EXHIBIT 10.45
COMMON AGREEMENT
AMONG
PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.
PEGASO PCS, S.A. DE C.V.
PEGASO TELECOMUNICACIONES, S.A. DE C.V.
PEGASO RECURSOS HUMANOS. S.A. DE C.V.
AND
CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK
AS COLLATERAL AGENT AND
CITIBANK, N.A.
AS INTERCREDITOR AGENT
AND
CITIBANK INTERNATIONAL PLC,
AS ALCATEL ADMINISTRATIVE AGENT
AND
ABN AMRO BANK N.V.,
AS QUALCOMM ADMINISTRATIVE AGENT
DATED AS OF DECEMBER 15, 1998
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS AND PRINCIPLES OF CONSTRUCTION................................... 2
1.01 Definitions.............................................................. 2
1.02 Principles of Construction............................................... 2
1.03 Conflicts................................................................ 3
ARTICLE 2 CREDIT FACILITIES............................................................ 3
2.01 Indebtedness Subject to this Agreement................................... 3
2.02 Senior Indebtedness Pari Passu........................................... 3
2.03 Pro Rata Payment of Obligations.......................................... 4
2.04 Additional Senior Indebtedness........................................... 4
2.05 Prepayments.............................................................. 6
2.06 Payments................................................................. 7
2.07 Swap Agreements as Senior Indebtedness................................... 7
ARTICLE 3 CONDITIONS PRECEDENT......................................................... 8
3.01 Conditions Precedent to Initial Disbursement............................. 8
3.02 Conditions Precedent to All Disbursements................................ 15
3.03 No Waiver................................................................ 16
3.04 Delivery of Certificates, Etc............................................ 16
3.05 Beneficiaries of Conditions to Disbursements............................. 16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES............................................... 17
4.01 Corporate Status......................................................... 17
4.02 Corporate Power and Authority............................................ 17
4.03 Valid and Binding Obligation............................................. 17
4.04 No Violation............................................................. 18
4.05 Permits.................................................................. 18
4.06 Financial Statements; Financial Condition; Undisclosed Liabilities; Etc.. 19
4.07 Litigation; Labor Disputes............................................... 19
4.08 Tax Returns and Payments................................................. 20
4.09 Capitalization........................................................... 20
4.10 Subsidiaries, Mortgage and Minimum Assets................................ 21
4.11 Compliance with Applicable Law........................................... 22
4.12 Property Rights.......................................................... 22
4.13 Single-Purpose........................................................... 22
4.14 Fees and Enforcement..................................................... 22
4.15 Foreign Exchange Approvals............................................... 23
4.16 Liens.................................................................... 23
4.17 Title; Security Documents................................................ 23
4.18 Transaction Documents.................................................... 24
4.19 Certain Ancillary Services............................................... 24
4.20 Environmental Matters.................................................... 24
4.21 Investment Company Act................................................... 24
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4.22 True and Complete Disclosure............................................. 25
4.23 No Additional Fees....................................................... 25
4.24 Use of Proceeds.......................................................... 25
4.25 Insurance................................................................ 26
4.26 Private Activities; Immunity............................................. 26
4.27 No Subordination......................................................... 26
4.28 Licenses................................................................. 26
4.29 Operator Agreements...................................................... 27
4.30 Employee Benefit Plans; Employment Matters............................... 27
4.31 Year 2000................................................................ 28
4.32 Indebtedness............................................................. 28
ARTICLE 5 AFFIRMATIVE COVENANTS........................................................ 28
5.01 Information Covenants.................................................... 28
5.02 Books, Records and Inspections; Accounting and Audit Matters............. 32
5.03 Maintenance of Property and Insurance.................................... 33
5.04 Corporate Franchises and System Permits; Enforcement of Transaction
Documents............................................................... 33
5.05 Compliance with Applicable Law........................................... 34
5.06 Use of Proceeds.......................................................... 34
5.07 Taxes; Proper Legal Form................................................. 34
5.08 Credit Agreements........................................................ 34
5.09 Additional Documents; Filings and Recordings............................. 34
5.10 Condemnation Event; Casualty Event....................................... 35
5.11 Application of Equity Contributions...................................... 36
5.12 Translations............................................................. 37
5.13 New Subsidiaries......................................................... 37
5.14 Other Properties Subject to Liens; After-Acquired Property............... 37
5.15 Equity Commitments....................................................... 38
5.16 Year 2000 Compliance..................................................... 38
5.17 Operator Agreements...................................................... 39
5.18 Payment of Certain Fees.................................................. 39
5.19 Consents, Approvals...................................................... 39
5.20 Maintenance of Licenses.................................................. 40
5.21 Site Acquisition......................................................... 40
5.22 Minimum Assets........................................................... 41
ARTICLE 6 NEGATIVE COVENANTS........................................................... 41
6.01 Liens.................................................................... 41
6.02 Consolidation; Merger; Sale of Assets.................................... 43
6.03 Restricted Payments...................................................... 44
6.04 Indebtedness............................................................. 46
6.05 Subsidiaries............................................................. 47
6.06 Advances, Investments and Loans.......................................... 48
6.07 Affiliate Transactions................................................... 48
6.08 No Other Business........................................................ 49
6.09 EBITDA Test.............................................................. 49
6.10 Leverage Ratio........................................................... 49
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6.11 Limitation on Issuance of Stock.......................................... 50
6.12 Prepayments.............................................................. 50
6.13 Modifications of Certain Documents and Agreements........................ 50
6.14 Abandonment of The System................................................ 50
6.15 Hazardous Substances..................................................... 50
6.16 Immunity................................................................. 50
6.17 Regulations.............................................................. 51
6.18 Investment Company Act................................................... 51
6.19 Disputes................................................................. 51
ARTICLE 7 EVENTS OF DEFAULT............................................................ 51
7.01 Payments................................................................. 51
7.02 Representations.......................................................... 51
7.03 Covenants................................................................ 52
7.04 Default Under Other Agreements........................................... 52
7.05 Involuntary Bankruptcy, Etc.............................................. 52
7.06 Voluntary Bankruptcy, Etc................................................ 53
7.07 Analogous Proceedings.................................................... 53
7.08 Attachment of Collateral................................................. 53
7.09 Financing Agreements..................................................... 53
7.10 Expropriation............................................................ 54
7.11 Monetary Restrictions.................................................... 54
7.12 Judgments................................................................ 54
7.13 Licenses and Permits..................................................... 54
7.14 Change of Control........................................................ 54
7.15 Other Senior Indebtedness................................................ 54
7.16 Mortgage................................................................. 55
7.17 Remedies................................................................. 55
ARTICLE 8 MISCELLANEOUS................................................................ 56
8.01 Payment of Expenses, Etc................................................. 56
8.02 Right of Setoff.......................................................... 57
8.03 Notices.................................................................. 58
8.04 Benefit of Agreement..................................................... 58
8.05 No Waiver; Remedies Cumulative........................................... 58
8.06 Severability............................................................. 59
8.07 Counterparts............................................................. 59
8.08 Effectiveness............................................................ 59
8.09 Survival................................................................. 59
8.10 Currency of Payment...................................................... 59
8.11 Judgment Currency........................................................ 60
8.12 Evidence of Debt......................................................... 60
8.13 English Language......................................................... 61
8.14 Entire Agreement......................................................... 61
8.15 Waiver of Sovereign Immunity............................................. 61
8.16 Reinstatement............................................................ 61
8.17 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL... 62
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8.18 Calculations; Computations.............................................. 63
8.19 No Third-Party Beneficiaries............................................ 63
8.20 Amendments.............................................................. 63
8.21 Confidentiality......................................................... 64
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THIS COMMON AGREEMENT, dated as of December 15, 1998 (this "Agreement"),
among PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a sociedad anonima de
capital variable organized under the laws of Mexico (the "Company" or the
"Borrower"), PEGASO TELECOMUNICACIONES, S.A. DE C.V., a sociedad anonima de
capital variable organized under the laws of Mexico ("Holdings"), PEGASO PCS,
S.A. DE C.V., a sociedad anonima de capital variable organized under the laws of
Mexico ("Pegaso PCS"), PEGASO RECURSOS HUMANOS, S.A. DE C.V., a sociedad anonima
de capital variable organized under the laws of Mexico ("Personnel Co."),
CITIBANK, NA., a national banking organization under the laws of the United
States of America, acting through its branch located in New York, New York, in
its capacity as Intercreditor Agent (the "Intercreditor Agent"), on behalf of
the Senior Lenders, CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, a national
banking organization under the laws of the United Mexican States, in its
capacity as Collateral Agent (the "Collateral Agent"), CITIBANK INTERNATIONAL
PLC, a corporation organized under the laws of England, in its capacity as
Alcatel Administrative Agent (the "Alcatel Administrative Agent"), on behalf of
the Alcatel Lenders, and ABN AMRO BANK N.V., a Netherlands banking organization
in its capacity as QUALCOMM ADMINISTRATIVE AGENT (the "Qualcomm Administrative
Agent") on behalf of the Qualcomm Lenders, and the other Senior Lenders
executing this Agreement from time to time as contemplated by Article 2 hereof.
WITNESSETH:
WHEREAS, the Company was awarded the Licenses; and
WHEREAS, the Company by itself (and, in some cases, through other
members of the Borrower Group) will engage in the Business; and
WHEREAS, the Company is a Wholly-owned subsidiary of Holdings the shares
of which are, on the date hereof, owned by the Sponsors in accordance with the
terms of the Joint Venture Agreement; and
WHEREAS, the Company has entered into the Alcatel Procurement Agreement
with Alcatel Indetel pursuant to which the Company has agreed to acquire from
Alcatel Indetel, and Alcatel Indetel has agreed to supply to the Company,
certain equipment and services required for the System and the Business; and
WHEREAS, the Company has entered into the Qualcomm Procurement
Agreements for the purpose of acquiring from the respective vendors thereunder
certain equipment and services required for the System and the Business; and
WHEREAS, to finance the cost of constructing, developing and equipping
the System and starting-up the Business, the Company is entering into various
senior indebtedness agreements, including the Alcatel Credit Agreement and the
Qualcomm Credit Agreement, and shall be entering into various other senior
indebtedness agreements, in each case setting out the terms upon which financing
is to be provided for such development; and
WHEREAS, the execution of this Agreement, which provides for, among
other things, (i) certain common representations, warranties and covenants of
the Company, (ii) certain uniform conditions to the making of Senior Loans and
(iii) certain common events of default, is a condition precedent to the
obligation of the Senior Lenders to extend credit to the Company; and
WHEREAS, the Intercreditor Agent, the Collateral Agent and the
Administrative Agents are simultaneously with the execution hereof entering into
the Collateral Agency Agreement and the Intercreditor Agreement; and
WHEREAS, the Company may incur Additional Senior Indebtedness and other
Indebtedness from time to time subject to the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements contained herein and in the other Financing Agreements,
the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
1.01 DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires,
capitalized terms used in this Agreement, its appendices, schedules and exhibits
have the meanings given to such terms in Appendix A.
1.02 PRINCIPLES OF CONSTRUCTION. In this Agreement and the other
Financing Agreements and the appendices, exhibits and schedules hereto or
thereto (unless otherwise provided therein):
(a) The meanings set forth for defined terms in Appendix A or in
any Financing Agreement shall be equally applicable to both the singular and
plural forms of the terms defined and the masculine, feminine or neuter gender
shall include all genders.
(b) All references in any Financing Agreement to clauses, sections,
appendices, schedules and exhibits are to clauses, sections, appendices,
schedules and exhibits in or to such Financing Agreement unless otherwise
specified therein.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in a Financing Agreement shall refer to such Financing
Agreement as a whole and not to any particular provision of such Financing
Agreement.
(d) References in any Financing Agreement 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,
redesignated, amended or extended from time to time, except as otherwise
provided in such Financing Agreement.
(e) References in any Financing Agreement to any Transaction
Document or any other document or agreement shall be deemed to include
references to such
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Transaction Document or such other document or agreement as amended, varied,
supplemented or replaced from time to time in accordance with the terms of such
Transaction Document, document or agreement and this Agreement and to include
any appendices, schedules, exhibits, clarification letters, side letters and
disclosure letters executed in connection therewith.
(f) References to any Person or Persons shall be construed as a
reference to any successors or assigns of such Person or Persons to the extent
permitted under the Financing Agreements and, in the case of any Governmental
Authority, any Person succeeding to its functions and capacities.
(g) The table of contents and the headings of the several sections
and subsections of this Agreement or any Financing Agreement are intended for
convenience only and shall not in any way affect the meaning or construction of
any provision therein.
(h) References to the words "include" or "including" shall be
deemed to be followed by "without limitation" or "but not limited to," whether
or not they are followed by such phrases or words of similar import.
(i) References to a number of days shall refer to calendar days
unless Business Days are otherwise specified.
(j) References to "the Borrower Group," to a "member of the
Borrower Group" or to "members of the Borrower Group" shall mean each member of
the Borrower Group agreeing, representing or otherwise acting on a joint and
several basis.
1.03 CONFLICTS. In the case of any conflict between the terms of this
Agreement and the terms of any Credit Agreement, the terms of such Credit
Agreement, as between the Company and the Senior Lenders party thereto, shall
control.
ARTICLE 2
CREDIT FACILITIES
2.01 INDEBTEDNESS SUBJECT TO THIS AGREEMENT. All Senior Indebtedness
shall be entitled to the benefits of and subject to the obligations set forth in
this Agreement and shall be entitled to the liens, charges, collateral
assignments and security interests granted by or pursuant to the Security
Documents.
2.02 SENIOR INDEBTEDNESS PARI PASSU. All Senior Indebtedness shall rank
pari passu without any preference among Senior Indebtedness by reason of date of
incurrence or otherwise.
2.03 PRO RATA PAYMENT OF OBLIGATIONS. Except as specifically set forth
in Section 2.05, (a) each prepayment to a Senior Lender in respect of the Senior
Indebtedness, and (b) on and after the occurrence of an Event of Default and the
delivery of a Remedies Instruction as described in the Intercreditor Agreement,
each payment to a Senior Lender in respect of the Senior Indebtedness, shall be
on a Pro Rata Payment basis in accordance with the respective
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interest, fees, commissions, indemnities, principal and other amounts due to all
of the Senior Lenders on the date of such payment or prepayment.
2.04 ADDITIONAL SENIOR INDEBTEDNESS. From time to time the Company may,
subject to the terms hereof, designate additional indebtedness of and
commitments to lend to the Company as Senior Indebtedness, and upon satisfaction
of each of the following conditions precedent such designated indebtedness and
commitments, for all purposes of this Agreement, shall be Senior Indebtedness
secured by the collateral subject to the Security Documents and entitled to the
benefits of this Agreement ("Additional Senior Indebtedness"):
(a) Subject to the terms and conditions of this Section 2.04, the
lenders of such Additional Senior Indebtedness (or an agent or fiduciary
representing such lenders) (the "Additional Senior Indebtedness Lender") shall
have executed and delivered to the Collateral Agent an agreement in which each
such lender agrees to be bound as a Senior Lender by all of the terms and
conditions of this Agreement, the Collateral Agency Agreement and the
Intercreditor Agreement as if it were a party hereto and thereto.
(b) The Company shall have furnished to the Collateral Agent and to
each of the Alcatel Administrative Agent and the Qualcomm Administrative Agent a
term sheet describing the terms and conditions of the proposed Additional Senior
Indebtedness, a summary describing any and all representations, warranties,
affirmative covenants, negative covenants, events of default and other
non-financial terms which are to be imposed in connection with the making of
such Additional Senior Indebtedness and which are potentially more restrictive
on the Borrower Group than the provisions of this Agreement (the "Further
Provisions"), and as soon as practicable, drafts of the proposed Credit
Agreement and each of the other documents related thereto. Within 10 Business
Days after the receipt of such term sheet and drafts of the Further Provisions,
the Alcatel Administrative Agent and the Qualcomm Administrative Agent shall
notify the Company, the Additional Senior Indebtedness Lender, the Collateral
Agent and each other such Administrative Agent whether they (acting on behalf
of, and at the instructions of, the Senior Lenders under their respective Credit
Agreements) agree to amend or supplement the provisions of this Agreement to
allow such Further Provisions to be incorporated herein; and, if either of them
(on behalf of the Senior Lenders under their respective Credit Agreements) so
agree, pursuant to the sole and absolute discretion of such Senior Lenders, this
Agreement shall be amended to include such Further Provisions and each party
hereto shall execute and deliver an amendment implementing such Further
Provisions, which amendment shall be in form reasonably satisfactory to each
such party; provided, that in no event shall any Administrative Agent or the
Collateral Agent be obligated to waive or modify any provision of the Financing
Agreements relating to the Collateral. If neither of such Administrative Agents
agrees to include such Further Provisions in this Agreement, such Further
Provisions may be included in the Credit Agreement under which such Additional
Senior Indebtedness is to be incurred and an "event of default" thereunder shall
constitute an Event of Default hereunder as set forth in Section 7.15. Any and
all Further Provisions related to any Additional Senior Indebtedness, which
Further Provisions were included in this Agreement pursuant to this Section
2.04(b), shall terminate, and this Agreement shall be amended to delete such
Further Provisions, upon the full refinancing of all of the obligations under
such related Additional Senior Indebtedness; provided, that if at the time of
any such refinancing, the Senior Indebtedness under either of the Alcatel Credit
Agreement or the Qualcomm Credit Agreement have been syndicated or participated
such
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that any of the commitments or outstanding obligations thereunder have been sold
without credit support from Alcatel or its Affiliates or QUALCOMM or its
Affiliates, as applicable, such Further Provisions shall remain in this
Agreement for the term hereof; provided further, that no Further Provisions
shall terminate as described above to the extent such Further Provisions are
included within the instruments or agreements pursuant to which such related
Additional Senior Indebtedness is refinanced. Each of QUALCOMM and Alcatel shall
be permitted to exercise their rights under this Section 2.04(b) any number of
times of so long as QUALCOMM or Alcatel, as the case may be, shall be a Senior
Lender or shall be providing credit support to any Senior Lender with respect to
the Senior Indebtedness of such Senior Lender.
(c) Any and all liens, collateral assignments, security interests
and charges which are to be given by the Borrower Group or their shareholders in
connection with such Additional Senior Indebtedness ("Additional Collateral")
shall be granted to the Collateral Agent (and the Security Documents shall be
amended or supplemented accordingly, or further security documents shall be
executed and delivered by the Borrower Group to grant such Additional Collateral
to the Collateral Agent), so that, following the issuance of such Additional
Senior Indebtedness, all of the Senior Indebtedness will be secured on a pari
passu basis.
(d) Each member of the Borrower Group shall execute and deliver a
Guaranty Agreement in favor of the Additional Senior Indebtedness Lender in such
a manner that the Additional Senior Indebtedness is guaranteed thereunder to the
same extent as the other Senior Indebtedness at the time outstanding is
guaranteed; provided, however, that, the Company may arrange for a guaranty or
guarantees of such Additional Senior Indebtedness from a third party or parties,
other than other members of the Borrower Group (a "Third Party Guarantor")
without providing for a similar guaranty or guarantees of other Senior
Indebtedness, so long as (i) any representations, warranties, covenants or
defaults included in any reimbursement or similar agreement between any member
of the Borrower Group and the Third Party Guarantor shall constitute Further
Provisions for purposes of clause (b) of this Section 2.04, and (ii) no
collateral or other security may be given to such Third Party Guarantor by any
member of the Borrower Group other than in respect of subrogation rights, if
any, which such Third Party Guarantor may have in the Collateral and the
Security Documents, if and to the extent that it makes payments under such
guaranty.
(e) At least five days prior to the issuance of the Additional
Senior Indebtedness, the Borrower Group shall have delivered to each
Administrative Agent a certificate (i) describing such Additional Senior
Indebtedness, (ii) stating that no Default or Event of Default has occurred and
is then continuing hereunder after giving full effect to the incurrence of such
Additional Senior Indebtedness, and (iii) stating that, following such issuance,
the Borrower Group will be in compliance with the provisions of this Section
2.04 and with the provisions of Section 6.04(d).
(f) All of the conditions precedent to the Initial Disbursement
under the applicable Credit Agreement for such proposed Additional Senior
Indebtedness shall have been satisfied or waived pursuant to the terms of such
Credit Agreement.
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2.05 PREPAYMENTS.
(a) Prepayments of Senior Indebtedness shall be permitted to the
extent provided in the applicable Credit Agreement and to the extent provided
below.
(b) Any prepayment of the principal amounts of any Senior
Indebtedness (other than (i) a prepayment of Non-Vendor Financing, (ii) a
prepayment of vendor financing from financing provided or supported by an export
credit agency or (iii) a prepayment made under a revolving credit or similar
facility, including a voluntary prepayment of a Loan the proceeds of which were
used for the payment of VAT, provided that the lender's commitment thereunder is
not permanently reduced at the time of such prepayment) shall be accompanied by
a prepayment, on a Pro Rata Payment basis, of the principal amounts of all other
Senior Indebtedness then outstanding, (which prepayments shall be made
simultaneously unless any such Senior Indebtedness does not permit such
prepayment at such time or would otherwise require a prepayment or break-funding
penalty, in which case such prepayment amounts, at the option of the Company,
may be deposited with the applicable Administrative Agent, invested in Permitted
Investments, and applied to the prepayment of such Senior Indebtedness on the
first date permitted or as to which no prepayment or break-funding penalty would
be imposed) which prepayment (unless the option described in the foregoing
parenthetical shall be exercised) shall be accompanied by the full payment of
any prepayment premium, break-funding amounts or other amounts due and payable
under the applicable Credit Agreement in connection with such prepayment;
provided, that (x) no such prepayment of any other Senior Indebtedness shall be
required if the Senior Lenders holding such Senior Indebtedness agree to waive
such prepayment or if the Credit Agreement governing such Senior Indebtedness
does not permit such prepayment and (y) the amount of the Senior Indebtedness
which would be so prepaid (but for the foregoing clause (x)) shall not be
applied to the other Senior Indebtedness then outstanding.
(c) Any prepayment of principal on any Senior Indebtedness as
described in Section 2.05(b) shall be accompanied in each case with the full
payment of all accrued and unpaid interest on such Senior Indebtedness to the
extent required under the applicable Credit Agreement.
(d) Subject to SECTION 2.05(b), any prepayment of any Senior
Indebtedness which is made from the proceeds of other Indebtedness ("Refinancing
Indebtedness") may be made on a non-Pro Rata Payment basis between or among
Senior Indebtedness; provided, however, that the documentation under which such
Refinancing Indebtedness (other than Refinancing Indebtedness provided or
supported by an export credit agency) is issued shall provide that Senior
Indebtedness may be prepaid by the Company on a non-Pro-Rata Payment basis to
the same extent as is set forth in this Section 2.05.
2.06 PAYMENTS.
(a) On each Payment Date, the Company shall make the scheduled
principal repayments of Senior Indebtedness due on such Payment Date except to
the extent that such repayments have been prepaid. Principal of the Senior
Indebtedness shall be payable in accordance with the applicable Credit Agreement
on the terms and conditions set forth therein. If two or more Credit Agreements
set forth the same Payment Date at any one time, and the
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Company shall not have sufficient funds on such date to make full payment of the
Senior Indebtedness amounts due on such date under the applicable Credit
Agreements, then the Company shall make payments to the Senior Lenders under
such Credit Agreements on a Pro Rata Payment basis (determined without regard to
clause (z) of the proviso of the definition of "Pro Rata Payment") in respect of
the amounts due on such date.
(b) On each Payment Date, the Company shall pay accrued and unpaid
interest on the unpaid principal amount of the Senior Indebtedness outstanding
under each Credit Agreement in accordance with the terms of the applicable
Credit Agreement.
(c) All payments due under any Credit Agreement shall be made by
the Company pursuant to the terms of the applicable Credit Agreement, in
Dollars, as required under the applicable Credit Agreement, and in immediately
available funds. Subject to the provisions of the Collateral Agency Agreement
and Intercreditor Agreement, the relevant Administrative Agent shall apply each
payment with respect thereto received by it in accordance with such Credit
Agreement.
(d) If at any time at which any Obligations are payable to a Senior
Lender such Senior Lender receives insufficient funds pursuant to the applicable
Credit Agreement to pay in full all Obligations payable to such Senior Lender at
such time, the funds so received by such Senior Lender at such time shall be
deemed to be applied as follows:
(i) FIRST, to interest (including post-default interest) on
the Senior Indebtedness held by such Senior Lender;
(ii) SECOND, to principal of the Senior Indebtedness held by
such Senior Lender; and
(iii) THIRD, to fees, commissions, indemnities, expenses and
all amounts (other than principal of and interest on the Senior Indebtedness)
payable to such Senior Lender.
2.07 SWAP AGREEMENTS AS SENIOR INDEBTEDNESS. Subject to any other
restrictions otherwise contained in this Common Agreement, the Company may enter
into interest rate and Peso-Dollar currency swap agreements (including collars,
caps and similar derivative arrangements) through the execution of an agreement,
(a "Swap Agreement") with an Eligible Swap Counterparty; provided, however, that
all interest rate swap agreements shall be bona fide xxxxxx of floating rate
exposure for a fixed rate obligation, shall have at any time a notional amount
not greater than the Company's floating rate Indebtedness outstanding at such
time, and cover a period not exceeding four years from any date of
determination; provided, further, that all currency swap agreements shall be
forward contracts, for a term not exceeding one year, for the purchase of
Dollars or Pesos with notional amounts in aggregate not exceeding the Company's
projected operating expenses coming due over the three month period following
the date upon which such currency swap agreement is entered. The Company may
incur obligations under the Swap Agreement without regard to any limitations
imposed under Section 2.04 or Section 6.04. The obligations of the Company under
any such Swap Agreement may, upon notice by the Company to the Collateral Agent,
be secured by the Collateral on a pro-
7
rata basis to the same extent as would be the case if such obligations of the
Company under such Swap Agreement were deemed to be Additional Senior
Indebtedness hereunder, in which event the Security Documents shall be amended
to the extent necessary to provide for such pro-rata treatment of the swap
counterparty in respect of such Collateral; provided, however, that in such
event (i) no member of the Borrower Group shall, if the swap counterparty is
secured as aforesaid, grant to such swap counterparty any other Lien upon the
property or assets of the Borrower Group, (ii) the amount secured by the
Collateral, as described in the preceding sentence, shall be the amount owed
from time to time by the Company under the Swap Agreement, and (iii) the swap
counterparty, in its capacity as such, shall not otherwise be, or be deemed to
be, a Senior Lender hereunder and shall have no voting rights with respect to
any matter described herein or in the other Financing Agreements. Upon delivery
of the notice to the Collateral Agent as aforesaid, accompanied by a certificate
of the Chief Financial Officer of the Company stating that no Default or Event
of Default has occurred and is then continuing, the Collateral Agent shall amend
or supplement the Security Documents to implement the provisions of this Section
2.07.
ARTICLE 3
CONDITIONS PRECEDENT
3.01 CONDITIONS PRECEDENT TO INITIAL DISBURSEMENT. Subject to Section
3.05, the obligation of a group of Senior Lenders under a particular Credit
Agreement to make an Initial Disbursement shall be subject to the satisfaction
or waiver by each such Senior Lender of the conditions set forth below:
(a) SYSTEM AGREEMENTS. The Administrative Agents and the Relevant
Parties shall have received a true and complete copy of each System Agreement
(other than the Vendor Agreements) and all supplements, clarifications or
amendments thereto, all of which shall be in form and substance satisfactory to
such Administrative Agents (acting on behalf of, and at the instructions of, the
Senior Lenders under their respective Credit Agreements) and Relevant Parties
and certified as of the Initial Disbursement Date by an Authorized Officer of
the Company (or, in the case of the Joint Venture Agreement, by an Authorized
Officer of Holdings) with respect to the following matters: (A) such System
Agreement is a true, complete and correct copy of such System Agreement, (B)
such System Agreement is in full force and effect, (C) since the date of
execution thereof, such System Agreement has not been amended, modified,
clarified or supplemented, nor has any waiver been granted thereunder, except
for those amendments, modifications, clarifications, supplements or waivers,
certified copies of which have been delivered to the Administrative Agents
pursuant to (A) above, and (D) no party to any System Agreement is or, but for
the passage of time, giving of notice, fulfillment of any condition or any
combination thereof would be, in breach of any obligation thereunder (provided
that the certification of the Company's Authorized Officer as to the matters set
forth in this clause (D) may be made to the best knowledge of such Authorized
Officer with respect to Persons that are not members of the Borrower Group).
(b) FINANCING AGREEMENTS. Each Financing Agreement required to be
executed and delivered on or prior to the Initial Disbursement Date (i) shall
have been executed and delivered, and (ii) shall be in full force and effect.
8
(c) SECURITY INTERESTS. (i) All security interests intended to be
created pursuant to the Security Documents shall have been created and, where
appropriate, registered or other action taken to create a security interest and
Lien over the relevant asset or property in favor of the Collateral Agent, for
the benefit of the Senior Lenders, (ii) all fees and duties shall have been paid
in connection with such registration and (iii) all such security interests shall
(except as otherwise provided in any opinion of counsel accepted pursuant to
paragraph (f) below) be valid and enforceable and constitute first priority
perfected security interests, and be enforceable against the members of the
Borrower Group and any subsequent lien or (including a judgment lien or), holder
of a fixed or floating charge, or transferee for or not for value, in bulk, by
operation of law, for the benefit of creditors, or otherwise, subject in any
such case only to Permitted Liens described in Section 6.01. In addition to the
above, the Collateral Agent shall have received (w) evidence issued by the
Public Registry of Commerce of the Federal District of Mexico that the Original
Mortgage has been recorded in its books and records, (x) if then available,
evidence issued by the Telecommunications Registry of Mexico that the Original
Mortgage has been recorded in its books and records, (y) a copy of the second
testimony of the public deed evidencing the execution and delivery of Amendment
No. 1 to the Mortgage, together with a certificate of the relevant Public Notary
that the first testimony of such public deed has been presented for, and
accepted for, registration at the Public Registry of Commerce of the Federal
District of Mexico and the Telecommunications Registry of Mexico, and (z) if
then available, evidence issued by each such Registry that Amendment No. 1 to
the Mortgage has been recorded in its books and records.
(d) PROCESS AGENTS. The Administrative Agents and the Relevant
Parties shall have received evidence that (i) each of the Company, Holdings and
each other Guarantor shall have duly and irrevocably appointed an agent for
service of process in New York, (ii) such agent shall have accepted such
appointment and (iii) all fees scheduled to accrue to each such agent for
service of process through and including the date following seven years after
the Initial Disbursement Date shall have been paid in full.
(e) INSURANCE.
(i) The Borrower Group shall have obtained the insurance
described in Schedule 5.03 on the terms and conditions set forth therein and
from financially sound and reputable insurers and reinsurers and meeting the
criteria set forth in Schedule 5.03, and shall have provided to the
Administrative Agents and the Relevant Parties a certificate of an Authorized
Officer of the Company to that effect. The evidence required to be delivered by
the Company pursuant to this clause (i) or clause (ii) below shall confirm that
all premiums due and payable as of the Initial Disbursement Date have been paid
and no insurance premiums are overdue. The Administrative Agents and the
Relevant Parties shall have received evidence that each insurance policy
referred to in Schedule 5.03 has named the Collateral Agent; for the benefit of
the Secured Parties, as a co-beneficiary or co-payee under such policy together
with the Company (or other member of the Borrower Group), as their respective
interests may appear.
(ii) The Insurance Consultant shall have provided the
Administrative Agents and the Relevant Parties with a report in form and
substance acceptable to the Administrative Agents and the Relevant Parties which
shall confirm the matters set forth in clause (i) above, indicate that such
insurance and reinsurance is effective and provides adequate
9
coverage for the System and the Business and cover such other matters as any
Administrative Agent may have reasonably requested.
(f) OPINIONS OF COUNSEL. The Administrative Agents and the Relevant
Parties shall have received the following legal opinions in the English language
addressed to each Senior Lender, each Agent and each Relevant Party:
(i) the opinion of White & Case LLP, special New York counsel
to the Borrower Group, substantially to the effect set forth in Appendix B-1;
(ii) the opinion of White & Case, S.C., Mexican counsel to the
Borrower Group, substantially to the effect set forth in Appendix B-2.
(g) CORPORATE DOCUMENTS. The Administrative Agents and the Relevant
Parties shall have received for each member of the Borrower Group, Charter
Documents, good standing certificates (to the extent applicable to such Person
and available in such Person's jurisdiction of formation), incumbency
certificates and resolutions in each case certified by the appropriate officers
of such Person. Such resolutions shall, in each case, approve such Person's
participation in the transactions contemplated by this Agreement and the
applicable Credit Agreement, and the granting of Liens in connection therewith,
and shall authorize the execution, delivery and performance by such Person of
the Financing Agreements to which such Person is a party.
(h) PLEDGES OF STOCK.
(A) (i) The Pledge Agreement executed on October 31, 1998
by and among Holdings, the Company, Pegaso PCS and Qualcomm in order to create a
pledge on the shares issued by Pegaso PCS and Personnel Co. (the "PCS/Recursos
Pledge Agreement") shall have been amended in form satisfactory to the
Administrative Agents and the Relevant Parties to include the Collateral Agent,
acting on behalf of and for the benefit of the Secured Parties, as beneficiary
of such agreement and (ii) the Pledge Agreement executed on October 31, 1998 by
and among Holdings, Pegaso PCS and Qualcomm in order to create a pledge on the
shares issued by the Company (the "Sistemas Pledge Agreement") shall have been
amended in form satisfactory to the Administrative Agents and the Relevant
Parties to include the Collateral Agent, acting on behalf of and for the benefit
of the Secured Parties, as beneficiary of such agreement.
(B) Each of the Sponsors shall have executed and delivered
the Sponsors Negative Pledge Agreement which shall effectively prohibit the
granting of any Lien over any such Capital Stock by any such Sponsor.
(i) BUSINESS PLAN. The Administrative Agents and the Relevant
Parties shall have received (1) a copy of the Original Business Plan; and (2) a
copy of the Final Business Plan, certified by an Authorized Officer of the
Company as having been approved by the Board of Directors of Holdings.
(j) STAMP DUTIES; TAXES; ETC. The Administrative Agents and the
Relevant Parties shall have received evidence satisfactory to them that all
required stamp duties,
10
registration fees, filing costs and other charges in connection with the
execution, delivery, filing and/or perfection of any Transaction Document
required to be stamped, registered or filed have been paid in full or an
appropriate exemption therefrom shall have been obtained, except to the extent
that the Company has provided the Administrative Agents and the Relevant Parties
with assurances satisfactory to them that such duties, fees, costs and charges
will be paid in full with the proceeds of the Initial Disbursement.
(k) CONSENTS, AMENDMENTS, ASSIGNMENTS AND ACKNOWLEDGMENTS. All
consents, amendments, assignments, acknowledgments, documents or other evidence
or information (including the Consents) necessary or desirable in connection
with the System, the Collateral and the assignment as security of the System
Agreements to the Collateral Agent (including all approvals of any Governmental
Authority or any third party) shall have been duly: obtained, executed and
delivered, including, without limitation, consents relating to the Vendor
Agreements, the Operator Agreement, the GTE Operator Agreement and the
Interconnection Agreements.
(l) SYSTEM COMPLIANCE. The System shall be in compliance in all
respect with all Applicable Laws as in effect upon the Closing Date and the
Administrative Agents arc the Relevant Parties shall have received a certificate
to such effect from an Authorized Officer of the Company.
(m) FINANCIAL STATEMENTS. The Administrative Agents and the
Relevant Parties shall have received the most recent financial statements of the
Borrower Group (on consolidated basis), together with a certificate from the
Chief Financial Officer of Holdings stating that no material adverse change in
the consolidated assets, liabilities, operations or financial condition of the
Borrower Group has occurred from those set forth in the financial statements
provided pursuant to this clause (m), except as otherwise provided (which
exceptions shall also be in form and substance satisfactory to each
Administrative Agent) in any such certificate with respect to such financial
statements.
(n) AUTHORIZATION TO INDEPENDENT ACCOUNTANT. The Chief Financial
Office of Holdings shall have authorized the Independent Accountant in writing
to communicate directly with the Relevant Parties, the Alcatel Administrative
Agent and the Qualcomm Administrative Agent (provided that such authorization
shall provide that no such communications shall occur with the Independent
Accountant unless and until such Relevant Party or such Agent has, prior
thereto, notified such Chief Financial Officer of Holdings that it intends to so
communicate with the Independent Accountant, and requests that such officer so
notify such Independent Accountant) and shall have furnished such Administrative
Agents and the Relevant Parties with a copy of such authorization, which
authorization shall be irrevocable until all Obligations have been fully and
finally paid.
(o) FEES AND EXPENSES. The Company (or other members of the
Borrower Group) shall have paid all fees and expenses due to any Secured Party
(including all reasonable fees and expenses of legal counsel for any of the
foregoing to the extent the Company (o~ another member of the Borrower Group) is
obligated to pay such expenses), on or before the Closing Date, or arrangements
satisfactory to such Secured Party, shall have been made for the payment of such
fees and expenses from the proceeds of the Initial Disbursement.
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(p) INITIAL CREDIT FACILITY CONDITIONS PRECEDENT. All of the
conditions set forth in each of Article 6 of the Alcatel Credit Agreement and
Section 4 of the Qualcomm Credit Agreement, shall have been satisfied or waived
in accordance with the terms of each such agreement.
(q) EXISTING EQUITY. The Administrative Agents shall have received
evidence that not later than the Closing Date that (i) the paid-in equity (in
the form of equity cash contributions made by the Existing Shareholders and the
New Shareholders of Holdings in consideration for Capital Stock issued by
Holdings to such shareholders) was not less than the aggregate amount of
$300,000,000 as of the date or dates contributed, (ii) not less than 99% of such
cash has been contributed by Holdings to the Company as equity, and (iii) the
remainder of such cash, if any, has been contributed by Holdings to either or
both of Pegaso PCS and/or Personnel Co. as equity.
(r) EQUITY COMMITMENTS. The Administrative Agents and the Relevant
Parties shall have received evidence of irrevocable cash Equity Commitments by
the Original Mexican Shareholders in the aggregate amount of (i) $50,000,000 to
be contributed, delivered and paid not later than July 31, 1999 and (ii)
$50,000,000 to be contributed, delivered and paid not later than August 30,
2000; there shall have been no default under any such Equity Commitments; there
shall have been no bankruptcy, insolvency or similar proceedings commenced or
initiated by or against any Original Mexican Shareholder making such Equity
Commitment; and each Sponsor, Holdings and the Company shall have executed an
Assignment Agreement with respect to such Equity Commitments in form and
substance satisfactory to the Required Voting Parties.
(s) LICENSES AND LICENSE FEE. The Licenses shall be in full force
and effect; such Licenses shall provide all of the Permits required to operate
the System in accordance with the Original Business Plan, and in those
geographical areas referred to in the Original Business Plan; and all fees,
costs and expenses payable in connection with the granting or maintaining of
such Licenses (including any VAT taxes or charges relating thereto) shall have
been paid in full from Existing Equity.
(t) MINIMUM ASSETS; MORTGAGED PROPERTY. The Administrative Agents
and the Relevant Parties shall have received (i) a certificate of an Authorized
Officer of the Company to the effect that (A) the Company owns, both legally and
beneficially, title to the Minimum Assets, and (B) all such Minimum Assets are
subject to the Lien created by the Security Documents, and (ii) an undertaking
by Holdings, and Holdings hereby undertakes, that Holdings holds and will
continue to hold as its only assets the Capital Stock of the Company, Pegaso PCS
and Personnel Co, the rights to receive equity as provided in the Equity
Commitments (and with all debt or other obligations owing from any such entity
to Holdings having been contributed to such entity as additional capital) and
the assets referred to in the parenthetical in Section 6.04(h)(C).
(u) VARIOUS CONSENTS AND APPROVALS. The Administrative Agents and
the Relevant Parties shall have received all Permits, material consents,
approvals and releases of all appropriate Governmental Authorities and all other
third parties in connection with the transactions contemplated by the
Transaction Documents, including (without limitation)
12
all required consents, authorizations, approvals or releases from contractual
counterparties of members of the Borrower Group required to be obtained to
permit the Lien of the Collateral Agent, acting for the benefit of the Secured
Parties, in the Collateral.
(v) SUPPLEMENT TO ALCATEL COMMITMENT LETTER. The Company shall have
received a supplemental letter updating and confirming the terms of the Alcatel
Commitment Letter and the conditions of for effectiveness. Such supplemental
letter shall be dated no earlier than five Business Days prior to the date
hereof and accurately reflect the terms and conditions of the commitment under
the Alcatel Commitment Letter as of such date, and the Administrative Agents
shall have received a fully-executed copy thereof, the substance of which shall
be reasonably satisfactory to the Qualcomm Administrative Agent.
(w) GUARANTY TRUST AGREEMENT AND RELATED DOCUMENTS AND APPROVALS.
Holdings shall deliver to the Administrative Agents and the Relevant Parties the
Guaranty Trust Agreement duly executed and delivered by each of the parties
thereto, together with evidence in writing that the Secretaria de Comunicaciones
y Transportes have approved the Guaranty Trust Agreement and all appropriate
documentation and instruments, which documentation and instruments shall have
been duly executed, in order to effectively transfer title to the trustee
thereunder, for the benefit of the Collateral Agent, to all of the Capital Stock
in the Company, Pegaso PCS and Personnel Co. as held by Holdings on the Closing
Date, which Capital Stock shall (except to the extent described in the last
sentence of this Section 3.01(w)) constitute 100% of the issued and outstanding
Capital Stock of each of the Company, Pegaso PCS and Personnel Co. The transfer
by Holdings of its title to the Capital Stock of the Company, Pegaso PCS and
Personnel Co., as applicable, to the trustee under such Guaranty Trust Agreement
shall have been registered in the shareholders' registry book of the Company,
Pegaso PCS and Personnel Co., respectively. Concurrently therewith, the parties
to the PCS/Recursos Pledge Agreement and the Sistemas Pledge Agreement will
amend said agreements to provide that said agreements only create a pledge on
the single share of each of Pegaso PCS, Personnel Co. and the Company not owned
by Holdings but which is owned by another member of the Borrower Group.
(x) CONSENTS FROM TELMEX AND TELNOR. The Company will deliver to
the Administrative Agents and the Relevant Parties a Consent duly executed and
delivered by each of TelMex and TelNor with respect to their respective
Interconnection Agreements.
(y) CLARIFICATION WRIT. The Company shall have filed or have caused
to be filed with the Ministry of Telecommunications of Mexico a clarification
writ with respect to the writ filed on November 30, 1998, and the said Ministry
shall have issued an order, to the effect that (i) Pegaso PCS is authorized to
act on behalf of the Company under the Pegaso PCS Services Agreement as a
"comisionista," not as a "comercializadora" and (ii) all accounts receivable
derived from the exploitation and use of the Licenses are the property of the
Company, not Pegaso PCS.
(z) POST-CLOSING AGREEMENT. The Company and each other member of
the Borrower Group shall have executed and delivered a post-closing agreement
(the "Post-Closing Agreement") dated as of the date hereof in form and substance
satisfactory to the Administrative Agents and the Relevant Parties with respect
to the satisfaction of certain of the
13
closing conditions contained herein or in the Credit Agreements within a
specified period of time after the Closing Date.
3.02 CONDITIONS PRECEDENT TO ALL DISBURSEMENTS. Subject to Section 3.05
the obligation of any Senior Lender to make any Disbursement (including the
Initial Disbursement) shall be subject to the satisfaction or waiver in
accordance with the terms of the relevant Credit Agreement, prior to and
concurrently with each such Disbursement, of each of the conditions set forth
below:
(a) NOTICE OF BORROWING. The Company shall have delivered to the
applicable Administrative Agent and the Relevant Parties a notice of borrowing
from an Authorized Officer of the Company if and to the extent required as a
precondition to the Disbursement of a Loan in the applicable Credit Agreement.
(b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. Immediately before
and after giving effect to such Disbursement:
(i) no Default or Event of Default shall have occurred and be
continuing; and
(ii) all representations and warranties made by each member of
the Borrower Group, each Guarantor and each Sponsor in each of the Financing
Agreements to which such Person is a party (except, as to any Agent or Senior
Lender, any Credit Agreement other than the Credit Agreement by and among such
Person, such Agent and such Senior Lender), shall be true, complete and correct
in all material respects with the same force and effect as though such
representations and warranties had been made on and as of the date of such
Disbursement, except for any representations and warranties herein or in any
Financing Agreement which expressly relate only to an earlier date.
(c) CREDIT AGREEMENT CONDITIONS PRECEDENT. In the case of a
Disbursement under any Credit Agreement, the additional conditions precedent (if
any) to such Disbursement set forth in such Credit Agreement shall have been
satisfied or waived by the applicable Senior Lenders on or before the date of
such Disbursement.
(d) FEES AND EXPENSES. The Borrower Group shall have paid or made
arrangements for payment (including, to the extent permitted, arrangement for
payment out of Disbursements) of all fees, expenses and other charges then
payable by it hereunder or under any other Financing Agreement in a manner
satisfactory to the relevant payee.
3.03 NO WAIVER.
(a) Subject to Section 3.05, no course of dealing or waiver by any
Senior Lender or any Agent in connection with any condition of Disbursement
under this Agreement or any Credit Agreement shall impair any right, power or
remedy of any such Senior Lender or Agent with respect to any other condition of
Disbursement, or be construed to be a waiver of any such other condition; nor
shall the action of any Senior Lender or any Agent in respect of any
Disbursement affect or impair any right, power or remedy of any Senior Lender or
the Collateral Agent in respect of any other Disbursement.
14
(b) Subject to Section 3.05, unless otherwise notified to the
Company by a Senior Lender or the Collateral Agent and without prejudice to the
generality of Section 3.03(a), the right of any Senior Lender or any Agent to
require compliance with any condition under this Agreement or relevant Credit
Agreement which may be waived in accordance with the provisions of such
applicable Credit Agreement is expressly preserved for the purpose of any
subsequent Disbursement.
3.04 DELIVERY OF CERTIFICATES, ETC. All of the certificates, legal
opinions, communications, notices and other documents and papers referred to in
Sections 3.01 or 3.02 to be delivered thereunder, unless otherwise specified,
shall be delivered in sufficient counterparts for distribution to each of the
Senior Lenders and, unless otherwise specified, shall be in form and substance
reasonably satisfactory to the Agent receiving the same. Notwithstanding the
foregoing, all of the certificates, legal opinions, communications, notices and
other documents and papers referred to in Sections 3.01 and 3.02 shall be
addressed to each Senior Lender.
3.05 BENEFICIARIES OF CONDITIONS TO DISBURSEMENTS. Notwithstanding any
other provision of this Article 3, any waiver of the conditions precedent (i) to
the Initial Disbursement or any subsequent Disbursement under the Alcatel Credit
Agreement must be waived by each Senior Lender under the Alcatel Credit
Agreement, but no Senior Lender under any other Credit Agreement shall have any
right or benefits thereto or any such waiver rights thereunder, (ii) to the
Initial Disbursement or any subsequent Disbursement under the Qualcomm Credit
Agreement must be waived by each Senior Lender under the Qualcomm Credit
Agreement, but no Senior Lender under any other Credit Agreement shall have any
right or benefit thereto or any such waiver rights thereunder, and (iii) to the
Initial Disbursement and any subsequent Disbursement under any Credit Facility
relating to Additional Senior Indebtedness must be waived by the Senior Lender
(or all or such percentage of the Senior Lenders) as provided in such Credit
Agreement, but no Senior Lender under the Alcatel Credit Facility, no Senior
Lender under the Qualcomm Credit Agreement and no Senior Lender under any other
Additional Senior Indebtedness then outstanding shall have any right or benefits
thereto or any such waiver rights thereunder.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each member of the Borrower Group, jointly and severally, makes the
representations and warranties contained in this Article 4 for the benefit of
each Senior Lender, each Agent and each Relevant Party. Each such representation
and warranty shall be deemed made for the benefit of any Senior Lender at the
times (and only the times) and to the extent (and only to the extent) specified
in the Credit Agreement to which such Senior Lender is party. The
representations and warranties contained herein shall survive the execution and
delivery of this Agreement. To the extent that any schedule referred to in this
Article 4 shall need to be updated in order to permit such representation to be
true and correct when made or deemed made, the Company or other member of the
Borrower Group shall provide the Agents with such updated schedule in writing
prior to the date such representation is made or deemed made and shall request
approval of such updated schedule in accordance with the provisions of the
Intercreditor Agreement. Unless any such schedule is updated and approved in
accordance with the
15
provisions of the Intercreditor Agreement, no change to any existing schedule
shall be deemed to have been made.
4.01 CORPORATE STATUS. Each member of the Borrower Group (i) is a
sociedad anonima de capital variable duly organized, validly existing and in
good standing under the laws of Mexico, (ii) is duly authorized to do business
in Mexico and in each other jurisdiction where the character of its properties
or the nature of its activities makes such qualification necessary (except for
any authorization the absence of which does not constitute a Material Adverse
Effect) and (iii) has the requisite power and authority to (a) own or possess
all of its property and assets, (b) transact the business in which it is engaged
or proposes to be engaged (including the Business), (c) incur and guarantee
Indebtedness and create Liens, (d) execute, deliver and perform its obligations
under the Transaction Documents to which it is a party and (e) do all things to
be done by it in respect of the construction, maintenance and operation of the
System and to consummate the transactions contemplated by this Agreement and the
other Transaction Documents.
4.02 CORPORATE POWER AND AUTHORITY. Each member of the Borrower Group
has taken all corporate action necessary to authorize the execution, delivery
and performance by it of each of such Transaction Documents as have been
executed and delivered by such member as of each date this representation and
warranty is made or deemed made. Each member of the Borrower Group has, or in
the case of the Transaction Documents other than this Agreement and future
Credit Agreements by the Initial Disbursement Date will have, duly executed and
delivered each of the Transaction Documents to which it is a party.
4.03 VALID AND BINDING OBLIGATION. This Agreement, when executed and
delivered by the members of the Borrower Group on or before the date this
representation is made or deemed made constitutes or, in the case of each other
Transaction Document to which it is a party, when executed and delivered by it,
will constitute, the legal, valid and binding obligation of such member
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by (i) applicable bankruptcy, insolvency and other similar laws
affecting creditors' rights generally and (ii) general equitable principles
regardless of whether the issue of enforceability is considered in a proceeding
in equity or at law.
4.04 NO VIOLATION. None of the execution and delivery by any member of
the Borrower Group of this Agreement and the other Transaction Documents to
which it is party, the consummation of the transactions contemplated hereby and
thereby or compliance with the terms and provisions hereof and thereof does or
will (i) contravene or violate its Charter Documents or any Applicable Law, (ii)
contravene or result in any breach or constitute any default under any order,
writ, injunction, judgment or decree of any court or other tribunal or
Governmental Authority or (iii) contravene or result in any breach or constitute
any default under, or result in or require the creation of any Lien upon any of
its revenues, properties or assets under any agreement or instrument to which it
is a party or by which it or any of its revenues, properties or assets may be
bound, except for Permitted Liens or (iv) require any permit, consent or
approval of any Person other than any such permits, consents or approvals which
have been obtained and are in full force and effect; provided, however, that (a)
with respect to the System Agreements, the above representation shall apply only
to the extent that any such contravention, violation or breach would result in a
Material Adverse Effect, and (b) it is understood that any remedial
16
action taken under the Security Documents, (y) to the extent that it results or
would result, directly or indirectly, in a transfer of the Licenses to a party
other than the Company, may require certain authorizations, consents or
approvals by Governmental Authorities under the Mexican Telecommunications Law,
and (z) to the extent that it results in Capital Stock of the Company being
transferred to a non-Mexican entity, may violate Applicable Law and/or require
Permits relating to restrictions on foreign ownership of Mexican companies.
Solely for purposes of this Section 4.04, the term "Applicable Law" shall be
deemed to be limited to those Applicable Laws in effect on the date such
representation is made.
4.05 PERMITS. All authorizations, consents and permits necessary under
Applicable Law in connection with (i) the clue execution and delivery of, and
performance by each member of the Borrower Group of its obligations under each
Transaction Document to which it is a party in effect or required to be in
effect as of each date this representation is made or deemed made, (ii) the
grant by the members of the Borrower Group of the Liens pursuant to the Security
Documents and the validity, enforceability and perfection thereof and the
exercise by the Collateral Agent of rights and remedies thereunder, and (iii)
the care, custody, control, construction, development and operation of the
System as contemplated by the Business Plan which are required to be obtained on
or prior to the date this representation is made or deemed made (other than, in
the case of this clause (iv), such consents, authorizations and permits the
absence of which would not constitute a Material Adverse Effect), in each case
have been obtained by such members (hereinafter, collectively the "Permits").
Each of such Permits has been duly obtained or made, is validly issued, is in
full force and effect, and is held in the name of the Person identified in such
Permit and is free from any condition or requirement compliance with which would
constitute a Material Adverse Effect or which the applicable member of the
Borrower Group does not reasonably expect to be able to satisfy.
4.06 FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED LIABILITIES;
ETC.
(a) Each of the financial statements of the Borrower Group
delivered pursuant to Sections 3.01 (m) and 5.01(a) is true, complete and
correct in all material respects as of the date of such statements and fairly
presents the financial condition, results of operations and cash flows as of the
date thereof. Such financial statements have been prepared in accordance with
GAAP on a consistent basis except as may otherwise be noted therein.
(b) Except as fully reflected in (i) the financial statements
referred to in Section 3.01(m), (ii) the contingent liabilities set forth on
Schedule 4.06 and (iii) the obligations set forth in the Transaction Documents,
there was, as of the Closing Date, no liability or obligation with respect to
any member of the Borrower Group of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) for the period to which
such respective financial statements relate which, either individually or in the
aggregate, constitutes a Material Adverse Effect. As of the Closing Date, no
member of the Borrower Group knows of any reasonable basis for the assertion
against any such member of any liability or obligation of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due) for
such relevant period that is not (x) fully reflected in the financial statements
referred to in Section 3.01(m), (y) set forth in Schedule 4.06 or (z) an
obligation set
17
forth in or contemplated by the Transaction Documents, which either individually
or in the aggregate, constitutes a Material Adverse Effect.
(c) Since the date of the last financial statements of the Borrower
Group submitted in accordance with Section 5.01(a), there has been no material
adverse change in the condition (financial or otherwise) or operations of the
Borrower Group (taken as a whole), except for the operating losses contemplated
by the most recent Business Plan submitted pursuant to Section 5.01 (d).
4.07 LITIGATION; LABOR DISPUTES.
(a) No member of the Borrower Group is in default with respect to
any order of any court, arbitrator, administrative agency or other Governmental
Authority, other than any order that is the subject of a Good Faith Contest or
other order the default under which, or the non-compliance with which, would not
result in a Material Adverse Effect. There is no injunction, writ, or
preliminary restraining order of any nature issued by an arbitrator, court or
other Governmental Authority directing that any of the transactions provided for
in any of the Financing Agreements not be consummated as herein or therein
provided. There is no action, suit, investigation or proceeding (including any
appeal by any Person of a Permit) by or before any court, arbitrator,
administrative agency or other Governmental Authority pending or, to the best
knowledge of each member of the Borrower Group, threatened against or affecting
any member of the Borrower Group (or any of such party's properties, revenues or
assets) which constitutes a Material Adverse Effect.
(b) There are no strikes, slowdowns or work stoppages by the
employees of any member of the Borrower Group or any Vendor, on-going, or, to
the best knowledge of each such member, currently threatened, which constitute a
Material Adverse Effect.
4.08 TAX RETURNS AND PAYMENTS.
(a) Each member of the Borrower Group has filed all income tax and
other material tax returns required by Applicable Law to be filed by it and has
paid all Taxes and assessments payable by it which have become due other than
those subject to a Good Faith Contest. Each member of the Borrower Group has
paid or has provided reserves adequate in the reasonable judgement of the
management of Holdings and consistent with GAAP for the payment of all income or
other Taxes imposed on it by the Government of Mexico for all prior Fiscal Years
and accrued for the current Fiscal Year to the date hereof.
(b) Except for those items set forth in Schedule 4.08, no
withholding Taxes are payable by the Company or any other member of the Borrower
Group, (under Applicable Law in existence as of the Closing Date), to any
Mexican Governmental Authority in connection with any amounts payable by the
Company or any other such member under or in respect of the Financing Agreements
as in effect on the Closing Date.
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4.09 CAPITALIZATION.
(a) Schedule 4.09 sets forth the capitalization of Holdings and
each other member of the Borrower Group as of the date hereof, including (i)
authorized capital, (ii) the number of shares issued and outstanding and (iii)
the shareholders and number of shares and advances held by each such
shareholder. All of the issued and outstanding shares of Holdings (other than
treasury stock held by Holdings) and each other member of the Borrower Group are
duly and validly issued and non-assessable and fully paid. Neither Holdings nor
any other member of the Borrower Group has outstanding (a) any securities
convertible into or exchangeable for its share capital or (b) except as set
forth in Section 4.09(b) below, any rights to subscribe for or to purchase, or
any option for the purchase of, or any agreement, arrangement or understanding
providing for the issuance (contingent or otherwise) of, or any call, commitment
or claims of any character relating to, or any rights or claims that restrict
the transfer of, its share capital.
(b) The Existing Equity, as of September 29, 1998, was $300,000,000
(or the Peso Equivalent thereof, determined as of the date or dates of
contribution). No Existing Shareholder or New Shareholder has any right
(contingent or otherwise) for the repayment or reimbursement of any of the
Existing Equity, nor any rights, contractual or otherwise, against Holdings (or
any other member of the Borrower Group) in respect of such Existing Equity,
other than rights to the shares of Capital Stock which have previously been
issued to the providers of such Existing Equity. Each of the Equity Commitments
constitutes the valid and enforceable obligation of the Original Mexican
Shareholders to subscribe for the Capital Stock of Holdings in the amounts and
on the date or dates specified in such Equity Commitments, and each such
obligation is (i) absolute and irrevocable, and (ii) not subject (directly or
indirectly) to any precondition or condition precedent except as set forth in
the Joint Venture Agreement. As of the date this representation is made (i)
there has been no amendment, supplement or modification of such Equity
Commitment, and (ii) there has been no waiver granted by Holdings under any such
Equity Commitment. Set forth in Schedule 4.09 is a true and complete listing of
each Original Mexican Shareholder and the amount of each Equity Commitment
required to be contributed by each such Original Mexican Shareholder as of the
Closing Date. The collateral assignments of the rights in respect of the Equity
Commitments by Holdings, the Company and the Sponsors to the Collateral Agent,
acting for the benefit of the Secured Parties, pursuant to the Assignment
Agreements are effective to allow the Collateral Agent to make demands
thereunder and to allow the Collateral Agent the right to enforce the
obligations of the Original Mexican Shareholders and Holdings, as applicable,
thereunder without any further action other than notice to the Original Mexican
Shareholders and Holdings, as applicable, and to commence appropriate legal
action on behalf of the Secured Parties against the Original Mexican
Shareholders and Holdings, as applicable.
4.10 SUBSIDIARIES, MORTGAGE AND MINIMUM ASSETS.
(a) Holdings is the legal and beneficial owner of 100% of the
Capital Stock of each of (i) the Company, (ii) Pegaso PCS and (iii) Personnel
Co. (the "Applicable Shares"). As of the Closing Date, Holdings does not own any
Capital Stock in any Person other than as set forth in the preceding sentence.
There are no Liens of any kind on any of the Applicable Shares other than
Permitted Liens, nor are there any restrictions on transfers of such
19
Applicable Shares, nor are there any agreements of any kind relating to the
voting of, or disposition of, such Applicable Shares (except as described in the
proviso to Section 4.04(iv)). As of the Closing Date, each of the Company,
Pegaso PCS and Personnel Co. has no Subsidiaries and does not otherwise control
any voting stock or any ownership interest in any other Person. All of the
Capital Stock of each Subsidiary of Holdings or of any other member of the
Borrower Group acquired after the date of this Agreement has been pledged by the
relevant party to the Collateral Agent for the benefit of the Secured Parties as
required by Section 5.14. Notwithstanding the other provisions of this Section
4.10(a), it is recognized that a single share of each of Pegaso PCS, Personnel
Co. and the Company is not owned by Holdings, but is owned by another member of
the Borrower Group.
(b) As of the Closing Date, the Sponsors, collectively, own 100% of
the Capital Stock of Holdings (the "Holdings Shares"). There are no liens of any
kind on the Holdings Shares other than Permitted Liens, nor (except for such
agreements or restrictions as are set forth in the Joint Venture Agreement, in
the form in existence on the Closing Date, and in the Registration Rights
Agreement referred to therein, and as otherwise described in the proviso to
Section 4.04 (iv)) are there any restrictions on transfer of the Holdings
Shares, nor are there any agreements of any kind relating to the voting of, or
disposition of, such Holdings Shares, other than as set forth in the Joint
Venture Agreement and the Registration Rights Agreement.
(c) The Company is the legal and beneficial owner of all of the
properties, assets and contract rights which are specifically described in the
Mortgage as being the subject of the Lien created by the Mortgage. The Mortgage
has the effect of creating, in favor of the Collateral Agent, for the benefit of
the Senior Lenders, a perfected and first priority Lien on all property, assets
and contract rights owned from time to time by the Company (including property
acquired by the Company after the date of execution, delivery and recording of
the Mortgage). Such properties, assets and contract rights, at the time this
representation is made or deemed made, constitute Minimum Assets.
4.11 COMPLIANCE WITH APPLICABLE LAW. Each member of the Borrower Group
is in compliance in all respects with all Applicable Law (including
Environmental Law), except to the extent that such failure to be in compliance
would not constitute a Material Adverse Effect.
4.12 PROPERTY RIGHTS. Each member of the Borrower Group owns, has a
license to use or otherwise has the right to use, free and clear of any pending
or threatened Liens (other than Permitted Liens), all property rights (real,
personal and mixed, tangible and intangible) including all patents, patent
applications, trademarks, permits, service marks, names, trade secrets,
proprietary information and knowledge, technology, computer programs, databases,
copyrights, licenses, franchises and formulas, or rights with respect thereto,
and has obtained assignments of all leases and other rights of whatever nature,
in each case, that are material to the care, custody, control, construction,
development, operation and maintenance of the System or the conduct of the
Business by the Borrower Group as contemplated by the Business Plan, without any
conflict with the rights of others as of the date such property rights are
necessary to operate and maintain the System and the Business.
20
4.13 SINGLE-PURPOSE. The Borrower Group (taken as a whole) has not
engaged in any business other than the care, custody, control, development,
construction, operation, maintenance and financing of the System and the conduct
of the Business; provided, that it is recognized that Personnel Co. is
authorized to provide human resource and similar services, and may provide such
services, to unrelated third parties to the extent consistent with the Original
Business Plan.
4.14 FEES AND ENFORCEMENT.
(a) Except for the fees and Taxes set forth on Schedule 4.14 that
have been paid in full or will have been paid in full by the date of any
Disbursement requested hereunder or with the proceeds of such Disbursement, no
fees or Taxes are required to be paid for the legality, validity or
enforceability of the Financing Agreements.
(b) This Agreement and each of such Financing Agreements executed
and delivered as of the date this representation is made or deemed made are each
in proper legal form under (i) the Applicable Law of Mexico and (ii) the
respective governing laws selected in such Transaction Documents, for the
enforcement thereof in such jurisdiction.
4.15 FOREIGN EXCHANGE APPROVALS. All requisite foreign exchange control
approvals and other similar authorizations, if any, required under Applicable
Law to be issued by any Mexican Governmental Authority to assure (i) the ability
of the Borrower Group to receive, and the ability of any other party to make to
the Borrower Group, any and all payments in the currency or currencies
contemplated by the Financing Agreements, (ii) the ability of the Borrower Group
to maintain Dollar accounts outside Mexico and to transfer amounts from and into
Mexico as necessary to meet its obligations under the Financing Agreements, in
accordance with their respective terms, and (iii) the ability of the Borrower
Group to use Dollars as necessary to perform all of its obligations under the
Financing Agreements, in accordance with their respective terms, including the
making of all payments contemplated in the Financing Agreements, have been duly
and validly obtained and are in full force and effect. Other than those
restrictions or requirements for which appropriate waivers, authorizations
and/or approvals have been received, there are no further restrictions or
requirements under Applicable Law which limit the availability or transfer of
foreign exchange, or the conversion to a foreign exchange, for the purpose of
(a) the performance by the Borrower Group of their obligations under this
Agreement or any other Financing Agreement or (b) repatriating the proceeds of
enforcement of the Obligations or the Collateral to the Collateral Agent.
4.16 LIENS. Except for Permitted Liens, there are no Liens securing any
Indebtedness or other obligations of any Person covering any present or future
revenues, properties or assets or share capital of any member of the Borrower
Group. No member of the Borrower Group has outstanding any Lien or obligation to
create any Lien on or with respect to any of its properties, revenues or assets,
other than Permitted Liens.
4.17 TITLE; SECURITY DOCUMENTS.
(a) Each member of the Borrower Group holds good and legal title to
all property, assets and revenues on which it purports to grant Liens pursuant
to the Security
21
Documents (including, with respect to the Mortgage, any
and all property, assets and revenues specifically identified therein), in all
cases free and clear of all Liens other than Permitted Liens.
(b) The provisions of the Security Documents are effective to
create in favor of the Secured Parties a legal, valid and enforceable first
priority Lien on all of the property, assets and revenues described therein
(including, with respect to the Mortgage, any and all property, assets and
revenues specifically identified therein) to the extent a security interest may
be created therein under Applicable Law and all necessary and appropriate
recordings, registrations and filings have been made in all appropriate public
offices, and all other necessary and appropriate action has been taken so that
each such Security Document creates an effective Lien with respect to the
property, assets, contract rights and revenues covered thereby to the extent a
security interest may be created therein under Applicable Law, prior and
superior to all other Liens except for Permitted Liens, and consents to the
creation, effectiveness, priority and enforcement of such Liens have been
obtained from each of the parties to the Transaction Documents and the relevant
Governmental Authorities, other than as described in the proviso to Section
4.04(iv).
4.18 TRANSACTION DOCUMENTS. The Collateral Agent and each Administrative
Agent have received a true, complete and correct copy of each of the Transaction
Documents in effect as of the date this representation is made or deemed made.
Each such Transaction Document is in full force and effect and has not been
amended, modified or terminated, except as previously disclosed in writing to
the Collateral Agent and each Administrative Agent and in accordance with the
terms hereof.
4.19 CERTAIN ANCILLARY SERVICES. Except where the failure to obtain the
services referred to below would not constitute a Material Adverse Effect, all
utility services, facilities and other services that can reasonably be expected
to be necessary for the care, custody, control, construction, operation and
maintenance of the System, are, or will be when needed, available to the
Borrower Group to the extent necessary or desirable, and arrangements in respect
thereof have been made.
4.20 ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 4.20 (i) no member of the
Borrower Group is now in violation of any Environmental Law which violation
constitutes a Material Adverse Effect, (ii) no member of the Borrower Group, nor
to the best knowledge of any member of the Borrower Group, any third party, has
used, released, discharged, generated, manufactured, produced, stored, or
disposed of in, on, under, or about the System or any real property owned or
leased by an member of the Borrower Group or transported thereto or therefrom,
any Hazardous Material in a manner that could reasonably be expected to subject
any member of the Borrower Group to any material liability which would
constitute a Material Adverse Effect, or subject any Senior Lender or any Agent
to any liability, under any Environmental Law, and (iii) to the best knowledge
of each member of the Borrower Group, there are no Hazardous Materials used,
stored, or present at, on or near the System or any real property owned or
leased by any member of the Borrower Group in violation of Applicable Law which
would constitute a Material Adverse Effect.
22
(b) Except as set forth in Schedule 4.07, there is no proceeding,
and to the best knowledge of each member of the Borrower Group, no investigation
or inquiry, by any Governmental Authority or any non-governmental third party
with respect to the presence or release of Hazardous Materials in, on, from or
to the System or any real property owned or leased by any member of the Borrower
Group which would constitute a Material Adverse Effect.
4.21 INVESTMENT COMPANY ACT. The Company is not an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940.
4.22 TRUE AND COMPLETE DISCLOSURE. (a) All factual information (taken as
a whole), including the Business Plan, furnished by or on behalf of any member
of the Borrower Group in writing to or for the benefit of any particular Senior
Lender (referred to herein as a "Relevant Lender," which term includes the
Collateral Agent or the applicable Administrative Agent under the Credit
Agreement to which such Relevant Lender is a party) was true and accurate in all
material respects (i) in the case of the Original Business Plan, as of the
Closing Date, and (ii) with respect to all other factual information (including
updates of the Business Plan), on the dates as of which such information was
furnished, and was not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was furnished; provided, however, that, except as otherwise
expressly set forth in this Agreement, the sole representation of each member of
the Borrower Group with respect to projections, estimates or other expressions
of view as to future circumstances shall be that such projections, estimates or
other expressions of view as to future circumstances (i) were prepared in good
faith, (ii) fairly present in all material respects the Borrower Group's
expectations as to the matters covered thereby as of their respective date(s) of
delivery (or, in the case of the Original Business Plan, as of the Closing Date)
(it being understood that assumptions utilized therein were believed by the
Borrower Group in good faith to be reasonable in light of conditions existing at
the time of preparation thereof, but that actual results may vary from the
projected results contained therein), (iii) were based on reasonable assumptions
as to all factual and legal matters material to the estimates therein (including
interest rates and costs) as of their respective date(s) of delivery (or, in the
case of the Original Business Plan, as of the Closing Date), and (iv) were in
all material respects consistent with the provisions of the Transaction
Documents as of their respective date(s) of delivery (or, in the case of the
Original Business Plan, as of the Closing Date). There are no statements,
assumptions or conclusions in the Business Plan, as of the date of delivery
thereof, which are based upon or include information known as such delivery date
to any member of the Borrower Group to be misleading or which fail to take into
account material information regarding the matters reported therein. As of the
Closing Date there are in existence no documents, agreements or other
information which have not been disclosed to the Relevant Lender in writing
which are material in the context of the Transaction Documents or which have the
effect of varying any of the Transaction Documents.
4.23 NO ADDITIONAL FEES. Other than as set forth in Schedule 4.23, as of
the Closing Date, no member of the Borrower Group has paid nor become obligated
to pay any fee or commission to any broker, finder or intermediary for or on
account of arranging the financing of the transactions contemplated by the
Transaction Documents.
23
4.24 USE OF PROCEEDS. No part of the proceeds of any Senior Indebtedness
will be used for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" (as defined in Regulation U) or to extend
credit to others for such purpose. No part of the proceeds of any Senior
Indebtedness will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose which entails a
violation of, of which is inconsistent with Regulations T, U or X promulgated by
the Board of Governors of the Federal Reserve System (12 C.F.R. Sections 220,
221 and 224, respectively). The Company has used and shall continue to use the
proceeds of all Disbursements in accordance with the term and conditions of all
applicable Financing Agreements.
4.25 INSURANCE. All insurance policies required to be maintained
pursuant to the terms of this Agreement are in full force and effect, and all
premiums due and payable have been paid.
4.26 PRIVATE ACTIVITIES; IMMUNITY. The transactions contemplated by the
Transaction Documents constitute private commercial activities (rather than
governmental or public activities). To the extent that any member of the
Borrower Group or any of its properties or assets has or hereafter may acquire
any rights to immunity from setoff, legal proceedings, attachment prior to
judgment, other attachment or execution of judgment on any grounds of
sovereignty or otherwise (whether under the laws of Mexico or any other
jurisdiction), to the extent permitted by Applicable Law such member hereby
irrevocably waives such right to immunity and its properties and assets in
respect of its obligations arising under or relating to this Agreement or any
other Financing Agreement.
4.27 NO SUBORDINATION. The obligations of each Guarantor under the
Guaranty and the Company under the Credit Agreements or under any other
contracts or instruments executed by Guarantors or the Company in connection
therewith and herewith (i) are not subordinated in right of payment to any other
obligation of the Company or such Guarantors and (ii) will at all times rank
prior to or pari passu in right of payment with all present and future unsecured
Indebtedness of any Guarantor or the Company, as applicable, except in either
case, to the extent provided by law.
4.28 LICENSES. The Licenses are in full force and effect; and the
Company holds legal, valid, binding and enforceable title to the Licenses free
of any Liens other than Permitted Liens and free of any conditions other than
those set forth in the Licenses. The Licenses are sufficient (together with
other authorizations, consents and permits which have been received, or are
reasonably anticipated to be received on a timely basis, by one or more members
of the Borrower Group) to grant to the Company the legal power and authority to
operate and maintain the System and conduct the Business in accordance with the
Business Plan. Other than as may be set forth in Schedule 4.28, on the Closing
Date there has been no notice given by any Governmental Authority that brings
into question the validity or effectiveness of the Licenses, nor is there any
litigation (or to the best knowledge of each member of the Borrower Group,
threatened litigation) relating in any way to the Licenses which, in either
case, if decided adversely, would have the effect of causing an Event of Default
under Section 7.13.
4.29 OPERATOR AGREEMENTS. Subject to Section 5.17 and after January 29,
1999, the GTE Operator Agreement and the Operator Agreement are in full force
and effect.
24
4.30 EMPLOYEE BENEFIT PLANS; EMPLOYMENT MATTERS.
(a) EMPLOYEE BENEFITS.
(i) Each employee benefit plan of any member of the Borrower
Group, if any, has been maintained, operated and administered in accordance with
its terms and with Applicable Law, and all notices, filing and disclosures
required by such terms or law have been timely made, except when the failure to
maintain, operate, or administer, or to notify, file or disclose, would not have
a Material Adverse Effect. No proceeding with respect to the administration or
the investment of the assets of any employee benefit plan (other than routine
claims for benefits) that would have a Material Adverse Effect or create Liens
(other than Permitted Liens) is pending or threatened.
(ii) All obligations of the Borrower Group for payments with
respect to any and all mandatory and additional employee benefit plans
including, but not limited to, all Instituto Mexicano del Seguro Social (Mexican
Social Security Institute), Instituto del Fondo Nacional Para la Vivienda de los
Trabajadores (National Worker's Housing Fund Institute), and accrued payroll
taxes payments for their respective employees have been timely paid and properly
reported in the financial statements required to be delivered under Section 5.01
(a) in accordance with GAAP except where the failure to make such payments would
not have a Material Adverse Effect or create any Lien (other than Permitted
Liens).
(iii) The Borrower Group has no liability for retiree
benefits.
(b) EMPLOYMENT PRACTICES. The Borrower Group has complied in all
material respects with all Applicable Laws, rules and regulations with respect
to employment practices including, but not limited to, applicable health and
safety regulations and there is no charge or complaint alleging any material
violation of such laws, rules or regulations against any member of the" Borrow
Group pending or threatened, or before any federal or local labor board,
tribunal or Comision Nacional del Sistema de Ahorro Para el Retiro (National
Savings and Retirement System Commission).
(c) LABOR MATTERS. There is no labor strike, request for
representation, slowdown or stoppage actually pending or, to the knowledge of
any member of the Borrower Group, threatened against or affecting it which would
have a Material Adverse Effect.
(d) FILINGS. Each member of the Borrower Group has filed all forms,
reports, statements, provider agreements benefit plan descriptions, payor
agreements, beneficiary materials and other documents (including, without
limitation, those related to employee benefit plans) required to be filed by it
with any Governmental Authority, including without limitation state and federal
insurance and health regulatory authorities except where the failure to file
would have a Material Adverse Effect or create a Lien.
4.31 YEAR 2000. Each member of the Borrower Group reasonably believes
that all computer applications that are material to its business and operations
will on a timely basis be able to perform properly date-sensitive functions for
all dates before, on and after January 1,
25
2000 (that is, be "Year 2000 compliant"), except to the extent that a failure to
do so is would not have Material Adverse Effect.
4.32 INDEBTEDNESS. As of the date hereof, Schedule 4.32 is a complete
and correct list of all Indebtedness, credit agreements, indentures, purchase
agreements, guaranties, capital leases and other investments, agreements and
arrangements presently in effect providing for or relating to extensions of
credit (including agreements and arrangements for the issuance of letters of
credit or for acceptance financing, but not including nondelinquent trade credit
providing for payment within ninety (90) days of invoice) involving $1,000,000
or more in respect of which each member of the Borrower Group is in any manner
directly or contingently obligated. The maximum principal or face amounts of the
credits in question, which are outstanding and which can be outstanding, are
correctly stated, and all Liens of any nature given or agreed to be given as
security therefor are correctly described or indicated in such Schedule.
ARTICLE 5
AFFIRMATIVE COVENANTS
Each member of the Borrower Group covenants and agrees, jointly and
severally, that until the Commitments have been terminated and all Obligations
in connection with the Senior Indebtedness are paid in full (unless waived in
writing in accordance with the Intercreditor Agreement):
5.01 INFORMATION COVENANTS. The Company shall furnish to each
Administrative Agent and to each Relevant Party:
(a) FINANCIAL STATEMENTS.
(i) ANNUAL FINANCIAL STATEMENTS OF THE BORROWER GROUP. As soon
as available, taut in any event within 120 days after the close of each Fiscal
Year, a consolidated balance sheet of the Borrower Group as at the end of such
Fiscal Year with the related audited statements of income and retained earnings
and statements of cash flows for such Fiscal Year, in each case setting forth
comparative combined figures for the prior Fiscal Year and certified by the
Independent Accountant, which certification shall state that all such statements
are in agreement with the Borrower Group's books of account and are prepared in
accordance with GAAP on a consistent basis and reconciled to U.S. GAAP.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available and
in any event within 45 days after the close of each of the first three quarterly
accounting periods in each Fiscal Year, the combined balance sheet of the
Borrower Group, as at the end of such quarterly period and the related unaudited
combined statements of income and of cash flows for such quarterly period and
for the portion of the Fiscal Year ended at the end of such quarterly period,
and in each case setting forth comparative combined figures for the related
quarterly period in the prior Fiscal Year and the figures for such portion of
the Fiscal Year ended at the end of such quarterly period, all of which shall be
certified by the chief financial officer or controller of Holdings as fairly
presenting the financial condition and results of operations of the Borrower
Group and as having been prepared in accordance with GAAP on a consistent basis
26
and reconciled to U.S. GAAP, subject to changes resulting from audit and normal
year-end audit adjustments.
(b) INDEPENDENT ACCOUNTANT'S REPORT. At the time of delivery of the
financial statements provided for in Section 5.01(x), a report of the
Independent Accountant (x) stating that in the course of its regular audit
conducted in accordance with GAAP of the financial statements of the Borrower
Group as described under this Section 5.01, the Independent Accountant obtained
no knowledge of a Default or Event of Default which has occurred, or if in the
opinion of the Independent Accountant such Default or Event of Default has
occurred, a statement as to the nature thereof and (y) certifying that, based on
such financial statements and its review of the terms hereof, the Borrower Group
was in compliance with Sections 5.02(a), 6.03, 6.04, 6.06, 6.09 and 6.10 as of
the end of the relevant Fiscal Year or, as the case may be, detailing any
non-compliance therewith.
(c) MANAGEMENT LETTERS. Promptly after receipt thereof, by any
member of the Borrower Group, a copy of any management letter or other similar
communication received by any such member from the Independent Accountant in
relation to the financial, accounting and other systems, management or accounts
of any such member.
(d) BUSINESS PLAN. Not less frequently than annually, commencing
not later than December 15, 1999, an updated Business Plan in the form approved
by the Board of Directors of Holdings, which shall be based on (i) facts and
circumstances existing as of the date of submission, and (ii) with respect to
future events and performance, assumptions believed by the Borrower Group to be
reasonable under the circumstances as of such date of submission. Each updated
Business Plan shall contain, at a minimum, (i) a description of the Borrower
Group's plans in connection with the roll-out of the System, (ii) the number of
subscribers to the System as of the date of such updated Business Plan for each
year thereafter through the final maturity date of any Senior Indebtedness then
outstanding, (iii) a pro-forma income statement (including EBITDA) for the year
in which the up-dated Business Plan is submitted and each year thereafter
through the final maturity date of any Senior Indebtedness then outstanding,
(iv) a debt service coverage table for the then current year and each year
thereafter through the final maturity date of any Senior Indebtedness then
outstanding, (v) at least the same amount of information as was contained in the
Original Business Plan, and (vi) a description of all major assumptions which
were used in connection with the preparation of such up-dated Business Plan.
During the 30-day period following the submission of the updated Business Plan,
the Borrower Group will make available the Chief Financial Officer of Holdings
and any other officer of the Borrower Group reasonably requested by any
Administrative Agent to report on, and answer questions with respect to, such
updated Business Plan at such times as such Agent(s) may reasonably request.
(e) OFFICERS' CERTIFICATES. At the time of the delivery of the
financial statements provided for in Section 5.01(a), a certificate of an
Authorized Officer of each member of the Borrower Group to the effect that,
based upon such Authorized Officer's review of the terms hereof and the other
Financing Agreements and the financial condition of each member of the Borrower
Group during the relevant accounting period and, to the best of such officer's
knowledge, (i) such member of the Borrower Group is in compliance with all of
its obligations under the terms of the Financing Agreements the non-performance
of which would constitute a
27
Material Adverse Effect (such certificate to set forth in reasonable detail the
calculations necessary to demonstrate compliance with the financial covenants
contained in Section 6.09 and 6.10 (as applicable)), and (ii) no Default or
Event of Default has occurred and is continuing, or, if any Default or Event of
Default has occurred and is continuing, specifying the nature and extent thereof
and what action the Borrower Group is taking or proposes to take in response
thereto.
(f) NOTICE OF CERTAIN OCCURRENCES, ETC. (i) Promptly, but in all
cases within five Business Days after any Responsible Officer of any member of
the Borrower Group obtains knowledge thereof, written notice of any event which
constitutes a Default or Event of Default, specifying the nature of such Default
or Event of Default and any steps the Borrower Group is taking and proposes to
take to remedy the same and (ii) promptly, and in any event within five Business
Days, after any senior officer of any member of the Borrower Group obtains
knowledge thereof, notice of:
(A) any litigation, arbitration or governmental proceeding
pending or threatened in writing (1) against any member of the Borrower Group
(x) involving a claim or claims in excess of $1,000,000 individually or
$2,000,000 in the aggregate or (y) which, if decided adversely to such member or
members, would constitute a Material Adverse Effect, or (2) with respect to any
Financing Agreement;
(B) any proceeding or legislation by any Governmental
Authority to acquire compulsorily ail or any portion of the Collateral or all or
any portion of the business or assets of any member of the Borrower Group
(whether or not constituting an "Event of Default" hereunder);
(C) any change in the Authorized Officers of the Company
or other member of the Borrower Group, giving certified specimen signatures of
any new officer so appointed and, if requested by an Administrative Agent,
reasonably satisfactory evidence of the authority of such new officer;
(D) any notice relating to a material dispute received or
initiated by any member of the Borrower Group under any of the Licenses;
(E) any Lien (other than a Permitted Lien) being granted
or established or becoming enforceable over any portion of the Collateral;
(F) any one or more events, conditions or circumstances
(including any event of force majeure or any on going or threatened strike,
slowdown or work stoppage by the employees of any member of the Borrower Group
or of any Vendor) known by a senior officer of any member of the Borrower Group
to exist or to have occurred or in the reasonable judgment of such officer are
expected or imminent that, in any case, constitute a Material Adverse Effect;
(G) any notice received by any member of the Borrower
Group purporting to cancel or materially alter in an adverse manner the terms of
any insurance contract (including any notification of any premium increase in
excess of 20% over the prior premium payable for such insurance contract); and
28
(H) any (i) fact, circumstance, condition or occurrence
that results in noncompliance with any Environmental Law and constitutes a
Material Adverse Effect and (ii) pending or, to the best knowledge of any member
of the Borrower Group, threatened (in writing) Environmental Claim against any
such member.
(g) GOVERNMENTAL REPORTS. Within 30 days after the date on which
any such report is submitted, a copy of any material report required to be filed
by any member of the Borrower Group with any Governmental Authority with respect
to an environmental aspect of the System.
(h) INFORMATION WITH RESPECT TO AMENDMENT, WAIVER OR CONSENT. In
connection with any proposed amendment, waiver or consent in respect of any of
the provisions hereof or of any other Transaction Document for which the
approval of any Agent or any Senior Lender is required, sufficient information
(including a narrative description of the effect thereof), sufficiently far in
advance of the date a decision is required, to enable such Agent or the Senior
Lenders to make an informed and considered decision with respect thereto
(provided that such information shall be required to be delivered only to those
Agents and Senior Lenders the consent of which is required).
(i) NOTICE OF DEFAULT, LITIGATION OR ENVIRONMENTAL CLAIM. Promptly,
and in any event within three Business Days after any Responsible Officer of the
Company obtains knowledge thereof, notice of (y) the termination of either of
the Alcatel Procurement Agreement or the QUALCOMM Procurement Agreements and (z)
any change in the ownership of Holdings of which it has knowledge. Each notice
pursuant to this subsection shall specify the nature thereof, the period of
existence thereof and what action, if any, the Borrower Group proposes to take
with respect thereto.
(j) YEAR 2000 COMPLIANCE. Promptly in the event the Borrower Group
discovers or determines that any computer application (including those of its
material suppliers and vendors) that is material to its or any of the Business
will not be Year 2000 compliant on a timely basis, except to the extent that
such failure would not have a Material Adverse Effect.
(k) OTHER INFORMATION. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the United States
Securities and Exchange Commission or any comparable Mexican Governmental
Authority by Holdings, (ii) copies of all financial statements, proxy
statements, notices and reports as Holdings shall send generally to public
shareholders and (iii) with reasonable promptness, such other information or
documents (financial or otherwise) as any Secured Party may reasonably request
from time to time (provided that such information shall be required to be
delivered only to the Secured Party or Parties requesting such information).
5.02 BOOKS, RECORDS AND INSPECTIONS; ACCOUNTING AND AUDIT MATTERS.
(a) Each member of the Borrower Group will maintain adequate
management information and cost control systems and will keep proper books of
record and account adequate to reflect fairly the financial condition and
results of operations of the
29
Borrower Group (taken as a whole) and all dealings and transactions related to
its business in which full, true and correct entries shall be made in conformity
with GAAP, consistently applied.
(b) Each member of the Borrower Group will permit, upon reasonable
notice from any Secured Party or a Relevant Party and during normal business
hours, such Administrative Agent or Relevant Party, as the case may be, and the
officers and designated representatives of such Person to visit and inspect any
of the properties of such member, and to examine and make copies of the books of
record and account and documents of such member and discuss the affairs and
accounts of the Borrower Group with, and be advised as to the same by, their
officers, all at such reasonable times and intervals and to such reasonable
extent as such Administrative Agent or Relevant Party may request.
(c) The Chief Financial Officer of Holdings shall authorize the
Independent Accountant (whose fees and expenses shall be for the account of the
Borrower Group) to communicate directly with the Relevant Parties, the Alcatel
Administrative Agent and the Qualcomm Administrative Agent, at reasonable times
regarding the accounts and operations of the Borrower Group, subject to the same
precondition as is described in Section 3.01(n).
(d) In the event that the Borrower Group wishes to replace the
existing Independent Accountant for any reason, the Borrower Group shall (i)
provide the Collateral Agent with written notice of its rationale therefor and
(ii) propose an alternative firm of independent public accountants to serve as
the Independent Accountant, which firm shall be internationally recognized.
5.03 MAINTENANCE OF PROPERTY AND INSURANCE.
(a) Each member of the Borrower Group will keep all property
necessary to its business in good working order and condition in accordance with
generally accepted practices, standards and requirements; and shall, from time
to time, in respect of its properties and equipment, make all necessary and
proper repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses.
(b) Each member of the Borrower Group will keep its present and
future properties and Business insured as required by and in accordance with the
terms and provision described in Schedule 5.03.
5.04 CORPORATE FRANCHISES AND SYSTEM PERMITS; ENFORCEMENT OF TRANSACTION
DOCUMENTS. The Borrower Group will:
(a) take, or cause to be taken, all actions necessary to obtain in
a timely manner all authorizations, consents and permits which are the
responsibility of the Borrower Group, and will promptly make, or cause to be
made, all required filings with governmental or similar authorities in Mexico,
in each case, to preserve, renew and keep in full force and effect (i) the
existence as a sociedad anonima de capital variable in good standing under the
laws of Mexico of each such member, (ii) its qualification to do business in
Mexico and (iii) (except to the extent the absence of which would not constitute
a Material Adverse Effect) its material rights, franchises, licenses, contracts,
powers, privileges and patents
30
necessary for the construction, development, operation and maintenance of the
System, the conduct of the Business, and the performance of its obligations
under the Transaction Documents;
(b) obtain and maintain, or cause to be obtained and maintained in
full ford and effect (or where appropriate, renew), (i) all consents,
authorizations and permits which arc the responsibility of the Borrower Group,
licenses and patents, trademarks (and other intellectual property) necessary or
desirable for the care, custody, control, construction, development operation
and maintenance of the System as contemplated by the Business Plan (other than
such consents, authorizations and permits the absence of which would not
constitute a Material Adverse Effect), and (ii) all consents, authorizations and
permits necessary for the conversion to Dollars of all Peso amounts which are
required to be converted by the Financing Agreements and for the remittance to
the United States in Dollars of any amounts paid or payable in Dollars, as
applicable, to the Senior Lenders in connection with any Financing Agreement or
Security Document or the transactions contemplated thereby; and
(c) preserve and maintain good and marketable title to its
properties and assets subject to no liens other than Permitted Liens.
5.05 COMPLIANCE WITH APPLICABLE LAW. Each member of the Borrower Group
will comply in all respects with all Applicable Law applicable to it or to the
System except to the extent that the failure to so comply would not constitute a
Material Adverse Effect.
5.06 USE OF PROCEEDS. The Company shall use the proceeds of all
Disbursements only for the purposes set forth in the applicable Credit
Agreement.
5.07 TAXES; PROPER LEGAL FORM. Each member of the Borrower Group shall
pay or arrange for payment on or prior to the date when due of all present and
future (i) Taxes imposed on it and (ii) claims, levies or liabilities (including
claims for labor, services, materials and supplies) for sums which have become
due and payable and which have become or, if unpaid, would become a Lien (other
than a Permitted Lien) upon, or otherwise would constitute a Material Adverse
Effect on, the property of the Borrower Group (or any part thereof); provided,
however, that no member of the Borrower Group shall be required to pay any
amount otherwise payable pursuant to either clause (i) or (ii), if such amount
is the subject of a Good Faith Contest. Each member of the Borrower Group will
promptly pay or cause to be paid any valid, final judgment enforcing any such
Taxes or other claims, levies or liabilities of any member of the Borrower
Group, and shall cause the same to be satisfied of record. Each member of the
Borrower Group shall take all such further action within its control required to
ensure that each of the Transaction Documents is in proper legal form under the
laws of Mexico or under the respective governing laws selected in such
Transaction Documents, for the enforcement thereof in such jurisdictions without
any further action on the part of any Agent or any other Person.
5.08 CREDIT AGREEMENTS. Each member of the Borrower Group will
diligently perform each of its obligations under each of the Credit Agreements.
31
5.09 ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS.
(a) Each member of the Borrower Group shall, at its own expense,
.take all actions that have been or shall be reasonably requested by the
Collateral Agent, or that such member knows are, necessary to establish,
maintain, protect, perfect and continue the perfection of the first priority
security interests of the Collateral Agent for the benefit of the Secured
Parties created by the Security Documents and shall furnish timely notice of the
necessity of any such action, together with such instruments, in execution form,
and such other information as may be required to enable the Collateral Agent to
effect any such action. Without limiting the generality of the foregoing, each
member of the Borrower Group shall, at its own expense, (i) execute or cause to
be executed and shall file or cause to be filed or register or cause to be
registered such financing statements, continuation statements, fixture filings
and mortgages or deeds of trust in all places necessary or advisable (in the
opinion of counsel for the Collateral Agent), to establish, maintain and perfect
such security interests, (ii) discharge all other Liens (other than Permitted
Liens) or other legal and valid claims adversely affecting the rights of the
Collateral Agent and/or the other Secured Parties in the Collateral, (iii)
deliver or publish all notices to third parties that may be required to
establish or maintain the validity, perfection or priority of any Lien created
pursuant to the Security Documents, and (iv) file or cause to be filed or
register or cause to be registered the Mortgage at the Public Registry of
Commerce and/or the Public Registry of Property in each locality where the
Borrower owns any real property in Mexico, including any real property acquired
by the Borrower after the Closing Date.
(b) Each member of the Borrower Group will do everything necessary
in the judgment of the Collateral Agent, (including filing, registering and
recording all necessary documents and paying all fees, taxes, levies, imposts
and expenses in connection therewith) to (A) create security arrangements,
including, if applicable, the establishment of a pledge or the perfection of any
Lien or, as applicable, the enforceability of a Lien as against any member of
the Borrower Group and any subsequent Lien or (including a judgment lien or),
holder of a fixed or floating charge, or transferee for or not for value, in
bulk, by operation of law, or otherwise, in each case granted, with respect to
future assets in accordance with the requirements of Mexican law and New York
law, (B) maintain the security and pledges created by the Security Documents in
full force and effect at all times (including, as applicable, the priority
thereof) and (C) preserve and protect the Collateral and protect and enforce its
rights and title, and the rights and title of the Collateral Agent, for the
benefit of the Secured Parties, to the security created by the Security
Documents. Furthermore, any member of the Borrower Group shall cause to be
delivered to the Intercreditor Agent such opinions of counsel and other related
documents as may be reasonably requested by the Collateral Agent, to assure
compliance with this Section 5.09.
5.10 CONDEMNATION EVENT; CASUALTY EVENT. If any Casualty Event or
Condemnation Event shall occur with respect to the System or any material part
thereof, the Borrower Group shall (i) promptly upon discovery or receipt of
notice of any occurrence thereof provide written notice thereof to the Agents
and the Relevant Parties, (ii) diligently pursue all its rights to compensation
against all relevant insurers, reinsurers and/or Governmental Authorities, as
applicable, in respect of such event, (iii) not, without the written consent of
the Collateral Agent compromise or settle any claim with respect thereto if the
amount of any such claim (either individually or in the aggregate) exceeds
$25,000,000, and (iv) if the amount of Loss Proceeds exceeds $50,000,000
immediately pay or apply all such Loss Proceeds stemming from
32
such event to the Collateral Agent for deposit into a separate escrow account to
be maintained by the Collateral Agent for the benefit of the Secured Parties
(the "Loss Proceeds Escrow Account") and to the extent that any Loss Proceeds
are less than the minimum required for deposit into the Loss Proceeds Escrow
Account, the Borrower Group shall not be obligated to make such deposit, but
shall be required to apply such Loss Proceeds, as soon as may be practicable, to
either (a) the prepayment of all Senior Indebtedness then outstanding on a Pro
Rata Payment basis, or (b) the repairing, rebuilding, reconstructing or
re-equipment of the System. Amounts on deposit in the Loss Proceeds Escrow
Account shall be disbursed to or for the credit of the Company for the purpose
of repairing, reconstruction or re-equipment of the System which has been
damaged or destroyed or condemned, upon satisfaction of conditions to such
disbursement which shall be set forth in an agreement (the "Loss Escrow
Agreement") which shall be executed and delivered by the Collateral Agent and
each member of the Borrower Group as soon as may be practicable following the
deposit to the Loss Proceeds Escrow Account, which Loss Escrow Agreement shall
be in form and substance reasonably satisfactory to the Required Voting Parties
as set forth in the Intercreditor Agreement. If the conditions set forth in the
Loss Escrow Agreement cannot be satisfied or if the Company otherwise elects,
then all of the Loss Proceeds shall be disbursed from the Loss Proceeds Escrow
Account and applied to the prepayment of Senior Indebtedness then outstanding on
a Pro Rata Payment basis. Each member of the Borrower Group consents to the
participation of the Collateral Agent in any proceedings regarding a Casualty
Event or Condemnation Event, and each such member shall from time to time
deliver to the Collateral Agent all documents and instruments requested by it in
connection with such participation. If and to the extent that any Senior
Indebtedness then outstanding does not permit the prepayment thereof at such
time or under such circumstances as are described in this Section 5.10, or any
Senior Lender notifies the Company and each Administrative Agent that it does
not desire any such prepayment from such amounts, then any prepayment referred
to in this Section 5.10 shall be applied on a Pro Rata Payment basis as if such
Senior Indebtedness was not then outstanding. Any prepayment of Senior
Indebtedness made in accordance with this Section 5.10 shall be made
simultaneously with the prepayment of other Senior Indebtedness (other than as
set forth in the preceding sentence), provided that if such prepayment of any
such Senior Indebtedness would require a prepayment or break-funding penalty,
such prepayment amounts may, at the option of the Company, be deposited with the
applicable Administrative Agent, invested in Permitted Investments, and applied
to the prepayment of such Senior Indebtedness on the first date as to which no
prepayment or break-funding penalty would be imposed.
5.11 APPLICATION OF EQUITY CONTRIBUTIONS. Holdings shall, immediately
upon receipt of cash or other funds or assets (i) representing the subscription
price paid in connection with the Equity Commitments or any other cash
contributions made by the shareholders of Holdings in consideration for Capital
Stock issued by Holdings, including any proceeds received by Holdings pursuant
to a Qualified Public Offering, or (ii) received as the proceeds of any
Indebtedness issued by Holdings (other than the proceeds of Indebtedness which,
is required by the Person furnishing or underwriting such Indebtedness, to be
held in a reserve or similar account by Holdings for payment of principal or
interest on such Indebtedness), or (iii) representing any other cash, liquid
investments or other assets (other than stock held by Holdings in its
subsidiaries), contribute no less than 99% of such cash or other funds or assets
to the Company (and the remainder, if any, to Pegaso PCS and/or Personnel Co.)
as an equity contribution and without any right, directly or indirectly, to
receive repayment. Other than with respect to a Qualified Public Offering,
Holdings shall ensure that each new shareholder of
33
Holdings, as a precondition to its contribution of equity, execute and deliver
the Sponsor Negative Pledge Agreement and in take all actions required by such
agreement with respect to the shares of such shareholder.
5.12 TRANSLATIONS. If any Transaction Document, notice, certificate,
instrument, communication or other document required to be delivered to any
Person pursuant to this Agreement is not originally executed, delivered or given
in English (regardless of whether such requirement arises before or after the
Initial Disbursement Date), the Borrower Group shall, upon written request of
any Agent or Relevant Party entitled to receive the same, concurrently with the
delivery of such Transaction Document, notice, certificate, instrument or other
document, additionally and at the Company's expense, provide to such Person a
certified English translation thereof. Subject to Section 8.13, if any
Transaction Document, notice, certificate, instrument, communication or other
document required to be delivered to any Person pursuant to this Agreement is
not originally delivered in Spanish, and a Spanish translation thereof shall be
necessary or appropriate, in the reasonable judgment of any Secured Party, under
Mexican law of in connection with the administration or enforcement of any of
the Financing Agreements, then any Secured Party may, or upon the request of any
Secured Party the Company shall, obtain a certified Spanish translation thereof
at the Company's expense for the benefit of the Secured Parties.
5.13 NEW SUBSIDIARIES. In the event that Holdings or any other member of
the Borrower Group (or any New Subsidiary, as defined below) forms, purchases or
acquires (whether for consideration or otherwise) any Subsidiary other than
those Persons which are, as of the Closing Date, members of the Borrower Group
(a "New Subsidiary"), then the member of the Borrower Group which has so formed,
acquired or purchased such New Subsidiary shall (at its own expense), within 30
days of the date of such formation, acquisition or purchase, deliver to the
Agents and the Relevant Parties the following documents (which shall be in form
and substance reasonably acceptable to the Agents): (A) a guaranty by the New
Subsidiary of all of the Obligations, substantially in the form of the Pegaso
Guaranty Agreement delivered by the Guarantors on the Closing Date, (B) a trust
agreement (substantially in the form of the Guaranty Trust Agreement) entered
into by the member of the Borrower Group which is the parent company of such New
Subsidiary, as settlor, which has the effect of transferring title to 100% of
the Capital Stock of such New Subsidiary to the trustee under such trust
agreement, (C) an instrument in writing, executed and delivered by the New
Subsidiary, pursuant to which such New Subsidiary becomes a member of the
Borrower Group and subject to this Agreement and (to the extent appropriate) the
other Financing Agreements, (D) such security documents as shall (in the opinion
of the Administrative Agents) be necessary to grant to the Collateral Agent a
first priority and perfected Lien on all of the assets, contract rights,
intangibles and revenues of the New Subsidiary, and (E) opinions of counsel,
reasonably acceptable to the Administrative Agents, as to the validity and
enforceability of such foregoing agreements.
5.14 OTHER PROPERTIES SUBJECT TO LIENS; AFTER-ACQUIRED PROPERTY.
(a) Within 30 days of the purchase or acquisition by the Company of
any property (including, without limitation, Capital Stock of any other Person),
asset, contract or other right, or intangible which is not then subject to a
Lien granted by the Security Documents (collectively, "After-Acquired
Property"), the Company shall so notify the Administrative
34
Agents, the Relevant Parties and the Collateral Agent in Writing and shall
deliver to the Collateral Agent (at the expense of such member) such agreements,
instruments and other documents (including amendments to the Mortgage or other
Security Documents) as shall be deemed necessary or appropriate, in the
reasonable opinion of the Collateral Agent, to grant a first priority and
perfected Lien on such After-Acquired Property to the Collateral Agent, subject
to no Liens other than Permitted Liens.
(b) Without limiting the generality of the foregoing and except as
expressly provided in the Post-Closing Agreement, the Company shall, within 30
days of entering into any Material Agreement, (i) execute an Assignment
Agreement in favor of the Collateral Agent, for the benefit of the Senior
Lenders, collaterally assigning all of the Company's rights under such material
agreement and (ii) obtain the consent of any contractual counterparties
necessary of desirable, in form and substance, reasonably satisfactory to the
Administrative Agents, to permit such collateral assignment.
(c) As provided in Section 2.04, any and all property, assets,
contract or other rights or intangibles which are granted to any Senior Lender
in connection with the issuance of Additional Senior Indebtedness shall be
granted to the Collateral Agent and held for the benefit of all of the Senior
Lenders as security for all of the Obligations as provided in the Intercreditor
Agreement.
5.15 EQUITY COMMITMENTS. Holdings shall take all actions necessary or
required to assure that all of the Equity Commitments remain in full force and
effect. Subject to any restrictions contained in the Joint Venture Agreement
relating to the timing of the obligation of the Original Mexican Shareholders to
make Equity Contributions, Holdings shall draw on such Equity Commitments, to
the extent permitted under such Equity Commitments, at the earlier to occur of
the following: (i) the last date on which any particular contribution is to be
made under such Equity Commitment, or (ii) at least five Business Days prior to
any date on which any member of the Borrower Group has an obligation to pay any
Obligation (or has any other obligation for the payment of money, the
non-payment of which would constitute a Material Adverse Effect) and has
insufficient funds on hand to make such payment. Any such drawing on the Equity
Commitments shall (subject to the limitations contained in such Equity
Commitments) be in an amount sufficient to satisfy the requirement set forth in
the preceding sentence. Holdings shall not permit the Joint Venture Agreement to
be amended or supplemented in any manner which would relieve the Original
Mexican Shareholders from fulfilling the Equity Commitments contained therein.
The obligations of Holdings under this Section 5.15 to draw upon the Equity
Commitments shall be reduced to the extent of (i) any cash equity investment
received by Holdings after the date hereof or (ii) the principal amount of any
Subordinated Loans extended to Holdings after the date hereof; provided, that
all obligations of Holdings pursuant to this Section 5.15 shall terminate upon
the investment of additional equity and/or incurrence of Subordinated Loans in
the aggregate amount of $100,000,000 after the date hereof.
5.16 YEAR 2000 COMPLIANCE. Each member of the Borrower Group shall take
such actions as are necessary or prudent to assure that any computer application
(including those operated by the Vendors) that is material to the Business of
the Borrower Group will be Year
35
2000 compliant on a timely basis, except to the extent that such failure will
not result in a Material Adverse Effect.
5.17 OPERATOR AGREEMENTS. The Borrower Group agrees to maintain in full
force and effect the Operator Agreement and to cause Leap Wireless Mexico to
maintain in full force and effect the GTE Operator Agreement, in each case,
through the date (the "Applicable Date") which is the earlier of (i) the
expiration date stated therein, and (ii) December 31, 2003; provided, however,
that (i) Leap Wireless Mexico may terminate the GTE Operator Agreement prior to
the Applicable Date so long as (a) Leap Wireless Mexico enters into a new
operator agreement substantially similar to the GTE Operator Agreement,
replacing GTE with another company of international standing and experience in
respect of operating systems (either as principal or agent) in the
telecommunications industry, and (b) the replacement operator executes a consent
in substantially the form of Appendix E-5 within 30 days of the execution of the
replacement operator agreement, and (ii) the Company may terminate the Operator
Agreement or Leap Wireless Mexico may terminate the GTE Operator Agreement so
long as (a) the Company enters into a new operator agreement substantially
similar to the GTE Operator Agreement, operating systems (either as principal or
agent) in the telecommunications industry and (b) the replacement operator
executes a Consent in substantially the form of Appendix E-5 within 30 days of
the execution of the replacement operator agreement.
5.18 PAYMENT OF CERTAIN FEES. The Borrower Group shall pay all of the
reasonable and customary fees and expenses (including up-front and on-going fees
and expenses) of (i) the Collateral Agent, (ii) the Intercreditor Agent, (iii)
the trustee under the Guaranty Trust Agreement, in each case upon receipt of
invoices from such parties, and (iv) the notary in connection with any
amendments to the Mortgage.
5.19 CONSENTS, APPROVALS. The Borrower Group shall, from time to time,
obtain all material governmental and third party consents, approvals, Permits
and licenses required to be obtained by such time in connection with the
transactions contemplated by the Alcatel Procurement Agreement, the QUALCOMM
Procurement Agreements and the Financing Agreements and such consents, approvals
and licenses shall be kept in effect so long as required, including, without
limitation, (i) any required consent of any Governmental Authority required to
be obtained to permit the assignment for security purposes of the Licenses and
all additional licenses granted to any member of the Borrower Group and (ii) all
required consents from contractual counterparties of the Borrower Group required
to be obtained to permit the due and proper assignment to the Collateral Agent
of the Collateral.
5.20 MAINTENANCE OF LICENSES.
(i) The Company shall take any and all action necessary to
maintain the Licenses in compliance with Applicable Law, except to the extent
that the failure to do so would not constitute an Event of Default under Section
7.13.
(ii) The Company shall not sell, assign, transfer or partition
the Licenses other than as permitted by Section 6.02 (e).
36
(iii) The Company shall not take any action which would
violate any federal, state, national, provincial or local statute, rule
regulation or order relating to the Licenses if such violation would constitute
a Material Adverse Effect.
(iv) The Company shall not materially modify or amend the
Licenses if such modification or amendment would result in the Licenses not
covering at least Region 9, and either Region 4 or Region 6 (as such Regions are
defined in Exhibit A to the Joint Venture Agreement) or the number of Covered
Pops covered by the Licenses, as so modified or amended, would not exceed
40,000,000 Pops.
(v) The Company shall enter into all interconnection
agreements required under or by the Licenses, if any.
(vi) The Company shall not take any action which would violate
any License or any agreement relating to the Licenses if such action would
result in an Event of Default under Section 7.13.
(vii) The Company shall not (other than as contemplated by the
Security Documents) pledge as collateral the Licenses, nor subject the Licenses
to any claim, Lien, security interest or other encumbrance.
Provided; however, that nothing in this Section 5.20 shall limit the
ability of the Company to sell or dispose of assets, including a portion of the
Licenses to the extent expressly permitted in Section 6.02(e).
5.21 SITE ACQUISITION.
(a) In connection with site acquisition for the placement or
installation of Intelligent Base Station Controllers ("BSCs"), Base Station
Transceivers ("BTSs"), Mobile Switching Centers ("MSCs") or other infrastructure
equipment, the Company shall enter into a Site Lease with minor modifications as
shall be reasonably necessary to negotiate with particular landlords; and
(b) concurrently with entering into any lease of real property in
connection with the placement or installation of BSCs, BTSs, MSCs or other
infrastructure equipment, whether or not in the form of a Site Lease, the
Company shall deliver to the Collateral Agent (i) a copy of such lease and (ii)
if the lessor of such real property is party to a lending arrangement with
respect to such real property, a nondisturbance agreement, duly executed by the
lessor's lender in form suitable for recordation, or, in the case of each item
(a) or (b) of this Section 5.21, other documentation reasonably satisfactory to
the Collateral Agent.
5.22 MINIMUM ASSETS. The Company shall at all times own, legally and
beneficially, title to the Minimum Assets.
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ARTICLE 6
NEGATIVE COVENANTS
Each member of the Borrower Group covenants and agrees, jointly and
severally, that, until the Commitments have been terminated and all Obligations
in connection with the Senior Indebtedness are paid in full (unless waived in
writing in accordance with the Intercreditor Agreement):
6.01 LIENS. Each member of the Borrower Group will not, and will not
agree to, create, incur, assume or suffer to exist any Lien upon or with respect
to any of its property, revenues or assets (real, personal or mixed, tangible or
intangible) whether now owned or hereafter acquired or sell any such property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable or
notes with recourse to such Person) or assign any right to receive income;
provided that the provisions of this Section 6.01 shall not prevent the
creation, incurrence, assumption or existence of the following Liens, rights or
trusts (each, a "Permitted Lien"):
(i) Liens created by any of the Security Documents or the
other Financing Agreements, or otherwise in favor of the Collateral Agent for
the benefit of the Senior Lenders in connection with the transactions
contemplated by this Agreement;
(ii) Liens in respect of property, revenues or assets of a
member of the Borrower Group imposed by Applicable Law, which were incurred in
the ordinary course of business, do not secure Indebtedness and do not arise as
a consequence of any default by a member of the Borrower Group in connection
with any Transaction Document or any obligation owed to any Person, and (x)
which do not in the aggregate materially detract from the value of such property
or assets or materially impair the use thereof in the operation of the Business
of the Borrower Group or (y) which are the subject of a Good Faith Contest by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset subject to such Lien;
(iii) Liens for taxes, assessments and other governmental
charges of requirements which are not then due or which are subject to a Good
Faith Contest;
(iv) Liens in respect of judgments or awards against a member
of the Borrower Group which are subject to a Good Faith Contest but only to the
extent, for an amount and for a period not resulting in an Event of Default
under Section 7.12;
(v) Liens created pursuant to Capital Leases permitted by
Section 6.04(c);
(vi) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
incurred in the ordinary course of business (exclusive of obligations in respect
of the payment for borrowed money);
38
(vii) leases, subleases or licenses granted to others not
interfering in any material respect with the Business;
(viii) easements, rights-of-way, restrictions, minor defects
or irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the Business;
(ix) any interest or title of a lessor under any lease
permitted by this Agreement and Liens arising from financing statements
regarding leases permitted by this Agreement;
(x) purchase money Liens securing payables arising from the
purchase by any member of the Borrower Group of any equipment or goods in the
normal course of business, provided that such payables do not constitute
Indebtedness;
(xi) Liens arising pursuant to purchase money mortgages or
security interest securing Indebtedness not constituting Senior Indebtedness or
High Yield Debt representing the purchase price of assets acquired by any member
of the Borrower Group after the Closing Date; provided that any such Liens
attach only to the asset so acquired and that all Indebtedness secured by Liens
created pursuant to this clause (xi) is permitted by this Article 6;
(xii) Liens on property (other than Capital Stock) of any
Person that becomes a member of the Borrower Group after the date hereof,
provided that such Liens are in existence at the time such Person becomes a
member of the Borrower Group, were not created in anticipation thereof and do
not attach to any property of any other member of the Borrower Group;
(xiii) Liens on wireless telecommunication handsets granted in
favor of a holder of Indebtedness, provided that (a) such Indebtedness was
incurred for the purpose of, and the proceeds thereof were expended for, the
payment for such handsets, and (b) such Indebtedness does not constitute
Additional Senior Indebtedness;
(xiv) with respect to the incurrence of High Yield Debt, the
Lien described in the parenthetical in Section 6.04(h)(C); and
(xv) Liens (other than Liens elsewhere described in this
Section 6.01), provided that (A) the aggregate amount of the Indebtedness
secured by such Liens does not at any time exceed the greater of (a)
$10,000,000, or (b) one percent (1 %) of the aggregate of the Consolidated Debt
and the Consolidated Paid-In Equity at the time of the incurrence of such
Indebtedness, and (B) such Liens do not encumber any of the following assets or
properties: (a) the Licenses, (b) any assets or equipment furnished under the
Vendor Agreements, (c) any intellectual property rights, (d) any accounts
receivable or proceeds thereof related to the Business, or (e) any real estate;
provided further, that this clause (xv) shall not apply to permit any Liens by
New Subsidiaries.
6.02 CONSOLIDATION; MERGER; SALE OF ASSETS. No member of the Borrower
Group will wind up, liquidate or dissolve its affairs, or enter into any
transaction of merger or consolidation, sell or otherwise dispose of all or any
part of its property or assets (other than
39
sales and other dispositions (including asset swaps and similar transactions)
when no Event of Default exists to the extent such sale or disposition is in the
ordinary course of business) or purchase, lease or otherwise acquire all or any
part of the property or assets of any Person (other than purchases or
acquisitions of inventory, leases, materials and equipment in the ordinary
course of business) or agree to do any of the foregoing at any future time,
except that the following shall be permitted:
(a) any Subsidiary of a member of the Borrower Group (other than
the Company) may be merged or consolidated with or into, or be liquidated into,
another member of the Borrower Group (so long as a member of the Borrower Group
is the surviving corporation), or all or any part of its business, properties
and assets may be conveyed, leased, sold or transferred to a member of the
Borrower Group, in each case to the extent that (i) no detriment results in the
operation of the Business, (ii) there is no detriment to the security interests
and Liens created pursuant to the Security Documents, and (iii) the Company
continues to own, both legally and beneficially, the Minimum Assets;
(b) Capital Expenditures; provided that such Capital Expenditures
do not exceed $750,000,000 from January 1, 1998 through December 31, 2000, and
do not exceed $200,000,000 for each calendar year thereafter; provided that if
any portion of such permitted Capital Expenditure is not made within the
designated period, such unused amount shall be available (and permitted) to be
made as Capital Expenditures in ensuing periods;
(c) each member of the Borrower Group may lease (as lessee) real or
personal property in the ordinary course of business (so long as such lease does
not create a Capitalized Lease Obligation not otherwise permitted by Section
6.04(c));
(d) licenses or sublicenses by members of the Borrower Group of
intellectual property in the ordinary course of business of such members,
provided, that such licenses or sublicenses shall not interfere with the
Business;
(e) sales of Licenses (or portions thereof), provided that (i)
following such sale or sales, the Company continues to own the Licenses covering
at least Region 9 and either Region 4 or Region 6 (as defined in Exhibit A to
the Joint Venture Agreement), (ii) following such sale or sales, the total
Covered Pops in the Regions covered by the Licenses (or portions thereof) owned
by the Company following such sale or sales are not less than 40,000,000, and
(iii) to the extent the amount of the net proceeds of such sale or sales exceeds
the aggregate amount of (A) Capital Expenditures of the Company (whether or not
financed) plus (B) all amounts paid in connection with acquisitions permitted
under clause (g) below, in each case, during the period from the date of receipt
of such net proceeds by the Company through and including the date that is 180
days thereafter, such excess shall be applied to the prepayment of outstanding
Senior Indebtedness on a Pro Rata Payment basis as soon as may be practicable
following the end of such 180-day period;
(f) sales or dispositions of assets (other than the Licenses or
portions thereof) provided, that to the extent the amount of the net proceeds of
such sale or sales exceeds the aggregate amount of (A) Capital Expenditures of
the Company (whether or not financed) plus (B) all amounts paid in connection
with acquisitions permitted under clause (g) below, in
40
each case, during the period from the date of receipt of such net proceeds by
the Company through and including the date that is 180 days thereafter, such
excess shall be applied to the prepayment of outstanding Senior Indebtedness on
a Pro Rata Payment basis as soon as may be practicable following the end of such
180-day period; and
(g) other than with respect to New Subsidiaries, the acquisitions
of additional telecommunications businesses and assets in Mexico, provided that
the aggregate acquisition price of all such businesses and assets does not
exceed $50,000,000.
In connection with the sale or disposition of any License (or portion
thereof) or any other asset or property of a member of the Borrower Group which
is permitted under this Section 6.02 and which is then subject to a Lien created
by the Security Documents, the Collateral Agent shall execute such documents of
release as shall be reasonably requested by the Borrower Group in order to
release such Licenses (or portions thereof) or such other asset or property from
the Lien created by the Security Documents. If and to the extent that any Senior
Indebtedness then outstanding does not permit the prepayment thereof at such
time or under such circumstances as are described in clause (e) or clause (f) of
this Section 6.02, or any Senior Lender notifies the Company and each
Administrative Agent that it does not desire any such prepayment from such
sources, then any prepayment referred to in such clauses shall be applied on a
Pro Rata Payment basis as if such Senior Indebtedness was not then outstanding.
Any prepayment of Senior Indebtedness made in accordance with this Section 6.02
shall be made simultaneously with the prepayment of other Senior Indebtedness
(other than as set forth in the preceding sentence), provided that if such
prepayment of any such Senior Indebtedness would require a prepayment or
break-funding penalty, such prepayment amounts may, at the option of the
Company, be deposited with the applicable Administrative Agent, invested in
Permitted Investments, and applied to the prepayment of such Senior Indebtedness
on the first date as to which no prepayment or break-funding penalty would be
imposed.
6.03 RESTRICTED PAYMENTS. No member of the Borrower Group will declare
or pay any dividends (other than dividends payable solely in Capital Stock of
such Person) or return any capital to, its stockholders or authorize or make any
other distribution, payment or delivery of property or cash to its stockholders
as such, or redeem, retire, purchase, or otherwise acquire, directly or
indirectly, for consideration, any shares of any class of its Capital Stock now
or hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares), or set aside any funds for any of the
foregoing purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the Capital Stock of any
other member of the Borrower Group or any other Subsidiary, as the case may be,
now or hereafter outstanding (or any options or warrants or stock appreciation
rights issued by such Person with respect to its capital stock) (all of the
foregoing "Dividends"), except that (A) any Subsidiary of the Company, Pegaso
PCS or Personnel Co. may pay Dividends to the Company, Pegaso PCS or Personnel
Co., as applicable, (B) each of the Company, Pegaso PCS or Personnel Co. may pay
cash Dividends to Holdings to the extent, but only to the extent, that Holdings
needs all of such Dividends within five Business Days following the payment of
such Dividend to pay (i) normal, reasonable and customary administrative costs
incurred in the ordinary course of its business, (ii) Taxes paid in cash related
to the Business on behalf of the Borrower Group, (iii) to the extent that no
Default or Event of Default exists at the time such Dividend is paid and the
Company reasonably believes that it has, or will have on each of the
41
next following Payment Dates applicable to each tranche of Senior Indebtedness,
cash or Permitted Investments equal to the debt service coming due on such
Payment Dates, interest on, and (subject to Section 6.04(h)(B)) regularly
scheduled principal coming due on, High Yield Debt (issued by Holdings) within
such five Business Day-period (and any Dividends not so utilized within such
five Business Day-period shall be returned to the appropriate Subsidiary of
Holdings) and (iv) to the extent no Default or Event of Default exists at the
time of such payment, dividends by Holdings which are permitted to be paid
pursuant to clause (C) below, and (C) at any time during any fiscal year,
Holdings may pay Dividends to its shareholders provided that, (1) the Cash Flow
Test shall be satisfied as of the date of such Dividend payment, (2) the EBITDA
Test shall be less than or equal to 5.0 as of the date of such Dividend payment;
provided, that for purposes of this Section 6.03 the components of the EBITDA
Test shall be calculated as follows: (x) Consolidated Debt, cash and Permitted
Investments shall be measured as of the date of such Dividend payment and (y)
EBITDA shall be measured based on the two preceding fiscal quarters most
recently ended, and (3) simultaneously with any such Dividend payment, there
shall be paid to the holders of Senior Indebtedness, as a prepayment of the
principal amount of such Senior Indebtedness then outstanding and on a Pro Rata
Payment basis, an amount equal to such Dividend multiplied by the ratio
(expressed as a percentage of not less than 100%) which (i) the total principal
amount of Senior Indebtedness outstanding on the date of such prepayment bears
to (ii) the total Consolidated Paid In Equity as of such date, both calculated
in a manner consistent with the provisions of Section 6.10. If and to the extent
that any Senior Indebtedness then outstanding does not permit the prepayment
thereof at such time or under such circumstances as are described in this
Section 6.03, or any Senior Lender notifies the Company and each Administrative
Agent that it does not desire any such prepayment from such sources, then any
prepayment referred to in this Section 6.03 shall be applied on a Pro Rata
Payment basis as if such Senior Indebtedness was not then outstanding. Any
prepayment of Senior Indebtedness made in accordance with this Section 6.03
shall be made simultaneously with the prepayment of other Senior Indebtedness
(other than as set forth in the preceding sentence), provided that if such
prepayment of any such Senior Indebtedness would require a prepayment or
break-funding penalty, such prepayment amounts may, at the option of the
Company, be deposited with the applicable Administrative Agent, invested in
Permitted Investments, and applied to the prepayment of such Senior Indebtedness
on the first date as to which no prepayment or break-funding penalty would be
imposed.
6.04 INDEBTEDNESS. No member of the Borrower Group will contract,
create, incur, assume or suffer to exist any Indebtedness, except the following
("Permitted Indebtedness"):
(a) subject to Section 6.09 or Section 6.10 (whichever is then
applicable), Indebtedness incurred pursuant to the Alcatel Credit Agreement and
the Qualcomm Credit Agreement and Indebtedness incurred as a result of the
Alcatel Commitment Letter;
(b) Indebtedness owing by any member of the Borrower Group to
another member of the Borrower Group so long as (i) not otherwise restricted by
this Agreement, and (ii) any payment of such debt (whether principal, interest
or otherwise) is specifically subordinated to the Senior Indebtedness and is not
secured in any form; provided, however, that no loan or advance may be made by
the Company to any other member of the Borrower Group if (A) an Event of Default
has occurred and is then continuing or (B) the total amount so loaned or
42
advanced by the Company and then outstanding exceeds an amount equal to 1% of
the Consolidated Paid-In Equity;
(c) Capitalized Lease Obligations of a member of the Borrower Group
not constituting Senior Indebtedness and Indebtedness incurred pursuant to
purchase money mortgages or security interests permitted by Section 6.01(xi),
provided that the aggregate of such Capitalized Lease Obligations under all
Capitalized Leases entered into after the Closing Date plus the principal amount
of all Indebtedness secured by such purchase money mortgages or security
interests shall not exceed at any time outstanding the greater of (i)
$15,000,000 or (ii) two percent (2%) of the sum of Consolidated Debt and
Consolidated Paid-In Equity at the time of incurrence thereof;
(d) Additional Senior Indebtedness as provided in Section 2.04,
provided that (i) after the incurrence thereof the Leverage Ratio set forth in
Section 6.10 or the EBITDA Test set forth in Section 6.09 (whichever is then
applicable) shall be satisfied as of the last day of the last fiscal quarter
last ended for which financial statements have been delivered in accordance with
Section 5.01(a), on a pro forma basis as if such Additional Senior Indebtedness
and any other Indebtedness which was incurred after such last day was incurred
and outstanding on such last day and any Indebtedness which was repaid after
such last day was not outstanding on such last day, and (ii) the weighted
average life of such Additional Senior Indebtedness is not shorter than the
shorter of (A) 4.3 years or (B) the remaining weighted average life of the
Indebtedness under the Alcatel Credit Agreement and the Qualcomm Credit
Agreement outstanding immediately prior to the issuance of such Additional
Senior Indebtedness;
(e) other Indebtedness outstanding prior to, and to remain
outstanding after, the Closing Date to the extent specified in Schedule 6.04;
(f) Contingent Obligations of any of the Borrower Group arising
with respect to customary indemnification obligations incurred in connection
with permitted asset dispositions;
(g) unsecured Indebtedness of the Company taking the form of a
working capital revolving credit facility, provided that (A) the principal
amount of such Indebtedness does not at any time exceed $50,000,000, and (B)
after the incurrence thereof the EBITDA Test set forth in Section 6.09 or the
Leverage Ratio set forth in Section 6.10 (whichever is then applicable) shall be
satisfied on the last day of the last fiscal quarter last ended for which
financial statements have been delivered in accordance with Section 5.01(a), on
a pro forma basis as if such unsecured Indebtedness and any other Indebtedness
which was incurred since such last day was incurred and outstanding on such last
day and any Indebtedness which was paid after such last day was not outstanding
on such last day;
(h) Indebtedness incurred by any member of Borrower Group, other
than the New Subsidiaries, not otherwise described in this Section 6.04 ("High
Yield Debt"), provided that (A) the proceeds of such High Yield Debt are
intended to be applied (and are applied) to System Costs, to operating expenses
of the Business, or to cover required debt service payments on Senior
Indebtedness, (B) no principal installments of such High Yield Debt are
scheduled to be due and payable (or are otherwise required to be paid by
Holdings) prior to
43
January 15, 2008, (C) such High Yield Debt is not subject to any Lien on any
property or assets of any member of the Borrower Group (other than any reserve
or similar fund established in connection therewith which is funded from the
proceeds thereof and which is to be used to pay interest or principal on such
High Yield Debt), (D) following the issuance of such High Yield Debt, the EBITDA
Test set forth in Section 6.09 or the Leverage Ratio set forth in Section 6.10
(whichever is then applicable) shall be satisfied as of the last day of the last
fiscal quarter last ended for which financial statements have been delivered in
accordance with Section 5.01(a), on a pro-forma basis as if such High Yield Debt
and any other Indebtedness which was incurred since such last day were issued
and outstanding on such last day and any Indebtedness which was paid after such
last day was not outstanding on such last day, and (E) such High Yield Debt is
issued by Holdings and is not guaranteed by any other member of the Borrower
Group;
(i) Indebtedness incurred in connection with the financing of
wireless telecommunication handsets, subject to the restrictions contained in
Section 6.01 (xiii);
(j) Contingent Obligations not otherwise permitted under this
Section 6.04 to the extent not exceeding in the aggregate at any time
outstanding $5,000,000;
(k) Subordinated Loans;
(l) Obligations in respect of Swap Agreements as described in
Section 2.07; and
(m) with respect to all New Subsidiaries, Indebtedness not
exceeding the aggregate principal amount of $5,000,000 outstanding at any one
time; provided, that no category of Permitted Indebtedness under this Section
6.04, other than this clause (m), shall apply to permit the incurrence of
Indebtedness by New Subsidiaries; provided, further, in any event, any guaranty
by any New Subsidiary pursuant to Section 5.13 hereof shall be permitted and
shall not apply to reduce the maximum allowable amount under this clause (m).
6.05 SUBSIDIARIES. No member of the Borrower Group will establish,
create or acquire any Subsidiary except Wholly-owned Subsidiaries which are
established, formed or purchased in accordance with the restrictions and
limitations set forth in Section 5.13. The assets owned by any such Subsidiary
shall not cause the Borrower Group to breach its representation made in Section
4.10(c) hereof (e.g. Minimum Assets).
6.06 ADVANCES, INVESTMENTS AND LOANS. No member of the Borrower Group
will lend money or credit or make advances to any Person, or purchase or acquire
any stock, obligations or securities of, or any other interest in, or make any
capital contribution to any Person, except:
(a) any member of the Borrower Group may invest in Permitted
Investments;
(b) any member of the Borrower Group may acquire and hold
receivables owing to them, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
44
(c) any member of the Borrower Group may incur intercompany
Indebtedness to the extent permitted pursuant to Section 6.04(b);
(d) any member of the Borrower Group may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;
(e) any member of the Borrower Group may make investments in any
other member of the Borrower Group provided that such investment does not cause
a breach of any representation or covenant hereunder;
(f) any member of the Borrower Group may make loans and advances to
officers and employees of the Borrower Group (but not to any shareholders or
non-employee directors of a member of the Borrower Group), provided that any
such loan or advance is made in the ordinary course of business and in an
aggregate principal amount not to exceed $5,000,000 (or the Peso Equivalent
thereof) at any time outstanding; and
(g) any member of the Borrower Group may make acquisitions
permitted by Section 6.02 (g).
6.07 AFFILIATE TRANSACTIONS. Each member of the Borrower Group will not,
and will not permit any Subsidiary to, enter into any transactions or series of
transactions whether or not in the ordinary course of business, with any
Affiliate other than on terms and conditions substantially as favorable to such
member of the Borrower Group or such Subsidiary as would be obtainable by such
member of the Borrower Group or such Subsidiary at the time in a comparable
arm's-length transactions with a Person other than an Affiliate; provided that
the foregoing restrictions shall not apply to (i) transactions solely among the
members of the Borrower Group, (ii) employment arrangements entered into in the
ordinary course of business with officers of such member, (iii) customary fees
paid to members of the Board of Directors of Holdings, and (iv) any transaction
permitted by the Joint Venture Agreement as in effect on the Closing Date.
6.08 NO OTHER BUSINESS. No member of the Borrower Group will undertake
and business other than the Business and activities reasonably incidental
thereto.
6.09 EBITDA TEST. From and after the Trigger Date, the Borrower Group
will no permit the EBITDA Test to be more than the following ratios for the
following dates (when calculating Consolidated Debt less cash and Permitted
Investments) and quarterly and annual periods (when calculating EBITDA) ending
on such dates:
PERIOD PERIOD ENDING ON EBITDA RATIO
------ ---------------- ------------
Annual December 31, 2003 8:1
Quarterly March 31, June 30 and
September 30, 2004 8:1
45
Annual December 31, 2004
and each December 31 thereafter 6:1
Quarterly March 31, June 30 and
September 30 of each year,
commencing March 31, 2005
and thereafter 6:1
All calculations made for purposes of determining compliance with this financial
covenant shall be based on financial statements reconciled to U.S. GAAP;
provided, that for purposes of this Section 6.09, Consolidated Debt and
Permitted Investments shall be calculated in Dollars on the date of any
determination.
6.10 LEVERAGE RATIO. At all times prior to the Trigger Date, the
Borrower Group will not permit the Leverage Ratio to exceed 1.5 to 1.0. All
calculations made for purposes of determining compliance with this financial
covenant shall be based on financial statement reconciled to U.S. GAAP;
provided, that for purposes of this Section 6.10, Consolidated Paid-In Equity
shall be calculated in Dollars on the date of contribution or dates of
contribution of such Consolidated Paid-In Equity, and Consolidated Debt and
Permitted Investments shall be calculated in Dollars on the date of any
determination.
6.11 LIMITATION ON ISSUANCE OF STOCK. No member of the Borrower Group
(other than Holdings) will, nor will it permit, any of its Subsidiaries,
directly or indirectly, to, issue an. shares of its capital stock or other
securities (or warrants, rights or options to acquire shares or other equity
securities), except (i) in favor of Holdings or another member of the Borrower
Group that is the parent company, (ii) for replacements of then outstanding
shares of Capital Stock, (iii) for stock splits, stock dividends and similar
issuances which do not decrease the percentage ownership of the Borrower Group
in any class of the Capital Stock of such other members or such Subsidiary, and
(iv) for issuances by newly created or acquired Subsidiaries in accordance with
Section 5.13.
6.12 PREPAYMENTS. So long as the Company shall have any Senior
Indebtedness outstanding, the Company shall not prepay any principal of High
Yield Debt or pay or prepay any principal or interest in respect of Subordinated
Loans.
6.13 MODIFICATIONS OF CERTAIN DOCUMENTS AND AGREEMENTS. No member of the
Borrower Group shall amend or modify any of its Charter Documents or change its
Fiscal Year without the prior written consent of the Required Voting Parties,
except for any modifications to its Charter Documents (including the Joint
Venture Agreement) that are not materially adverse to any Secured Party. For
purposes of this Section 6.13, any amendment or modification to the Equity
Commitments set forth in the Joint Venture Agreement prior to the date on which
the sum of additional equity contributions made to Holdings after the Closing
Date and the Subordinated Loans made to Holdings after the Closing Date which
have not been repaid equal or exceeds $100,000,000 shall be deemed materially
adverse.
46
6.14 ABANDONMENT OF THE SYSTEM. No member of the Borrower Group shall
(i) abandon the System, (ii) agree to abandon the System or (iii) make any
public declaration or statement regarding its intention to abandon the System.
6.15 HAZARDOUS SUBSTANCES. No member of the Borrower Group shall
release, emit or discharge into the environment any Hazardous Materials in
violation of any Environmental Law to the extent that any such release, emission
or discharge would constitute a Material Adverse Effect. No member of the
Borrower Group will exercise care, custody or control over the System or any
real property owned or leased by any member of the Borrower Group in any manner
that would pose a major or unreasonable hazard to the environment, health or
safety.
6.16 IMMUNITY. In any proceedings in Mexico or elsewhere in connection
with any of the Financing Agreements to which a member of the Borrower Group is
a party, no such member shall claim for itself or any of its assets immunity
from suit, execution, attachment or other legal process.
6.17 REGULATIONS. No member of the Borrower Group shall directly or
indirectly apply any part of the proceeds of any Loan or other revenues to the
purchasing or carrying of margin stock within the meaning of Regulation T, U or
X of the Federal Reserve Board, or any regulations, interpretations or rulings
thereunder.
6.18 INVESTMENT COMPANY ACT. No member of the Borrower Group shall take
(or permit any other Person to take) any action which could reasonably result in
such member falling within the definition of an "investment company" or a
company "controlled" by an "investment company," under the Investment Company
Act of 1940.
6.19 DISPUTES. No member of the Borrower Group will agree, authorize or
otherwise consent to any proposed settlement, resolution or compromise of any
litigation, arbitration or other dispute with any Person which is an Affiliate,
unless such settlement, resolution or compromise is made on terms similar to
those which would apply if such Person were not an Affiliate.
ARTICLE 7
EVENTS OF DEFAULT
Each of the specified events set forth in Sections 7.01 through 7.16
shall constitute an "Event of Default":
7.01 PAYMENTS. A failure by one or more members of the Borrower Group to
pay (whether by scheduled maturity, required prepayment, by acceleration or
otherwise) any principal of any Senior Indebtedness, any interest on any Senior
Indebtedness, any other amounts owing hereunder or under any other Financing
Agreement or any other amounts constituting Obligations within three Business
Days after such principal, interest or other amount first becomes due.
47
7.02 REPRESENTATIONS. Any representation or warranty made by any
Sponsor, Guarantor, or any member of the Borrower Group herein or in any other
Financing Agreement or any representation, warranty or statement in any
certificate, financial statement or other document furnished to any Secured
Party by or on behalf of the Borrower Group hereunder or under any other
Financing Agreement shall prove to have been false or misleading in any material
respect as of the time made, deemed made, confirmed or furnished; provided,
however, that no Event of Default shall occur pursuant to this Section 7.02 if
the false or misleading representation, warranty or statement can be eliminated
or otherwise cured within 30 days after any responsible officer of the Borrower
Group receives notice or has knowledge thereof such that the applicable
representation, warranty or statement is no longer false or misleading in any
material respect.
7.03 COVENANTS.
(a) A member of the Borrower Group shall default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 5.13, 5.15, 5.16, 5.17 or Article 6.
(b) Any member of the Borrower Group shall default in the due
performance or observance by it of any term, covenant or agreement contained
herein or in any other Financing Agreement (except as otherwise provided in
Section 7.01 and paragraph (a) of this Section 7.03), and such default shall
continue unremedied for a period of 30 days after the date on which written
notice thereof shall have been received by a member of the Borrower Group from
the Collateral Agent; provided, that if (A) any such default under this Section
7.03(b) does not involve the payment of money and cannot be cured within such
30-day period, (B) such failure is in fact susceptible of cure, (C) no other
independent Default or Event of Default has occurred and is continuing, (D) the
Borrower Group is proceeding with diligence and in good faith to cure such
failure, (E) the existence of such failure does not constitute a Material
Adverse Effect and (F) the Collateral Agent shall have received an officer's
certificate signed by an Authorized Officer of the Company to the effect of
clauses (A), (B), (C), (D) and (E) above and describing all action the Borrower
Group is taking to cure such failure, such 30-day cure period shall be extended
by up to an additional 60 days as shall be necessary for the Borrower Group to
diligently cure such failure.
7.04 DEFAULT UNDER OTHER AGREEMENTS.
(a) Any member of the Borrower Group defaults for a period beyond
the applicable grace period in the payment of any principal, interest or other
amount due under any agreement evidencing, securing or creating any Indebtedness
of such member (including swap or similar derivative agreements) in excess
(individually or in the aggregate) of $15,000,000.
(b) Any member of the Borrower Group shall default in the
observance or performance of any agreement or condition relating to any
Indebtedness the principal amount of which (individually or in the aggregate)
exceeds $25,000,000, or any other event or condition shall have occurred
thereunder, the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness (or a trustee acting
48
on behalf of such holders) to cause any such Indebtedness to become due prior to
its stated maturity; or any such Indebtedness of any member of the Borrower
Group shall be declared due and payable prior to the stated maturity thereof.
7.05 INVOLUNTARY BANKRUPTCY, ETC. An involuntary proceeding shall have
been commenced against any member of the Borrower Group or seeking that such
Person be wound up or liquidated, adjudging such Person bankrupt or insolvent or
seeking reorganization, arrangement, adjustment or composition of or in respect
of such Person under any Applicable Law or seeking the appointment of a
receiver, liquidator, sindico, interventor, assignee, trustee, sequestrator (or
other similar official) of such Person or of any substantial part of its
property or other assets, or the winding up or liquidation of its affairs and
such proceeding continues undismissed for 60 days.
7.06 VOLUNTARY BANKRUPTCY, ETC. The institution by any member of the
Borrower Group of proceedings to be adjudicated bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency proceedings against
it; or the filing by it of a petition or answer or consent seeking
reorganization or debt relief under any Applicable Law or to the appointment of
a receiver, liquidator, sindico, interventor, assignee, trustee, sequestrator
(or other similar official) of any such Person or of any substantial part of its
property; or the making by it of an assignment for the benefit of creditors
generally; or the admission by it in writing of its inability to pay its debts
generally as they become due; or any other event shall have occurred which under
any Applicable Law would have an effect analogous to any of those events listed
above in this Section 7.06 with respect to any such Person; or any action is
taken by any such Person for the purpose of effecting any of the foregoing.
7.07 ANALOGOUS PROCEEDINGS. There occurs, in relation to any member of
the Borrower Group, in any country or territory in which any of them carries on
business or to the jurisdiction of whose courts any part of their assets is
subject, any event which in that country or territory corresponds with, or has
an effect equivalent or similar to, any of those mentioned in Section 7.05 or
7.06.
7.08 ATTACHMENT OF COLLATERAL. Any Person other than the Collateral
Agent for the benefit of the Secured Parties or a Senior Lender attaches or
institutes proceedings to attach all e any part of the Collateral, and any
attachment or any judgment Lien against any such Collateral (i) remains
unlifted, unstayed or undischarged for a period of 30 days or (ii) is upheld in
a final nonappealable judgment of a court of competent jurisdiction.
7.09 FINANCING AGREEMENTS.
(a) This Agreement or any of the Financing Agreements or any
material provision hereof or thereof is or becomes invalid, illegal or
unenforceable or the Company or any Guarantor shall have repudiated or disavowed
or taken any action to challenge the validity or enforceability of such
agreement.
(b) Any of the Security Documents, once executed and delivered,
shall fail to provide the Liens, security interests, rights, titles, interests,
remedies, powers or privilege intended to be created thereby (including the
priority intended to be created thereby), or such
49
Lien shall fail to have the priority contemplated therefor in such Security
Documents, or any such Security Document shall cease to be in full force and
effect, or the validity thereof or the applicability thereof to any obligations
purported to be secured or guaranteed thereby or any part thereof, shall be
disaffirmed in writing by or on behalf of a member of the Borrower Group or any
other party thereto.
7.10 EXPROPRIATION. There shall have occurred any act or series of acts
attributable to a Mexican Governmental Authority which (i) in the reasonable
judgment of the Required Voting Parties has the effect of depriving the Senior
Lenders of their fundamental rights as creditors in respect of this Agreement
(including rights under the security interests granted under the Security
Documents), or (ii) confiscates, expropriates or nationalizes the ownership or
control of all or any substantial part of the System or other assets of a member
of the Borrower Group and such act or series of acts continues uncured for 120
days or more.
7.11 MONETARY RESTRICTIONS. Any law, order, decree or regulation shall
impose and restriction on (i) the lawful transfer of Dollars by the Borrower
Group from Mexico to the Collateral Agent (and from the Collateral Agent to any
other Person or locale whether within or outside of Mexico), or (ii) the
conversion of (a) Dollars to Pesos or (b) Pesos to Dollars and which restriction
constitutes a Material Adverse Effect.
7.12 JUDGMENTS. One or more judgments or decrees shall be entered
against one or more members of the Borrower Group and such judgments or decrees
shall not be vacated discharged or stayed or bonded pending appeal for any
period of 60 consecutive days, and the aggregate amount of all such judgments
and decrees outstanding at any time (except to the extent any applicable
insurer(s) shall have acknowledged liability therefor) exceeds $5,000,000.
7.13 LICENSES AND PERMITS. The Borrower Group shall fail to obtain,
renew, maintain or comply in all material respects with the Licenses (or any
portion thereof); or any License (or any portion thereof) shall be rescinded,
terminated, suspended, modified or withheld or shall be determined to be invalid
or shall cease to be in full force and effect; or any proceedings shall be
commenced by or before any Governmental Authority for the purpose of rescinding,
terminating, suspending, modifying or withholding any such License (or any
portion thereof) and such proceeding is not dismissed within 60 days; and as a
result of such failure, rescission, determination of invalidity, termination,
suspension, modification, withholding, cessation or commencement the valid,
enforceable and effective Licenses then owned by the Company (a) fail to cover
all of Region 9, and either all of Region 4 or all of Region 6 (as such Regions
are defined in Exhibit A to the Joint Venture Agreement) or (b) result in
Covered Pops being less than 40,000,000 Pops.
7.14 CHANGE OF CONTROL. A Change of Control shall have occurred and be
continuing.
7.15 OTHER SENIOR INDEBTEDNESS. An "event of default" shall have
occurred and be continuing under (and as defined in the documentation relating
to) any Credit Agreement relating to Senior Indebtedness, including any Senior
Indebtedness which is described in Section 2.04.
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7.16 MORTGAGE. The Company shall fail to deliver to the Collateral Agent
within forty five (45) days after the filing of Amendment No. 1 to the Mortgage,
the first testimony of the public deed evidencing the execution and delivery of
Amendment No. 1 to the Mortgage, duly recorded at the Public Registry of
Commerce of the Federal District of Mexico; or the Company shall fail to deliver
to the Collateral Agent (i) within ninety (90) days after filing of the
Mortgage, the first testimony of the public deed evidencing the execution and
delivery of the Mortgage, duly recorded at the Telecommunications Registry of
Mexico and (ii) within ninety (90) days after filing of Amendment No. 1 to the
Mortgage, the first testimony of the public deed evidencing the execution and
delivery of Amendment No. 1 to the Mortgage, duly recorded at the
Telecommunications Registry of Mexico.
7.17 REMEDIES. Subject to the provisions of the Intercreditor Agreement
and the Collateral Agency Agreement, upon the occurrence and during the
continuation of an Event of Default, the Secured Parties may, without further
notice of default, presentment or demand for payment, protest or notice of
non-payment or dishonor, or other motion or demands of any kind, all such
notices and demands being waived (to the extent permitted by Applicable Law),
exercise any or all rights and remedies at law or in equity (in any combination
or order that the Secured Parties may elect) and, without limitation or
prejudice to the foregoing, the Secured Parties may:
(a) unless otherwise provided in the applicable Credit Agreement,
refuse, and they shall not be obligated, to make any Disbursements and/or may
suspend or terminate their Commitments;
(b) declare and make all sums of accrued and outstanding principal
and accrued but unpaid interest remaining under the Credit Agreements and Credit
Facilities, and any other Senior Indebtedness, including unpaid fees, costs and
charges, immediately due and payable, provided that in the event of an Event of
Default occurring under Section 7.05, 7.06 or 7.07 (in each case in respect of a
member of the Borrower Group), all such amounts shall become immediately due and
payable without reference to the Credit Agreements or any other Financing
Agreement and without further notice, demand or act of any Secured Party;
(c) set off and apply all monies on deposit with any Secured Party
to the satisfaction of the Obligations under all of the Financing Agreements and
otherwise in accordance with the terms of any such applicable document; and
(d) exercise any and all rights and remedies available to them
under any of the Security Documents or any of the other Financing Agreements or
as otherwise permitted by Applicable Law.
ARTICLE 8
MISCELLANEOUS
8.01 PAYMENT OF EXPENSES, ETC.
(a) Without limiting any amounts agreed to be paid by the Borrower
Group under the applicable Credit Agreements, each member of the Borrower Group
shall, jointly and severally, whether or not the transactions herein
contemplated are consummated, pay:
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(i) all reasonable out-of-pocket costs and expenses of each of the Collateral
Agent and the Intercreditor Agent (including all commissions, charges, costs and
expenses for the conversion of currencies and all other reasonable costs,
charges and expenses (including all reasonable fees and expenses of the legal
counsel, consultants and advisors for any of the foregoing)) made, paid,
suffered or incurred in connection with (A) any amendment or modification to, or
the protection or preservation of any right or claim under, or consent or waiver
in connection with, this Agreement or any other Transaction Document, any such
other document or instrument related hereto or thereto, or any Collateral, (B)
the authentication, registration, translation and recordation (where
appropriate) and the delivery of the evidences of indebtedness relating to the
Loans and the Disbursements thereof and (C) the administration and enforcement
(including with respect to a work out) of this Agreement, the other Transaction
Documents and any other documents and instruments referred to herein or therein
(including the reasonable fees and disbursements of one common Mexican counsel
and one common United States counsel for the Collateral Agent and the
Intercreditor Agent upon the occurrence and during the continuation of an Event
of Default, (ii) the fees of the Insurance Consultant retained pursuant to the
Financing Agreements, and (iii) the expenses set forth in Section 3.06 and
Section 6.03 (a) (iv) of the Intercreditor Agreement.
(b) Each member of the Borrower Group shall, whether or not the
transactions herein contemplated are consummated, jointly or severally,
indemnify each of the Secured Parties and their respective officers, directors,
employees, representatives, attorneys and agents (each an "Indemnified Party"
and, collectively, the "Indemnified Parties") from and hold each of them
harmless against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses and disbursements
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of, any investigation, litigation or other proceeding or
inquiry (whether or not such Indemnified Party is a party thereto) related to
the entering into and/or performance of any Transaction Document or the
disbursement of, or use of the proceeds of, any Senior Indebtedness or the
consummation of any transactions contemplated herein or in any Transaction
Document, including the reasonable fees and disbursements of counsel selected by
such Indemnified Party incurred in connection with any such investigation,
litigation or other proceeding or in connection with enforcing the provisions of
this Section 8.01(b) (but excluding any such liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses and
disbursements to the extent incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified or its officers, directors,
employees, representatives, attorneys or agents, as the case may be, as
determined pursuant to a final, non-appealable judgment by a court of competent
jurisdiction).
(c) Without limitation to the provisions of Section 8.01(b) above,
each member of the Borrower Group agrees to defend, protect, indemnify and hold
harmless each Indemnified Party from and hold each of them harmless against any
and all liabilities (including removal and remedial actions), obligations,
losses; damages, penalties, claims, actions, judgments, suits, costs, expenses
and disbursements (including reasonable attorneys' and consultants' fees and
disbursements) imposed on or asserted against any such Persons directly or
indirectly based on, or arising or resulting from (i) the actual or alleged
presence of Hazardous Materials on, under or at the System or any real property
owned or leased by any member of the Borrower Group, (ii) any Environmental
Claim relating to any member of the Borrower Group or the System or any real
property owned or leased by any member of the Borrower Group, or
52
(iii) the exercise of any Indemnified Party's rights under any of the provisions
of this Section 8.01, but excluding any matter based solely on the gross
negligence or willful misconduct of any such Indemnified Party, as the case may
be, as determined pursuant to a final, non-appealable judgment by a court of
competent jurisdiction.
(d) To the extent that the undertaking in the preceding paragraphs
of this Section 8.01 may be unenforceable because it is violative of any law or
public policy, the Borrower Group will contribute the maximum portion that it is
permitted to pay and satisfy under Applicable Law to the payment and
satisfaction of such undertakings.
(e) All sums paid and costs incurred by any Indemnified Party with
respect to any matter indemnified hereunder shall bear interest at the default
rate applicable to their respective Credit Facility from the date any member of
the Borrower Group receives notice thereof from such Indemnified Party, until
reimbursed by the Borrower Group, and all such sums and costs shall be added to
the debt and be secured by the Security Documents and shall be immediately due
and payable on demand. Each such Indemnified Party shall promptly notify the
Company in a timely manner of any such amounts payable by the Borrower Group
hereunder, provided that any failure to provide such notice shall not affect the
Borrower Group's obligations under this Section 8.01.
(f) Each Indemnified Party pursuant to Section 8.01(b) and (c)
above, within 10 days after the receipt by it of notice of the commencement of
any action for which indemnity may be sought by it, or by any Person controlling
it, from the Borrower Group on account of the agreements contained in this
Section 8.01, shall notify the Company in writing of the commencement thereof,
but the failure of such Indemnified Party to so notify the Company of any such
action shall not release the Borrower Group from any liability which it may have
to such Indemnified Party.
8.02 RIGHT OF SETOFF. Subject to the terms of the Intercreditor
Agreement, upon the occurrence and during the continuance of any Event of
Default, each Senior Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Senior Lender to or for
the credit or the account of any member of the Borrower Group against any and
all of the obligations of the Borrower Group now or hereafter existing under the
applicable Credit Agreement and, if applicable, the corresponding Note held by
such Senior Lender, irrespective of whether or not such Senior Lender shall have
made any demand under the applicable Credit Agreement or Note, and without
presentment, protest or other notice of any kind to any member of the Borrower
Group, all of which are hereby expressly waived and although such obligations
may be unmatured.
8.03 NOTICES.
(a) Except as otherwise expressly provided herein or in any
Financing Agreement, all notices and other communications provided for hereunder
or thereunder shall be (i) in writing (including telex or telecopier) and (ii)
telexed, telecopied or sent by overnight courier (if for inland delivery) or
international courier (if for overseas delivery) to a party hereto
53
(with a copy to the Relevant Party) or to a Relevant Party at its address and
contact number specified in Schedule 8.03, or at such other address and contact
number as is designated by such party in a written notice to the other parties
hereto.
(b) All such notices and communications shall be effective (i) if
sent by telex, when sent (with the correct answer back), (ii) if sent by
telecopier, when sent (on receipt of confirmation) and (iii) if sent by courier,
(x) one day after deposit with an overnight courier if for inland delivery and
(y) three days after deposit with an international courier if for overseas
delivery.
8.04 BENEFIT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, no member of the Borrower
Group may assign or transfer any of its rights or obligations hereunder without
the prior written consent of each of the Senior Lenders. Any Senior Lender may
transfer, assign or grant its rights hereunder in connection with an assignment
or transfer of all or any part of its interest in its Senior Indebtedness in
accordance with the provisions of the applicable Credit Agreement; provided that
any such assignee has agreed to be bound by the terms of the Financing
Agreements, including the Intercreditor Agreement. Notwithstanding anything to
the contrary contained in any Financing Agreement (including this Agreement),
the Senior Lenders under each respective Credit Agreement shall be entitled to
appoint a successor administrative agent in accordance with the terms of such
Credit Agreement upon the resignation or removal of their Administrative Agent
without any consent of or notice to any other Secured Party, and upon such
appointment becoming effective in accordance with such terms, such successor
shall be deemed to be the "Administrative Agent" of such Senior Lenders for all
purposes of this Agreement and the other Financing Agreements. Each of the
Relevant Parties shall be deemed a third party beneficiary to this Agreement to
the extent that it is to receive any document, instrument, notification or other
paper as provided herein.
8.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
the Collateral Agent, any other Agent, or any Senior Lender in exercising any
right, power or privilege hereunder or under any other Financing Agreement and
no course of dealing between any member of the Borrower Group, or any of its
Affiliates, on the one hand, and the Collateral Agent, any other Agent and the
Senior Lenders, on the other hand, shall impair any such right, power or
privilege or operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Financing
Agreement preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder of thereunder. The rights, powers and
remedies herein or in any other Financing Agreement expressly provided are
cumulative and not exclusive of any rights, powers or remedies which any party
thereto would otherwise have. No notice to or demand on a member of the Borrower
Group in any case shall entitle such member (or any other member) to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Collateral Agent, any other Agent, or any Senior
Lender to any other or further action in any circumstances without notice or
demand.
8.06 SEVERABILITY. Any provision of any Financing Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the
54
extent of prohibition or unenforceability, but that shall not invalidate the
remaining provisions of such Financing Agreement or affect such provision in any
other jurisdiction.
8.07 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when executed and delivered, shall be effective for purposes of
binding the parties hereto, but all of which shall together constitute one and
the same instrument. A set of counterparts executed by all the parties hereto
shall be lodged with each of the parties hereto.
8.08 EFFECTIVENESS. This Agreement shall become effective on the date
hereof. Any Credit Agreement shall become effective pursuant to its terms
(except for this Agreement having become effective, if that is a condition of
effectiveness of any of such agreement).
8.09 SURVIVAL. All indemnities set forth herein, including in Section
8.01, shall survive the execution and delivery of this Agreement and the making
and repayment of the Senior Indebtedness.
8.10 CURRENCY OF PAYMENT. The obligation of the Company and the Borrower
Group to pay in Dollars those amounts of the sums specified to be due in
Dollars, under this Agreement or the respective Financing Agreements (the
"Financing Agreement Currency") shall not be deemed to have been novated,
discharged or satisfied by any tender of (or recovery under judgment expressed
in) any currency other than the Financing Agreement Currency, except to the
extent to which such tender (or recovery) shall result in the effective payment
of such aggregate amount in the applicable Financing Agreement Currency at the
place where such payment is to be made and, accordingly, the amount (if any) by
which any such tender (or recovery) shall fall short of such amount shall be and
remain due to the Senior Lenders as a separate Obligation, unaffected by
judgment having been obtained (if such is the case) for any other amounts due in
respect of this Agreement or the Financing Agreements.
8.11 JUDGMENT CURRENCY.
(a) The obligations of the Borrower Group hereunder and under the
other Financing Agreements to make payments in Dollars (the "Obligation
Currency"), shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any currency other than
the Obligation Currency, except to the extent that such tender or recovery
results in the effective receipt by the respective Secured Party of the full
amount of the Obligation Currency expressed to be payable to such Secured Party
under this Agreement or the other Transaction Documents. If for the purpose of
obtaining or enforcing judgment against the Company in any court or in any
jurisdiction, it becomes necessary to convert into or from any currency other
than the Obligation Currency (such other currency being hereinafter referred to
as the "Judgment Currency") an amount due in the Obligation Currency, the
conversion shall be made at the Peso Equivalent, in the case of Pesos, and in
the case of other currencies, the rate of exchange (as quoted by the
Intercreditor Agent or if the Intercreditor Agent fails to quote a rate of
exchange on such currency, by a known dealer in such currency designated by the
Intercreditor Agent) determined, in each case, as of the day on which the
judgment is given (such Business Day being hereinafter referred to as the
"Judgment Currency Conversion Date").
55
(b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Borrower Group covenants to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount), as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.
(c) For purposes of determining the Peso Equivalent or rate of
exchange under this Section 8.11, such amounts shall include any premium and
costs payable in connection with the purchase of the Obligation Currency.
8.12 EVIDENCE OF DEBT.
(a) Each Senior Lender shall maintain, or cause to be maintained,
in accordance with its usual practice, internal records evidencing the amounts
from time to time lent by and owing to it under its respective Financing
Agreement and each of the payments from time to time made in respect thereof.
(b) Except as otherwise provided in any Financing Agreement, in any
legal action or proceeding arising out of or in connection with any Financing
Agreement or any other Transaction Document, the entries made in the internal
records maintained by each of the Senior Lenders pursuant to clause (a) above
shall be prima facie evidence of the existence and amount of obligations of the
Borrower Group as therein recorded.
8.13 ENGLISH LANGUAGE This Agreement is made in the English language.
One Spanish language translation of this Agreement prepared at the Company's
expense by an official public interpreter and approved by Mexican counsel to the
Company and Mexican counsel to the Senior Lenders under the Alcatel Credit
Agreement and the Qualcomm Credit Agreement shall be the agreed Spanish language
translation hereof for all purposes. Such translation and no other may be filed
in one or more public registries in Mexico or used in any proceeding in Mexico.
For all purposes, the English language version hereof shall be the original
instrument and in all cases of conflict between the English and the Spanish
versions, the English version shall control.
8.14 ENTIRE AGREEMENT. This Agreement (including the exhibits, schedules
and appendices attached hereto), including the documents referred to herein,
embodies the entire agreement and understanding of the parties hereto and
supersedes all prior agreements and understandings of the parties hereto
relating to the subject matter herein contained.
8.15 WAIVER OF SOVEREIGN IMMUNITY. Each member of the Borrower Group
acknowledges and agrees that the activities contemplated by the provisions of
the Financing Agreements are commercial in nature rather than governmental or
public, and therefore acknowledges and agrees that it is not entitled to any
right of immunity on the grounds of sovereignty or otherwise with respect to
such activities or in any legal action or proceeding arising out of or relating
to the Financing Agreements. Each member of the Borrower Group, in
56
respect of itself, its process agents, and its properties and revenues,
expressly and irrevocably waives any such right of immunity which may now or
hereafter exist (including any immunity from any legal process, from the
jurisdiction of any court or from any execution or attachment in aid of
execution prior to judgment or otherwise) or claim thereto which may now or
hereafter exist, and agrees not to assert any such right or claim in any such
action or proceeding, whether in the United States or otherwise.
8.16 REINSTATEMENT. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
obligations of the Company or the Borrower Group hereunder, or any part thereof,
is, pursuant to Applicable. Law, rescinded or reduced in amount, or must
otherwise be restored or returned by the Collateral Agent or any Secured Party.
In the event that any payment or any part thereof is so rescinded, reduced,
restored or returned, such obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, restored or returned.
8.17 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL.
(a) This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, United States, without
reference to principles of conflicts of law (other than Section 5-1401 of the
General Obligations Laws of the State of New York); provided, however, that, in
connection with any legal action or proceeding (other than an action to enforce
a judgment obtained in another jurisdiction) brought in respect to this
Agreement in the courts of Mexico or any political subdivision thereof, this
Agreement shall be deemed to be an instrument made under the laws of Mexico and
for such purposes shall be governed by, and construed in accordance with, the
laws of the Federal District of Mexico.
(b) Each party hereto hereby agrees that any suit, action or
proceeding with respect to this Agreement or any judgment entered by any court
in respect thereof may be brought in the United States of America District Court
for the Southern District of New York, in the Supreme Court of the State of New
York sitting in New York County (including its Appellate Division), or in any
other appellate court in the State of New York or the competent courts of the
Federal District of Mexico, as the party commencing such suit, action or
proceeding may elect in its sole discretion; and each party hereto hereby
irrevocably submits to the jurisdiction of such courts for the purpose of any
such suit, action, proceeding or judgment. Each party hereto further submits,
for the purpose of any such suit, action, proceeding or judgment brought or
rendered against it, to the appropriate courts of the jurisdiction of its
domicile. Each member of the Borrower Group hereby waives any rights to a
specific jurisdiction it may have by virtue of its present or any future
domicile, or otherwise.
(c) Each member of the Borrower Group hereby agrees that service of
all writs, process and summonses in any such suit, action or proceeding brought
in the State of New York may be made upon CT Corporation System, presently
located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, X.X.X. (the "Process
Agent"), and each member of the Borrower Group hereby confirms and agrees that
the Process Agent has been duly and irrevocably appointed as its agent and true
and lawful attorney-in-fact in its name, place and stead to accept such service
of any and all such writs, process and summonses, and agrees that the failure of
the
57
Process Agent to give any notice of any such service of process to such member
of the Borrower Group shall not impair or affect the validity of such service or
of any judgment based thereon. Each member of the Borrower Group hereby further
irrevocably consents to the service of process in any suit, action or proceeding
in said courts by the mailing thereof by any Secured Party by registered or
certified mail, postage prepaid, at its address set forth beneath its signature
hereto.
(d) Nothing herein shall in any way be deemed to limit the ability
of the Secured Parties to serve any such writs, process or summonses in any
other manner permitted by applicable law or to obtain jurisdiction over any
member of the Borrower Group in such other jurisdictions, and in such manner, as
may be permitted by applicable law.
(e) Each member of the Borrower Group hereby irrevocably waives any
objection that it may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
other Financing Agreement brought in the Supreme Court of the State of New York,
County of New York, or in the United States of America District Court for the
Southern District of New York or the competent courts of the Federal District of
Mexico, and hereby further irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(f) The Borrower Group hereby agrees to cause the Process Agent to
execute and deliver to each Agent a letter from the Process Agent to each such
Agent confirming Process Agent's acceptance of the appointment by the members of
Borrower Group.
(g) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO ANY OF THE FINANCING AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
8.18 CALCULATIONS; COMPUTATIONS. The financial statements to be
furnished to the Agents, to the Relevant Parties and/or the Senior Lenders
pursuant hereto shall be made and prepared in accordance with GAAP consistently
applied throughout the periods involved (except as set forth in the notes
thereto); provided that (x) except as otherwise specifically provided herein,
all computations of determining compliance with Sections 6.09 and 6.10,
including definitions used therein, except to the extent otherwise set forth
therein, shall utilize accounting principles and policies in effect at the
Closing Date, (y) in the event GAAP shall be modified from that in effect on the
Closing Date, the Borrower Group shall be entitled to utilize GAAP, as so
modified, for purposes of such computations to the extent that (i) the Company
gives each Administrative Agent 30 days' prior written notice of such proposed
modification and (ii) prior thereto the Company and such Administrative Agents
shall have agreed upon adjustments, if any, to such definitions and/or such
Sections the sole purpose of which shall be to give effect to such proposed
change (it being understood and agreed that to the extent that the Company and
such Administrative Agent cannot agree on appropriate adjustments to such
definition and/or Sections (or that no adjustments are necessary), the proposed
change will not be utilized for the purposes of computations under such
definition and/or Sections) and (z) if at any time such computations utilize
accounting principles different from those utilized in the financial
58
statements furnished pursuant to Section 5.01(a), such financial statements
shall be accompanied by reconciliation worksheets.
8.19 NO THIRD-PARTY BENEFICIARIES. The covenants contained herein are
made solely for the benefit of the parties hereto (and the Senior Lenders), and
successors and assigns of such parties as specified herein, and shall not be
construed as having been intended to benefit any third party not a party to this
Agreement, except as expressly set forth in Section 8.04 or otherwise herein.
8.20 AMENDMENTS.
(a) Any provision of this Agreement may be amended, modified,
supplemented or waived only by an instrument in writing signed by each member of
the Borrower Group, the Administrative Agents, the Collateral Agent and the
Intercreditor Agent (with the Administrative Agents, Collateral Agent and
Intercreditor Agent acting pursuant to the provisions of the Intercreditor
Agreement).
(b) Notwithstanding anything in the Intercreditor Agreement to the
contrary and only with respect to the following terms set forth therein, any
amendment or modification thereof which would extend the time periods or
decrease any Voting Party Percentage set forth in the definition of "Initiating
Voting Parties" or which would increase the Voting Party Percentage applicable
to clauses (iii) and (iv) of the definition of "Required Voting Parties," shall
be signed by each member of the Borrower Group; provided however, that neither
the foregoing nor any provision of the Intercreditor Agreement shall in any way
restrict the ability of the parties to the Intercreditor Agreement or the Senior
Lenders from entering into additional agreements among themselves as to how such
Persons will vote in connection with any issue arising under the Financing
Agreements notwithstanding the fact that such additional agreements would have
the practical effect of making such amendment or modification.
8.21 CONFIDENTIALITY. Subject to the right of each Senior Lender to
assign or sell a participation in any Loans held by it or in its commitment and
to furnish information in connection therewith, the Senior Lenders shall hold
all nonpublic information obtained pursuant to the requirements of this
Agreement which has been identified as such by any member of the Borrower Group
in accordance with its customary procedure for handling confidential information
of this nature and in accordance with safe and sound banking practices and in
any event may make disclosure to its Affiliates, employees, auditors, advisors,
or counsel or as reasonably required by any bona fide transferee or participant
in connection with the contemplated transfer of any Loans or participation
therein (so long as such transferee or participant agrees to be bound by the
provisions of this Section 8.21) or as required or requested by any governmental
agency or representative thereof or pursuant to legal process; provided that,
unless specifically prohibited by Applicable Law or court order, each Senior
Lender shall notify the Company of any request by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Senior Lender by such
governmental agency) for disclosure of any such nonpublic information prior to
disclosure of such information; and provided further, that in no event shall any
Senior Lender be obligated or required to return any materials furnished by any
member of the Borrower Group.
59
IN WITNESS WHEREOF, the parties hereto have caused this Common Agreement
to be executed and acknowledged by their respective officers or representatives
hereunto duly authorized, as of the date first above written.
PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PEGASO TELECOMUNICACIONES, S.A. DE C.V.
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PEGASO PCS, S.A. DE C.V.
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PEGASO RECURSOS HUMANOS, S.A. DE C.V.
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
60
CITIBANK, N.A., as Intercreditor Agent
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as Collateral Agent
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CITIBANK INTERNATIONAL PLC, as Alcatel Administrative Agent
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ABN AMRO BANK N.V., as Qualcomm Administrative Agent
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
61
APPENDIX A TO COMMON AGREEMENT
DEFINED TERMS.
As used in any Financing Agreement (as defined below), including the
Common Agreement, the following terms shall have the following meanings, except
to the extent otherwise defined in such Financing Agreement:
"Acceptable Financial Institution" shall mean a bank or trust company
with a combined capital plus surplus of at least $500,000,000 and whose
long-term senior unsecured debt is rated "A" or higher by S&P or "A2" or higher
by Xxxxx'x.
"Additional Senior Indebtedness" shall have the meaning set forth in
Section 2.04. Any Alcatel Loans made under or pursuant to the Alcatel Commitment
Letter (or any credit or similar agreement in connection therewith) constitute
Additional Senior Indebtedness, but shall be permitted as provided in Section
6.04 (a) without compliance with the provisions of Section 6.04(d).
"Additional Senior Indebtedness Lenders" shall have the meaning set
forth in Section 2.04.
"Additional Senior Indebtedness Loans" shall mean, collectively, all of
the loans and notes made pursuant to the documentation relating to or evidencing
the Additional Senior Indebtedness.
"Administrative Agent" shall mean (i) with respect to the Alcatel Credit
Agreement, the Alcatel Administrative Agent, or any successor Administrative
Agent appointed pursuant to Section 10.08 of the Alcatel Credit Agreement, (ii)
with respect to the Qualcomm Credit Agreement, the Qualcomm Administrative
Agent, or any successor Administrative Agent appointed pursuant to Section 10.8
of the Qualcomm Credit Agreement, and (iii) with respect to any Additional
Senior Indebtedness, the administrative agent (or, in the case of notes, bonds
or other debt securities, the trustee, fiscal agent or comparable fiduciary)
appointed pursuant to the documentation evidencing such Additional Senior
Indebtedness, or any successor administrative agent appointed pursuant to the
applicable section of such documentation.
"Affiliate" shall mean, with respect to a specified Person, any other
Person which directly or indirectly controls, or is under common control with,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns directly or indirectly 10% or more of
the securities having ordinary voting power for the election of directors or
other governing body of a corporation or 10% or more of the partnership or other
ownership interests of any other Person will be deemed to control such
corporation or other Person. Notwithstanding the foregoing, (i) no individual
shall be deemed to be an Affiliate of a Person solely by reason of his or her
being a director, committee member, officer or
1
employee of such person and (ii) each member of the Borrower Group and each of
their respective Affiliates shall be deemed to be an Affiliate of each other
member of the Borrower Group.
"Agents" shall mean, collectively, the Intercreditor Agent, the
Collateral Agent and the Administrative Agents.
"Alcatel" shall mean Alcatel, a corporation duly incorporated under the
laws of France.
"Alcatel Administrative Agent" shall mean Citibank International plc, in
its capacity as Administrative Agent under the Alcatel Credit Agreement.
"Alcatel Commitment Letter" shall mean the commitment letter dated as of
October 28, 1998, from Electro Banque to, and accepted by, the Company relating
to Facility 2 (as therein defined and described), as supplemented, updated and
confirmed pursuant to SECTION 3.01(v).
"Alcatel Costs" shall mean all of the amounts (other than value-added
taxes) due and payable by the Company or other members of the Borrower Group to
or for the account of Alcatel Intedel under the provisions of the Alcatel
Procurement Agreement , and including the repayment of any bridge or similar
loan (and interest thereon) made by Citibank, N.A., London Branch to the Company
and guaranteed by Alcatel, the proceeds of which were used to pay the foregoing
costs.
"Alcatel Credit Agreement" shall mean the Credit Agreement, dated as of
the date hereof, between the Company, the Alcatel Lenders referred to therein
and the Alcatel Administrative Agent.
"Alcatel Guaranty" shall mean the Guaranty Agreement, dated as of the
date hereof, between Alcatel and the Alcatel Administrative Agent pursuant to
which Alcatel has guaranteed the payment obligations of the Company under the
Alcatel Credit Agreement as therein provided.
"Alcatel Intedel" shall mean Alcatel Intedel Industria de
Telecomunicacion S.A. de C.V., a sociedad anonima de capital variable under the
laws of Mexico.
"Alcatel Lenders" shall mean the Persons from time to time making or
carrying Loans and Commitments to the Company under the Alcatel Credit Agreement
or under the credit agreement executed as a result of the Alcatel Commitment
Letter.
"Alcatel Loans" shall mean, collectively, all of the loans made under
the Alcatel Credit Agreement and all of the loans made under the credit
agreement referred to in the Alcatel Commitment Letter.
"Alcatel Procurement Agreement" shall mean the Agreement for Services,
Procurement, and Construction, with an effective date of October 21, 1998,
between the Company and Alcatel Indetel.
2
"Alcatel Qualified Costs" shall mean (a) all of the Alcatel Costs other
than (i) the cost of the towers to be delivered by Alcatel Indetel under the
Alcatel Procurement Agreement and (ii) the cost of the shelters to be delivered
by Alcatel Indetel under the Alcatel Procurement Agreement. For the avoidance of
doubt, the term "Alcatel Qualified Costs" shall not include interest on any
Indebtedness, whether capitalized or otherwise (other than the interest referred
to in the definition of Alcatel Costs) nor any VAT costs paid in connection with
services rendered, or equipment or other property furnished, under the Alcatel
Procurement Agreement.
"Applicable Currency Exchange Rate" shall mean, as of any date of
determination, the rate of exchange (net of all fees and commissions) then
applicable to (i) the conversion of Dollars to Pesos or, (ii) the conversion of
Pesos to Dollars, as the context may require. The applicable rate of exchange
shall be the most favorable rate quoted by the Intercreditor Agent at 11:00 a.m.
(Mexico City time) on the applicable date of determination (or, if no such
quotations shall be available on such date, on the date closest to such date of
determination).
"Applicable Law" shall mean any constitution, statute, law, rule,
regulation, ordinance, judgment, order, decree, Permit, or any published
directive, guideline, requirement or other governmental restriction which has
the force of law, or any determination by, or interpretation of any of the
foregoing by, any judicial authority, binding on a given Person whether in
effect as of the date hereof or as of any date thereafter, including all
applicable Environmental Laws.
"Applicable Shares" shall have the meaning set forth in Section 4.10.
"Assignment Agreements" shall mean the Assignment Agreements as referred
to in the Post-Closing Agreement (appropriately completed) pursuant to which (i)
the Sponsors and Holdings have collaterally assigned to the Collateral Agent all
of the rights they have or may have as against the Original Mexican Shareholders
regarding the Equity Commitments, (ii) the Company has collaterally assigned to
the Collateral Agent all of the rights it has or may have as against Holdings
regarding the subscription of additional shares of the Company by Holdings with
the proceeds of the Equity Commitments, (iii) the Company has collaterally
assigned to the Collateral Agent all of its rights under the Pegaso PCS Services
Agreement, the Vendor Agreements, the Operator Agreement, and the
Interconnection Agreements, (iv) Pegaso PCS has collaterally assigned to the
Collateral Agent all of its rights under the Personnel Co. Services Agreement
and the Site Leases.
"Authorized Officer" shall mean, with respect to any Person, the
Managing Director, the President, the Vice President, the Assistant Vice
President, the Treasurer, the Assistant Treasurer or equivalent officers of such
Person and, with respect to the Company, shall include any officer or
representative holding any of the foregoing positions (or their equivalent)
whose name appears on a certificate of incumbency delivered concurrently with
the execution of this Agreement, as such certificate of incumbency may be
amended from time to time to identify names of the individuals then holding such
offices or the names of such representatives and the capacity in which they are
acting.
"Borrower" or "Company" shall mean Pegaso Comunicaciones y Sistemas,
S.A. de C.V., a sociedad anonima de capital variable under the laws of Mexico.
3
"Borrower Group" shall mean (i) the Company, (ii) Holdings, (iii) Pegaso
PCS, (iv) Personnel Co. (v) the respective Subsidiaries of each of the foregoing
in existence as of the Closing Date, and (vi) any Subsidiary of any of the
foregoing which is formed, established, purchased or acquired after the Closing
Date as described in Section 5.13. Any reference to a "member" or to a "member
of the Borrower Group" shall mean one or more of the Persons described in clause
(i) through (vi) of this definition.
"Business" shall mean the business of development, operation and use of
the Licenses (and, subject to Articles 4, 5 and 6, other new licenses and/or
concessions issued to any member of the Borrower Group) and pursuant thereto the
installation and operation of terrestrial-based wireless telecommunications
systems in Mexico and, to the extent integral to such wireless terrestrial-based
telecommunications systems, long-distance telecommunications systems in Mexico.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the City of New York, in the Federal District of Mexico or in the City of
London a legal holiday or a day on which banking institutions are authorized by
law or other governmental actions to close and (ii) with respect to any
determination of the Eurodollar Rate, any day which is a Business Day described
in clause (i) and which is also a day for trading by and between banks in U. S.
Dollar deposits in the interbank Eurodollar market.
"Business Plan" shall mean the Final Business Plan, as updated from time
to time as provided in Section 5.01(d).
"Capital Expenditures" shall mean, with respect to any Person for any
period, expenditures that are capitalized in accordance with U.S. GAAP and, for
purposes of this definition, expenditures made during such period for equipment
and services financed under sale/leaseback arrangements or under an operating
lease.
"Capital Lease" as applied to any Person, shall mean any lease of any
property (whether real personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of such Person.
"Capital Stock" of any Person shall mean any and all shares, interest,
rights to purchase, warrants, options, participations or other equivalents of or
interest in (however designated) the common or preferred equity or equity or
preference share capital of such Person, including, without limitation,
partnership interests.
"Capitalized Lease Obligations" shall mean all obligations under Capital
Leases of any Person in each case taken at the amount thereof accounted for as
liabilities in accordance with GAAP.
"Cash Flow Test" shall mean, for any date or any particular calculation
period, that (A) EBITDA for the two consecutive fiscal quarters ending on the
date of the last financial statements delivered in accordance with Section
5.01(a) multiplied by a factor of two (2), is at least equal to (B) the total
regularly scheduled principal and interest on Indebtedness outstanding on the
date of such calculation (other than Indebtedness described in clauses (g), (k)
and (l) of
4
Section 6.04) to become due during the twelve-month period commencing on the
date of such financial statements; provided, that for purposes of the
calculation in clause (B), the pro forma interest shall be based on the amount
of principal Indebtedness outstanding and the interest rates existing on the
date of determination and it shall be assumed that principal amounts will be
repaid as scheduled.
"Casualty Event" shall mean an event which causes all or a portion of
the System to be damaged, destroyed or rendered unfit for normal use for any
reason whatsoever.
"Change of Control" shall mean (i) the failure at any time prior to the
consummation of a Qualified Public Offering of (a) the Original Mexican
Shareholders to own at least 51 % of the voting Capital Stock of Holdings, or
(b) Leap to own, directly or indirectly through a wholly-owned Subsidiary, at
least 20% of the Capital Stock of Holdings, or (ii) at any time after the
consummation of a Qualified Public Offering, any transaction or series of
transactions whereby (A) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of voting Capital Stock of Holdings representing
35% or more of the combined voting power of all voting stock of Holdings, or (B)
during any period of 18 consecutive months, commencing before or after the date
of this Agreement, individuals who at the beginning of such 18 month period were
directors of Holdings, together with such directors who are approved by
directors who were directors at the beginning of such period, shall cease for
any reason to constitute a majority of board of directors of Holdings; or (iii)
any Person or two or more Persons acting in concert shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of the power to
exercise, directly or indirectly, a controlling influence over the management or
policies of Holdings, or (iv) the failure of Holdings to own all of the Capital
Stock of each of the Company, Pegaso, PCS and Personnel Co. (other than one
share of such Capital Stock which is owned, and shall continue to be owned, by
another member of the Borrower Group). Notwithstanding the foregoing, any such
transaction or series of transactions described in clause (ii) above shall not
constitute a Change of Control if the Original Mexican Shareholders or their
wholly-owned Subsidiaries and Leap continue to own, directly or indirectly, in
the aggregate a greater percentage of the voting Capital Stock of Holdings than
any other Person or two or more Persons acting in concert.
"Charter Documents" shall mean, with respect to any Person, the articles
of incorporation, by-laws, partnership agreements or such other documents or
instruments which are required to be registered or lodged in the place of
incorporation or organization of such Person and which establish the legal
existence of such Person. With respect to Holdings, the term "Charter Documents"
shall also include the Joint Venture Agreement.
"Closing Date" shall mean the later to occur of (i) the execution and
delivery of the Alcatel Credit Agreement, or (ii) the execution and delivery of
the Qualcomm Credit Agreement.
"COFETEL" shall mean Comision Federal de Telecomunicaciones de Mexico.
"Collateral" shall mean the security for the Senior Indebtedness,
including: (i) all property, assets (including cash, investments and accounts
receivable held from time to time by
5
the Company) and contract rights (including rights to intellectual property),
whether now owned or hereafter acquired, of the Company which are described
(either specifically or generally) in the Mortgage, (ii) all property, assets
and rights of any member of the Borrower Group which is made subject to a Lien
as required by Section 5.14, (iii) the rights of the Sponsors and Holdings and
the other members of the Borrower Group which are collaterally assigned pursuant
to the Assignment Agreements, (iv) the Capital Stock of the Company, Pegaso PCS
and Personnel Co., which will be pledged to the Secured Parties pursuant to the
PCS/Recursos Pledge Agreement and Sistemas Pledge Agreements or transferred to
the trustee under the Guaranty Trust Agreement, (v) the Capital Stock of any New
Subsidiary, which will be pledged to the Secured Parties pursuant to a pledge
agreement substantially similar to the above-referenced pledge agreements or
transferred to the trustee under the Guaranty Trust Agreement (vi) any and all
security provided by any member of the Borrower Group in connection with any
Additional Senior Indebtedness as provided in Section 2.04(c), and (vii) all
proceeds and revenues of the foregoing.
"Collateral Agent" shall mean Citibank Mexico, S.A., Grupo Financiero
Citibank, or any successor designated as collateral agent pursuant to Article 2
of the Collateral Agency Agreement.
"Collateral Agency Agreement" shall mean the Collateral Agency
Agreement, dated as of the date hereof, among the Collateral Agent, the
Intercreditor Agent, the Administrative Agents and the Company.
"Commitments" shall mean, collectively, (i) the commitment of the Senior
Lenders to make Loans under the Alcatel Credit Agreement, (ii) the commitment of
the Senior Lenders to make Loans under the Qualcomm Credit Agreement, (iii) the
commitment of Alcatel to make Loans under the Alcatel Commitment Letter and (iv)
the commitment of the Senior Lenders to make Loans under any credit or similar
agreement evidencing Additional Senior Indebtedness.
"Commitment Fees" shall mean (i) in the case of the Alcatel Credit
Agreement, the fees payable by the Company under Section 2.03 thereof, (ii) in
the case of the Qualcomm Credit Agreement, the fees payable by the Company under
Section 2.1 thereof, (iii) in the case of the Alcatel Commitment Letter, the
fees payable by the Company in consideration thereof, and (iv) in the case of
any Additional Senior Indebtedness, those fees specified therein which are
payable to the Senior Lenders thereunder in consideration for the Commitments
made by such Senior Lenders thereunder.
"Condemnation Event" shall mean any compulsory transfer or taking, or
transfer under threat of compulsory transfer or taking, of all or any part of
the System by any Governmental Authority.
"Consents" shall mean, collectively, each consent and agreement, as
referred to in the Post-Closing Agreement, from (i) each Vendor, (ii) Personnel
Co., with respect to the assignment of the Personnel Co. Services Agreement, and
Pegaso PCS, with respect to the assignment of the Pegaso PCS Services Agreement,
(iii) Leap Wireless Mexico, with respect to the assignment of the Operator
Agreement, and GTE, with respect to the assignment of the GTE Operator
Agreement, (iv) TelMex and TelNor, with respect to the assignment of their
respective
6
Interconnection Agreements, and (v) each additional consent and agreement
required to be delivered pursuant to Section 5.04(b)(ii).
"Consolidated Debt" shall mean, as of any date of determination, the
aggregate amount of all Indebtedness of each member of the Borrower Group on a
combined basis, as shown on the balance sheet, or as would be shown on the
balance sheet, as of the date of determination, determined in accordance with
GAAP, plus (without duplication) any Indebtedness for borrowed money of any
other Person which has been (directly or indirectly) guaranteed by a member of
the Borrower Group or any other Contingent Obligation of a member of the
Borrower Group.
"Consolidated Paid-In Equity" shall mean, as of any date of
determination, and without duplication, the sum of (a) the aggregate amount of
equity capital which has been contributed in cash, as of such date of
determination, to Holdings by the Existing Shareholders and the New Shareholders
less any Dividends paid to the shareholders of Holdings in accordance with
Section 6.03 prior to such date of calculation, and (b) the aggregate principal
amount of Subordinated Loans then outstanding. The term "Consolidated Paid-In
Equity" shall not include the Equity Commitments until such time as such Equity
Commitments have been honored and converted into cash by Holdings.
"Contingent Obligations" shall mean as to any Person any obligation of
such Person Guaranteeing or intending to Guarantee any Indebtedness ("primary
obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (d) otherwise
to assure, indemnify or hold harmless the owner of such primary obligation
against loss in respect thereof (other than indemnity obligations arising in the
ordinary course of business), provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined in good faith.
"Covered Pops" shall mean, as of any date of determination, Pops for
those geographical areas as to which (a) the Company has the right under valid,
enforceable and effective Licenses owned by the Company to provide PCS and WLL
services, and (b) the Company has, as of such date of determination, constructed
or intends to construct facilities to provide such services.
"Credit Agreements" shall mean, collectively, (i) the Alcatel Credit
Agreement, (ii) the Qualcomm Credit Agreement, and (iii) any and all credit or
similar agreements evidencing any Additional Senior Indebtedness.
7
"Credit Facilities" shall mean the credit facilities made available to
the Company under the Credit Agreements.
"Default" shall mean any event, act or condition which, with the giving
of notice, lapse of time, fulfillment of any condition or any combination
thereof, would become an Event of Default.
"Disbursement" shall mean any disbursement to or for the benefit of the
Company by any Senior Lender of the proceeds of Senior Indebtedness.
"Dividends" shall have the meaning provided in Section 6.03.
"Dollars" or "$" shall mean the lawful currency of the United States.
"EBITDA" shall mean, for any period of calculation, the total earnings
of the Borrower Group before interest, Taxes, depreciation and amortization
during such period of calculation, calculated in accordance with GAAP
eliminating (i) any net income or gain (or net loss), net of any tax effect,
during such period from any extraordinary items as defined according to GAAP,
(ii) any interest income, (iii) gains or losses on the sale of assets (other
than the sale of inventory in the ordinary course of business), (iv) any
extraordinary non-cash items deducted from or included in the calculation of
pre-tax net income (other than items which will require cash payments and for
which an accrual or reserve is, or is required by GAAP to be, made) and (v) the
EBITDA of any Subsidiaries or other assets disposed of or discontinued during
such period.
"EBITDA Test" shall mean, for any annual or quarterly period of
calculation ending on a specified date, the ratio (i) of the Consolidated Debt
of the Borrower Group outstanding on such date (other than Subordinated Loans)
less cash and Permitted Investments in excess of $5,000,000 held by the Borrower
Group on such date to (ii)(x) the EBITDA for the two consecutive fiscal quarters
last ended on or prior to such date for which financial statements have been
delivered in accordance with Section 5.01(a) multiplied by (y) 2.
"Eligible Swap Counterparty" shall mean a swap counterparty that (i) has
a long-term Dollar denominated debt rating of at least "A," as determined by
both Standard & Poors, a division of the XxXxxx-Xxxx Companies, Inc. and Xxxxx'x
Investors Service, Inc., (ii) shall, at the time of execution of the Swap
Agreement, already be a Senior Lender hereunder, (iii) shall be Banamex,
Bancomer, S.A., Citibank Mexico or Banco Santander, or (iv) shall otherwise be
acceptable to Required Voting Parties.
"Environmental Claims" shall mean, with respect to any Person, any
notice, claim, administrative, regulatory or judicial action, suit, judgment,
demand or other communication (whether written or oral) by any other Person
alleging or asserting such Person's liability for investigatory costs, cleanup
costs, governmental response costs, damages to natural resources or other
property of such Person, personal injuries, fines or penalties arising out of,
based on or resulting from (i) the presence, use, or release into the
environment of any Hazardous Material at any location, whether or not owned by
such Person or (ii) any fact, circumstance, condition or occurrence forming the
basis of any violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, (a) any and all claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages
8
pursuant to any applicable Environmental Law and (b) any and all claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any statute, law, rule, regulation,
ordinance, code or policy having the force of law, in each case, applicable to
any member of the Borrower Group or the System now or hereafter in effect and in
each case as amended, and any applicable judicial or administrative
interpretation thereof, including any judicial or administrative order, decree
or judgment, relating to any Environmental Matter.
"Environmental Matter" shall mean any:
(a) release emission, entry or introduction of any Hazardous Materials
into the air, including the ambient air;
(b) discharge, release or entry of any Hazardous Materials into water,
including into any river, watercourse, lake, or pond (whether natural or
artificial or above ground or which joins or flows into any such water outlet
above ground), or reservoir, or the surface of the river bed or of other land
supporting such waters, ground waters, sewer or the sea;
(c) deposit, disposal, keeping, treatment, importation, exportation,
production, transportation, handling, processing, carrying, manufacture,
collection, sorting or presence of any Hazardous Materials;
(d) nuisance, noise, defective premises, health and safety and work,
industrial illness, industrial injury due to environmental factors,
environmental health problems (including without limitation, asbestosis or other
illness or injury caused by exposure to asbestos) which is regulated by
Applicable Law;
(e) conservation, preservation or protection of the natural resources
environment which is regulated by Applicable Law; or
(f) other matter whatsoever directly affecting the environment or any
part of it which is regulated by Applicable Law.
"Equity Commitments" shall mean the commitments of the Original Mexican
Shareholders as set forth in Article III of the Joint Venture Agreement and in
resolutions adopted at various shareholder meetings pursuant to which such
Persons have become obligated to contribute specified amounts of equity capital
to Holdings on or prior to the dates specified therein in consideration for
Capital Stock to be issued by Holdings.
"Event of Default" shall have the meaning set forth in Article 7.
"Existing Equity" shall mean the equity capital contributed to Holdings
by the Existing Shareholders and the New Shareholders (in consideration for
Capital Stock of Holdings issued to such shareholders) prior to the Closing
Date, in the aggregate amount of $300,000,000.
9
"Existing Shareholders" shall have the meaning set forth in the Joint
Venture Agreement.
"Final Business Plan" shall mean the Business Plan approved by the Board
of Directors of Holdings and delivered to the Administrative Agents and the
Relevant Parties.
"Financing Agreements" shall mean, collectively, the following
agreements and instruments: (i) the Common Agreement, (ii) the Alcatel Credit
Agreement, (iii) the Qualcomm Credit Agreement, (vi) the Alcatel Commitment
Letter and any credit or similar agreements executed as contemplated therein,
(v) the Notes, (vi) any and all credit or similar agreements evidencing
Additional Senior Indebtedness, (vii) each of the Guaranty Agreements, (viii)
the Security Documents, (ix) the Intercreditor Agreement, and (x) the Collateral
Agency Agreement.
"Fiscal Year" shall mean the accounting year of the Company or the
Borrower Group, as the case may be, commencing each year on January 1 and ending
on December 31 or such other period agreed between the Company or the Borrower
Group, as the case may be, and the Intercreditor Agent.
"Frequency Band Concessions" shall mean the Concessions for the Use,
Development and Operation of Radio-electric Spectrum Frequency Bands to Provide
Fixed or Mobile Wireless Access Services issued by the Secretariat of
Communications of Transport in favor of, and held by, the Company by means of
its decision dated May 8, 1998 for the bands of frequencies of the radioelectric
spectrum in order to render wireless access services and more fully described in
the Joint Venture Agreement, including Exhibit A thereto.
"Further Provisions" shall have the meaning set forth in Section
2.04(b).
"GAAP" shall mean generally accepted accounting principles in Mexico as
in effect on the date of this Agreement, it being understood and agreed that
determinations in accordance with GAAP (i) for purposes of Articles 5 and 6 of
the Common Agreement, including defined terms as used therein, are subject (to
the extent provided therein) to Section 8.18 and shall include U.S. GAAP
reconciliations, and (ii) for the purposes of any other Section, to the extent
that GAAP is limited, qualified or modified in any such particular Section of
this Agreement, such determinations are subject to such limitations,
qualifications or modifications as are set forth in such Section (but only as
applied to such Section).
"Good Faith Contest" shall mean, with respect to the payment of Taxes or
any other claims or liabilities by any Person, the satisfaction of each of the
following conditions: (i) the validity or amount thereof is being diligently
contested in good faith by such Person by appropriate proceedings timely
instituted, (ii) during the period of such contest, the enforcement of any
contested item is effectively stayed, and (iii) such contest and any resultant
failure to pay or discharge the claimed or assessed amount is not reasonably
likely to have a Material Adverse Effect.
"Government of Mexico" shall mean the Government of Mexico, including
any instrumentality, subdivision, authority, agency, ministry or statutory or
legal entity or person (whether autonomous or not) thereof, including any
successors thereof, whether lawful or not.
10
"Governmental Authority" shall mean any national, state, county, city,
town, village, municipal or other local government department, commission,
board, bureau, agency, authority or instrumentality of the United States, Mexico
or any other national authority or any political subdivision of any thereof, and
any Person exercising executive, legislative, judicial, regulatory
administrative functions of or pertaining to any of the foregoing entities,
having jurisdiction over the Person or matters in question.
"GTE" shall mean GTE Data Services Mexico, S.A. de C.V., a sociedad
anonima de capital variable under the laws of Mexico.
"GTE Operator Agreement" shall mean the "GTE Operator Agreement," as
referred to in the Post-Closing Agreement, between Leap Wireless Mexico and GTE.
"Guarantors" shall mean (i) Pegaso PCS, (ii) Personnel Co. (iii)
Holdings, and (iv) any other Subsidiary of a member of the Borrower Group
executing a Guaranty Agreement as required by Section 5.13.
"Guaranty" by any Person shall mean any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing in any manner any
Indebtedness of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided that the term "Guaranty" shall not include (x) endorsements for
collection or deposit in the ordinary course of business, or (y) indemnity or
hold harmless provisions included in contracts entered into in the ordinary
course of business. The term "Guaranty" or "Guaranteed" used as a verb has a
correlative meaning.
"Guaranty Agreements" shall mean any agreement by which a Guarantor
Guarantees the obligations of the Company under any of the Credit Agreements,
including, without limitation the Pegaso Guaranty Agreement.
"Guaranty Trust Agreement" shall mean the Irrevocable Administration and
Guaranty Trust Agreement pursuant to which Holdings will (except to the extent
described in the last sentence of Section 5.23) transfer title to 100% of the
Capital Stock of the Company, Pegaso PCS, and Personnel Co. to the trustee
thereunder for the benefit of the Secured Parties represented by the Collateral
Agent.
"Hacienda" shall mean the Secretaria de Hacienda y Credito Publico
(Ministry of Finance and Public Credit) of Mexico.
"Hazardous Materials" shall mean (i) any chemicals, materials or
substances defined as or included in the definition "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar import, under any
11
applicable Environmental Law and (ii) any other chemical, material or substance,
in each case to the extent exposure to the same is prohibited, limited or
regulated by any Environmental Law by reason of its hazardous nature.
"High Yield Debt" shall have the meaning set forth in Section 6.04(h).
"Holdings" shall mean Pegaso Telecomunicaciones, S.A. de C.V., a
sociedad anonima de capital variable under the laws of Mexico.
"Holdings Shares" shall have the meaning set forth in Section 4.10.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money, (ii) all obligations of such Person for the deferred
purchase price of property or services, other than trade accounts payable
arising, and accrued expenses incurred, in the ordinary course of business so
long as such trade accounts payable are payable (and have been paid) within 90
days of the date the respective goods are delivered or the respective services
are rendered, (iii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iv) the currently available amount of
all letters of credit issued for the account of such Person and all outstanding
reimbursement obligations with respect to such letters of credit, (v) all
liabilities secured by any Lien on any property owned by such Person, (vi) any
Guaranty of Indebtedness by such Person, (vii) all obligations under trade or
bankers' acceptances, (viii) Capitalized Lease Obligations, (ix) without
duplication, any amounts due to trade creditors and accrued expenses, (x) all
net obligations under agreements providing for swaps, ceiling rates, ceiling and
floor rates, contingent participation or other hedging mechanisms with respect
to the payment of interest or the convertibility of currency, (xi) all
obligations under any conditional sale agreement or other title retention
agreement and (xii) all Contingent Obligations of such Person; provided that
Indebtedness shall not include trade credit and accrued expenses, in each case
arising in the ordinary course of business.
"Indemnified Parties" shall have the meaning set forth in Section
8.01(b).
"Independent Accountant" shall mean Price Waterhouse Coopers or any
replacement therefor of international recognized standing appointed by the
Borrower Group.
"Initial Disbursement" shall mean, with respect to any tranche of Senior
Indebtedness, the first Disbursement to occur on or after the Closing Date to or
for the benefit of the Company by one or more of the Senior Lenders of the
proceeds of such tranche of Senior Indebtedness under a Credit Agreement to
which it is a party.
"Initial Disbursement Date" shall mean the date on which the Initial
Disbursement is made.
"Insurance Consultant" shall mean AON Risk Services, or any replacement
therefor of international recognized standing appointed by the Intercreditor
Agent after consultation with the Company.
12
"Insurance Contracts" shall mean the insurance policies required to be
obtained by the Company or any other member of the Borrower Group pursuant to
any Financing Agreement.
"Interconnection Agreements" shall mean, collectively, (i) that certain
Interconnection Agreement dated as of November 26, 1998 between the Company and
TelMex, and (ii) that certain Interconnection Agreement dated as of November 26,
1998 between the Company and TelNor.
"Intercreditor Agent" shall mean Citibank, N.A., or any successor
intercreditor agent designated pursuant to the Intercreditor Agreement.
"Intercreditor Agreement" shall mean the Intercreditor Agreement, dated
as of the date hereof, among the Intercreditor Agent, the Collateral Agent and
the Administrative Agents.
"Interest Expense" shall mean, for any period, determined on a
consolidated basis for the Borrower Group, the sum (without duplication) of (a)
interest expense on Indebtedness, including (i) fees, (ii) payments under any
interest rate protection agreements or other hedging agreements, (iii) the
interest portion of any deferred payment obligations, (iv) all fees and charges
owed with respect to letters of credit or performance or other bonds, (v) all
accrued or capitalized interest, (vi) any amortization of debt discount and
(vii) all but the principal component of Capital Lease payments and (b)
dividends declared or paid pursuant to this Agreement.
"Investment Company Act of 1940" shall mean the U.S. Investment Company
Act of 1940, as amended and the rules and regulations promulgated thereunder.
"Joint Venture Agreement" shall mean the Joint Venture Agreement entered
into as of July 16, 1998 by and among the Existing Shareholders, Leap Mexico,
Holdings and the New Shareholders, in the form delivered to the Collateral Agent
prior to the Closing Date.
"Judgment Currency" shall have the meaning set forth in Section 8.11.
"Judgment Currency Conversion Date" shall have the meaning set forth in
Section 8.11.
"Leap" shall mean Leap Wireless International, Inc., a corporation under
the laws of Delaware.
"Leap Mexico" shall mean Leap PCS Mexico, Inc., a corporation under the
laws of California, formerly called Qualcomm PCS Mexico, Inc.
"Leap Wireless Mexico" shall mean Leap Wireless Mexico, a corporation
under the laws of Mexico.
"Leases" shall mean all leases of real property in which Pegaso PCS is
the lessee, including any and all leases entered into for the purpose of placing
components of the System.
"Leverage Ratio" shall mean, as of any date of determination, the ratio
of (i) Consolidated Debt as of such date, less cash and Permitted Investments in
excess of
13
$5,000,000 held by the Borrower Group on such date, to (ii) Consolidated Paid-In
Equity as of such date.
"Licenses" shall mean the Frequency Band Concessions and the
Telecommunication Networks Concession and any other licenses acquired by the
Company in connection with the Business.
"Lien" shall mean any security interest, mortgage, pledge, assignment by
way of security, charge, lease, easement, servitude, deposit arrangement,
encumbrance, lien (statutory or other), preference, priority or other security
agreement of any kind or nature whatsoever including, without limitation, (i)
any conditional sale or other title retention agreement, any financing or
similar statement or notice filed under any recording or notice statute, and any
lease having substantially the same effect as any of the foregoing, and (ii) any
designation (except as contemplated by this Agreement, or any Credit Agreement)
of loss payees or beneficiaries or any similar arrangement under any Insurance
Contract.
"Loans" shall mean, as the context shall indicate, either one or all of
(i) the Alcatel Loans, (ii) the Qualcomm Loans, or (iii) the Additional Senior
Indebtedness Loans.
"Loss Proceeds" any and all amounts received by any member of the
Borrower Group (i) under insurance policies maintained by or for the benefit of
such member, or (ii) from any Governmental Authority as a result of a
Condemnation Event.
"Material Adverse Effect" shall mean an event, circumstance, occurrence
or condition which has caused or could reasonably be expected to cause, as of
any date of determination, a material and adverse effect on (i) the business,
assets, liabilities, operations or financial condition of the Borrower Group
(taken as a whole), (ii) the ability of the Borrower Group (taken as a whole) to
perform its (or their) material obligations under the Financing Agreements
(including its (or their) ability to pay its (or their) Obligations under the
Financing Agreements as such obligations become due, (iii) the validity or
enforceability of any of the Financing Agreements (including the ability of any
Secured Party to enforce any of its remedies under any Financing Agreement), or
(iv) the validity, priority or enforceability of the Secured Parties in the
Collateral.
"Material Agreement" shall mean (i) any operator agreement or
replacement operator agreement, (ii) any equipment or services procurement
agreement (other than the Qualcomm Procurement Agreement or the Alcatel
Procurement Agreement) pursuant to which the aggregate payments are expected to
exceed $5,000,000, and (iii) any interconnection agreement, the absence of which
would be reasonably likely to reduce the Company's gross revenues by more than
ten percent (10%) of gross revenues projected over the twelve months following
the date upon which the agreement was entered.
"Mexico" shall mean the United Mexican States.
"Minimum Assets" shall mean those assets of the Borrower Group which (a)
constitute not less than 95% of the value of all assets of the Borrower Group
(valued on the same basis as such assets are carried on the books of each member
of the Borrower Group on a consolidated basis), and (b) are necessary to carry
on the Business of the Borrower Group in substantially the same manner as is
then being carried out by the Borrower Group, and (c) the legal and beneficial
14
ownership of which is required to be maintained in the name of the Company as
required by Section 4.10 and is required to be subject to the Mortgage as
provided in Section 4.10. For the avoidance of doubt, the term Minimum Assets
shall include all Licenses, all accounts receivable, and all real estate,
fixtures and personal and intellectual property (including customer lists,
billing and other records of the Borrower Group and computer software.
"Moody's" shall mean Xxxxx'x Investors Service, Inc. or any successor
thereto.
"Mortgage" shall mean the mortgage, dated as of October 30, 1998 (the
"Original Mortgage"), as amended by Amendment No. 1 dated as of December [___],
1998 ("Amendment No. 1 to the Mortgage"), established under the
Telecommunications Law, pursuant to which the Company has granted a Lien in
favor of the Collateral Agent over all of its properties and assets, including,
without limitation, (i) all components of the System, (ii) the Licenses, (iii)
all accounts receivable of the Company (including all amounts owed from time to
time by subscribers of the System), (iv) all cash and securities owned by the
Company, and (v) the Company's rights in, to and under the Vendor Agreements,
the Operator Agreement, the Pegaso PCS Services Agreement and any other contract
to which the Company is a party.
"New Shareholders" shall have the meaning set forth in the Joint Venture
Agreement.
"Non-Vendor Financing" shall mean the financing other than (i) the
financing provided under the Qualcomm Credit Agreement and the Alcatel Credit
Agreement or the Alcatel Commitment Letter, and (ii) other financing provided by
Persons to directly finance the purchase of equipment and services, which when
taken together with similar financing provided by such Person and its Affiliates
exceeds $5,000,000 in amount outstanding.
"Note" shall mean any promissory note issued by the Company pursuant to
a Credit Agreement.
"Obligation Currency" shall have the meaning ascribed thereto in Section
8.11.
"Obligations" shall mean all obligations of members of the Borrower
Group now existing or hereinafter arising, direct or indirect, absolute or
contingent, due or to become due, under any of the Financing Agreements,
including (and without duplication) (i) the principal of and interest on the
Loans and other Senior Indebtedness and all other obligations, advances, debts
and liabilities of members of the Borrower Group, including indemnities,
Commitment Fees and other fees and interest incurred under, arising out of or in
connection with the Credit Agreements or any other Financing Agreement (whether
or not evidenced by any note, bond or other instrument and whether or not for
the payment of money), (ii) any and all sums advanced by the Collateral Agent,
in order to preserve the Collateral or preserve its security interest in the
Collateral and (iii) in the event of any proceeding for the collection or
enforcement of the Obligations, after an Event of Default shall have occurred
and be continuing and unwaived, the expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the Collateral,
or of any exercise by the Collateral Agent of its rights under the Security
Documents, together with reasonable attorneys' fees and court costs.
15
"Operator Agreement" shall mean the "Operator Agreement," as referred to
in the Post-Closing Agreement, between the Company and Leap Wireless Mexico,
which agreement shall provide for operation of the System.
"Original Business Plan" shall mean the business plan, upon which the
management, officers and directors of the Borrower Group are relying to operate
the Business as of the Closing Date, and which shall be delivered to the
Administrative Agents and the Relevant Parties prior to the Closing Date.
"Original Mexican Shareholders" shall mean Pegaso Comunicaciones y
Servicios, S.A. de C.V., Corporativo del Xxxxx de Mexico, S. A. de C. V. and
Xxxxxxxxx Xxxxxxx Xxxxxxxxx.
"Overnight Eurodollar Rate" shall mean the Eurodollar Rate determined
daily for an Interest Period of one day (or if longer the shortest period for
which an interest rate is quoted).
"Payment Date" shall mean the date on which any interest or principal
payments are to be made on any Senior Indebtedness pursuant to any Credit
Agreement.
"PCS/Recursos Pledge Agreement" shall have the meaning set forth in
Section 3.01(h).
"Pegaso Guaranty Agreement" shall mean the Guaranty Agreement dated as
of December 15, 1998 as executed by each of the Guarantors in favor of the
Collateral Agent for the benefit and on behalf of the Senior Lenders.
"Pegaso PCS" shall mean Pegaso PCS, S.A. de C.V., a sociedad anonima de
capital variable under the laws of Mexico.
"Pegaso PCS Services Agreement" shall mean the Services Agreement, dated
as of December 15, 1998 between Pegaso PCS and the Company.
"Permit" shall have the meaning set forth in Section 4.05.
"Permitted Indebtedness" shall have the meaning set forth in Section
6.04.
"Permitted Investments" of any Person shall mean (A) (i) obligations
issued or Guaranteed as to principal and interest by the United States or any
agency thereof whose obligations are backed by the full faith and credit of the
United States, as applicable, and in either case, which mature no later than one
year after the date of acquisition, (ii) certificates of deposit or other
interest-bearing obligations, maturing no later than six months after the date
of acquisition, of any Acceptable Financial Institution, (iii) commercial paper
and other corporate debt securities rated, on the date of purchase, "A-1" or
"P-1" (as applicable) by S&P or Moody's, respectively, or higher for securities
with original maturities of less than one year and "A" or "A2" by S&P and
Moody's, respectively, or higher, for securities with original maturities of one
year or greater (or the equivalent rating) and maturing no later than one year
after the date of acquisition, (iv) repurchase agreements with respect to any of
the foregoing obligations or securities, maturing no later than one year after
the date of acquisition, with any bank of the type referred to in clause (ii)
above, (v) participations in 28-day auction-rate tax-exempt funds rated, on the
date of purchase, "AA" or "Aa2" by S&P or Moody's (as applicable) or higher,
(vi) any
16
mutual funds comprising investments referred to in clauses (i) through (v)
above, and (vii) any other investments approved by the Collateral Agent;
provided, however, in order for any investment described above, which has been
rated both by S&P and Moody's, to qualify as a Permitted Investment, such
investment must have received at least the minimum rating specified above from
each such rating institution, and (B) investments in any of the following
denominated in Pesos: (i) obligations with a maturity of six months or less
which are direct obligations of Mexico or of entities representing the full
faith and credit of Mexico, or obligations which are unconditionally guaranteed
by Mexico; (ii) obligations with a maturity of six months or less of Mexican
commercial banks of recognized stature, supervised by the Mexican National
Banking and Securities Commission, with a capital and surplus of at least
$250,000,000; provided, that the aggregate investments of the Borrower Group in
Mexican commercial banks other than Banamex or Bancomer, S.A., Citibank Mexico
or Banco Santander will not exceed $5,000,000 at any time; (iii) commercial
paper of Mexican corporations with a maturity of six months or less and rated at
least "A3" by Calificadora de Valores S.A. de C.V.; provided, that the aggregate
amount invested under this clause (iii) shall not exceed $2,500,000 at any time,
and (iv) repurchase agreements with maturities of not more than 90 days related
to any of the obligations described in clause (i), (ii) or (iii) above, and that
are collateralized by such obligations with any Mexican commercial bank which
meets the criteria outlined in clause (ii) above; provided, that the aggregate
amount invested under this clause (iv) shall not exceed $2,500,000 at any time;
provided further that the aggregate amount invested in all investments in this
clause (B) shall not exceed the amount equal to the Company's average monthly
operating expenses for the preceding six months.
"Permitted Lien" shall have the meaning set forth in Section 6.01.
"Person" shall mean any individual, corporation, partnership (including,
without limitation, association), limited liability company, joint stock
company, trust, unincorporated organization or government or political
subdivision thereof.
"Pesos" or "Ps." shall mean the lawful currency of Mexico.
"Peso Equivalent" shall mean, with respect to any monetary amount in
Pesos, at any time for the determination thereof, the amount of Dollars obtained
or obtainable by converting the amount of Pesos involved in such computation
into Dollars at the Applicable Currency Exchange Rate against delivery of Pesos
at approximately 11:00 A.M. (Mexico City time) on the date of determination
thereof.
"Personnel Co." shall mean Pegaso Recursos Humanos, S.A. de C.V., a
sociedad anonima de capital variable under the laws of Mexico.
"Personnel Co. Services Agreement" shall mean the Services Agreement,
dated as of December 15, 1998, between Pegaso PCS and Personnel Co., pursuant to
which Personnel Co. will provide certain services to Pegaso PCS.
"Pops" shall mean population, as based on specific population estimates
of geographic areas as determined in accordance with those population estimates
provided by COFETEL in connection with the bidding for and award of the
Licenses.
17
"Post-Closing Agreement" shall have the meaning set forth in Section
3.01(y).
"Pro Rata Payment" shall mean a payment to a Senior Lender on any
Payment Date in which (a) interest paid to such Senior Lender on such Payment
Date bears the same proportion to the total interest payments made to all Senior
Lenders on such Payment Date as (i) the total Obligations for interest due to
such Senior Lender on such Payment Date bears to (ii) the total Obligations for
interest due to all Senior Lenders on such Payment Date, (b) principal paid or
prepaid to such Senior Lender on such Payment Date bears the same proportion to
the total principal payments or prepayments made to all Senior Lenders on such
Payment Date as (i) the total Obligations for principal due to such Senior
Lender on such Payment Date bears to (ii) the total Obligations for principal
due to all Senior Lenders on such Payment Date and (c) fees, commissions,
indemnities and all amounts other than interest and principal paid to such
Senior Lender on such Payment Date bears the same proportion to the total fees,
commissions, indemnities and such other amounts paid to all Senior Lenders on
such Payment Date as (i) the total Obligations for fees, commissions,
indemnities and such other amounts due to such Senior Lender on such Payment
Date bears to (ii) the total Obligations for fees, commission, indemnities and
such other amounts due to all Senior Lenders on such Payment Date; provided,
that, unless otherwise provided in this Agreement, (x) all Commitment Fees shall
be paid in full when due; no such fees shall be paid on a Pro Rata Payment basis
or included in any Pro Rata Payment calculation, (y) any prepayment premiums or
break-funding amounts shall be paid in full at the time of prepayment; no such
amounts shall be paid on a Pro Rata Payment basis or included in any Pro Rata
Payment calculation, and (z) any prepayment of a Loan the proceeds of which were
used for the payment of VAT shall not be paid on a Pro Rata Payment basis and
any such Loans shall not be included in any Pro Rata Payment calculation.
"Qualcomm" shall mean QUALCOMM, Incorporated, a corporation under the
laws of Delaware.
"Qualcomm Administrative Agent" shall mean ABN AMRO Bank N.V., in its
capacity as Administrative Agent under the Qualcomm Credit Agreement.
"Qualcomm Costs" shall mean the cost of all equipment and services
delivered to the Company under the Qualcomm Procurement Agreements, plus brokers
fees, export credit insurance premiums, transportation costs and import duties
payable in connection therewith but in no event including any Subscriber Units
(as defined in the Qualcomm Equipment Agreement).
"Qualcomm Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of December 15, 1998, between the Company, the Qualcomm
Lenders referred to therein and the Qualcomm Administrative Agent.
"Qualcomm Lenders" shall mean the financial institutions and other
entities making Loans and Commitments under the Qualcomm Credit Agreement;
provided, that such term shall refer to such Persons only in their capacities as
lenders under the Qualcomm Credit Agreement and not in their capacities as
equipment suppliers or otherwise.
"Qualcomm Loans" shall mean all of the loans made under the Qualcomm
Credit Agreement
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"Qualcomm Procurement Agreements" shall mean collectively, (i) the
Equipment Purchase Agreement dated as of June 10, 1998 between the Company (by
assignment or otherwise) and Qualcomm, including the Software Maintenance
Agreement dated as of June 10, 1998 between the Company and Qualcomm, which
agreement was attached as Exhibit D to the Equipment Purchase Agreement and
separately executed, and (ii) the Services Agreement dated as of June 10, 1998
between Qualcomm Wireless Services (Mexico) S.A. de C.V. (by assignment or
otherwise) and the Company (by assignment or otherwise).
"Qualified Public Offering" shall mean a public offering of common stock
of Holdings, (i) in which the offering is made by Holdings and the proceeds are
to used by Holdings in its Business, (ii) the amount received by Holdings (net
of commissions, discounts and expenses) is not less than $75,000,000, and (iii)
such offering results in the common stock (or depository receipts with respect
thereto) of Holdings being listed on a national securities market in the United
States or in the European Economic Union.
"Rating Agencies" shall mean, collectively, S&P, Moody's and any other
internationally recognized statistical ratings organization approved by the
Collateral Agent.
"Relevant Lender" shall have the meaning given to that term in Section
4.22.
"Relevant Parties" shall mean (i) so long as the Alcatel Guaranty shall
remain in effect, Alcatel, (ii) with respect to loans made in accordance with
the Alcatel Commitment Letter that are subject to credit support from a third
party, such third party, and (iii) if and to the extent that Qualcomm (or any
Subsidiary of Qualcomm) shall guarantee the obligations of the Company under the
Qualcomm Credit Agreement, and for so long as such guaranty shall remain in
effect, Qualcomm or such Subsidiary of Qualcomm.
"Required Pops" shall mean Covered Pops (a) covering the entire
population of Regions 9, 4 and 6 (as such regions are defined in Exhibit A to
the Joint Venture Agreement), and (b) covering at least 40 million Pops.
"Required Voting Parties" shall have the meaning given to that term in
the Intercreditor Agreement.
"Responsible Officer" shall mean, with respect to any member of the
Borrower Group, the President, Chief Executive Officer, Chief Financial Officer,
Chief Operating Officer or General Counsel of such member, or any Person having
a similar function.
"S&P" shall mean Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx, Inc., or any successor thereto.
"Secured Parties" shall mean, collectively, (i) the Senior Lenders and
(ii) the Agents.
"Security Documents" shall mean, collectively, the Mortgage, the
PCS/Recursos Pledge Agreement, the Sistemas Pledge Agreement, the Guaranty Trust
Agreement, the Sponsors Negative Pledge Agreement, the Assignment Agreements,
the Guaranty Agreements, the Consents, any documents or instruments executed in
accordance with Section 2.04(c), Section 5.13(A), Section 5.13(B), Section
5.13(D) and Section 5.14(a) and (b), and any filings
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registrations, recordings or similar instruments or documents necessary or
required by the Collateral Agent or any other Secured Party to record, perfect
or otherwise evidence a security interest in the Collateral.
"Senior Indebtedness" shall mean, collectively, the Obligations under
the Alcatel Loans, the Obligations under the Qualcomm Loans and the Obligations
under any Additional Senior Indebtedness.
"Senior Lenders" shall mean, collectively, the Alcatel Lenders, the
Qualcomm Lenders and the lenders providing funds under any Additional Senior
Indebtedness; provided, however, that with respect to, and to the extent of, any
Obligations paid by Alcatel under the Alcatel Guaranty, Alcatel shall be deemed
the Senior Lender as described in the Alcatel Guaranty.
"Services Agreements" shall mean, collectively, the Personnel Co.
Services Agreement and Pegaso PCS Services Agreement.
"Sistemas Pledge Agreement" shall have the meaning set forth in Section
3.01(h).
"Site Lease" shall mean a Site Lease Agreement, substantially in the
form of Exhibit A to the Common Agreement; provided, however, that with respect
to any Site Lease Agreement which has not yet been forwarded to a potential
lessor on or before the Amendment Effective Date, such Site Lease Agreement
shall reflect appropriate changes to reflect the ownership of the Company in
assets located at the leased sites.
"Sponsors" shall mean collectively all of the shareholders of Holdings,
which as of the date hereof are Leap Mexico, the Original Mexican Shareholders
and the New Shareholders.
"Sponsors Negative Pledge Agreement" shall mean the Negative Pledge
Agreement, dated as of the date hereof, pursuant to which each of the Sponsors
has agreed not to xxxxx x Xxxx to any third party on the Capital Stock of
Holdings held by such Sponsor.
"Subordinated Loans" shall mean unsecured loans or other advances made
to Holdings by shareholders of Holdings or any Affiliate of any such
shareholder, or which are made by third parties and are guaranteed directly or
indirectly by such shareholder or Affiliate, which (i) are subordinated in right
of payment to all other Indebtedness of the Borrower Group, (ii) do not require
that any payment of principal or interest be made (whether at scheduled
maturity, by acceleration or otherwise) until the date which is one year
following the latest final maturity date for any Senior Indebtedness then
outstanding, (iii) are not guaranteed by any other member of the Borrower Group
and (iv) are the subject of an instrument executed by such shareholder or
Affiliate or third party and deposited with the Intercreditor Agent pursuant to
which such Person acknowledges that it shall receive no payment or amount or
other consideration (other than as permitted by Section 6.12) in respect of such
Subordinated Loan until all Senior Indebtedness has been paid in full.
"Subsidiary" shall mean, for any Person, any other Person (whether now
existing or hereafter organized) for which at least a majority of the securities
or other ownership interests having ordinary voting power for the election of
directors or other managers are at the time
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owned or controlled by such first Person or one or more Subsidiaries of such
first Person or any combination thereof.
"System" shall mean the wireless broadband PCS system to be constructed
and rolled out by the Borrower Group pursuant to the Business Plan.
"System Agreements" shall mean, collectively, the Vendor Agreements, the
Joint Venture Agreement, the Operator Agreement, the GTE Operator Agreement, or,
subject to Section 5.17, any replacement operator agreement, the Services
Agreements, the Site Leases, the Interconnection Agreements and the Licenses.
"System Costs" shall mean all costs incurred by the Company or other
members of the Borrower Group in connection with the care, custody, control,
construction, development and financing of the System, in all cases as and to
the extent set forth in the Business Plan, including (without duplication or
limitation):
(i) amounts payable under the Vendor Agreements (other than indemnities,
if any);
(ii) interest, fees, expenses and withholding taxes payable under the
Credit Facilities, in each case prior to the date on which the System is
completed in accordance with the Business Plan;
(iii) costs and expenses of legal, engineering, accounting, construction
management and other advisors or consultants incurred in connection with the
System and the Business prior to the date on which the System is completed in
accordance with the Business Plan;
(iv) fees, commissions and expenses payable to the Secured Parties at
the Initial Disbursement Date for each Facility;
(v) construction insurance premiums for coverage obtained prior to the
date on which the System is completed in accordance with the Business Plan;
(vii) the Company's labor costs; and
(viii) value-added taxes and import duties payable by the Company in
Mexico with respect to equipment and material imported by or on behalf of the
Company;
"Taxes" shall mean all taxes of every kind (including without
limitation, gross and net income, gross and net receipts, capital gains, excess
profits and minimum taxes, taxes on tax preferences, capital, net worth,
franchise, sales, use value-added, stamp, documentary, excise, property and
other similar taxes), charges and withholdings, levies, imposts, duties, fees
and deductions imposed by any government or political subdivision thereof,
quasi-governmental authority or taxing jurisdiction or authority, together with
all interest, additions to tax, penalties and similar add-ons payable with
respect thereto.
"Tax Return" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes or any amendment thereto, and
including any schedule or attachment thereto.
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"Telecommunication Law" shall mean the Mexican General Means of
Communications Law.
"Telecommunication Networks Concession" shall mean the license granted
on June 23, 1998 by the Secretariat of Communications of Transport in favor of,
and held by, the Company to install, operate and exploit a public
telecommunications network.
"TelMex" shall mean Telefonos de Mexico, S.A. de C.V.
"TelNor" shall mean Telefonos del Noroeste, S.A. de C.V.
"Transaction Documents" shall mean, collectively, the System Agreements
and the Financing Agreements.
"Transfer" shall mean any sale, assignment or other transfer, regardless
of whether carried out directly or indirectly.
"Trigger Date" shall mean the date on which the Company delivers to the
Administrative Agents and the Relevant Parties financial statements for the
Borrower Group for the fiscal quarter ended December 31, 2003 in accordance with
Section 5.01(a).
"United States" or "U.S." shall mean the United States of America.
"U.S. GAAP" means generally accepted accounting principles in the United
States.
"VAT" shall mean Mexican impuesto al valor agregado (value-added taxes).
"Vendor" shall mean each Person (other than the Company) which is a
party to a Vendor Agreement.
"Vendor Agreements" shall mean collectively (i) the Alcatel Procurement
Agreement; and (ii) the Qualcomm Procurement Agreements.
"Voting Party" shall have the meaning set forth in the Intercreditor
Agreement.
"Wholly-owned" when used in respect of any Subsidiary, shall mean that
the parent company of such Subsidiary owns all of the Capital Stock of such
Subsidiary, other than any minimal shares which are required by Mexican (or
other) Applicable Law to be owned by another Person.
"Wireless Services" shall mean PCS (Personal Communications Services)
and/or WLL (wireless local loop) services.
"Written" or "in writing" shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.
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