NORTEL NETWORKS OR ITS AGENTS OR SUPPLIERS BE LIABLE FOR
ANY OF THE FOLLOWING: A) DAMAGES BASED ON ANY THIRD PARTY CLAIM EXCEPT AS
EXPRESSLY PROVIDED FOR HEREIN AND IN SECTION 6; B) LOSS OF, OR DAMAGE TO,
CUSTOMER'S RECORDS, FILES OR DATA; OR C) INDIRECT, SPECIAL, INCIDENTAL,
PUNITIVE, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS OR LOST
SAVINGS), EVEN IF NORTEL NETWORKS IS INFORMED OF THEIR POSSIBILITY.
11. Force Majeure
11.1 Neither party shall be liable for delays or nonperformance of this
Agreement occasioned by fire, casualty, explosion, lightning, accident,
strike, lockout, labor unrest, labor dispute (whether or not, in respect of
the foregoing labor-
Page 5
related matters, the affected party is in a position to settle the matter),
war (declared or undeclared), armed conflict, civil disturbance, riot, Act
of God, delay of common carrier, the enactment, issuance, or application of
any law, local by-law, regulation, or executive, administrative, or
judicial order, acts (including delay or failure to act) of any
governmental authority, or any other cause or causes (whether of the
foregoing, nature or not), or any other similar or different occurrence,
which cause or occurrence is beyond the reasonable control of the affected
party and whether or not foreseeable by such party ("Force Majeure").
However, if the delay or non-performance due to Force Majeure exceeds 3
(three) months, the party not affected by Force Majeure may terminate this
Agreement provided written notice has been given to the other party.
12. Independent Contractors
12.1 The parties herein are independent contracting entities. Nothing herein
shall be construed to create a relationship of employer and employee, joint
venture, partnership or association between Customer and Nortel Networks.
Except as expressly provided herein, neither party shall have the right to
bind or obligate the other party in any manner without the written consent
of the other party.
13. Termination; Survival
13.1 Without prejudice to any rights and remedies provided for hereunder, either
party hereto may terminate this Agreement, effective immediately, upon
written notice to any other party, upon the occurrence of any of the
following events or conditions (the "Events of Default"):
(i) the other party applies for or consents to the appointment of, or the
taking of possession by a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property,
(ii) the other party makes a general assignment for the benefit of its
creditors,
(iii) the other party commences a voluntary proceeding under the
bankruptcy, insolvency or similar laws relating to relief from
creditors generally,
(iv) the other party fails to contest in a timely or appropriate manner, or
acquiesces in writing to, any petition filed against it in an
involuntary proceeding under the bankruptcy, insolvency or similar
laws relating to relief from creditors generally, or any application
for the appointment of a receiver, custodian, trustee, or liquidator
of itself or of all or a substantial part of its property or its
liquidation, reorganization, dissolution or winding-up, or
Page 6
(v) the other party materially fails to perform any term or condition
under this Agreement or any of its Annexes, which failure continues
for a period of thirty (30) days after written notice has been given
to the breaching party; provided, however, that if any party exercises
its termination rights as provided in this Section 13.1 after the sale
of the FWA Business by any affiliate of Nortel Networks, the Supply
Contract for Non-FWA Equipment, dated as of even date herewith,
entered into among Nortel Networks Limited, Nortel Networks and
Customer (the "Non-FWA Supply Contract"), shall automatically be
terminated concurrently therewith; and provided, further, that if any
party exercises its termination rights as provided in this Section
13.1 prior to the sale of the FWA Business by any affiliate of Nortel
Networks, the three other Replacement Agreements shall automatically
be terminated concurrently therewith.
13.2 In addition, without prejudice to any other rights and remedies provided
for hereunder, Nortel Networks may terminate all four Replacement
Agreements, effective immediately, upon written notice to Customer, upon
the occurrence of any of the following events or conditions:
(i) Customer fails to make payment in accordance with the terms and
conditions hereof, which failure continues for a period of ten (10)
business days (in Mexico) after written notice to Customer,
(ii) within eighteen (18) months from the date hereof, the identity of
Customer's business materially changes by sale of its business,
transfer of control of its capital stock, merger or otherwise, unless
prior written consent therefore has been received from Nortel
Networks; or
(iii) the occurrence of an Event of Default under any one of the Senior
Note or the other Replacement Agreements which by the terms of such
agreements would allow Nortel Networks to declare such Senior Note due
and payable or to terminate such Replacement Agreement, as the case
may be.
13.3 The respective obligations of each party pursuant to Sections 2, 3, 6, 7,
8, 9, 10, 12, 13, 14 and 15 hereof, and any other obligations of each party
pursuant to this Agreement that by their nature would continue beyond the
termination, cancellation, or expiration hereof shall survive such
termination, cancellation, or expiration; provided, however, that if
Customer fails to make payment in accordance with the terms and conditions
hereof (subject to the cure period provided in Section 13.2 above), the
parties expressly agree that Section 9.1 hereof shall not survive such
termination, cancellation, or expiration.
14. Confidential Information
Page 7
14.1 Confidential information ("Information") means: (i) software; and (ii) all
business, technical, marketing and financial information and data that is
clearly marked with a restrictive legend of the disclosing party
("Discloser").
14.2 The party receiving Information ("Recipient") will use the same care and
discretion to avoid disclosure, publication or dissemination of Information
as it uses with its own similar information that it does not wish to
disclose, publish or disseminate. The Recipient may disclose Information
only to: (i) its employees and employees of its parent, subsidiary or
affiliated companies or subcontractors who have a need to know for purposes
of carrying out this Agreement; and (ii) any other party with the
Discloser's prior written consent. Before disclosure to any of the above
parties, the Recipient will have a written agreement with such party
sufficient to require that party to treat Information in accordance with
this Agreement.
14.3 The Recipient may disclose Information to the extent required by law.
However, the Recipient must give the Discloser prompt notice and make a
reasonable effort to obtain a protective order.
14.4 No obligation of confidentiality applies to any Information that the
Recipient: (i) already possesses without obligation of confidentiality;
(ii) develops independently; or (iii) rightfully receives without
obligations of confidentiality from a third party. No obligation of
confidentiality applies to any Information that is, or becomes, publicly
available without breach of this Agreement.
14.5 Each party's obligations hereunder shall survive for a period of five (5)
years after receipt of Information hereunder from the Discloser, except as
otherwise mutually agreed upon by the parties.
14.6 The Discloser makes no representations or warranties of any nature
whatsoever with respect to any Information furnished to the recipient,
including, without limitation, any warranties of merchantability or fitness
for a particular purpose or against infringement.
15. General Provisions
15.1 This Agreement will be governed by and construed in accordance with the
laws of Mexico.
15.2 The terms and conditions stated herein, together with its Exhibits A and B
attached hereto, are the complete and exclusive statement of the agreement
between the parties with respect to the Services described herein. There
are no
Page 8
representations, warranties, promises, covenants or undertakings between
the parties except as described in this Agreement.
15.3 If any of the provisions of this Agreement are found to be invalid under an
applicable statute or rule of law, they are to be enforced to the maximum
extent permitted by law and beyond such extent are to be deemed omitted
from this Agreement, without affecting the validity of any other provision
of this Agreement.
15.4 The headings and captions in this Agreement are for convenience only and
shall not be used to construe the meaning of this Agreement.
15.5 Customer agrees not to assign or otherwise transfer this Agreement or
Customer's rights under it, or delegate Customer's obligations, without
Nortel Networks' prior written consent, and any attempt to do so is void.
Nortel Networks reserves the right to assign this Agreement, in whole or in
part.
15.6 Any changes to this Agreement must be made by mutual agreement and in
writing.
15.7 Capitalized terms used in this Agreement without definition shall have the
meaning assigned to those terms in the Non-FWA Supply Contract.
16. Notices
16.1 The Parties expressly agree that any notices, communications or requests
which must be made under this Contract shall be given in person, by express
or overnight courier or telefax (in which case hard copy by express courier
must follow) at the following addresses (or in such other address or
telefax number that the Parties may designate by notice to the other party
under the terms set forth herein):
If to Customer: Axtel, S.A. de C.V.
Blvd.. Gustavo Diaz Ordaz Km. 3.33
Piso 2
Col. Unidad San Pedro
San Pedro Garza Garcia, 66215 N.L.
Attention: Alberto de Villasante Herbert
Tel: (52-81) 8114-1131
Fax: (52-81) 8114-1762
With copy to:
Corporate Counsel
Tel: (52-81) 8129-8137
Fax: (52-81) 8114-1762
If to Nortel Networks: Nortel Networks de Mexico, S.A. de C.V.
Page 9
Insurgentes Sur No. 1605, Piso 30
Col. San Jose Insurgentes
03900 Mexico, D.F.
Attention: President and General Manager
Tel: (52-55) 5480-2100
Fax: (52-55) 5480-2977
With a copy to: Nortel Networks (CALA) Inc.
1500 Concord Terrace
Sunrise, FL 33323-2815
U.S.A.
Attention: Senior Counsel
Tel: 954-858-7158
Fax: 954-851-8817
Any notices to be given under this Agreement shall be made in writing and
shall be effective upon receipt at the address or telefax number specified
herein, or shall be given in any other way that the Parties may agree,
which may prove that the notice was effectively given.
IN WITNESS WHEREOF, the parties have executed this Agreement through their duly
authorized representatives.
NORTEL NETWORKS DE AXTEL, S.A. DE C.V.
MEXICO, S.A. DE C.V.
By: ________________________ By: ________________________
Name: ______________________ Name: ______________________
Title: _______________________ Title: _______________________
Page 10
EXHIBIT B-5 FORM OF FWA TECHNOLOGY LICENSE AGREEMENT
Exhibit B-5
Execution Copy - March 4, 2003
FWA TECHNOLOGY LICENSE AGREEMENT
between
Nortel Networks Limited
and
Axtel, S.A. de C.V.
Execution Copy - March 4, 2003
FWA TECHNOLOGY LICENSE AGREEMENT
THIS TECHNOLOGY LICENSE AGREEMENT ("Agreement") is made and entered into as of
the day of March 2003 (the "Effective Date")
BY AND BETWEEN
Nortel Networks Limited, a corporation organized and existing under the
laws of Canada, having its executive offices at 8200 Dixie Road, Brampton,
Ontario, Canada L6T 5P6, on behalf of itself, its Subsidiaries and its
Affiliates (hereinafter referred to as "Nortel Networks");
AND
Axtel, S.A. de C.V. , a corporation organized and existing under the laws
of Mexico, having its primary business office at Blvd. Diaz Ordaz Km. 3.33
L-1, Col. Unidad San Pedro, San Pedro Garza Garcia, N.L. 66215, Mexico
(hereinafter referred to as "Licensee").
WHEREAS Nortel Networks and Licensee have entered into a supply agreement with
respect to Licensee's purchase of Nortel Networks Fixed Wireless Access product
operating in the 3.5 GHz spectrum using TDMA technology ("FWA Product"); and
WHEREAS Nortel Networks owns certain rights in technology and software
pertaining to the FWA Product and intellectual property rights associated
therewith; and
WHEREAS Licensee wishes to acquire a contingent license to certain of these
rights, and Nortel Networks is willing to grant Licensee such license upon the
terms and conditions contained herein;
NOW THEREFORE, in consideration of the mutual promises set forth herein, the
Parties agree as follows:
1. DEFINITIONS
1.1 Definitions. The following capitalized terms, and other capitalized terms
defined elsewhere in this Agreement, will have the meanings ascribed
thereto wherever used in this Agreement:
(a) "Affiliate" means a company which Nortel Networks Limited, or its
parent, Nortel Networks Corporation, effectively controls, directly or
indirectly, other than a Subsidiary, through the ownership or control
of shares in the company.
(b) "Binary Code" means the machine-executable code included with the
Technology.
(c) "Confidential Information" means any business, marketing, technical,
scientific or other information disclosed by any Party which, at the
time of disclosure, is designated as confidential (or like
designation), is disclosed in circumstances of confidence, or would be
understood by the Parties, exercising reasonable business judgment, to
be confidential. Confidential Information includes,
Page 2
without limitation, all Technology, all Source Code, all Binary Code,
all Technical Information, and the terms and conditions of this
Agreement.
(d) "Contractor" means a third party contracted by Licensee to perform
services on behalf of Licensee.
(e) "Derivative Work(s)" means any works based upon the Technology and/or
Technology IP to the extent that they are developed or created by or
for Licensee.
(f) "Documentation" means all end user documentation (in any form), other
than Technical Information (in any form), related to the Technology
and provided by Nortel Networks to Licensee.
(g) "End User" means an end user of Licensee Products in the Licensee
network.
(h) "End User License Agreement" means a license agreement between
Licensee and End User that is substantially similar to the license
agreement formerly used by Nortel Networks in connection with the
Licensee Product.
(i) "Event of Default" has the meaning set out in Section 2.9 of this
Agreement.
(j) "Field of Use" means, only upon the Event of Default, the deployment,
use, offer for use, lease, or other commercialization of the Licensee
Products within the Licensee Network for the use of its End Users and
shall include the right to make, have made, and support the Licensee
Products solely for such purposes. Prior to the Event of Default,
there is no permissible Field of Use.
(k) "Infringement Claim" means a claim by a third party that the
Licensee's use of the Technology under the terms of this Agreement
will infringe the patents, copyrights, trademarks, trade secrets, or
any other intellectual property right of that third party solely to
the extent to which Nortel Networks had actual knowledge of the third
party claim prior to the Event of Default and failed to promptly
disclose such claim to the Licensee upon or promptly after the Event
of Default provided that Nortel Networks shall be deemed to have so
disclosed to Licensee to the extent to which the Licensee itself had
actual knowledge of such claim.
(l) "Licensee Network" means the current and future network owned and
operated by the Licensee that is and/or will be located in Mexico and
is based on the FWA Product.
(m) "Licensee Product" means the FWA Product as more fully described in
Schedule A.
(n) "Manufacturing Licensee" means a third party with whom Nortel Networks
has entered into an agreement permitting such third party to make and
sell or lease products based on products designed by or for and sold
or leased by Nortel Networks.
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(o) "Modified Binary Code" means machine-executable code obtained from
Modified Source Code or works derived from Binary Code.
(p) "Modified Documentation" means works derived from Documentation and
includes translations.
(q) "Modified Source Code" means software code in human-readable form
derived from Source Code.
(r) "Party" means either Licensee or Nortel Networks.
(s) "Patent Rights" means any patent rights associated with the patents
and patent applications owned by Nortel Networks respectively having
at least one claim which reads on the Technology provided to Licensee
by Nortel Networks and which Technology is incorporated in the
manufacture, use, or sale of the Licensee Products in the Territory
together with any patents or patent rights arising or issuing from
said patent applications, provided, however, that such patents and
patent applications have an effective filing date prior to or
including the Effective Date.
(t) "Source Code" means the software code in human-readable form that is
included with the Technology.
(u) "Subsidiary" means any corporation or other legal entity in which
Nortel Networks Corporation directly or indirectly owns or controls,
and continues to own or control, fifty percent (50%) or more of the
voting stock or shares.
(v) "Supply Agreement" means the Purchase and License Agreement for FWA
Equipment among Nortel Networks Limited and Nortel Networks de Mexico,
S.A. de C.V. and Axtel, S.A. de C.V. entered into by those Parties in
or about March 2003 and effective on the Closing Date (as defined in
the Supply Agreement).
(w) "Supply Period" means period for the supply of FWA Product commencing
on the Closing Date (as defined in the Supply Agreement) and
continuing for the term of the Supply Agreement.
(x) "Technical Information" means all technical or scientific
documentation, product drawings, bills of materials, component
supplier lists, and other information (in any form) that is related to
the manufacture, use, support or maintenance of Licensee Products, or
that is related to the Technology, and that is provided by Nortel
Networks to Licensee.
(y) "Technology" means the Software and Hardware described in Schedule A
and as provided by Nortel Networks to Licensee, and the Technical
Information as provided by Nortel Networks to Licensee.
(z) "Technology IP" means the copyrights, trade secrets and Patent Rights
owned by Nortel Networks as of the Effective Date directed to and
covering the Technology but excludes the Trademarks.
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(aa) "Territory" means Mexico (subject to applicable United States and
Canadian export restrictions).
(bb) "Trademarks" means the registered and unregistered trademarks, service
marks, trade names and/or product names of Nortel Networks including
those formerly used in connection with the Licensee Product.
2. LICENSES
2.1 Grant of Licenses. Subject to the terms and conditions of this Agreement,
Nortel Networks grants to Licensee, a personal, non-transferable,
non-exclusive, non-sublicensable (except for the purposes set forth in
Section 2.2 below), fully paid-up license, including under the Technology
IP, within the Territory and solely in the Field of Use:
(a) to make a reasonable number of backup copies of the Source Code and
the Binary Code and retain such copies on Licensees business premises;
(b) to use, copy, modify, and create Derivative Works from the Source Code
(provided that all Source Code shall remain on Licensees premises)
solely to the extent to which it is commercially necessary to support
the Licensee Product:
(1) to create, compile and assemble Binary Code and such Modified
Binary Code integral to Licensee Products for use therewith;
(2) to integrate Binary Code and such Modified Binary Code into
Licensee Products; and
(3) to provide technical support for Licensee Products used within
the Field of Use;
(c) to make, have made, use, sell, offer to sell, manufacture and produce
Licensee Products for use within the Field of Use and to use the
Technology in conjunction with such manufacture and production;
(d) to create Modified Documentation for use with Licensee Products within
the Field of Use solely to the extent to which it is commercially
necessary to support the Licensee Product;
(e) to use the Technology, Technology IP, and any such Derivative Works
internally to provide technical support for Licensee Products used
within the Field of Use;
(f) subject to End User License Agreements:
(1) to use Licensee Products internally to provide associated
services to End Users within the Field of Use;
(2) to use Licensee Products within the Field of Use;
(3) to sell, lease and license Licensee Products to End Users for use
within the Field of Use;
Page 5
(4) to use, copy and distribute such Modified Documentation in
conjunction with the use of Licensee Products within the Field of
Use;
(g) and, to use the Technical Information only as may be necessary to
exercise the rights granted in this Section 2.1.
2.2 Contractors. Licensee may sublicense its rights in Subsections 2.1 (b),
(c), (d), (e), (f)(1), (f)(3) and (g) to Contractors solely to allow such
Contractors to develop or assist in the development, manufacture,
installation, provision and/or support of Licensee Products and/or Licensed
Services. Prior to, or at the time of providing any portion of the
Technology to a Contractor, Licensee shall enter into a written agreement
with the Contractor requiring that:
(a) the Contractor use the provided Technology exclusively for the benefit
of the Licensee;
(b) the Contractor shall incur and agree to be bound by all of the same
obligations and restrictions with respect to the Technology as those
incurred by and applicable to Licensee under this Agreement,
including, without limitation, the restrictions set forth herein
associated with use of the Technology and the confidentiality
provisions contained herein; and
(c) all copies of any Technology provided to or made by the Contractor
shall be returned to Licensee upon Contractor's completion of work or
termination.
2.3 Limited License. Notwithstanding any other provision of this Agreement,
neither Licensee nor any Contractor, End User or any other third party
shall use, exercise, practice or exploit any Technology or Technology IP
except in conjunction with Licensee Products within the Field of Use.
2.4 Copying. Licensee shall not reproduce or copy, except as permitted
hereunder or for back up or archival purposes, or in any other manner use
any part of the Technology except in association with the Licensee
Products.
2.5 Prohibited Uses. Licensee shall not reverse engineer, disassemble, reverse
translate, decompile, or in any other manner decode any Binary Code
provided or licensed under this Agreement in order to derive the source
code form unless the Source Code for such Binary Code is also licensed
under this Agreement. Licensee shall not decode any passwords, encrypted
keys or other security features associated with any Binary Code that has
been provided or licensed under this Agreement.
2.6 Grant Back License. In partial consideration of the License granted herein
by Nortel Networks, Licensee hereby grants to Nortel Networks and its
Manufacturing Licensees, to the full extent of its legal right to do so, an
irrevocable, perpetual, non-exclusive, fully-paid up, royalty-free,
worldwide license under any patents or patent applications that Licensee
owns or acquires that relate to the Technology or Technology IP.
2.7 Specific Acknowledgments. (i) Licensee acknowledges that Licensee shall be
solely responsible for integrating, manufacturing and obtaining any
required government or regulatory approvals for Licensee Products and any
associated services. (ii) Nortel
Page 6
Networks represents that if it fails to meet the scheduled delivery date
set out in an accepted purchase order under the Supply Agreement, then 30
days after that scheduled delivery date, Licensee shall have the right to
request Nortel Networks to provide any and all documentation and
information relating to the manufacture of the FWA Products (the "Licensee
Request"), and Nortel Networks shall be obligated to provide such
documentation and information within a period no longer than thirty (30)
days after such Licensee Request. Additionally, for the purposes of
obtaining information relating to the manufacture of the FWA Products,
Licensee shall have the right to send one of its employees, solely at
Licensee's expense, to observe the manufacture, if any, of FWA Products at
the appropriate Nortel Networks facility, subject to Licensee's and its
employee's compliance with Nortel Networks then-current confidentiality and
safety policies and procedures. In the event that such information and
documentation is insufficient to allow Axtel to manufacture the FWA
Products, Nortel Networks will make its best efforts to provide further
information or documentation to allow the manufacture of the FWA Products,
or it may offer reasonable assistance, for a reasonable fee, that Axtel may
require for such purposes.
2.8 Third Party Components. Except at expressly set out herein, this Agreement
does not grant Licensee any rights to copy, modify, manufacture, distribute
or use (in any manner) any third party hardware or software, including any
Third Party Components identified in Schedule A. Licensee acknowledges and
agrees that Licensee must acquire from suppliers of any third party
hardware or software, including the Third Party Components, all rights
necessary to provide services using Licensee Products containing software
and hardware supplied by such third parties or covered by intellectual
property rights owned by such third parties, and to create, manufacture,
and use such Licensee Products. Licensee shall be solely responsible for
payment of all applicable third party royalties and license fees directly
to the applicable third party licensors and/or suppliers. To the extent to
which Nortel Networks has paid-up license rights that are assignable (or
sublicensable) with respect to the use of such Third Party Components in
the FWA Product, Nortel Networks will assign (or sublicense) such rights to
Licensee on a non-exclusive basis without additional consideration payable
to Nortel Networks. To the extent to which any such rights cannot be
assigned (or sublicensed), Nortel Networks will grant to Licensee a
non-exclusive right to source such Third Party Components without
additional consideration payable to Nortel Networks and Nortel Networks
will provide commercially reasonable assistance to Licensee to obtain such
Third Party Components directly from such third party suppliers.
2.9 Event of Default. For the purposes of this Agreement, "Event of Default"
shall mean
(a) a general product discontinuance of the FWA Product by Nortel
Networks,
(b) a material failure by Nortel Networks for any reason, other than a
reason contemplated under the Supply Agreement, through no fault of
Licensee, to supply FWA Product to Licensee within 120 days of the
scheduled delivery date set out in an accepted purchase order under
the Supply Agreement. For avoidance of doubt, "material failure" shall
mean Nortel Networks' failure to deliver, in a period of 120 days of
the relevant scheduled delivery date, the amount of product which is
essential for the business objective of the relevant purchase order.
Furthermore, Nortel Networks acknowledges that Licensee, by exercising
its rights under this Agreement, shall not relinquish any of its
rights under the Supply Agreement.
Page 7
2.10 Insolvency. All rights and licenses granted under or pursuant to this
Agreement are, and shall otherwise be deemed to be, for purposes of Section
365(n) of the U.S. Bankruptcy Code or other applicable bankruptcy or
insolvency laws, licenses of rights to "intellectual property" as defined
under Section 101 of the U.S. Bankruptcy Code (or comparable sections). The
parties agree that Licensee shall retain and may fully exercise its rights
and elections under the U.S. Bankruptcy Code or other applicable bankruptcy
or insolvency laws. The parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against either party under
the U.S. Bankruptcy Code or otherwise, the party that is not a party to
such proceedings shall be entitled to a complete duplicate of (or complete
access to, as appropriate) any such intellectual property and all
embodiments of such intellectual property, and the same, if not already in
their possession, shall be delivered to them (i) in the event of any such
commencement of a bankruptcy proceeding, upon their written request
therefore, unless the party subject to such proceeding (or trustee on
behalf of the subject party) elects to continue to perform all of its
obligations under this Agreement, or (ii) if not delivered under (i) above,
upon the rejection of this Agreement by or on behalf of the party subject
to such proceeding upon written request therefore by the non-party.
3. OWNERSHIP, RESERVATION OF RIGHTS, AND PROTECTION
3.1 Ownership. Except for the rights (including the license rights) expressly
granted under this Agreement, Nortel Networks shall retain all right,
title, and interest in and to the Technology, Technology IP and Trademarks.
Nortel Networks reserves all rights not expressly granted herein, and any
express reservations of rights set forth herein shall not be construed as
limiting such reservation or as implying any grant or license not expressly
set forth in this Agreement.
3.2 Copies. Nortel Networks retains title to all copies of Technology, and
Licensee hereby grants and assigns title to Nortel Networks of all copies
of Technology made, or to be made, by or on behalf of Licensee, including
copies of Source Code and Binary Code.
3.3 Non-exclusivity. Nortel Networks reserves all rights to continue to
develop, manufacture, license and use the Technology as Nortel Networks, in
its discretion, sees fit. Nortel Networks also reserves the right to
license the Technology to other parties.
3.4 Specific Disclaimers. Nothing contained in this Agreement shall be
construed as:
(a) a warranty or representation by Nortel Networks as to the validity or
scope of any of the Technology IP;
(b) subject to Section 6.0, a warranty or representation that any use of
the Technology will be free from infringement of any patent,
copyright, trade secret, or other industrial or intellectual property
rights of any third party;
(c) conferring on Nortel Networks an obligation to file, secure or
maintain in force any Technology IP;
(d) conferring on Nortel Networks an obligation to make any determination
as to the applicability of any Technology IP to any product or service
of Licensee; or
Page 8
(e) imposing on any Party any obligation to institute any suit or action
for infringement of any of the Technology IP licensed under this
Agreement or to defend any suit or action brought by a third party
which challenges or concerns the validity of any Technology IP, it
being expressly understood that Licensee shall have no right to
institute any such suit or action for infringement of any Technology
IP, nor the right to defend any such suit or action which challenges
or concerns the validity of any Technology IP.
3.5 Trademarks. No trademark license is granted hereunder, and Licensee shall
not use or display any name, trade name or trademark of Nortel Networks on
or in association with Licensee Products, Licensed Services, Modified
Documentation, or in any other manner, including but not limited to in
branding, labelling, advertising or promotions. Licensee shall not employ
trade dress similar to that used by Nortel Networks in its products,
documentation, advertising or publicity.
3.6 Duty to Enforce. Licensee shall enforce its sublicense agreements with
Contractors and End Users as Nortel Networks deems necessary to protect its
intellectual property rights.
3.7 Intellectual Property Notices.
(a) Licensee shall not remove or destroy any patent, copyright or
restricted rights notices affixed to any original media containing any
Technology or Documentation. All copies of Technology made by or on
behalf of Licensee shall either be labeled in the same manner as on
the original media or in a manner substantially similar to the
following:
Copyright Nortel Networks. All Rights Reserved.
(b) All copies of Modified Source Code, Modified Binary Code and Modified
Documentation made by or on behalf of Licensee shall either be labeled
in the same manner as on the original media or in a manner
substantially similar to the following:
Copyright [year(s)] [name of Licensee] and its licensors. All Rights
Reserved.
(c) Upon request from Nortel Networks, Licensee shall provide Nortel
Networks with a sample of all of Licensee Products related packaging
and publicity (including but not limited to advertising, catalogues
and brochures, and the like), to enable verification of such marking
and notation.
4. FEES AND RECORDS
4.1 Third Party License Fees. Licensee acknowledges that Licensee may be
required to pay license fees to suppliers of Third Party Components.
4.2 Taxes. All costs, such as stamp duties, taxes and other similar levies
originating from or in connection with this Agreement shall be borne by
Licensee, except for Nortel Networks income tax, if any.
Page 9
4.3 Records. Licensee shall keep clear, complete and accurate records with
respect to Licensee Products for a period of at least three (3) years
following such sale, lease or license, including but not limited to the
date of sale, lease and/or license of same, and the End User License
Agreement applicable to same. Nortel Networks shall have the right, through
independent certified public accountants to examine and audit, during
normal hours, at least semi-annually (or at less frequent intervals) all
such records, and such other records and accounts monitor the Licensees
compliance with the terms and conditions of this Agreement. Such
examinations and audits shall be completed at Nortel Networks' expense.
5. LIMITATION OF LIABILITY
5.1 THE TECHNOLOGY IS LICENSED TO LICENSEE BY NORTEL NETWORKS (AND ITS
SUPPLIERS/LICENSORS, IF ANY) "AS IS" WITHOUT WARRANTY, REPRESENTATION OR
CONDITION OF ANY KIND. NORTEL NETWORKS (AND ITS SUPPLIERS/LICENSORS, IF
ANY) EXPRESSLY DISCLAIM ALL WARRANTIES, REPRESENTATIONS AND CONDITIONS,
STATUTORY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY,
REPRESENTATION OR CONDITION OF TITLE, NON-INFRINGEMENT (SUBJECT TO SECTION
6.0), MERCHANTABILITY, FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE
(EVEN IF ON NOTICE OF SUCH PURPOSE), CUSTOM OR USAGE IN THE TRADE.
5.2 IN NO EVENT SHALL NORTEL NETWORKS (OR ITS SUPPLIERS/LICENSORS, IF ANY) BE
LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL
DAMAGES OF ANY KIND, INCLUDING WITHOUT LIMITATION, LOST BUSINESS, LOST
SAVINGS, LOST DATA, AND LOST PROFITS, REGARDLESS OF THE CAUSE AND WHETHER
ARISING IN CONTRACT (INCLUDING FUNDAMENTAL BREACH), TORT (INCLUDING
NEGLIGENCE), OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
5.3 The Parties acknowledge and agree that the exclusions of liability
contained herein are reasonable and appropriate in the circumstances
and were a material factor in concluding this Agreement.
6. INDEMNIFICATION
6.1 Licensee shall defend and indemnify Nortel Networks from any and all claims
and actions brought against Nortel Networks by any third party, and shall
hold Nortel Networks harmless from all corresponding damages, penalties,
liabilities, costs and expenses, (including reasonable attorneys' fees)
incurred by Nortel Networks arising out of or in connection with this
Agreement, including but not limited to Licensee's exercise of its rights
granted in this Agreement, or arising out of or in connection with
Licensee's use, sale, lease, license or provision of Licensee Products and
any associated services.
6.2 Nortel Networks shall indemnify and hold harmless Licensee, its officers,
directors, representatives, agents, employees, contractors, subcontractors,
subsidiaries and affiliates against any actual direct loss, damage,
liability, cost, expense, action or claim, including reasonable attorneys'
fees, litigation costs and expenses and amounts paid in settlement, subject
to the limitations set forth in the following paragraphs, arising out of or
in connection with any Infringement Claim. Nortel Networks will defend
Licensee against
Page 10
an Infringement Claim at Nortel Networks' expense and pay all costs and
damages that a court finally awards or are agreed in settlement, provided
that Licensee: (a) promptly notifies Nortel Networks in writing of the
Infringement Claim, and (b) allows Nortel Networks to control, and
cooperates with Nortel Networks at Nortel Networks' expense in, the defense
and any related settlement negotiations. If such an Infringement Claim is
made or appears likely to be made, Nortel Networks agrees to secure the
right for Licensee to continue to use the Technology, or use its best
efforts to assist the Licensee to modify it, or to replace it with
equivalent Technology. If Nortel Networks determines that none of these
options is reasonably available, Nortel Networks may upon thirty (30) days
notice terminate the rights of the Licensee under this Agreement, such
termination will not in any way limit Nortel Networks obligations with
respect to any Infringement Claim arising out of events occurring prior to
the effective date of termination. This represents Licensee's sole and
exclusive remedy regarding any claim of infringement.
6.3 Nortel Networks has no obligation regarding any claim based on any of the
following: (a) anything Licensee provides which is incorporated into the
Licensee Product; (b) the amount of revenues or profits earned or other
value obtained by the use of a Licensee Product by Licensee or its End
Users; (c) Licensee's modification of Technology; (d) the combination,
operation, or use of Technology with any product, data, or apparatus that
Nortel Networks did not provide; (e) the Licensee's failure to install or
have installed changes, revisions or updates as instructed by Nortel
Networks; or (f) infringement by a Third Party Vendor Item alone, as
opposed to its combination with Products Nortel Networks provided to
Licensee as a system.
6.4 In case of any infringement caused by any Third Party Vendor Item, Nortel
Networks shall reasonably cooperate with Licensee and hereby assigns to
Licensee any of its rights to request the proper defense and
indemnification for such claim to such Third Party Vendor. Nortel Networks
shall provide Licensee with all necessary contact information and
applicable documentation, if available, for those third party vendors.
Furthermore, Nortel Networks shall use its best efforts to provide
reasonable assistance to Licensee for Licensee to be able to obtain from
the Third Party Vendor the applicable defense and indemnification for such
Third Party Vendor Item infringement, but only to the extent such
assistance does not cause Nortel Networks to incur any out-of-pocket
expenses or material additional costs.
7. CONFIDENTIALITY
7.1 Confidential Information. Any Confidential Information received by Licensee
pursuant to this Agreement shall be used, disclosed, or copied, only for
the purposes of, and only in accordance with, this Agreement. Licensee
shall use, as a minimum, the same degree of care as it uses to protect its
own Confidential Information of a similar nature, but no less than
reasonable care, to prevent the unauthorized use, disclosure or publication
of Confidential Information. Without limiting the generality of the
foregoing:
(a) Licensee shall only disclose Confidential Information to its bona fide
employees, agents, Contractors or End Users who need to obtain access
thereto consistent with Licensee's license and sublicense rights under
this Agreement;
(b) Licensee shall not make or have made any copies of Confidential
Information except those copies which are necessary for the purposes
of this Agreement; and
Page 11
(c) Licensee shall affix to any copies it makes of the Confidential
Information, all proprietary notices or legends affixed to the
Confidential Information as they appear on the copies of the
Confidential Information originally received from Nortel Networks.
7.2 Persons with Access. Licensee acknowledges that Nortel Networks
Confidential Information associated with Technology and/or Technology IP is
Nortel Networks' sole and exclusive property. Therefore, in addition to the
confidentiality obligations Licensee assumes in Section 7.1 above, Licensee
also agrees to devote its best efforts to ensure that all persons afforded
access to Confidential Information associated with Technology and/or
Technology IP protect such Confidential Information against unauthorized
dissemination or disclosure and that all employees and Contractors sign a
written Confidentiality and Intellectual Property Agreement containing
substantially similar terms to the provisions contained in this Agreement.
7.3 Exclusions. Licensee shall not be bound by obligations restricting
disclosure and use set forth in this Agreement with respect to any
Confidential Information that is not part of Technology or Technology IP,
which:
(a) was known by Licensee prior to disclosure, as evidenced by its
business records;
(b) was lawfully in the public domain prior to its disclosure, or lawfully
becomes publicly available other than through a breach of this
Agreement or any other confidentiality obligation on behalf of any
third party;
(c) was disclosed to Licensee by a third party provided such third party,
or any other party from whom such third party receives such
information, is not in breach of any confidentiality obligation in
respect of such information;
(d) is independently developed by Licensee, as evidenced by its business
records; or
(e) is disclosed when such disclosure is compelled pursuant to legal,
judicial, or administrative proceedings, or otherwise required by law,
provided that Licensee advises Nortel Networks of any such disclosure
in a timely manner prior to making any such disclosure (so that either
Party can apply for such legal protection as may be available with
respect to the confidentiality of the information which is to be
disclosed), and provided that Licensee shall apply for such legal
protection as may be available with respect to the confidentiality of
the Confidential Information which is required to be disclosed.
7.4 Return of Confidential Information. Immediately upon termination of this
Agreement, Licensee shall return to Nortel Networks all Confidential
Information and all copies thereof, or, if so directed by Nortel Networks,
shall immediately destroy such Confidential Information and all copies
thereof and shall certify such destruction to Nortel Networks. Except for
the documentation that Licensee requires to operate and support the FWA
Products already installed in their Licensee Network.
7.5 Notice of Disclosures. Except for disclosures authorized under the terms of
this Agreement, Licensee shall notify Nortel Networks immediately upon
learning of any disclosure of Nortel Networks' Confidential Information.
Page 12
8. TERM AND TERMINATION
8.1 Term. The term of this Agreement shall commence on the Effective Date and
will expire at the end of the Supply Period unless earlier terminated as
permitted elsewhere in this Agreement.
8.2 Licenses Under Patent Rights. Notwithstanding Section 8.1, all licenses
granted under Patent Rights shall commence on the Effective Date, solely in
the Field of Use, to the extent Patent Rights exist as of that date, or
when letters patent are issued or granted or Patent Rights arise or become
effective if subsequent thereto, and, provided this Agreement is not
terminated as permitted elsewhere in Section 8.0, shall continue for the
shortest of:
(a) the entire terms of the respective Patent Rights under which they are
granted or are in force,
(b) for that part of such Patent Right terms for which Nortel Networks has
the right to grant such licenses, or
(c) the term of this Agreement.
8.3 Breach. In the event Licensee is in breach of, or fails to perform a
material obligation under this Agreement, and fails to cure such breach or
perform such obligation within thirty (30) days after notice thereof,
Nortel Networks may upon notice immediately terminate the rights of the
Licensee under this Agreement.
8.4 Bankruptcy. If Licensee should file a voluntary petition in bankruptcy,
make any assignment for the benefit of its creditors, seek any court or
governmental protection from creditors, or should an order be entered
pursuant to any law relating to bankruptcy or insolvency or appointing a
receiver or trustee for Licensee or for any tangible or intangible assets
of Licensee related to this Agreement, and if any such order, proceeding or
receivership is not terminated within sixty (60) days, or if Licensee is
otherwise dissolved, then Nortel Networks may immediately upon notice
terminate this Agreement and the license and rights granted to Licensee
herein, in whole or in part as specified in such notice.
8.5 Other Default. In addition, and without prejudice to any rights and
remedies provided for hereunder, Nortel Networks may terminate this
Agreement together with all four Replacement Agreements (as defined in the
Supply Agreement), effective immediately, upon written notice to Licensee,
upon the occurrence of any of the following events or conditions:
(i) Licensee fails to make payment in accordance with the terms and
conditions of the Supply Agreement, which failure continues for a
period of ten (10) business days (in Mexico) after written notice to
Licensee,
(ii) within eighteen (18) months from the commencement of the Supply
Period, the identity of Licensee's business materially changes by sale
of its business, transfer of control of its capital stock, merger or
otherwise, unless prior written consent therefor has been obtained
from Nortel Networks; or
Page 13
(iii) the occurrence of an Event of Default under any one of the Senior
Note or the other Replacement Agreements, all as defined in the Supply
Agreement, which by the terms of such agreements would allow Nortel
Networks to declare such Senior Note due and payable or to terminate
such Replacement Agreement, as the case may be.
8.6 Return of Technology. Licensee shall, within thirty (30) days of
termination, return to Nortel Networks or certify in writing to Nortel
Networks that all copies of the Technology have been destroyed.
8.7 Survival. In addition to this Section 8.0, the following provisions shall
survive termination or expiry of this Agreement: Section 1.0 - Definitions,
Section 2.6 - Grant Back License, Section 3.0 - Ownership, Reservation of
Rights and Protection, Section 4.0 -Fees and Records, Section 5.0 -
Limitation of Liability, Section 6.0 - Indemnification, and Section 7.0 -
Confidentiality. Further, any End User License Agreements shall, subject to
their terms, survive termination or expiry of this Agreement.
9. GENERAL
9.1 Notices. All notices shall be in writing and sent by certified or
registered mail, return receipt requested, or by hand delivery to the other
Party at the following address or fax number:
(a) if to Licensee:
Boulevard Gustavo Diaz Ordaz Km. 3.33 L-1
Colonia Unidad San Pedro
San Pedro Garza Garcia
Nuevo Leon, Mexico
Attention: Director de Negociaciones Estrategicas
with a copy to the Corporate Counsel.
(b) if to Nortel Networks:
Nortel Networks (CALA) Inc.
1500 Concord Terrace
Sunrise, Florida 33323-2815
Attention: Senior Counsel
with a copy to:
Nortel Networks de Mexico, S.A. de C.V.
Insurgentes Sur 1605, Piso 30
Col. San Jose Insurgentes
03900 Mexico, D.F.
Attn.: President
Such notices shall be deemed to have been received five (5) business
days after mailing if forwarded by mail or on the day of receipt if
delivered by hand. The address of either
Page 14
Party may be changed by giving notice to the other Party in accordance
with the foregoing.
9.2 Independent Contractors. No agency, partnership, joint venture or
employment relationship is or shall be created by virtue of this Agreement.
9.3 Solicitation of Employees. Neither Party shall during the Term or for one
(1) year thereafter solicit for employment or hire, directly or indirectly,
the other Party's employees who are directly involved in the conception,
reduction to practice, or development of any Technology, Derivative Work or
related technology, or the transfer or receipt of any Technology,
Derivative Work or related technology, hereunder, without the express prior
written consent of the other Party.
9.4 Publicity. No Party shall use the name of the other Party in any
advertising, public relations or media release without the prior written
consent of the other Party.
9.5 Assignment. This Agreement may not be assigned or transferred by Licensee
or by operation of law without the prior written consent of the Nortel
Networks. Any purported assignment in violation of this provision shall be
null and void and shall constitute a material breach of this Agreement that
is not subject to cure, notwithstanding Section 8.3. Either Party shall
have the right to delegate any duty or assign any right hereunder upon the
prior written consent of other Party, such consent not to be unreasonably
withheld. Notwithstanding any of the foregoing, either Party shall have the
right to delegate or assign this Agreement to any Subsidiary or in
conjunction with the transfer or sale of a substantial portion of that
Party's business or an entire business unit of that Party without the
consent of the other Party, and that Party shall provide notice to the
other Party of any such delegation or assignment.
9.6 Non-Assertion of Rights. If at any time a Party shall elect not to assert
its rights under any provision of this Agreement, such action or lack of
action in that respect shall not be construed as a waiver of its rights
under such provision or of any other provision of this Agreement.
9.7 Arbitration. If, within thirty (30) days from the date of any notice of
dispute from a Party to any other Party, such Parties are unable to resolve
the issue, then either Party may initiate the binding arbitration to
resolve such dispute by written notice to such other Party upon expiration
of such thirty (30) day period. Any dispute between the Parties arising in
connection with this Agreement shall be exclusively resolved by arbitration
pursuant to the Rules of Conciliation and Arbitration of the International
Chamber of Commerce then in force. The arbitration proceedings pursuant to
this Section 9.7 shall take place in the English language in the City of
Miami, State of Florida, before a panel of three (3) arbitrators appointed
in accordance with the aforementioned rules. The decision of the
arbitrators shall be final and binding upon the Parties and their
respective successors and assigns. The decision and award rendered by the
arbitrators may be entered in any court of competent jurisdiction and any
such court may order the enforcement of such award against the Parties and
their respective successors and assigns.
9.8 Section Headings. Section headings are for convenience only and shall not
be considered in the construction or interpretation of this Agreement.
Page 15
9.9 Entire Agreement. The attached Schedule(s) form part of this Agreement and
are incorporated by reference herein. This Agreement constitutes the entire
agreement between the Parties as to the subject matter contained herein and
supersedes all other agreements between the Parties concerning such subject
matter. This Agreement may only be modified by an instrument in writing
executed by each Party's duly authorized representative(s).
9.10 Export. Licensee acknowledges that the Technology may be subject to
Canadian and United States export control laws. Licensee agrees to comply
strictly with all such regulations and acknowledges that it has the
responsibility to obtain such licenses to export, re-export or import the
Technology as may be required after delivery to Licensee. Licensee shall
notify and inform its employees and Contractors having access to the
Technology of Licensee's obligation to comply with the requirements stated
in this section of this Agreement.
9.11 Language. This Agreement has been drafted in the English language at the
mutual request of the Parties hereto.
9.12 Severability. In the event that any provision of this Agreement is found to
be invalid, void, voidable or unenforceable, the Parties agree that unless
such provision materially affects the entire intent and purpose of this
Agreement, such invalidity, voidness, voidability or unenforceability shall
affect neither the validity of this Agreement nor the remaining portions
herein, and that the provision in question shall be deemed to be replaced
with a valid and enforceable provision most closely reflecting the intent
and purpose of the original provision. In the event that any provision of
this Agreement is found to be invalid, void, voidable or unenforceable, and
such provision materially affects the entire intent and purpose of this
Agreement, the Parties shall negotiate in good faith to enter into a new
agreement replacing this Agreement. In the event that the Parties are
unable to enter into a new agreement replacing this Agreement within sixty
(60) days of such event, this Agreement shall terminate.
9.13 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
any choice of law rule or conflict of law, rules or provisions thereof.
9.14 Representation of Nortel Networks. Notwithstanding any contrary provision,
condition, or term set forth in this Agreement, the Parties hereby agree
that if an Event of Default occurs as provided in Section 2.9 of this
Agreement, unless Licensee permits otherwise in writing, (i) all
obligations of Nortel Networks under the Supply Agreement shall remain
valid and enforceable, including but not limited to Nortel Networks'
obligation to deliver the FWA Products requested by Licensee pursuant to an
Order Document, (ii) the Supply Agreement shall remain valid and
enforceable, unless Licensee terminates the Supply Agreement pursuant to
the terms set forth thereunder, and (iii) Nortel Networks shall not be
released from its liabilities and obligations to Licensee under the Supply
Agreement, including but not limited to its obligations arising out of any
delay in the delivery of the FWA Products.
9.15 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Page 16
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.
Nortel Networks Limited Axtel, S.A. de C.V.
______________________________ ______________________________
Authorized Signature Authorized Signature
______________________________ ______________________________
Printed Name and Title Printed Name and Title
______________________________
Authorized Signature
______________________________
Printed Name and Title
Page 17
Execution Copy - March 4, 2003
SCHEDULE A:
TECHNOLOGY
Much of the documentation listed below is held on Nortel Proprietary databases.
Access to theses databases would be made available in the event of the TLA
coming into force.
The following describes the resources required to enable a third party to build
and maintain all FWA operating software from source code in the event of change
of ownership. The scope of this document is limited to software for system
releases SR13 and SR14.
This document does not include software and systems used to test the software
prior to release to a customer.
Section A 1.1 Documentation
Nearly all FWA software design Documentation (both current and archive) is
stored on the European Livelink Server in a hierarchical fashion. The Server URL
is (http://eur-livelink.europe.nortel.com). The following project folders are
applicable to FWA software development:
o FWA Core Library: Line Interface Specifications for RSS Code and archive
material
o FWA Environment: Livelink Project Hierarchy etc.
o Internet FWA Development Project: Software Design Documents
o FWA Admin and Department: Quality Documents
o Some older documents are currently stored in the Nortel PLS system
(MDIVDOC).
The document FWA-ENV Folder Structure.doc located in the Livelink project Folder
`FWA Environment' describes the document storage hierarchy.
These Livelink folders contain confidential data for all FWA developments and
customers and not all of it is required for the licensee, and access to those
areas would be restricted.
Section B 1.2 Source Code
All FWA source code is maintained using two different source code control and
configuration management systems.
The REM and FET software is managed using MDE (Multi-Site Development
Environment) which is a proprietary Nortel tool. However standard Unix SCCS
tools can be used to view and maintain the source code if required. The source
code is stored on server pnd-project-pp3. The NFS mount points are
currently/project/fra/rem and /project/fra/fet.
All other software is managed using Clearcase.
Source code for each Network Element is stored in Clearcase Versioned Object
Bases (VOBs) on the SUN Server zmdhs000. The applicable VOB names used for the
Axtel SR13/SR14 product are as follows:
Page 18
F5 RTU and RDA : g_rss
F2 RTU : fra_rss
ITS (TPM,TTM,TPM-PD) : fra_its_d, fra_dsp , fra_pdsp, v52
ASEM : pd_asem
RMT : fra_rmt
TMU : fra_tmu
TBM-CD : tbm_cd
MIB : fra_mibpd
Tools : tools (Third Party Tools compilers etc.)
Details of the tools required and how to build the software can be found in
various Process/Work Instruction documents stored in Livelink with the other FWA
documentation. The top-level documents are: -
Airside Software : MQAPR622 - Airside software module release procedure Issue
1.1, Livelink Location : FWA Admin And Department/QUA/UNC/Airside Development
FET : QUA-PRO FET Build, Release and Sanity Process Instruction, Version 0.1,
Livelink Folder : FWA Core Library/QUA/PRO
REM : FWA REM Loadbuild Guide, Doc ID: REMLDBLD, Version AB02, Located in: PLS
MDIVDOC
The term `Airside Software' is used for all operating FWA software apart from
the REM and FET.
Once the software has been built the processes to release the software onto
CDROM are described in several documents located at Livelink Folder FWA Core
Library/QUA/SR.
Section C 1.3 Object Code
All FWA software (bootcode, applications and scripts) is stored in the `FWA
Software release folder'/mdn05/fwa/software currently located on server
pnd-tools-pp4. The system release notes, engineering data files and sysrel files
are also stored here. The Product Engineering Codes (PECs) and associated
software version numbers for each network element required for a specific system
release are defined within the system release note.
Software required in OEM production is also stored within the manufacturing
database (DDME) and is included in the relevant Bill Of Materials (BOM)
referenced by PEC.
Page 19
2 Hardware:
Formal Nortel Networks hardware design information is stored in the `design
delivery management environment' (DDME) database. DDME is a Nortel proprietary
database storing design information from which the product can be manufactured.
GDL is the Global Documentation Library for use with DDME from which all the
documentation associated with DDME can be retrieved.
Other hardware design information (both current and archive) is stored on the
European Live-link Server in a hierarchical fashion. The Server URL is
(http://eur-livelink.europe.nortel.com). The following project folders are
applicable to FWA hardware development:
o EMEA - Enterprise: FWA: Prox I hardware archive
o EMEA - Enterprise: FWA: Internet FWA Development Project:-: HW -
Hardware Design
The tables below list the main hardware components, their Nortel identification
number (PEC code) and the key design / manufacturing documents. Table A1
provides a list of ITS sub-modules whilst table A2 provides a list for the RSS
and RIS.
Page 20
Execution Copy - March 4, 2003
[Enlarge/Download Table]
----------------------- ----------------------------------- ------------- --------------------- ---------------------------------
Product Description PEC Document Document Type
======================= =================================== ============= ===================== =================================
Radio base-station PREG 10-3 Product specification
Cabinet 2M Internal ITS cabinet NTEG94CA PDEG94CA FM00 Procurement Document
REWORK 103-496 Rework EC detail
FM00
----------------------- ----------------------------------- ------------- --------------------- ---------------------------------
OVPU Over-Voltage Protection Unit NTEG74BA SLEG74BA MSL DDME Stock List
ADEG74BA PEAM Pro Engineer 3D drawing
DSEG74BA FM00 Design Specification
ISEG74BA ARC DDME Interconnection Schematic
ISEG74BA SH01 Interconnection Schematic,
PSEG74BA ACAD sheet 1
VPEG74BA FM00 Product Structure
VREG74BA FM00 Verification Test Plan
XSEG74BA FM00 Verification Test Report
Test Specification
----------------------- ----------------------------------- ------------- --------------------- ---------------------------------
TMU Transceiver Microwave Unit NTEG77GB SLEG77GB MSL DDME Stock List
ADEG77GB PEAM Pro Engineer 3D drawing
ISEG77GB ARC DDME Interconnection Schematic
ISEG77GB SH01 Interconnection Schematic,
ISEG77GB SH02 sheet 1
VPEG77G PS Interconnection Schematic,
XSEG77GB PS sheet 2
Verification Test Plan
Test Specification
----------------------- ----------------------------------- ------------- --------------------- ---------------------------------
TBM-CD Transceiver baseband Module- NTEG72AD SLEG72AD MSL DDME Stock List
Combining Diversity ADEG72AD PEAM Pro Engineer 3D drawing
DSEG72AD PS Design Specification
VPEG72AD PS Verification Test Plan
XSEG72AD PS Test Specification
----------------------- ----------------------------------- ------------- --------------------- ---------------------------------
TTM Transceiver Timer Module NTEG63AA SLEG63AA MSL DDME Stock List
ADEG63AA PEAM Pro Engineer 3D drawing
DSEG63AA FM00 Design Specification
PSEG63AA ACAD Product Structure
VPEG63AA FM00 Verification Test Plan
VREG63AA FM00 Verification Test Report
XSEG63AA FM00 Test Specification
----------------------- ----------------------------------- ------------- --------------------- ---------------------------------
NMM Network Management Module NTEG73AA SLEG73AA MSL DDME Stock List
ADEG73AA PEAM Pro Engineer 3D drawing
DSEG73AA FM00 Design Specification
P0884577 PS Piece Part drawing
PSEG73AA ACAD Product Structure
VPEG73AA FM00 Verification Test Plan
VREG73AA FM00 Verification Test Report
XSEG73AA PS Test Specification
----------------------- ----------------------------------- ------------- --------------------- ---------------------------------
TPM-PD Transceiver Processor Module NTEG71HA SLEG71HA MSL DDME Stock List
ADEG71 HA PEAM Pro Engineer 3D drawing
XSEG71HA PS Test Specification
----------------------- ----------------------------------- ------------- --------------------- ---------------------------------
Antenna Basestation Antenna - NTEG97KC PDEG97KC FM00 Procurement Document
Omni-Directional,
Vertically Polarised NTEG97KD PDEG97KD FM00 Procurement Document
Basestation Antenna -
Omni-Directional,
Horizontally Polarised
----------------------- ----------------------------------- ------------- --------------------- ---------------------------------
Table A1: Key design and manufacturing documents for ITS sub-modules
Page 21
[Enlarge/Download Table]
------------------------- ---------------------------- ------------- ------------------------- --------------------------
Product Description PEC Document Document Type
========================= ============================ ============= ========================= ==========================
RSS Remote Service System PREG 10-3 Product Specification
F2100 RTU with application code NTEG17DA SLEG17DA MSL DDME Stock List
RTU hardware NTEG17GB SLEG17GB MSL DDME Stock List
ADEG17GB PEAM Pro Engineer 3D drawing
VPEG18-1 PS Verification Test Plan
ISEG17G ARC DDME Interconnection
Schematic
XSEG17GB PS Test Specification
RMB (radio modem board) NTEG1781 SLEG1781 MSL DDME Stock List
ADEG1781 PEAM Pro Engineer 3D drawing
CSEG1781.PDF Circuit Diagrams
DSEG1781 PS Design Specification
FDEG1781 PS Functional Description
FTEG1781 SP01 Unicad Board Solder
Paste file
NTEG1781 ARC Unicad Design File
NTEG1781 IPLA Unicad Component
Placement file
WI-F2F5RMB_01 PS Work Instruction
WI-F2F5RMB_02 PS Work Instruction
XSEG1781 PS Test Specification
PSM (power supply module) NTEG1760 PDEG1760 Procurement Document
F5100PD RTU with application code NTEG18DA SLEG18DA MSL DDME Stock List
RTU hardware NTEG18HB SLEG18HB MSL DDME Stock List
ADEG18HB PEAM Pro Engineer 3D drawing
VPEG18-1 PS Verification Test Plan
WI-18HB F51D DOC Work Instruction
XSEGI8H PS Test Specification
RMB (radio modem board) NTEG1810 SLEG1810 MSL DDME Stock List
ADEG1810 PEAM Pro Engineer 3D drawing
CSEG181O.PDF Circuit Diagrams
DSEG1810 PS Design Specification
FTEG1810 SP01 Unicad Board Solder
Paste file
NTEG 1810 ARC Unicad Design File
NTEG1810 IPLA Unicad Component
Placement file
WI-F2F5RMB_01 PS Work Instruction
WI-F2F5RMB_02 PS Work Instruction
WI-1810SLIC DOC Work Instruction
XSEG1810 PS Test Specification
PSM (power supply module) NTEG1816 PDEG1816 Procurement Document
RPCU RPCU NTEG12FA PDEG12FA PS Procurement Document
RTU DCA RTU DROP CABLE ASS'Y NTEG19AT PDEG19AT PS Procurement Document
PCA POWER CORD ASS'Y NTEG12CL PDEG12CL PS Procurement Document
EBCA EXT. BATTERY CABLE ASS'Y NTEG15CA PDEG15CA PS Procurement Document
RDA RSS Data Adapter NTEG18FG PDEG18F Procurement Document
R.I.S RSS Installation System PREG-20 Product specification
R.I.S RIS GLOBAL SURVEY KIT NTEG24BF SLEG24BF MSL DDME Stock List
ADEG24BF PS Pro Engineer 3D drawing
------------------------- ---------------------------- ------------- ------------------------- --------------------------
Table A2: Key design and manufacturing documents for RSS and RIS
Page 22
3 (End user) Documentation
Internet FWA end user documentation, otherwise known as `customer documentation'
within Nortel Networks, is produced in the Adobe `Framebuilder' application and
supplied to customer as .PDF documents (Adobe Acrobat). All internet FWA
customer documents are held on a Windows server known as 'custdocs', actually
node zmdhb000 at 47.96.0.128. Currently this documentation is being migrated to
the European live-link server, locations TBD.
Documents for SR11 and SR14.0.2 releases are referenced below for convenience.
NTPs are Nortel Networks Technical Publications that are released to the
customer, whilst IMs are Installation Methods for use by Nortel installation
staff.
Section A 3.1 SR11 Customer documentation NTEG00NC containing
RBS NTEG50BF containing
o RBS product description 411-8541-103 NTEG94DF
o Internal ITS and mast maintenance and trouble shooting 411-8541-540
NTEG94BG
RSS NTEG10CR containing
o RSS maintenance and trouble shooting 411-8541-542 NTEG10CK
o RSS I&C 411-8541-207 NTEG10CC
o RSS product description 411-8541-104 NTEG10CQ
o RSS safety guidelines 411-8541-108 NTEG10CP
o RSS install quick ref 411-8541-900 NTEG10CD
o RIS user guide 411-8541-503 NTEG20AD
o RIS product description 411-8541-101 NTEG20HJ
Reference guide NTEG00ND containing
o MIB ref guide 411-8541-801 NTEG00NE
o System release ref guide 411-8541-800 NTEG00NF
FET NTEG30BD containing
o FET product description 411-8541-105 NTEG30QP
o FET user guide 411-8541-500 NTEG30DB
o Linux installation guide 411-8541-230 NTEG30QQ
o Panasonic installation guide 411-8541-234 NTEG30QW
REM NTEG40BL containing
o REM product description 411-8541-102 NTEG40CJ
o REM network management guide 411-8541-509 NTEG40CK
o REM line and RSS provisioning guide 411-8541-516 NTEG40CH
o Remote fault management guide 411-8541-507 NTEG40CG
o REM operation measurement data collection 411-8541-510 NTEG40AW
o REM I&C guide 411-8541-221 NTEG40AF
o REM network communications server config guide 411-8541-233 NTEG40AV
o REM disaster recovery 411-8541-518 NTEG40AX
Section B 3.2 MR14.0.2 Customer documents NTEG00NH containing
RBS NTEG50BG containing
o RBS product description 411-8541-103 NTEG50CA
Page 23
o Internal ITS and mast maintenance and trouble shooting 411-8541-540
NTEG50CD
o RBS test procedure 411-8541-235 NTEG50CB
o RBS upgrades using rehoming 411-8541-237 NTEG50CC
RSS NTEG10DC containing
o RSS maintenance and trouble shooting 411-8541-542 NTEG10DE
o RSS I&C 411-8541-207 NTEG10DD
o RSS product description 411-8541-104 NTEG10DF
o RSS safety guidelines 411-8541-108 NTEG10DG
o RSS install quick ref 411-8541-900 NTEG10DH
o RIS user guide 411-8541-503 NTEG20DJ
o RIS product description 411-8541-101 NTEG20DK
o RDA installation, maintenance and trouble shooting guide 411-8541-236
NTEG18JC
o RDA installation quick reference 411-8541-903 NTEG18JB
o RDA user guide 411-8541-904 NTEG18JG
o RDA safety leaflet 411-8541-905 NTEG18JF
Reference guide NTEG00KF containing
o System release ref guide 411-8541-800 NTEG00KH
FET NTEG30BE containing
o FET product description 411-8541-105 NTEG30DC
o FET user guide 411-8541-500 NTEG30DE
o Linux installation guide 411-8541-230 NTEG30DF
o Panasonic installation guide 411-8541-234 NTEG30DG
REM NTEG40BM containing
o REM product description 411-8541-102 NTEG40CL
o REM network management guide 411-8541-509 NTEG40CM
o REM subscriber provisioning guide 411-8541-519 NTEG40CN
o Remote fault management guide 411-8541-507 NTEG40CG
o REM operation measurement data collection 411-8541-510 NTEG40AW
o REM I&C guide 411-8541-221 NTEG40AF
o REM network communications server config guide 411-8541-233 NTEG40CS
o REM disaster recovery 411-8541-518 NTEG40AX
Section C 3.3 MR14.0.2 Installation methods (Ims)
o System Upgrade Preface 01-9116 03.06
o Changing the Frequency of a Cell Site 65-9140 03.02
o SR11 to SR13 65-9141 03.01
o SR13 to SR14 65-9147 03.01
o Adding Trunks 35-9121 03.08
o Adding Bearers 35-9122 03.05
o Transfer Of Service GDL Site 214 35-9142 02.01
o Connect FET 65-9117 03.04
o Disconnect FET 65-9125 03.05
o FET Upgrade Procedure 65-9129 03.05
o RSS Software Upgrade (full and selected populations) 65-9119 03.05
o RBS Software Upgrade (SR6 & SR10) 65-9120 03.04
Page 24
o RBS Software Upgrade (SR11 Onwards) 65-9120 04.06
o RMT Software Upgrade Procedure 65-9128 03.05
o RTU Software Upgrade Using an RMT 65-9130 03.05
o Upgrade TBM Boot Code 65-9151 03.01
o Changing Classified Carrier Lists 65-9123 03.06
o Bring Carrier(s) into Service 65-9134 03.04
o Change the Channel Number of an RF Carrier 65-9135 03.04
o Take Carrier(s) Out of Service 65-9136 03.04
o Synchronising Classified Carrier Lists 65-9150 03.01
o Permanently Shut Down a Carrier 65-9152 03.01
o Activate Unused Carriers 65-9133 03.02
o Activating Diversity 65-9124 03.03
o TBM Upgrade Module Swap-out 65-9126 03.04
o Upgrade Audit 65-9118 03.06
o Upgrade Viability 65-9132 03.06
o Removing Trunks 35-9130 03.02
o Saving, loading and deleting IRS configuration data 65-9145 03.03
o Connecting and disconnecting masthead cables 65-9146 03.01
o Sector re-alignment 65-9149 03.01
o Fixed Wireless Access (FWA) - Preface 01-9100 03.04
o Proximity-II Cell-site Job Planning 02-9101 03.05
o Proximity-II Cell-site General Information 04-9102 03.05
o Proximity-II Internal ITS Cabinet Floor Preparation 06-9103 03.04
o Proximity-II External RBS Cabinet Floor Preparation 06-9112 03.03
o Proximity-II Internal ITS Handling and Securing 08-9104 03.03
o Proximity-II Mast Equipment Handling and Securing 08-9105 03.07
o Proximity-II External RBS Cabinet Handling and Securing 08-9109 03.03
o Proximity-II External RBS Cabinet Primary Assembly 12-9110 03.04
o Proximity-II External RBS Cabinet Alarm Configuration 12-9131 03.03
o Proximity-II Mast Equipment Cabling 18-9106 03.09
o Proximity-II Internal ITS Cabinet Preparation and Power-up 22-9107
03.06
o Proximity-II External RBS Cabinet Preparation and Power-up 22-9111
03.04
o Proximity-II Cabinet and Mast Equipment Configuration Procedure
24-9108 03.11
4. Technical Information
In addition to the documents listed in previous sections, access will be
provided to the areas within the European Live-link server covering systems
information, product test and verification. The location of this is at:
o Internet FWA Development Project: P2 Sys
o Internet FWA Development Project: P6 PT
o Internet FWA Development Project: P7 Ver
These locations contain product specifications additional to those listed under
the hardware heading:
PREG 00 Proximity I FRA System
PREG 30 Field Engineering Terminal (FET)
PREG 40 Radio Element Manager (REM03)
Page 25
5. Third Party Software
The software components listed below represents some key third party software
components that are required to integrate and manufacture a Licensee Product.
This list is provided for the convenience of Licensee and may not / does not
include all third party software components necessary to produce a working
Licensee Product.
Section A 5.1 Third party software with the FWA product
Third party software that is included within the FWA product is as shown below.
There may be a charge to transfer these licenses to the Licensee.
Supported HPUX-10 REM System Third Party Software Configuration:
[Enlarge/Download Table]
---------------------------- ------------------------- ----------------------------- --------------------
Server Software Version Client Software Version
============================ ========================= ============================= ====================
HP-UX (800) 10.20 HP-UX (700) 10.20
---------------------------- ------------------------- ----------------------------- --------------------
Remedy AR Server 3.2.1 Remedy AR Client 3.2.1
---------------------------- ------------------------- ----------------------------- --------------------
Netstation 9.1 Netstation 9.1
(D-series XTerm)
---------------------------- ------------------------- ----------------------------- --------------------
Adobe Acrobat Reader 4.0 Adobe Acrobat 4.0
Reader
---------------------------- ------------------------- ----------------------------- --------------------
HP-UX Application 10.20 HP-UX Application 10.20
Dynatext Dynatext
---------------------------- ------------------------- ----------------------------- --------------------
HP-UX Application Jetadmin 10.20 HP-UX Application Jetadmin 10.20
(Printer) (Printer)
---------------------------- ------------------------- ----------------------------- --------------------
Oracle 7.3.4.1.1
---------------------------- ------------------------- ----------------------------- --------------------
Cleo A+ HP9000
3.14.1100
---------------------------- ------------------------- ----------------------------- --------------------
Openview NNMGR 4.11
---------------------------- ------------------------- ----------------------------- --------------------
HP General Release Patches 10.20.51.2 HP General Release 10.20.51.2
for HPUX Patches for HPUX
---------------------------- ------------------------- ----------------------------- --------------------
AMP 3.11
---------------------------- ------------------------- ----------------------------- --------------------
Middleware (TOME) 2.6.6
---------------------------- ------------------------- ----------------------------- --------------------
Table A3: Software incorporated with the REM
Page 26
The airside system contains third party software as listed below:
[Enlarge/Download Table]
--------------------------------------------- ------------------------------- --------------------------------------
Software Original manufacturer Contained in FWA module
============================================= =============================== ======================================
VRTX Operating System Mentor Graphics ITS(TPM-C/TTM/TPMPD/NMM)
TCP/IP Stack Spider ITS/NMM
IFX (comes with VRTX) Mentor Graphics ITS/NMM
IP/L2TP RouterWare Protocol Stack WindRiver ITS/TPM-PD
RTX Operating system & libraries Keil RDA
--------------------------------------------- ------------------------------- --------------------------------------
Table A4: Software incorporated with the Airside system
In addition, the FET contains the RED Hat 4.0 Linux operating system.
Section B 5.2 Third party Software packages used for software maintenance &
development
The software tools required to maintain and build (compile and link the source
code) are listed in the table below. These tools execute on various target
platforms that are also listed in the table. The FWA development team uses the
latest versions of Operating Systems that execute on these platforms (e.g. SUN,
HP or PC) as licensed to Nortel.
[Enlarge/Download Table]
--------------------------------------------- -------------------------- ---------------
Software Tool Target Platform
============================================= ========================== ===============
Microtec Mitsubishi 7702 Compiler RSS- F2 SUN/Solaris
Clearcase All SUN/Solaris
Microsoft Word Design Docs PC/Windows
Framemaker (Adobe) Design Docs PC/Windows
Open T1 MIB GDMO PC/Windows
Borland C++ MIB GDMO PC/Windows
HC11 Compiler/Assembler TMU PC/Windows
Microtec 68360 Dev Tools TTM/TPM/NMM SUN/Solaris
SUN Sparkworks (C/C++compiler) ITS/RSS-F2 SUN/Solaris
Analog Devices 218x TPM-PD PC/Windows
Analog Devices 2171 ITS SUN/Solaris
Motorola DSP compilers ITS PC/Windows
Code Warrior ITS SUN/Solaris
Hitachi SH2 IDE RSS - F5 PC/Windows
Keil /UV2 IDE RDA PC/Windows
Microtec PowerPC Compilers TPM-PD/TBM-CD SUN/Solaris
Linux (Red Hat 4.0) FET/PTG PC/Linux
Quantify REM HP/HP-UX 10:20
Purify REM HP/HP-UX 10:20
TCLPro (TCL debugger) REM/Scripts Various
Glance REM HP/HP-UX 10:20
Ansi C Compiler REM HP/HP-UX 10:20
TCL 7 & 8 - Tix, BLT, TcIX, TcIDP REM Various
Psion Dev Kit RMT PC/Windows 95
MDE REM/FET Unix Scripts
--------------------------------------------- -------------------------- ---------------------
Table A5: Software tools required to maintain and build FWA Software
Page 27
Section C 5.3 Software packages used for hardware design maintenance &
development
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------
Package Package Description
===============================================================================================
DDME Manufacturing data-base
PACES Component & Software coding data-base
GDL Global Document Library for manufacturing &
Procurement Specifications
UNICAD CAD package for all FWA designs with exception
of F5 Daughter Board
VIEWDRAW CAD package utilised in conjunction with Unicad
for Assembly, Circuit Diagrams & IPLA files
PADS CAD package for pcb layout
LIVELINK Project information store
CLARIFY Problem management
EXTRANET Security client for Nortel intranet access
XILINX FOUNDATION EPLD/FPGA compiler/simulator/download
ISE EPLD/FPGA compiler/simulator/download
DUALSLICON/DUALSLICOS Coefficient generator for F5 line interface
CAM 350 Gerber viewer/manipulator & ipla generation
PROENGINEER 3D CAD drawing package
AUTOCAD Drawing package
FRAMEMAKER Publisher package for Specifications
ACROBAT DISTILLER PDF Generator for PostScript conversion
GE PREVIEW HPGL & Gerber viewer
CLIT Country line interface test software
HITACHI EMBEDED WORKSHOP C compiler for Hitachi processor
CYGWIN Unix environment emulator
XEMACS Unix text editor
VI Unix text editor
MINIMON JTAG debugger/download for RDA
VISUAL BASIC Test set maintenance
---------------------------------------------------------------------------------------------
Table A6: Software tools required to maintain and build FWA Hardware
6. Third Party Hardware
The hardware components listed below represents the majority of key third party
hardware components that may be required to integrate and manufacture a Licensee
Product. This list is provided for the convenience of Licensee and may not
include all third party hardware components necessary to produce a working
Licensee Product.
Section A 6.1 Software development
Software development is carried out on standard PC's, SUN & HP Workstations. The
only software development specific hardware items are:
Hitachi E6000 Emulator - with suitably modified F5 RTU
Easy ICE for DSP-2188M for TPM-PD (In circuit emulator)
Page 28
Section B 6.2 System Integration and Test
System Integration and Test requires a complex captive office containing the
following major items:
DMS switch including GPPs running MMP13/15
Service gateway equipment (Shasta and Passport)
FWA equipment including traffic rigs with up to 180 RTUs for exercising
base-stations Fading simulator (HP 11759C)
Call generators (Ameritec AM-2)
PSTN Analogue interface analysis equipment (Ameritec AM-5)
Packet traffic generator (`PTG' - proprietary Nortel Networks equipment based on
Linux PC) General purpose test gear including signal generators, oscilloscopes,
spectrum analysers etc.
Section C 6.3 Manufacturing (production test)
1. 6.3.1 RTU and board level test set
The Manufacturing process of the RTU requires the transceiver board (RMB) is
calibrated and tested before being integrated with the antenna (RTU) and body.
The test sets are 2- meter high 19-inch racks containing proprietary test
equipment.
o Spectrum analyser
o RF pulse power meter
o RF signal/modulation generator
o DVM
o DC power supply.
o Frequency counter
o Pulse generator
o Ruggedised PC (for industrial environments)
o Audio Analyser
o A test fixture (RF tray) connected via spring loaded pins to the board
under test.
The test set requires a compressed air supply to operate the fixture and an
external 10MHz-frequency reference signal.
The test set is fully automated controlled by the PC through a Visual Basic test
programme and takes approximately 4.5 minutes to complete the electrical
parametric tests
Once fully assembled the RTU is placed in a 1 meter anechoic chamber and
connected to the verification test set. This contains proprietary test
equipment.
o DC power supply
o RF pulse power meter
o RS232 interface module
o DVM
o Ruggedised PC (for industrial environments)
The test set is full automated and again completes the electrical testing with
the aid of a Visual Basic test programme.
Page 29
2. 6.3.2 TMU Production Test Set
This test set performs the functional tests on the complete TMU as defined in
production spec XSEG77XX.
The following proprietary test equipment is housed in racks, with the TMU's to
be tested brought up on custom trolleys.
o Spectrum Analyser
o RF Power Meter and Sensor
o Signal Generator (55.296MHz reference source)
o Vector Signal Analyser (hp89410A)
o Downconverter (hp89411A)
o Programmable Power Supply
o Network Analyser
o Noise Figure Meter
In addition,
RF trays containing switches, ferrite isolators, amplifiers, directional
couplers, noise source etc. Special custom interface test box - enabling
controlling communications etc 100 metres of 50 ohm lossy cable Punch tool
type T10180
PC running code controlling the above instrumentation, the interface test
box and to perform code downloads to the TMU.
3. 6.3.3 TBM-CD Production Test Set.
This test set consists of two 2-metre equipment racks and an adjacent bench.
The process of production testing is fully automated, controlled by a PC, once
the TBM-CD board to be tested has been installed. A diagnostic / engineering
mode is available for product repair etc.
The test software to implement test spec XSEG72AD has been rewritten using
"LabView", originally in Visual Basic.
The equipment racks contain the following proprietary test equipment, all
programmable.
o Spectrum Analyser
o RF power Meter
o Wide band variable noise source
o Signal generator providing "pi/4-QPSK" modulation
o Signal generator providing CW interferer signals
o DC power supply and current monitoring o Ruggedised PC (for industrial
environments)
o RF trays containing switches, amplifiers, ferrite isolators and
directional couplers
Page 30
The adjacent bench houses a frame into which the TBM-CD to be tested is
positioned to connect to a special interface card, the "CDIC".
The TBM-CD to be tested has to be loaded with a special "test-code" download to
permit the CDIC to control functions. The CDIC is under PC control. At the end
of a successful functional test, "operational" code is then downloaded.
These download functions require a dedicated BDM box assigned to the test set.
4. 6.3.4 BTS Card Production Test
6.3.4.1 TTM Card Test Set
The TTM Card is tested to the Production Test Specification for the FWA
Transceiver Timing Module - XSEG63AA.
The Equipment List for the TTM Production Test Set is detailed below.
[Enlarge/Download Table]
--------------------------------------------- ----------------- -------------------------------------------
ITEM MODEL COMMENT
--------------------------------------------- ----------------- -------------------------------------------
Control PC -- 486 with 8M RAM, IEEE, RS232 & 96 DIO
--------------------------------------------- ----------------- -------------------------------------------
E1 Telecom Analyser HP37732A
--------------------------------------------- ----------------- -------------------------------------------
External E1 Reference HP3325A
--------------------------------------------- ----------------- -------------------------------------------
48V Power Supply
--------------------------------------------- ----------------- -------------------------------------------
Standard ITS Backplane -- Backplane to insert Unit Under Test
--------------------------------------------- ----------------- -------------------------------------------
Gold Standard TTM -- Standard working TTM Card
--------------------------------------------- ----------------- -------------------------------------------
BIC Card -- Proprietary Backplane Interface Card
--------------------------------------------- ----------------- -------------------------------------------
The Control PC runs the test set from a Production Test Application, written in
LabView (ported from original Visual Basic software).
Page 31
6.3.4.2 NMM Card Test Set
The TTM Card is tested to the Production Test Specification for the FWA Network
Management Module - XSED4619.
The Equipment List for the NMM Production Test Set is detailed below.
[Enlarge/Download Table]
--------------------------------------------- ----------------- -------------------------------------------
ITEM MODEL COMMENT
--------------------------------------------- ----------------- -------------------------------------------
Control PC -- 486 with 8M RAM, IEEE,RS232 & 96 DIO
--------------------------------------------- ----------------- -------------------------------------------
4 Line PBX BT Renown Small PBX
--------------------------------------------- ----------------- -------------------------------------------
E1 Signal Generator HP37732A
--------------------------------------------- ----------------- -------------------------------------------
External E1 Reference HP3325A
--------------------------------------------- ----------------- -------------------------------------------
Gold Standard TPM -- Standard Working TPM
--------------------------------------------- ----------------- -------------------------------------------
2 x Gold Standard TTM -- Standard Working TTMs
--------------------------------------------- ----------------- -------------------------------------------
Standard ITS Backplane -- Backplane to insert Unit Under Test
--------------------------------------------- ----------------- -------------------------------------------
Gold Standard TTM -- Standard working TTM Card
--------------------------------------------- ----------------- -------------------------------------------
BIC Card -- Proprietary Backplane Interface Card
--------------------------------------------- ----------------- -------------------------------------------
48V Power Supply --
--------------------------------------------- ----------------- -------------------------------------------
2 Standard |Telephones --
--------------------------------------------- ----------------- -------------------------------------------
The Control PC runs the test set from a Production Test Application, written in
LabView (ported from original Visual Basic software).
6.3.4.3 TPM-PD Card Test Set
The TPM-PD Card is tested to the E1 Production Test Specification - XSEG71AA.
The Equipment List for the TPM Production Test Set is detailed below.
[Enlarge/Download Table]
--------------------------------------------- ----------------- -------------------------------------------
ITEM MODEL COMMENT
--------------------------------------------- ----------------- -------------------------------------------
Control PC -- 486 with 8M RAM, IEEE,RS232 & 96 DIO
--------------------------------------------- ----------------- -------------------------------------------
Oscilloscope HP54520
--------------------------------------------- ----------------- -------------------------------------------
48V Power Supply --
--------------------------------------------- ----------------- -------------------------------------------
Switch Matrix Pickering 120/75
--------------------------------------------- ----------------- -------------------------------------------
2 x Gold Standard TTM -- Standard Working TTMs
--------------------------------------------- ----------------- -------------------------------------------
Standard ITS Backplane -- Backplane to insert Unit Under Test
--------------------------------------------- ----------------- -------------------------------------------
BIC Card -- Proprietary Backplane Interface Card
--------------------------------------------- ----------------- -------------------------------------------
BBA Card -- Proprietary Baseband Adaptor Card
--------------------------------------------- ----------------- -------------------------------------------
The Control PC runs the test set from a Production Test Application, written in
LabView (ported from original Visual Basic software).
Page 32
EXHIBIT B-6 form of certification of amendment to by-laws
EXHIBIT B-6
SECRETARY'S CERTIFICATE OF AMENDMENT TO BY-LAWS
Pursuant to Section 4.01(a)(i) of the Restructuring Agreement dated as of
March _______, 2003 (the "Restructuring Agreement"), among Axtel, S.A. de C.V.
(the "Company"), as Borrower and Customer, Nortel Networks Limited, as Lender,
Nortel Networks Limited together with Nortel Networks de Mexico, S.A. de C.V.,
as Supplier, and Toronto Dominion (Texas), Inc., as Collateral Agent, the
undersigned hereby certify the following:
1. Attached hereto as Exhibit A is a true, correct and complete copy of all
amendments to by-laws (estatutos) of the Company made from the date of
execution of the Amended and Restated Finance Agreement to the Closing
Date.
2. Attached hereto as Exhibit B is a true, correct and complete copy of the
resolutions duly adopted by the Shareholders of the Company at a meeting on
February 28, 2003 (the "Shareholders' Meeting"). Such resolutions have not
been amended or modified and are in full force and effect on the date
hereof. Such resolutions are the only resolutions adopted by the Board of
Directors or by the Shareholders' Meeting relating to the transactions
contemplated by the Transaction Documents
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to such term in the Restructuring Agreement.
[the remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the undersigned has executed this certificate this ___
day of March, 2003.
By: _______________
Name: ______________
Title: _______________
EXHIBIT B-7 FORM OF INCUMBENCY CERTIFICATE
EXHIBIT B-7
INCUMBENCY CERTIFICATE
Pursuant to Section 4.01(a)(ii) of the Restructuring Agreement dated as of
March _______, 2003 (the "Restructuring Agreement"), among Axtel, S.A. de C.V.,
as Borrower and Customer, Nortel Networks Limited, as Lender, Nortel Networks
Limited together with Nortel Networks de Mexico, S.A. de C.V., as Supplier, and
Toronto Dominion (Texas), Inc., as Collateral Agent, the undersigned hereby
certify the following:
Each of the persons whose names, titles and signatures appear below are duly
elected, qualified and acting officers of the Borrower and hold on the date
hereof the offices set opposite their respective names and the signatures
appearing opposite their respective names thereon are genuine signatures of such
officers:
Name Title Signature
Tomas Milmo Santos Chief Executive Officer _______________
Patricio Jimenez Barrera Chief Financial Officer ________________
IN WITNESS WHEREOF, the undersigned has executed this certificate this ___
day of March, 2003.
By: _______________
Name: Alberto J. Morales
Title: Corporate Secretary
I, Tomas Milmo Santos, do hereby certify that I am the duly elected,
qualified and acting Chief Executive Officer of Axtel, S.A. de C.V., a Mexican
corporation, that the signature subscribed to the foregoing certificate
purporting to be the signature of Alberto J. Morales is the genuine signature of
said person and that said Alberto J. Morales is the duly elected, qualified and
acting Corporate Secretary of Axtel, S.A. de C.V.
By: _______________
Name: Tomas Milmo Santos
Title: Chief Executive Officer
EXHIBIT B-8 FORM OF BORROWER OFFICER'S CERTIFICATE
EXHIBIT B-8
OFFICER'S CLOSING CERTIFICATE
Pursuant to Section 4.01(b) of the Restructuring Agreement dated as of
March ______, 2003 (the "Restructuring Agreement") among Axtel, S.A. de C.V., as
Borrower and Customer, Nortel Networks Limited, as Lender, Nortel Networks
Limited together with Nortel Networks de Mexico, S.A. de C.V., as Supplier, and
Toronto Dominion (Texas), Inc., as Collateral Agent, the undersigned hereby
certifies the following:
1. That as of the date hereof and upon effectiveness of the Restructuring
Agreement, all representations and warranties contained in Article III of
the Restructuring Agreement are true and correct in all material respects.
2. That since January 1, 2003, no Material Adverse Effect has occurred.
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to such term in the Restructuring Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate this ___
day of March, 2003.
Axtel, S.A. de C.V.
By: __________________
Name:
Title:
EXHIBIT B-9 FORM OF POWER OF ATTORNEY
Exhibit B-9
NORTEL NETWORKS LIMITED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that NORTEL NETWORKS LIMITED (the "Corporation"),
a Corporation duly organized and existing under the laws of Canada and having
its executive offices at 8200 Dixie Road, Suite 100, Brampton, Ontario L6T 5P6,
Canada, hereby constitutes and appoints EDUARDO SANTOYO, Senior Customer Finance
Manager, Nortel Networks de Mexico, S.A. de C.V., and JORGE H. SUAREZ, Senior
Legal Counsel, Nortel Networks (CALA) Inc., jointly or individually, as its
attorneys with full power and authority to do all acts and things as fully and
effectually as and in the name, place and stead of, the Corporation with respect
to the execution and delivery, on behalf of the Corporation, of any and all
amendments, modifications, consent, waivers, supplemental agreements or other
correspondence or documentation related to the executed US$495,000,000 Amended
and Restated Finance Agreement (the "Agreement"), between Axtel, S.A. de C.V.
(the "Borrower"), Toronto Dominion (Texas), Inc. and the Corporation, and the
ancillary documents executed in conjunction therewith.
The Corporation hereby ratifies and confirms and agrees to ratify and confirm
whatever its said attorneys shall do or purport to do in and by virtue hereof
whether prior to or after the date hereof.
This Power of Attorney shall remain in full force and effect until June 30,
2003, unless otherwise revoked by the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Power of Attorney to be
executed and signed on this 10th day of January, 2003, and its corporate seal to
be hereunto affixed.
NORTEL NETWORKS LIMITED
----------------------------------
Blair F. Morrison
Assistant Secretary
----------------------------------
Deborah J. Noble
Corporate Secretary
EXHIBIT B-10 FORM OF LENDER OFFICER'S CERTIFICATE
EXHIBIT B-10
OFFICER'S CLOSING CERTIFICATE
Pursuant to Section 4.02(c) of the Restructuring Agreement dated as of
March _______, 2003 (the "Restructuring Agreement") among Axtel, S.A. de C.V.,
as Borrower and Customer, Nortel Networks Limited, as Lender, Nortel Networks
Limited together with Nortel Networks de Mexico, S.A. de C.V., as Supplier, and
Toronto Dominion (Texas), Inc., as Collateral Agent, the undersigned hereby
certify the following:
1. That as of the date hereof and upon effectiveness of the Restructuring
Agreement, all representations and warranties contained in Article III of
the Restructuring Agreement are and will be true and correct in all
material respects.
2. That since January 1, 2003, no Material Adverse Effect has occurred.
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to such term in the Restructuring Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate this ___
day of March, 2003.
Nortel Networks Limited
By: __________________
Name:
Title:
Nortel Networks Mexico, S.A. de C.V.
By: ___________________
Name:
Title:
Exhibit C-1 form of extraordinary shareholders meeting
Exhibit C-2 Form of Share subscription Agreement
Exhibit C-2
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT dated as of March ___, 2003 (this "Agreement"),
entered by AXTEL, S.A. DE C.V., a corporation organized under the laws of the
United Mexican States with its principal office at Boulevard Diaz Ordaz Km.
3.33, Colonia Unidad San Pedro, Garza Garcia, N.L., Mexico, (the "Corporation")
and NORTEL NETWORKS LIMITED, a company organized under the laws of Canada, with
its principal office at 8200 Dixie Road, Suite 100, Brampton, Ontario L6T 5P6,
Canada, as (the "Investor").
WITNESSETH
WHEREAS, the shareholders of the Corporation held a General Extraordinary
Shareholders Meeting as of February 28, 2003 (the "Extraordinary Meeting") in
order to approve the execution of a Restructuring Agreement to be entered into
by and between the Corporation and the Investor (the "Restructuring Agreement")
and to approve a capital stock increase in the Corporation by means of a
debt-capitalization of amounts owed by the Corporation to the Investor as
provided for under the Restructuring Agreement, a copy of which Extraordinary
Meeting is attached hereto as Exhibit "1".
WHEREAS, simultaneously with the execution of the Restructuring Agreement,
the Corporation and the Investor will enter into this Subscription Agreement as
provided under Section 2.06(b) of the Restructuring Agreement.
WHEREAS, the Investor hereby agrees to subscribe a certain number of Series
N shares to comply with all terms and conditions provided under the
Restructuring Agreement.
NOW, THEREFORE, in consideration of the premises, covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the Corporation, the Shareholders and the Investor hereby agree as
follows:
1. Subscription of the Shares. Subject to the conditions precedent
described in Section 2 below, the Investor hereby agrees to subscribe for
250,836,980 (Two Hundred Fifty Million Eight Hundred Thirty Six Thousand Nine
Hundred Eighty) nominative, non par value and non-voting Series N Shares (the
"Shares") at a subscription price per share of US$0.711617561334059, for a total
subscription price of US$178,500,000.00 (the "Subscription Price"). Such
Subscription Price shall be considered to be satisfied by means of the debt
capitalization as contemplated in the Restructuring Agreement in such amount
owed by the Corporation to the Investor as currently recorded in the accounts of
the Corporation. Upon subscription of the Shares, such Shares shall represent
9.9% (nine and nine tenths percent) of the total issued and outstanding shares
of capital stock of the Corporation.
2. Conditions Precedent to the Shares.
(a) Notwithstanding any other provision of this Subscription Agreement,
the Investor's subscription for the Shares remains subject to (i)
payment in full of the US$60,000,000 capital increase resolved in the
Extraordinary Meeting, and (ii) the pre-emptive rights of other
Shareholders under the Shareholders' Agreement (as defined in the
Restructuring Agreement). Accordingly, the subscription of the Shares
as described in Section 1 above shall not produce any legal effects
until payment in full of the aforementioned capital increase and the
expiration of the relevant pre-emption period. In the event the
capital increase is not paid in full or all or any of the Shares are
acquired by any other shareholder of the Borrower or are otherwise not
available to be acquired by and delivered to the Lender upon
expiration of the relevant pre-emption period, such subscription shall
be null and void to the extent of the portion of Shares not made
available to the Lender.
(b) In accordance with article 1,939 of the Federal Civil Code as in
effect, related with Article 1,833 of the Civil Code for Nuevo Leon as
in effect, the subscription of the Shares as described in Section 1
above shall not produce any legal effects until the Corporation
obtains the authorization of the Federal Commission of Competition of
Mexico ("Comision Federal de Competencia") (the "COFECO
Authorization"). The Corporation hereby agrees to give immediate
written notice to the Investor of the fulfillment of the condition
above referred.
3. Headings. Sections used herein are for convenience of reference only,
are not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.
4. Governing Law. This Agreement shall be governed by Mexican law.
5. Jurisdiction and Venue. For all matters related to the interpretation
and performance of the obligations set for in this Agreement, the parties hereto
expressly submit themselves to exclusive jurisdiction of the competent courts
siting in the city of Monterrey, State of Nuevo Leon, Mexico. Each Party to this
is Agreement 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.
6. Notices. All communications and notices provided for hereunder shall be
in writing and shall be personally delivered, delivered by internationally
recognized courier service, or telefaxed (with a confirmation copy by
internationally recognized courier service),
To the Corporation: Axtel, S.A. de C.V.
Boulevard Diaz Ordaz Km 333
Colonia Unidad San Pedro 400
Garza Garcia, N.L., Mexico 66360
Attention: Tomas Milmo-Santos
Fax No.: 52 8 114 1771
Attention: Patricio Jimenez
Fax No.: 52 8 114 1771
with a copy to:
D&A Morales y Asociados, S.C.
Vallarta 811 Sur Colonia Mirador
64070 Monterrey, N.L., Mexico
Attention: Alberto J. Morales
Fax No.: 52 8 129 9220
To the Investor: Nortel Networks Limited
c/o Nortel Networks (CALA) Inc.
1500 Concord Terrace
Sunrise, FL 33323-2815
Attention: Jorge H. Suarez
Fax No.: 1 954 851 8763
Except as otherwise specified herein, all notices shall be deemed duly
given on the date of receipt.
7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
8. Amendment. None of the terms or provisions of this Agreement may be
amended, supplemented or otherwise modified without the consent of each of the
parties hereto.
9. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors (whether by
merger, consolidation, exchange of securities, acquisition of assets or
otherwise). No party hereto may assign its rights and obligations hereunder, and
any such purported assignment in contravention of this Section 9 shall be null
and void, unless consented to in writing by the other party hereto.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the individuals whose names appear below and by the duly authorized
representatives of each party hereto as of the date first above written.
THE INVESTOR:
NORTEL NETWORKS LIMITED
By: _________________________
Name:
Title:
THE CORPORATION:
AXTEL S.A. DE C.V.
By: _________________________
Name:
Title:
Exhibit D-1 Form of joinder to unanimous Shareholders Agreement
Exhibit D-2 Supplemental joinder agreement
EXHIBIT E-1 FORM OF New York LEGAL OPINION
Exhibit E-1
[Letterhead of Cahill Gordon & Reindel]
March 20, 2003
Nortel Networks Limited
c/o Nortel Networks (CALA) Inc.
1500 Concord Terrace
Sunrise, Florida 33323-2815
Nortel Networks de Mexico S.A. de C.V.
Insurgentes Sur No 1605
Piso 26 Torre Mural
Col. San Jose Insurgentes C.P.
Mexico City, D.F. 03900 Mexico
We have acted as New York special counsel to Axtel, S.A. de C.V. (the
"Borrower") in connection with the execution and delivery of the Restructuring
Agreement (the "Restructuring Agreement") dated March 20, 2003 by and among the
Borrower, Nortel Networks Limited, as the Lender (the "Lender"), Nortel Networks
Limited, together with Nortel Networks de Mexico, S.A. de C.V., as Supplier, and
Toronto Dominion (Texas), Inc., As Collateral Agent (the "Collateral Agent").
This opinion is delivered to you pursuant to Section 4.01(h)(i) of the
Restructuring Agreement. Capitalized terms used but not otherwise defined herein
shall have the respective meanings specified in the Restructuring Agreement.
In connection with the opinions expressed herein, we have examined the
following documents:
(a) the Restructuring Agreement;
(b) the Restructured Amended and Restated Restructured Finance Agreement
(the "Restructured Finance Agreement"), dated as of March 20, 2003, by and among
the Borrower, Nortel Networks Limited, as Administrative Agent, the Collateral
Agent and the Lender; and
-2-
(c) the note in the form of Exhibit C to the Restructured Finance Agreement
(the "Note") to be issued by Borrower in favor of the Lender pursuant to the
Restructured Finance Agreement.
The documents listed in (b) and (c) above are collectively referred to as
the "Loan Documents". The Loan Documents and the Restructuring Agreement are
collectively referred to as the "Transaction Documents".
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and officers of the Borrower and other
instruments as we have deemed necessary or appropriate to enable us to render
this opinion. As to questions of fact material to this opinion, we have relied
without independent verification upon certificates of public officials and
statements, representations and certificates of officers and other
representatives of the Borrower.
In rendering this opinion to you, we have assumed, without inquiry:
(a) (i) the genuineness of all signatures on original copies of the
Transaction Documents; (ii) the conformity to the original documents of all
documents submitted to us as copies and the authenticity of all documents
submitted to us as originals; (iii) the due authorization, execution and
delivery of the Transaction Documents by each of the parties thereto and (iv)
the validity and enforceability of the Transaction Documents against each of the
parties thereto other than the Borrower;
(b) that the execution, delivery and performance of the Transaction
Documents by each party thereto do not breach, conflict with or constitute a
violation of (i) any Applicable Law of any jurisdiction other than the United
States of America and the State of New York; (ii) any agreement, instrument or
document to which any such party was, or is, a party or by which any such party
or any of its properties was, or is, bound or (iii) any order, judgment or
decree to which any such party was, or is, bound or subject or by which any of
its properties was, or is, bound;
(c) that the execution, delivery and performance of the Transaction
Documents by each party thereto do not violate or conflict with the
organizational documents, certificate of incorporation, by-laws or any other
charter or governing document of such party; and
(d) that any consideration contemplated to be given on or prior to the
Closing Date by any party in any of the Transaction Documents was given on or
prior to such date.
Based upon the foregoing assumptions and subject to the limitations,
qualifications and exceptions herein set forth, we are of the opinion that:
1. The execution and delivery by the Borrower of the Loan Documents
and the performance by the Borrower under the Loan Documents of its
obligations thereunder do not and will not contravene any currently
effective provision of the law of the State of New York
-3-
or of the federal law of the United States of America generally applicable
to transactions of the type contemplated by the Loan Documents.
2. The Loan Documents constitute the legal, valid and binding
obligation of the Borrower, enforceable against it in accordance with their
respective terms.
3. No New York or U.S. Federal Governmental Approval, and no notice to
any New York or U.S. Governmental Authority, is required in connection
with: (a) the execution, delivery or performance by the Borrower of either
of the Loan Documents, (b) the maintenance of the Liens contemplated
thereby or (c) the legality, binding effect or enforcement thereof.
4. No taxes or other charges, including, without limitation,
intangible or documentary stamp taxes, mortgage or recording taxes or
similar charges, are payable to the State of New York or to any
jurisdiction therein on account of the execution and delivery of either of
the Loan Documents.
5. Under the law of New York and applicable federal law relating to
submission to jurisdiction, the Borrower has validly and irrevocably: (a)
submitted to the jurisdiction of the courts of the State of New York
sitting in New York, Borough of Manhattan and the federal courts of the
United States of America for the Southern District of New York and (b)
waived any objection to the venue of a proceeding in any such court.
Service of process on the process agent in the manner set forth in Section
12.2 of the Restructured Finance Agreement and Section 6.08 of the
Restructuring Agreement will be effective to confer valid jurisdiction over
the Borrower.
6. Except as set forth in this paragraph 6, we express no opinion as
to the enforceability of choice of law provisions set forth in the
Transaction Documents. You have asked for our opinion as to whether or not
a court of competent jurisdiction of the State of New York would, in
connection with the interpretation or enforcement of any of the Transaction
Documents, apply the conflict-of-laws rules of the State of New York so as
to find the internal laws of the State of New York applicable thereto even
if the Transaction Documents were executed and delivered outside the State
of New York and/or the Borrower were located outside the State of New York.
Section 5-1401 of the New York General Obligations Law provides, in effect,
that the parties to certain contracts involving more than $250,000 may
elect to have such contacts governed by New York law whether or not such
contacts bear a reasonable relation to New York. Accordingly, we are of the
opinion (subject to the matters specified in qualification (a) below or as
may be limited by federal law, treaty or convention) that a court of
competent jurisdiction of the State of New York should apply the internal
laws of the State of New York to the construction or enforcement of the
Transaction Documents as against the Borrower.
7. Assuming that the Borrower is not a "foreign state" or an "agency
or instrumentality of a foreign state" as defined in Section 1603 of the
Foreign Sovereign Immunities
-4-
Act of 1976 (the "Foreign Sovereign Immunities Act"), the Borrower is not
entitled to any immunity under the Foreign Sovereign Immunities Act, in the
courts of New York or in any federal court sitting in New York.
Our opinions set forth above are subject to the following qualifications:
(a) The enforceability of the Transaction Documents may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance and transfer acts,
moratorium or other laws affecting creditor's rights generally and (ii) general
principles of equity (regardless of whether considered in a proceeding in equity
or at law), including concepts of materiality, reasonableness, good faith and
fair dealing.
(b) Certain provisions of the Transaction Documents may be unenforceable in
whole or in part under the laws of the State of New York, but the inclusion of
such provisions does not affect the validity thereof, taken as a whole, and the
Transaction Documents contain adequate provisions for the practical realization
of the rights and benefits intended to be provided thereby. Without limiting the
foregoing, New York courts or Federal courts applying New York law may deny or
limit the enforceability of clauses or provisions that purport to: (i) give the
right of specific performance, (ii) limit or expand the rights of set-off or the
enforceability of any waiver by any Borrower of demand, (iii) authorize a
secured party to take discretionary independent action for the account of or as
an agent or attorney-in-fact for a debtor, (iv) give a secured party cumulative
or duplicative remedies, to the extent such cumulative or duplicative remedies
purport to or would have the effect of compensating such secured party in
amounts in excess of the actual loss suffered by such secured party, (v) require
that provisions thereof be waived only in writing, to the extent that an oral
agreement or an implied agreement by trade practice or course of conduct has
been created modifying any provisions of such documents or (vi) limit
jurisdiction of any courts or establish any exclusive venue or evidentiary
standards.
(c) The opinions set forth in paragraphs 2 and 5 above are qualified to the
extent a court could determine that the submission to jurisdiction and waiver of
objection to venue are against public policy.
(d) Waivers of equitable rights and defenses may not be valid, binding or
enforceable under New York State or Federal law.
(e) We express no opinion on the effect of the laws of any jurisdiction
other than New York that limits rates of interest that may be charged or
collected by the Lender.
(f) We express no opinion as to the Lender's right to collect any payment
to the extent that such payment constitutes a penalty, forfeiture or late
charge.
(g) We express no opinion as to the existence of, the right, title or
interest of any Borrower in, to or under or the validity or enforceability
against any obligor of any of, of any property constituting the Collateral.
-5-
(h) We express no opinion as to the creation, validity, perfection or
priority of any security interest purported to be created in the Collateral.
The foregoing opinions are limited to matters involving the Federal laws of
the United States and the law of the State of New York, in each case as they
exist as of the date of this opinion, and we do not express any opinion as to
the laws of any other jurisdiction.
This opinion is furnished by us solely for your benefit and the benefit of
your successors and your assignees and participants under the Restructured
Finance Agreement, and it may not be relied upon, quoted from or delivered to
any person other than your successors and your assignees and participants under
the Restructured Finance Agreement, your legal counsel and the legal counsel of
your successors and your assignees and participants under the Restructured
Finance Agreement, except that you may deliver copies of this opinion to any
state or federal authority having regulatory jurisdiction over you and
requesting to see this opinion in connection with its review of the loan
transactions contemplated by the Restructured Finance Agreement.
Very truly yours,
/s/ Cahill Gordon & Reindel
Exhibit E-2 form of mexican legal opinion
Exhibit E-2
D & A MORALES Y ASOCIADOS, S.C.
VALLARTA 811 SUR o COLONIA MIRADOR
64070 MONTERREY, N L., MEXICO
TELEFONO: (52) (81) 8129-9200 / TELEFAX: (52) (81) 8l29-9220
--------------------------------------------------------------------------------
March 20, 2003
Nortel Networks Limited
8200 Dixie Road Suite 100
Brampton, Ontario
L6T 5P6 Canada
Nortel Networks de Mexico, S.A. de C.V.
Insurgentes Sur No. 1605
Piso 30 Torre Mural
Col. San Jose Insurgentes
Mexico City, Federal District 03900
Mexico
Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 77010
Houston, TX 77010
U.S.A.
Ladies and Gentlemen:
We have acted as special Mexican counsel to Axtel, S.A. de C.V., a
"sociedad anonima de capital variable" organized and validly existing under the
laws of Mexico (the "Borrower"), in connection with the preparation, execution
and delivery of (1) the Restructuring Agreement dated as of March 20, 2003 (the
"Restructuring Agreement"), by and among Nortel Networks Limited as Lender and
Supplier and Nortel Networks de Mexico, S.A. de C.V. as Supplier, and the
Borrower and (ii) the Reviewed Documents (as such term is defined below) and the
consummation of the transactions contemplated therein. Capitalized terms used
herein but not defined herein shall have the respective meanings given to such
terms in the Restructuring Agreement and/or and the Restructured Finance
Agreement, as the applicable case may be.
In rendering the opinions set forth below, we have examined the following
documents (the "Reviewed Documents"):
1. The Restructuring Agreement;
2. The Restructured Finance Agreement;
3. The Restructured Note;
4. The Share Subscription Agreement;
5. The Amendments to the Mortgages;
6. The Civil Mortgage;
7. The Pledges;
8. The Shares.
Nortel Networks Limited D & A MORALES Y ASOCIADOS, S.C.
March 20, 2003
Page 2
In connection with this opinion, we have examined executed counterparts of the
documents listed above (other than those identified as forms, in which case we
have examined such forms). We have also reviewed the articles of incorporation
("acta constitutiva"), by-laws ("estatutos") and corporate books and records of
the Borrower and its Subsidiaries. As to matters of fact, we have also received
certificates obtained from certain public records, and other certificates issued
by officers of the Borrower and its Subsidiaries and made such other
investigations that we deemed necessary or appropriate. Except as set forth
above, we have made no other factual investigation and, to the extent that the
opinions expressed below involve matters of fact, we have also relied upon such
records, documents, certificates, representations and warranties of officers and
other representatives of the Borrower and its Subsidiaries as in our judgment we
deemed necessary or appropriate to render the opinions set forth below.
This opinion is being furnished to you pursuant to Section 4.01(h) of the
Restructuring Agreement. In rendering this opinion, we have assumed:
(i) the genuiness of all signatures;
(ii) the authenticity of all documents submitted to us as originals,
and the conformity to the originals of all copies submitted to us as
certified, conformed copies or photocopies;
(iii) that each signatory of the Reviewed Documents, other than the
Credit Parties, has the power and authority to enter into and perform their
respective obligations under the Reviewed Documents;
(iv) the due authorization, execution and delivery, validity, binding
effect and enforceability of the Reviewed Documents by all parties thereto
other than the Credit Parties.
Based on the foregoing assumptions and subject to limitations, qualifications
and exceptions hereinafter set forth, we are of the opinion that:
1. Each of the Credit Parties (a) is a sociedad anonima de capital
variable, duly organized and validly existing under the laws of Mexico; (b) have
the corporate power and authority to (i) execute, deliver and perform the
Reviewed Documents to which it is a party, and (ii) carry on its business as now
conducted, to own its property and assets, to incur indebtedness and to create
or suffer to exist Liens on its properties; and (c) holds all material
Governmental Approvals required under Mexican law to conducts its business as
now conducted, except for such Governmental Approvals which can not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
2. The execution, delivery and performance by each Credit Party of the
Reviewed Documents to which it is a party (a) has been duly authorized by all
necessary corporate actions of the Credit Parties, (b) do not violate any
provision of its "Acta Consitutiva " (charter of incorporation) or its
"Estatutos" (bylaws), (c) do not violate any material law, rule or regulation of
Mexico as of the date hereof, and (d) to the best of our knowledge after due
inquiry, do not conflict with, are not inconsistent with and do not result in
breach of any material Contractual Obligation which may cause a Material Adverse
Effect.
3. Each Credit Party has duly executed and delivered the Reviewed Documents
to which it is a party, each of which constitutes a legal, valid and binding
obligation of such Credit Party enforceable in accordance with its terms.
Nortel Networks Limited D & A MORALES Y ASOCIADOS, S.C.
March 20, 2003
Page 3
4. The Borrower has obtained all necessary Governmental Approvals for its
execution, delivery and performance of the Reviewed Documents, except for the
COFECO Authorization; and, to the best of our knowledge after due inquiry, there
is no proceeding pending or threatened against the Borrower that seeks to
rescind, terminate or suspend any Governmental Approvals which may cause a
Material Adverse Effect.
5. Except as otherwise disclosed in Schedule 3.01(i) of the Restructuring
Agreement, to the best of our knowledge after due inquiry, there is no legal
action, suit, proceeding, claim, arbitration or dispute pending or threatened
(whether at law or in equity) by or before any Governmental Authority against
any of the Credit Parties or any of their respective properties.
6. To best of our knowledge, each Credit Party is in compliance with all
material Mexican laws and Governmental Approvals in respect of its conduct of
business and the ownership of its properties, except for such non-compliance
that can not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
7. The Secured Parties have a valid, legally binding and perfected security
interest under the Civil Mortgage on the assets which such mortgage purports to
cover.
8. The Secured Parties have a valid and legally binding security interest
under the Original Mortgage and the Amendments to the Mortgages on all assets
owned by the Borrower (subject only to Permitted Liens and excluding the Texas
Accounts), subject only to the recording requirements provided for in the
Restructure Finance Agreement.
9. The Secured Parties have a valid, legally binding and perfected security
interest under the Pledges on the shares of the Borrower's Subsidiaries. The
stock certificates have been duly endorsed in pledge in favor of the
corresponding pledgees and such Pledges have been duly registered in
shareholders' register of the Borrower's Subsidiaries.
10. The Reviewed Documents are in proper legal form under the law of Mexico
for the enforcement thereof in Mexico. For the purpose of any legal proceeding
in the courts of Mexico, an official Spanish translation of any documents not
executed in Spanish in respect of which enforcement is sought must be presented
to the court. Such translation would have to be approved by the Mexican court
after the defendant had been given an opportunity to be heard with respect to
the accuracy of the translation, and such proceedings would thereafter be based
upon the translated documents. Furthermore, the submission of any non-Mexican
public document in a Mexican court from (a) a country which is a party to the
Convention Abolishing the Requirements of Legalization for Foreign Public
Documents (The Hague October 5, 1961), will have to comply with all requirements
set forth therein, and (b) a country which is not party to such convention will
have to comply with the authentication procedure provided for under the laws of
Mexico.
11. The issuance and subscription of the Shares has been duly and validly
authorized by the Borrower. Upon issuance, subscription and payment of the
Shares, by means of a debt-capitalization by the Lender pursuant to the terms of
the Share Subscription Agreement and the Extraordinary Shareholders Meeting,
such Shares will be outstanding, fully paid, non-assessable and not subject to
any Liens. There are no outstanding securities convertible into or exchangeable
for, or warrants, rights or options to purchase the Shares from the Borrower.
Nortel Networks Limited D & A MORALES Y ASOCIADOS, S.C.
March 20, 2003
Page 4
12. The Borrower is subject to civil and commercial law with respect to its
respective obligations under the Reviewed Documents. The execution, delivery and
performance of the Reviewed Documents by the Borrower constitute private and
commercial acts rather than public or governmental acts. Neither the Borrower
nor any of its properties have any immunity from the jurisdiction of any court
or from set-off or from any legal process (whether through service or notice
attachment before judgment, attachment in aid of execution, execution or
otherwise).
13. The choice of law of the State of New York as the governing law under
the Restructuring Agreement and the Restructured Finance Agreement is legal and
binding on the Borrower.
14. The submission to the jurisdiction of the competent State and Federal
courts in the State of New York by the Borrower in the Restructuring Agreement
and the Restructured Finance Agreement is legal, valid and binding under Mexican
law.
15. There are no restrictions or requirements that limit the acquisition or
transfer of foreign exchange for the purpose of the performance by the Borrower
of its obligations under the Reviewed Documents.
16. A final judgment from a competent court in New York arising out of or
in connection with any obligation of the Borrower under the Restructuring
Agreement, the Restructured Finance Agreement and/or the Restructured Note will
be enforceable in the courts of Mexico; provided, however, that all requirements
under the (i) Mexican Federal Code of Civil Procedure ("Codigo Federal de
Procedimientos Civlies"), (ii) Mexican Commerce Code ("Codigo de Comercio"), and
(iii) all procedural requirements for the enforcement itself applicable in the
state where assets of the Borrower are located must be fully complied with, and
such judgment itself most not violate or contravene Mexican laws or public
policy ("orden publico").
17. A final judgment from a competent court in New York or in Monterrey
arising out of or in connection with any obligation of the Borrower under the
Restructuring Agreement, the Restructured Finance Agreement or the Restructured
Note, the enforcement of which is being made in Mexico requesting payment to be
made in a currency other than Mexican pesos, may be discharged by any Credit
Party by tendering Mexican pesos at the rate of exchange prevailing on the date
in which such payment is to take place pursuant to the publications made by the
Mexican Central Bank ("Banco de Mexico") in the Mexican Federal Official Gazette
("Diario Oficial de la Federation") in accordance with the terms of the "Ley
Monetaria" (the Mexican Monetary Law).
The opinions set forth above are subject to the following qualifications
and, therefore, we express no opinion with respect to the following matters and
their impact on the opinions set forth hereinabove:
(a) Any laws or regulations other than the laws, rules or regulations of the
United Mexican States ("Mexico").
(b) Any enforcement may be subject to the limitations, imposed by bankruptcy,
insolvency, liquidation, concurso mercantil, moratorium or similar laws
relating to or affecting the priority and enforcement of creditors' rights
generally, and by Liens, claims and other interests that arise by operation
of law and do not require any possession, filing or similar action to take
priority over perfected security interests, or by public order ("orden
publico");
Nortel Networks Limited D & A MORALES Y ASOCIADOS, S.C.
March 20, 2003
Page 5
(c) Any proceedings brought before the courts of Mexico, including any
enforcement action, are subject to Mexican procedural laws, as well as
Mexican laws concerning statutes of limitations and expirations
("prescripcion y caducidad");
(d) The construction or interpretation and enforceability by a Mexican court of
the provisions of Sections 2.4(b) of the Restructure Finance Agreement as
it relates to interest on overdue interest, as well as the provisions in
the laws of the State of Nuevo Leon regarding usury;
(e) Any covenant, provision or agreement in the Reviewed Documents which (i)
intends to bind any Credit Party or its assets on matters reserved by
Mexican law to a shareholders meeting, or (ii) impose an obligation on the
holders of any shares of capital stock to exercise or refrain from
exercising any voting rights arising from such of shares of capital stock.
(f) The provisions of the Reviewed Documents granting discretionary authority
to any party thereto with respect to the determination of any right or
obligation of any other party; and, in addition, under Mexican law, the
parties will have the right to contest in court any notice or certificate
purporting to be conclusive and binding;
(g) The provisions included in the Restructured Note with respect to (i) choice
of governing law, (ii) interest on overdue interest, and (iii) any
calculations involved in the determination of the principal amount due;
(h) The admissibility in a court of Mexico of any document not drafted in
Spanish for the enforcement thereof, and the submission of any non-Mexican
public document, are subject to federal and/or state (as the applicable
case may be) procedural rules of evidence.
(i) With respect to provisions contained in the Reviewed Documents in
connection with service of process, it should be noted that service of
process by mail does not constitute personal service of process under
Mexican law and, since such service is considered to be a basic procedural
requirement, if for purposes of proceedings outside Mexico service of
process is made by mail, a final judgment based on such process would not
be enforced by the courts of Mexico.
We are furnishing this opinion to you and solely for your benefit and the
benefit of your assignees under the Restructuring Agreement in connection with
the transactions contemplated under the Reviewed Documents. This opinion letter
may not be used, circulated, quoted or otherwise referred to or relied upon for
any other purpose without our express written consent. This opinion is limited
solely to questions arising under the laws of Mexico, and speaks only as of the
date hereof. We expressly disclaim any responsibility to advise you of any
development or circumstance of any kind, including any change of law or fact,
which may occur after the date of this opinion.
Very truly yours,
/s/ D & A Morales y Asociados, S.C.
-----------------------------------
D & A Morales y Asociados, S.C.
exhibit E-3 form of mexican tax opinion
Exhibit E-3
[Letterhead of Chevez, Ruiz, Zamarripa y Cia., S.C.]
March 19, 2003
Mr. Patricio Jimenez Barrera
AXTEL, S.A. DE C.V.
Blvd. Diaz Ordaz Km. 333
Unidad San Pedro 400
Garza Garcia, N.L.
Dear Patricio:
We are pleased to give you our opinion on the tax consequences of the
capitalization of debt arising from the contemplated financial restructuring
between Axtel, S.A. de C.V. (AXTEL) and Nortel Networks Limited (NORTEL).
Scope
The opinion contained in this letter is based on the Facts, Assumptions and
Representations stated herein. You have provided us with all facts and
circumstances that you know or have reason to know are pertinent to this opinion
letter. If any of these facts, assumptions or representations is not entirely
complete or accurate, it is imperative that we are informed immediately in
writing as the incompleteness or inaccuracy could cause us to change our
opinion.
This opinion is provided solely for the benefit of AXTEL and NORTEL and may
not be relied upon, in whole or in part, by any other person.
In rendering our opinion, we are relying upon the relevant provisions of
applicable Mexican legislation. These legal provisions are subject to change or
modification and any such change could affect the validity or correctness of our
opinion. We will not update our advice for subsequent changes or modifications
to the law, unless you separately engage us to do so in writing after such
subsequent change or modification.
This opinion is not binding on the Mexican tax authorities, or any court,
and no assurance can be given that a position contrary to that expressed herein
will not be asserted by a tax authority and ultimately sustained by a court.
-2-
Background
In 1997, 1998 and 1999 NORTEL and AXTEL entered into a supply and service
agreement whereby the former and some of its affiliates have supplied AXTEL
various telephone equipment and accessories.
In this respect, there is a revolving credit line utilized by AXTEL and
provided by NORTEL to finance equipment and accessories supplied to the former.
As a result of negotiations between the companies, the debt owed by AXTEL,
which is properly documented, will be restructured.
You informed us that the companies referred to herein are not related
parties, because they do not participate either directly or indirectly in each
other's management, control or equity, nor is there any related-party pricing in
accordance with the customs legislation.
Accordingly, based on the information you furnished to us the contemplated
restructuring of the documented debt would be carried out as follows:
1) A portion of the balance of the debt would be paid by AXTEL in cash.
For this purpose it is evaluating the possibility of a capital
contribution by the current stockholders and/or obtaining a loan from
a third party;
2) The current conditions of another portion of the loan would be
renegotiated;
3) A portion would be paid through the issuance of AXTEL shares delivered
to NORTEL as capital increase.
4) Finally, the remaining part would be discharged through the
acquittance of the debt, including capital and interest.
In accordance with the proposed restructuring agreement the AXTEL shares
would be issued at par value plus a premium (paid-in surplus).
We have been informed that the par value per share plus the related premium
would be proportionally higher than AXTEL's theoretical equity per share on the
date of the restructuring.
You have requested our opinion with respect to the income tax implications
derived from the above-mentioned capitalization.
Applicable tax provisions
and our comments
The proposed restructuring implies an increase in the company's capital
stock, through the execution of certain legal acts whereby a company's legal
capital is increased either through a direct contribution from the stockholders,
or the transfer of equity accounts, or the capitalization of debt in exchange
for the issuance of the company's shares of stock.
-3-
Indeed, a company may agree with any creditor that in lieu of a repayment
in cash under the agreed timing and terms, or on the due date of the
corresponding collateral securities, it will deliver its own shares in full or
partial payment of the debt.
In this respect, the direct capitalization of a liability or debt is the
act through which a company increases its legal capital in order to substitute
the debt with capital, since the creditor receives shares of stock of the debtor
in exchange for the extinguishment of the debt.
Under this approach, it is valid to consider that the concurring
obligations in a capitalization of debt are extinguished through a set-off,
because the issuing company, on the one hand, and the shareholder that
subscribes the shares, on the other, have the characteristic of being
reciprocally debtor and creditor.
In accordance with Article 9 of the Law of Commercial Companies (Ley
General de Sociedades Mercantiles), any company may increase or reduce its legal
capital by complying, in accordance with its characteristics, with the
requirements established in such statute. Considering that the issued stock
could be formed by par or non-par value shares, as regulated in Article 125-JV
of such law, legal capital Increments may have different modalities:
- They may be at par value, which occurs when the stock issued by the
issuer company is represented by par value shares for the total amount of the
stockholder's contribution.
- Also, the stock issued may not have a stated par value, in which case it
is considered that the value of each share is the theoretical value determined
by dividing the aggregate amount of the contribution by the number of shares
issued.
- A capital contribution with a premium is another modality in which the
stockholder receives shares with a par or theoretical value lower than the
amount of his contribution.
There is no specific provision in the Law of Commercial Companies regarding
the last mentioned modality; nevertheless, its existence is recognized
explicitly in several provisions of the commercial statute, such as Article 116,
which establishes that fully paid shares are those delivered to the stockholders
as a result of the capitalization of stock premiums or other contributions
previously made by the stockholders.
For this purpose, Mexican legal doctrine unanimously recognizes that a
premium is an amount contributed by a stockholder in addition to the par value
of the legal capital that he has subscribed, but for which the company does not
assume a predetermined obligation to reimburse such amount to the stockholder
because it is considered an integral part of his contribution to the legal
capital. There are various reasons why a new stockholder may be willing to pay a
premium for subscribing an increase of the legal capital.
In light of the foregoing, we are of the opinion that the proposed
restructuring constitutes a capitalization of AXTEL through the extinguishment
of its debt by means of an increase in the legal capital and equity.
-4-
In other words, by subscribing the shares, NORTEL would capitalize in AXTEL
the amount required so that the latter will be able to repay the agreed portion
of the debt, thus complying with its obligation.
Notwithstanding that the proposed restructuring will be effected through
the issuance of shares with a premium, such circumstance is not an obstacle for
the capitalization.
In this specific case, we understand that shares equivalent to 10% of the
total AXTEL shares will be issued; these shares will be acquired by NORTEL in
exchange for the agreed portion of the debt. The difference between the par
value of the shares and the amount capitalized will represent the premium paid
on the subscription.
Income Tax Law
Article 17 of the Income Tax Law in effect beginning January 1, 2002
establishes that a contribution to increase a company's capital, or the premium
obtained for placement of its shares, do not constitute income of the taxpayer.
In accordance with this provision, the issuance of shares with a premium
through the capitalization of debt does not constitute taxable revenue of AXTEL,
either from the capital stock increase or from the premium obtained from the
placement of shares issued.
Accordingly, the capitalized amount shall be considered the proven cost of
acquisition of the shares for the new investors.
Indeed, we are of the opinion that for creditors that become stockholders,
the proven cost of acquisition that will be the tax cost basis of their shares
in a future sale or disposition thereof will be represented by the amount of the
contribution to the capital plus the amount of the corresponding premium paid.
The above affirmation is supported by analogy with Article 89 of the law,
which establishes that the contributed capital account shall be increased by the
amount of capital contributions and also with net premiums on the subscription
of shares paid by the stockholders, which confirms that for purposes of this
statute both capital contributions and premiums paid by the stockholders are
characterized as increases in the legal capital.
There is no specific provision in the Income Tax Law that limits or
restricts the decisions made by the stockholders when determining the value of
capital contributions or premiums, because, in any event, both items are
includible in the proven cost of acquisition of the shares acquired by the new
stockholder.
On the other hand, as indicated in the Background section of this letter,
it is worth pointing out that a part of the debt would be discharged through the
acquittance of the debt, which would settle the applicable capital and interest.
-5-
In this respect, Article 17 of the Income Tax Law establishes that legal
entities resident of Mexico shall accumulate the aggregate amount of income in
cash, goods, services, credit or in any other type that is obtained through the
tax year.
In this way, we consider that income should be understood as every entry
that increases positively the patrimony of an economic entity or of an
individual, even when such increase originates from the decrease or cancellation
of a payable liability.
Under this context, the acquittance of debt would generate that the
patrimony of AXTEL will be increased while its liabilities decrease; in
consequence, the discharged amount of the debts shall be deemed as taxable
income for income tax purposes.
Estimated Income
Generally, Article 91 of the income Tax Law establishes that the tax
authorities may modify the taxable income or loss determined by the taxpayers
through a presumptive determination of the price at which taxpayers acquire or
dispose of property as well as the amount of the consideration in the event of
transactions other than a sale or other disposition. These cases are, among
others, when transactions are performed at less than the market price, or the
cost of acquisition is higher than such price, or the sale or disposition is
made at cost or less than cost, unless the taxpayer is able to prove that the
sale or disposition was made at the market price on the date of the transaction,
or that the property has deteriorated, or that there existed circumstances that
caused the need to make the sale or disposition under such conditions.
The law also provides that for purposes of the foregoing, the tax
authorities may apply the prices prevailing in the domestic or foreign market,
or request or perform appraisals.
It should be noted that the Income Tax Law indicates that transactions must
be carried out at the market value. The law also provides that in the case of
transactions where the tax authorities attempt to presume income of the
taxpayer, it is necessary to analyze the situations or circumstances that could
have had an effect on the determination of the consideration fixed for the
transaction in question.
In the case referred to herein, a restructuring would be carried out
through the issuance of shares at a premium. For determining the premium, risk
factors and the value of money in time are taken into consideration, which
presupposes a market value in transactions among non-related parties; therefore,
in our opinion, AXTEL will not be subject to the rules for the estimation of
income.
Further, we consider that a possible claim by the tax authorities for a
determination of presumed income would not apply, because this transaction does
not imply a sale of shares, but a capital increase for which the tax laws do not
establish a presumption of income.
Other considerations
You have expressed doubt about whether the tax authorities could consider
the proposed restructuring a fraudulent act. In this respect, we consider it
advisable to analyze the provisions, currently in effect, dealing with tax
fraud, in order to provide you with several elements of judgment that will allow
you to evaluate this situation.
-6-
In accordance with Article 108 of the Federal Fiscal Code (FFC), whoever by
means of deceit or taking advantage of errors omits, partially or in full,
payment of any tax, or obtains an undue benefit to the detriment of the federal
tax authorities, commits the criminal offense of tax fraud. In this respect, In
our opinion, the transaction referred to herein does not contain any kind of
deception, nor takes advantage of errors; as a consequence, it cannot be
characterized as fraudulent.
Indeed, in order to commit the criminal offense of tax fraud it is
necessary that the two following situations occur:
1) That there be a full or partial omission of a tax payment, or that an
undue benefit is obtained to the detriment of the federal tax
authorities;
2) That said omission in the payment of a tax or the obtainment of a
benefit is achieved by means of deceit, or by taking advantage of
errors.
For a better understanding of the previously described legal presumption,
we consider it advisable to define the following items, starting from their
meaning:
1) An undue benefit arises when a gain or benefit not allowed by the law
is obtained;
2) Deceit is a lack of truth in what is said;
3) Error is a false appreciation of reality.
It should be noted that, based on the foregoing, the cited presumptions do
not occur in the transaction analyzed herein, because the proposed
capitalization of the debt to be carried out between the companies originates
from an exact observance of the tax laws. There is no deceit in the transactions
carried out, therefore, the concept of deceiving anyone does not arise herein,
nor is there a distortion of the reality of the legal acts to be performed.
In turn, Article 109-IV of the FFC establishes that whoever simulates one
or more acts or contracts and obtains an undue benefit to the detriment of the
federal tax authorities is subject to the same penalties applicable in the case
of tax fraud. In our opinion, the transaction referred to herein does not
contain the element of simulation in the execution thereof, because it is
carried out through the performance of valid and real legal acts; as a
consequence, it should not be characterized as fraudulent.
Regarding the foregoing, it is worth referring to Article 2180 of the
Federal Civil Code which literally establishes: "A simulated act is that in
which the parties declare or confess falsely what in reality has not occurred or
has not been agreed among them."
In common language, simulate means "to make appear what is not, present a
thing that does not exist in reality. The etymological origin confirms this
term: simulate is to make similar, to give appearance and semblance to what is
not real.
The Federal Criminal Code establishes that the same penalties applicable to
fraud shall be imposed "on whoever simulates a contract, an act or judicial
writing to the detriment of another in order to obtain any undue benefit".
-7-
Concerning the issue of simulation, we are faced with a situation in which
the subjectivity of the tax authorities could generate some controversy, because
the latter, upon exercising their powers of inspection, could consider that any
given transaction should have been carried out through other legal form and
that, if the transaction had been carried out under such form, the federal tax
authorities would have obtained a benefit, if it did not obtain it, or a greater
benefit than that obtained from the performance of the presumably simulated act.
Obviously, an irresponsible performance on the part of the fiscal
inspection authorities could give rise to arbitrariness or political harassment
derived from a broad definition of the term; however, from an essentially
technical standpoint, we are of the opinion that the transaction analyzed herein
should not be considered fraudulent under the simulation term set out in the
FFC, since the case posed is not intended to pretend the realization of an act
or contract or make it appear as something different from what in reality has
been agreed by the parties.
Conclusions
1. The proposed restructuring contemplates a capitalization of AXTEL by the
extinguishment of its debt through the issuance of legal capital with a premium,
which is a legally valid transaction and can be carried out by complying with
the requirements for capital stock increases established in the Law of
Commercial Companies.
2. The capitalization in an amount equal to a portion of the restructured
debt plus a premium in the subscription thereof, does not constitute income of
the issuing company in accordance with the provisions of Article 17 of the
Income Tax Law currently in force.
3. The restructuring that would be carried out through the issuance of
shares of stock with a premium does not give rise to presumed income, because it
is a capital stock increase, which is not included in the presumptions for the
determination of such presumed income.
4. In view of the fact that part of the debt was discharged through the
acquittance of the debt, such amount should be considered as taxable income for
purposes of calculating AXTEL's income tax during the tax period it occurs.
5. In our opinion, the transaction analyzed herein should not be considered
fraud under the concept of simulation set out in the Federal Fiscal Code,
because in the case posed herein there is no intention to pretend the
realization of an act or contract or make it appear different from that agreed
in reality between the parties.
Despite that we consider that there are elements to support the previously
mentioned conclusions, it should be noted that the tax authorities could not
concur with such criteria. However, we consider that there are sound and
reasonable arguments of defense to sustain such criteria in the event this case
were litigated before the competent courts, even though, as is the case with tax
litigation, it is not possible to guarantee the outcome.
* * * * *
-8-
We will be glad to provide you with any additional information or comment
you may require with respect to the issue discussed in this letter.
Sincerely,
CHEVEZ, RU1Z, ZAMARRIPA Y CIA., S.C.
/s/ Manuel C. Scapachini
------------------------
Manuel C. Scapachini
EXHIBIT f FORM OF LENDER OPINION
Exhibit F
March 20, 2003
Axtel, S.A. de C.V.
Boulevard Diaz Ordaz Km 3.33
Colonia Unidad San Pedro
Garza Garcia, N.L., Mexico 66215
Dear Sirs:
I am the Chief Legal Officer of Nortel Networks Limited (the "Corporation")
and give this opinion pursuant to Section 4.02(f) of the Restructuring Agreement
dated as of March 20, 2003 (the "Restructuring Agreement") among the
Corporation, as Lender, the Corporation together with Nortel Networks Mexico SA.
de C.V., as Supplier, Axtel, S.A. de C.V., ("Axtel"), as Borrower and Customer,
and Toronto Dominion (Texas), Inc., as Collateral Agent. Terms defined in the
Restructuring Agreement are used herein as therein defined.
I have examined originals or copies, certified or otherwise identified to
my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
In rendering this opinion, I have assumed the genuineness of all signatures
other than those on behalf of the Corporation, the authenticity of all documents
submitted to me as originals and the conformity to authentic originals of all
documents submitted to me as copies, whether facsimile, photostatic, certified
or otherwise.
The opinions expressed herein are subject to the following qualifications:
(a) enforceability of the Restructuring Agreement may be limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws of general application relating to or affecting the
enforcement of creditors' rights generally;
(b) enforceability of the Restructuring Agreement may be limited by
general principles of equity, including the fact that equitable remedies,
including remedies of specific performance and injunction, may only be
granted in the discretion of a court of competent jurisdiction;
(c) the Currency Act (Canada) precludes the courts in Canada from
awarding a judgment for an amount expressed in a currency other than
Canadian dollars;
(d) any requirement to pay interest at a greater rate after than
before default may not be enforceable if the same is construed by a court
to constitute a penalty or is contrary to the Interest Act (Canada);
(e) provisions which purport to waive any statutory rights or which
purport to sever any provision which is invalid or unenforceable under
applicable law without affecting the validity or enforceability of the
remainder of the Restructuring Agreement may not be enforceable; and
(f) no opinion is expressed as to the enforceability of any provision
of the Restructuring Agreement:
(i) which purports to waive any or all defences which might be
available to, or constitute a discharge of the liability of, the
Corporation;
(ii) to the extent it purports to exculpate Axtel from liability in
respect of acts or omissions which may be illegal, fraudulent or
involve willful misconduct; or
(iii) which states that modifications, amendments or waivers are not
binding unless in writing.
In expressing the opinions stated below, I have relied exclusively upon the
opinion of Gordon A. Davies, Assistant Secretary of the Corporation, dated the
date hereof (the "Opinion"), a copy of which is attached hereto as Schedule A.
The opinions expressed herein are limited in scope to the matters addressed in
the Opinion, and to the extent any such opinion is stated to be based on any
assumption or to be given in reliance on any certificate or other document or to
be subject to any limitation, qualification or exemption, the opinions expressed
herein in reliance on such opinion are based upon the same assumption, are given
in reliance on the same certificate or document, and are subject to the same
limitation, qualification or exemption. I have reviewed the Opinion and found it
to be satisfactory in form, substance and scope to address the matter for which
it has been relied upon by me herein.
Upon the basis of the foregoing, I am of the opinion that:
1. the Corporation is a corporation duly incorporated and validly existing
under the laws of Canada;
2. the execution, delivery and performance by the Corporation of the
Restructuring Agreement (i) have been duly authorized by all necessary corporate
action, and (ii) do not contravene any provision of applicable law or regulation
or any provision of the certificate of incorporation or by-laws of the
Corporation or any contractual restriction, order, decree or other instrument
binding upon the Corporation, except, in the case of (ii), any such
contravention which would not have a material Adverse effect on the ability of
the Corporation to perform its obligations under the Restructuring Agreement;
3. the Restructuring Agreement has been duly executed and delivered by the
Corporation; and
4. assuming the execution, delivery and performance of the Restructuring
Agreement by each of the parties thereto, other than the Corporation, are within
such persons' corporate powers and have been duly authorized by all necessary
corporate action, the Restructuring Agreement constitutes a valid and binding
agreement of the Corporation, enforceable in accordance with its terms.
This opinion is furnished solely for your benefit in connection with the
Restructuring Agreement and is not to be used, circulated, quoted or otherwise
referred to for any other purpose.
Yours truly,
-----------------------
Nicholas J. DeRoma
Chief Legal Officer
-2-
SCHEDULE A
March 20, 2003
Mr. N.J. DeRoma
Chief Legal Officer
Nortel Networks Limited
8200 Dixie Road, Suite 100
Brampton, Ontario
L6T 5P6
Dear Sir:
I am Assistant Secretary of Nortel Networks Limited (the "Corporation") and
an attorney qualified to practice law in the Province of Ontario. I understand
that you will rely on this opinion letter in connection with the delivery of
your opinion pursuant to Section 4.02(f) of the Restructuring Agreement dated as
of March 20,2003 (the "Restructuring Agreement") among the Corporation, as
Lender, the Corporation together with Nortel Networks Mexico S.A. de C.V., as
Supplier, Axtel, S.A. de C.V. ("Axtel"), as Borrower and Customer, and Toronto
Dominion (Texas), Inc., as Collateral Agent. Terms defined in the Restructuring
Agreement are used herein as therein defined.
I have examined originals or copies, certified or otherwise identified to
my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
In rendering this opinion, I have assumed the genuineness of all signatures
other than those on behalf of the Corporation, the authenticity of, all
documents submitted to me as originals and the conformity to authentic originals
of all documents submitted to me as copies, whether facsimile, photostatic,
certified or otherwise.
I am qualified to practice law solely in the Province of Ontario, Canada
and express no opinion as to any laws or matters governed by any laws other than
the laws of the Province of Ontario and the federal laws of Canada applicable
therein.
The opinions expressed herein are subject to the following qualifications:
(a) enforceability of the Restructuring Agreement may be limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws of general application relating to or affecting the
enforcement of creditors' rights generally.
(b) enforceability of the Restructuring Agreement may be limited by
general principles of equity, including the fact that equitable remedies,
including remedies of specific performance and injunction, may only be
granted in the discretion of a court of competent jurisdiction;
(c) the Currency Act (Canada) precludes the courts in Canada from
awarding a judgment for an amount expressed in a currency other than
Canadian dollars;
(d) any requirement to pay interest at a greater rate after than
before default may not be enforceable if the same is construed by a court
to constitute a penalty or is contrary to the Interest Act (Canada);
(e) provisions which purport to waive any statutory rights or which
purport to sever any provision which is invalid or unenforceable under
applicable law without affecting the validity or enforceability of the
remainder of the Restructuring Agreement may not be enforceable; and
(f) no opinion is expressed as to the enforceability of any provision
of the Restructuring Agreement:
(i) which purports to waive any or all defences which might be
available to, or constitute a discharge of the liability of, the
Corporation;
(ii) to the extent it purports to exculpate Axtel from liability in
respect of acts or omissions which may be illegal, fraudulent or
involve willful misconduct; or
(iii) which states that modifications, amendments or waivers are not
binding unless in writing.
Upon the basis of the foregoing, I am of the opinion that:
(a) the Corporation is a corporation duly incorporated and validly
existing under the laws of Canada;
(b) the execution, delivery and performance by the Corporation of the
Restructuring Agreement (i) have been duly authorized by all necessary
corporate action and (ii) do not contravene any provision of applicable law
or regulation or any provision of the certificate of incorporation or
by-laws of the Corporation or any contractual restriction, order, decree or
other instrument binding upon the Corporation, except, in the case of (ii),
any such contravention which would not have a material adverse effect on
the ability of the Corporation to perform its obligations under the
Restructuring Agreement;
(c) the Restructuring Agreement has been duly executed and delivered
by the Corporation; and
(d) assuming the execution, delivery and performance of the
Restructuring Agreement by each of the parties thereto, other than the
Corporation, are within such persons' corporate powers and have been duly
authorized by all necessary corporate action, the Restructuring Agreement
constitutes a valid and binding agreement of the Corporation, enforceable
in accordance with its terms.
This opinion is furnished solely for your benefit in connection with the
aforementioned delivery of your opinion letter (including as an attachment to
your opinion) in connection with the Restructuring Agreement and is not to be
used, circulated, quoted or otherwise referred to for any other purpose.
Yours truly,
Gordon A. Davies
Assistant Secretary
-2-
EXHIBIT G cnie aUTHORIZATION
EXHIBIT H FORM OF RELEASE
Exhibit H
RELEASE OF BORROWER SHAREHOLDERS
WHEREAS NORTEL NETWORKS LIMITED (formerly known as NORTEL NETWORKS
CORPORATION), a company organized under the laws of Canada, with its principal
office at 8200 Dixie Road, Suite 100, Brampton, Ontario L6T 5P6, Canada, as
lender (the "Lender"), is the beneficiary under the Amended and Restated
Shareholders' Undertaking dated as of June 18, 2001 (the "Shareholders'
Undertaking") of certain obligations undertaken by Bell Canada International
(Mexico Telecom) Limited, a limited liability company duly organized and
existing under the laws of the British Virgin Islands, with its registered
offices at Arawak Chambers, Road Town, Tortola, British Virgin Islands ("BCI
Mexico Telecom"), Bell Canada International Inc., a corporation duly organized
and existing under the laws of Canada, with its registered offices at 1000 rue
de la Gauchetiere Ouest, Bureau 1100, Montreal, (Quebec), Canada H3B 4Y8 ("BCI
Inc."), Telinor Telefonia S. de R.L. de C.V., a limited liability company duly
organized and existing under the laws of the United Mexican States, with its
registered offices at Vasconcelos 210 Ote., Piso 12, Residencial San Agustin,
San Pedro, Garza Garcia, N.L., Mexico ("Holdco") and WorldTel Mexico Telecom
Limited, a corporation duly organized and existing under the laws of Bermuda,
with its registered offices at 41 Cedar Avenue, Hamilton HM12, Bermuda
("WorldTel") (BCI Mexico Telecom, Holdco, and WorldTel each a "Borrower
Shareholder" and hereinafter collectively referred to as the "Borrower
Shareholders").
WHEREAS that certain Restructuring Agreement dated as of March __, 2003
between, among others, Lender and AXTEL, S.A. DE C.V., a corporation organized
under the laws of the United Mexican States, with its principal office at
Boulevard Diaz Ordaz Km 333, Colonia Unidad San Pedro 400, Garza Garcia, N.L.,
Mexico 66260, as borrower (the "Borrower") (the "Restructuring Agreement")
provides for a release of the Borrower Shareholders.
WHEREAS all capitalized terms used herein which are defined in the
Restructuring Agreement shall have the same meaning herein as therein.
NOW, THEREFORE, in consideration of and subject to Lender's full and final
receipt of the Cash Payment, the Restructured Note, the Shares and the
Secretary's Certificate, the Lender as sole Lender under the Amended and
Restated Finance Agreement releases and discharges the Borrower Shareholders,
and any shareholder of the Borrower Shareholders from any and all undertakings
in the Shareholders' Undertaking and any other obligations arising under the
Loan Documents (as defined in the Amended and Restated Finance Agreement) with
respect to their direct or indirect equity interest in the Borrower.
This Release shall be governed by and construed in accordance with the laws
of the State of New York, except for choice of law provisions thereof which
would require the application of the laws of another state.
IN WITNESS WHEREOF, the Lender has caused this Release to be executed and
delivered by its duly authorized officer as of the date first written above.
NORTEL NETWORKS LIMITED
By: ______________________
Its: ______________________
EXHIBIT I ADDITIONAL MORTGAGES
EXHIBIT I
"LIST OF ADDITIONAL MORTGAGES"
1.- Pursuant to public instrument number 2,648 dated August 27, 2001, which was
certified by Jose Luis Farias Montemayor, Notary Public number 120 of
Monterrey, Nuevo Leon, and was recorded in the Public Registry of Real
Property of Mexico City under real estate folio #802492 dated September 20,
2001, Axtel granted a voluntary unilateral first priority security interest
for the benefit of Nortel, HP and other lenders (represented thereunder by
the Collateral Agent), pursuant to the provisions of Articles 92 and 93 of
the General Law on Communications Means, in those certain industrial
facilities located at Jose F. Gutierrez #346, Col. Angeles Zimbron, Del.
Azcapotzalco, Mexico, D.F., and the land where such property is
constructed. This land is formed by three parcels that resulted from the
subdivision of section "A" of the former orchard of "Rancho de San Lucas",
and is identified, for cadastral purposes, as lot 3 of block 99, cadastral
region 44, and has a total surface area of 2,106.41 square meters.
2.- Pursuant to public instrument number 2,814 dated March 18, 2002, which was
certified by Jose Luis Farias Montemayor, Notary Public number 120 in and
for Monterrey, Nuevo Leon, and was recorded in the Public Registry of Real
Property of Distrito Federal under real estate folio 9181087, dated April
25, 2002, Axtel granted a voluntary unilateral first priority security
interest for the benefit of Nortel, HP and other lenders (represented
thereunder by the Collateral Agent), pursuant to the provisions of articles
92 and 93 of the General Law on Communication Means, in the southern
portion that resulted from the subdivision of the remaining section of
those certain parcels formerly known as "Copalantitla" and "Xocalco",
located in the town then called Santa Cruz Atoyac. The current address of
the mortgaged land is Uxmal street number 973, Colonia Santa Cruz Atoyac,
and is identified, for cadastral purposes, as lot 51 of block number 107,
cadastral region 41, and has a total surface area of 2,086.55 square
meters.
3.- Pursuant to public instrument number 11,032 dated March 20, 2002, which was
certified by Eduardo Adolfo Manautou Ayala, Notary Public number 123 in and
for Monterrey, Nuevo Leon, and was recorded in the Public Registry of Real
Property of Leon, Guanajuato under real estate folio R20*062572, dated
April 12, 2002, Axtel granted a unilateral voluntary first priority
security interest for the benefit of Nortel, HP and other lenders
(represented thereunder by the Collateral Agent), pursuant to the
provisions of articles 92 and 93 of the General Law on Communication Means,
in certain plot of land having no officially assigned number, located at
Miguel Aleman street [formerly Venustiano Carranza], in the
city of Leon, Guanajuato, in block XIII, XXVII Quarter, and having a total
surface area of 1,254.78 square meters.
4.- Pursuant to public instrument number 11,031 dated March 20, 2002, which was
certified by Eduardo Adolfo Manautou Ayala, Notary Public number 123 in and
for Monterrey, Nuevo Leon, and was recorded in the Public Registry of Real
Property of Leon Guanajuato under real estate folio R20*038965, dated April
12, 2002, Axtel granted a unilateral voluntary first priority security
interest for the benefit of Nortel, HP and other lenders (represented
thereunder by the Collateral Agent), pursuant to the provisions of articles
92 and 93 of the General Law on Communication Means, in that certain house
located at Miguel Aleman [formerly Venustiano Carranza] #1,308, in the city
of Leon Guanajuato, block 13, XXVII Quarter, and having a total surface
area of 1,782.92 square meters.
5.- Pursuant to public instrument number 2,845 dated April, 17, 2002, which was
certified by Jose Luis Farias Montemayor, Notary Public number 120 in and
for Monterrey, Nuevo Leon, Axtel granted a unilateral voluntary first
priority security interest for the benefit of Nortel, HP and other lenders
(represented thereunder by the Collateral Agent), pursuant to the
provisions of articles 92 and 93 of the General Law on Communication Means,
in that certain real state located at Extension del Ferrocarril
Interoceanico de Mexico #1,318 of the Avenida 4 Poniente in the city of
Puebla, Puebla, and having a total surface area of 2,280.52 square meters.
Real state recorded in the Public Registry of Real Property of Puebla,
Puebla, under real estate folio 571039, dated October 02, 2000.
EXHIBIT J AMENDMENT TO THE CIVIL MORTGAGE
EXHIBIT K AMENDMENT TO ADDITIONAL MORTGAGES
EXHIBIT L AMENDMENT TO THE ORIGINAL MORTGAGE
EXHIBIT M CIVIL MORTGAGE
EXHIBIT N ORIGINAL MORTGAGE
EXHIBIT O FORM OF PLEDGE ON IC'S STOCK
EXHIBIT P FORM OF PLEDGE ON IIR'S STOCK
EXHIBIT Q FORM OF PLEDGE ON SERVICIOS AXTEL'S STOCK
EXHIBIT R FORM OF CONFIRMATION OF GUARANTEE
EXHIBIT R
CONFIRMATION OF GUARANTEE
This CONFIRMATION OF GUARANTEE, dated as of March __, 2003 (the
"Confirmation") made by IMPULSORA E INMOBILIARIA REGIONAL S.A. DE C.V.,
INSTALACIONES Y CONTRATACIONES, S.A. DE C.V. and SERVICIOS AXTEL, S.A. DE C.V.,
each a business corporation duly organized, validly existing and in good
standing under the laws of the United Mexican States ("Mexico") (herein, each
individually, together with its successors and assigns, a "Guarantor" and
collectively the ("Guarantors"), in favor of Nortel Networks Limited, a company
organized under the laws of Canada, with its principal office at 8200 Dixie
Road, Suite 100, Brampton, Ontario L6T 5P6, Canada ("Nortel Networks"), as
administrative agent (the "Administrative Agent"), Toronto Dominion (Texas),
Inc, a corporation duty organized under the laws of the State of Delaware,
United States, with its principal office at 900 Fannin Street, Houston, TX,
77010, United States, as collateral agent (the "Collateral Agent"), and Nortel
Networks and the several lenders party from time to time to the Restructured
Finance Agreement (as defined below) as lenders (the "Lenders,") (the
Administrative Agent, the Collateral Agent and the Lenders being referred to
herein as the "Lender Parties").
WHEREAS, Impulsora e Inmobiliaria Regional S.A. de C.V. and Instalaciones y
Contrataciones, S.A. de C.V. entered into the Restricted Subsidiary Guarantee
dated August 31, 1999 in favor of the Lender Parties in order to guarantee
Obligations under the Finance Agreement dated as of June 18, 1999 among Axtel,
S.A. de C.V. (the "Borrower") and the Lender Parties (the "Subsidiary
Guarantee");
WHEREAS, Servicios Axtel, S.A. de C.V. entered into the Supplement to the
Restricted Subsidiary Guarantee dated October 6, 2001 in favor of the Lender
Parties, pursuant to which it became a party to the Subsidiary Guarantee with
the same force and effect as if it had been an original signatory thereto, in
order to guarantee Obligations under the Amended and Restated Finance Agreement
dated as of June 18, 2001 (the "Amended and Restated Finance Agreement") among
the Borrower and the Lender Parties;
WHEREAS, the Borrower, Nortel Networks de Mexico, S.A. de C.V. and the
Lender Parties have entered into a Restructuring Agreement dated as of March 20,
2003 (the "Restructuring Agreement"), pursuant to which the Parties have agreed
to amend and restructure the Amended and Restated Finance Agreement;
WHEREAS, the Borrower and the Lender Parties have entered into the
Restructured Amended and Restated Finance Agreement dated as of March __, 2003
(the "Restructured Finance Agreement");
WHEREAS, capitalized terms used herein and not defined herein shall have
the meaning assigned to such terms in the Restructured Finance Agreement.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, each Guarantor hereby acknowledges and agrees that, upon the
effectiveness of the Restructuring Agreement and the Restructured Finance
Agreement, the Subsidiary Guarantee and all of such Guarantor's obligations
thereunder shall continue to be in full force and effect and to apply to the
same extent with respect to the Restructured Fi-
nance Agreement and Obligations thereunder as to the Amended and Restated
Finance Agreement and Obligations thereunder.
This Confirmation shall be governed by and construed on accordance with the
laws of the State of New York, except for choice of law provisions thereof which
would require the application of the laws of another state.
IN WITNESS WHEREOF, this Confirmation has been duly executed as of the day
and year first above written.
IMPULSORA E INMOBILIARIA
REGIONAL S.A. DE C.V.
By:
--------------------------------
Name:
Title:
INSTALACIONES Y CONTRATACIONES,
S.A. DE C.V.
By:
--------------------------------
Name:
Title:
SERVICIOS AXTEL, S.A. DE C.V.,
By:
--------------------------------
Name:
Title:
-2-
Dates Referenced Herein and Documents Incorporated by Reference
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