EX-10.45 4 a76829ex10-45.txt EXHIBIT 10.45 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 ---- 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

i 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 ii 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 iii 8.18 Calculations; Computations.............................................. 63 8.19 No Third-Party Beneficiaries............................................ 63 8.20 Amendments.............................................................. 63 8.21 Confidentiality......................................................... 64 iv 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 2 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 3 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 4 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. 5 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 6 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 hedges 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. 11 (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. 18 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)