EX-10.46 5 a76829ex10-46.txt EXHIBIT 10.46 EXHIBIT 10.46 PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V. ----------------------------------- CREDIT AGREEMENT DATED AS OF SEPTEMBER 25, 1998 ----------------------------------- QUALCOMM INCORPORATED AS LENDER AND ADMINISTRATIVE AGENT TABLE OF CONTENTS

PAGE SECTION 1. AMOUNT AND TERMS OF CREDIT............................................... 1 1.1 Commitment............................................................... 1 1.2 Types of Long-Term Loans................................................. 3 1.3 Conversion and Continuation Elections.................................... 3 1.4 Duration of Interest Periods............................................. 3 1.5 Existing Loans and Notice and Manner of Making Additional Loans or Converting/Continuing Long-Term Loans.................................... 4 (a) Existing Loans.................................................... 4 (b) Notice and Manner of Making Additional Loans...................... 4 (c) Conversions/Continuations of Loans................................ 5 1.6 Evidence Of Debt......................................................... 6 1.7 Pro Rata Borrowings...................................................... 7 1.8 Interest................................................................. 7 1.9 Increased Costs, Illegality, Etc......................................... 8 1.10 Compensation............................................................. 10 1.11 Change Of Lending Office................................................. 10 1.12 EXIM Financing, Etc...................................................... 10 1.13 Common Terms Agreement; Conformance to Pari Passu Debt................... 11 1.14 No Net Payments.......................................................... 12 1.15 Replacement of Lenders................................................... 13 SECTION 2. FEES; COMMITMENTS........................................................ 13 2.1 Fees..................................................................... 13 2.2 Voluntary Reduction Of Commitments....................................... 14 2.3 Mandatory Adjustments Of Commitments, Etc................................ 14 SECTION 3. PAYMENTS................................................................. 14 3.1 Voluntary Prepayments.................................................... 14 3.2 Mandatory Prepayments and Repayments..................................... 15 3.3 Method And Place Of Payment.............................................. 16 3.4 Net Payments............................................................. 16

i. TABLE OF CONTENTS (CONTINUED)

PAGE SECTION 4. CONDITIONS PRECEDENT TO ADDITIONAL LOANS................................. 17 4.1 Conditions Precedent To Additional Loans on Additional Loans Closing Date............................................................. 17 (a) Effectiveness; Notes.............................................. 17 (b) Opinion Of Counsel................................................ 17 (c) Corporate Proceedings............................................. 18 (d) Guaranty.......................................................... 18 (e) Security Documents................................................ 18 (f) Consent Letter.................................................... 19 (g) QUALCOMM Procurement Agreements and Other Agreements.............. 19 (h) Officer's Certificate............................................. 19 (i) Adverse Change.................................................... 19 (j) Consents, Approvals............................................... 19 (k) Litigation........................................................ 19 (l) Incumbency Certificates........................................... 19 (m) Evidence Of Insurance............................................. 20 (n) Fee Letter........................................................ 20 (o) Capital Contributions............................................. 20 (p) License Fees...................................................... 20 (q) All Integral Assets In Borrower; Holdings Undertaking............. 20 (r) Spanish Translations.............................................. 20 (s) Government Authorizations......................................... 20 (t) Mortgage.......................................................... 20 (u) Frequency Band License............................................ 21 (v) Additional Matters, Documents Or Information...................... 21 4.2 Conditions Precedent To All Additional Loans............................. 21 (a) Borrowing Notice.................................................. 21 (b) No Default; Representations And Warranties........................ 21

ii. TABLE OF CONTENTS (CONTINUED)

PAGE SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS............................... 21 5.1 Corporate Status......................................................... 22 5.2 Corporate Power And Authority............................................ 22 5.3 No Violation............................................................. 22 5.4 Enforceability........................................................... 22 5.5 Litigation............................................................... 22 5.6 Use Of Proceeds.......................................................... 23 5.7 Governmental Approvals................................................... 23 5.8 Financial Condition; Financial Statements................................ 23 5.9 Security Interests....................................................... 23 5.10 Subsidiaries............................................................. 24 5.11 Intellectual Property.................................................... 24 5.12 Compliance With Law; Licenses............................................ 24 5.13 Environmental Matters.................................................... 24 5.14 Year 2000................................................................ 24 5.15 No Subordination......................................................... 24 5.16 Taxes.................................................................... 25 5.17 Ownership And Liens...................................................... 25 5.18 Indebtedness............................................................. 25 5.19 Accuracy Of Information Furnished; Complete Disclosure................... 25 5.20 Other Regulatory Compliance.............................................. 26 5.21 Employee Benefit Plans; Employment Matters............................... 26 5.22 Sovereign Immunity....................................................... 27 SECTION 6. AFFIRMATIVE COVENANTS.................................................... 27 6.1 Information Covenants.................................................... 27 (a) Annual Financial Statements....................................... 27 (b) Quarterly Financial Statements.................................... 27 (c) Business Plan..................................................... 28 (d) Officer's Certificates............................................ 28 (e) Notice Of Default, Litigation Or Environmental Claim.............. 28

iii. TABLE OF CONTENTS (CONTINUED)

PAGE (f) Year 2000 Compliance.............................................. 28 (g) Other Information................................................. 28 6.2 Books, Records And Inspections........................................... 29 6.3 Insurance................................................................ 29 6.4 Payment Of Taxes......................................................... 29 6.5 Corporate Franchises..................................................... 29 6.6 Compliance With Statutes, Etc............................................ 29 6.7 Good Repair.............................................................. 30 6.8 Alcatel Procurement Agreement and Alcatel Credit Agreement............... 30 6.9 Shareholder Pledge of Holdings Stock..................................... 30 6.10 Intragroup Service Agreements............................................ 30 6.11 Business Plan............................................................ 30 6.12 Additional Security; Further Assurances.................................. 30 6.13 Consents, Approvals...................................................... 31 6.14 Maintenance Of Licenses And Compliance With Regulations And Related Agreements............................................................... 32 6.15 Site Acquisition......................................................... 32 6.16 Completion of Conditions Precedent....................................... 33 6.17 Addition of Other Secured Creditors...................................... 33 SECTION 7. NEGATIVE COVENANTS....................................................... 33 7.1 Changes In Business...................................................... 33 7.2 Consolidation, Merger, Sale Or Purchase Of Assets, Etc................... 33 7.3 Liens.................................................................... 34 7.4 Indebtedness............................................................. 36 7.5 Advances, Investments And Loans.......................................... 37 7.6 Limitation On Creation Of Subsidiaries................................... 37 7.7 Prepayments; Modifications............................................... 37 7.8 Dividends, Etc........................................................... 38 7.9 Transactions With Affiliates............................................. 39 7.10 Leverage Ratio........................................................... 39

iv. TABLE OF CONTENTS (CONTINUED)

PAGE 7.11 Minimum Asset Ownership Concentration.................................... 39 7.12 Limitation On Issuance Of Stock.......................................... 39 7.13 Compliance With Certain Regulations...................................... 39 SECTION 8. EVENTS OF DEFAULT........................................................ 39 8.1 Payments................................................................. 40 8.2 Representations, Etc..................................................... 40 8.3 Covenants................................................................ 40 8.4 Default Under Other Agreements........................................... 40 8.5 Bankruptcy............................................................... 40 8.6 Security Documents....................................................... 41 8.7 Guaranty................................................................. 41 8.8 Judgments................................................................ 41 8.9 Lost Licenses............................................................ 41 8.10 Change Of Control........................................................ 41 8.11 Failure to Complete Conditions........................................... 41 8.12 Objection to Pledge...................................................... 41 8.13 Mortgage................................................................. 42 SECTION 9. DEFINITIONS.............................................................. 42 9.2 Other Interpretive Provisions............................................ 58 SECTION 10. ADMINISTRATIVE AGENT.................................................... 59 10.1 Appointment of QUALCOMM as Administrative Agent.......................... 59 10.2 Delegation of Duties by Administrative Agent............................. 59 10.3 Liability of Administrative Agent........................................ 59 10.4 Reliance by Administrative Agent......................................... 60 10.5 Notice of Default........................................................ 60 10.6 Non-Reliance by Lenders.................................................. 61 10.7 Indemnification.......................................................... 61 10.8 Successor Administrative Agent........................................... 62

v. TABLE OF CONTENTS (CONTINUED)

PAGE SECTION 11. MISCELLANEOUS........................................................... 63 11.1 Payment Of Expenses, Indemnification, Etc............................... 63 11.2 Right Of Setoff......................................................... 63 11.3 Notices................................................................. 63 11.4 Benefit Of Agreement.................................................... 64 11.5 No Waiver; Remedies Cumulative.......................................... 65 11.6 Payments Pro Rata....................................................... 66 11.7 Calculations; Computations.............................................. 66 11.8 Governing Law; Submission To Jurisdiction; Venue; Waiver Of Jury Trial................................................................... 66 11.9 Counterparts............................................................ 67 11.10 Effectiveness........................................................... 68 11.11 Headings Descriptive.................................................... 68 11.12 Amendment Or Waiver..................................................... 68 11.13 Survival................................................................ 68 11.14 Domicile Of Loans....................................................... 68 11.15 Confidentiality......................................................... 69 11.16 Lender Register......................................................... 69 11.17 Judgment Currency....................................................... 69 11.18 Entire Agreement; Construction.......................................... 70

vi. CREDIT AGREEMENT CREDIT AGREEMENT, dated as of September 25, 1998, among PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a corporation organized under the laws of Mexico (the "Borrower"), QUALCOMM INCORPORATED, a corporation organized under the laws of Delaware, ("QUALCOMM"), the lenders from time to time party hereto (each, a "Lender" and, collectively, the "Lenders"), and QUALCOMM as agent for the Lenders ("Administrative Agent"). Unless otherwise defined herein, all capitalized terms used herein and defined in SECTION 9 are used herein as so defined. WITNESSETH WHEREAS, Borrower Group intends to construct and operate a nationwide wireless broadband PCS system (the "System") in Mexico and QUALCOMM has entered into the Equipment Agreement and QUALCOMM Wireless Services (Mexico), S.A. de C.V., a wholly-owned subsidiary of QUALCOMM, (QUALCOMM and QUALCOMM Wireless Services, (Mexico), S.A. de C.V. each being a "Vendor" and collectively "Vendors") has entered into the Services Agreement pursuant to which Vendors have agreed to supply to Borrower certain of the equipment and services needed to complete and operate such system; WHEREAS, QUALCOMM has agreed to make available to Borrower credit facilities, the proceeds of which shall be used to finance certain of such equipment and services; WHEREAS, Borrower and QUALCOMM wish to enter into this Agreement to establish the credit facilities described above; NOW, THEREFORE, IT IS AGREED: SECTION 1. AMOUNT AND TERMS OF CREDIT. 1.1 COMMITMENT. Subject to and upon the terms and conditions, and subject to the limitations, herein set forth, each Lender severally agrees to make Loans to Borrower, which Loans shall be drawn, to the extent such Lender has a commitment under such Facility, under Facility-1, Facility-2 and the VAT Facility, as set forth below: (a) Loans under Facility-1 (each, together with Facility-1 Loans deemed made pursuant to SECTION 1.5(b), a "Facility-1 Loan" and, collectively, the "Facility-1 Loans") shall (i) be made from time to time on a Business Day during the Facility-1 Availability Period, (ii) constitute Tranche A Loans if such Loans are EXIM Qualified and are made prior to the Facility-1 Refinancing Date, (iii) constitute Tranche C Loans if such Loan are not EXIM Qualified and do not exceed $55,000,000 in aggregate original principal amount, (iv) constitute Tranche B Loans if such Loans are not Loans or Tranche C Loans, (v) not exceed in aggregate principal amount for any Lender with respect to any incurrence thereof the Facility-1 Commitment of such Lender as in effect on the date of such incurrence and (vi) to the extent made in any calendar year, not exceed in the aggregate the sum of the Base Financing Percentage plus the Contingent Financing Percentage, if any, for such calendar year of QUALCOMM Costs required to be paid in such calendar year; provided that, with respect to all of the foregoing, no Loans that are EXIM 1. Qualified will be made under Facility-1 after the Facility-1 EXIM Loans Closing Date. Once repaid, Facility-1 Loans may not be reborrowed. (b) Loans under Facility-2 (each a "Facility-2 Loan" and, collectively, the "Facility-2 Loans") shall (i) be made from time to time on a Business Day during the Facility-2 Availability Period, (ii) constitute (x) Tranche A Loans if such Loans are EXIM Qualified and are made prior to the Facility-2 Refinancing Date or (y) Tranche B if such Loans are not EXIM Qualified or are made on and after the Facility-2 Refinancing Date, (iii) not exceed in aggregate principal amount with respect to any incurrence thereof the Facility-2 Commitment of such Lender as in effect on the date of such incurrence and (iv) to the extent made in any calendar year, not exceed in the aggregate the sum of the Base Financing Percentage plus the Contingent Financing Percentage, if any, for such calendar year of QUALCOMM Costs required to be paid in such calendar year; provided that, with respect to all of the foregoing, no Loans that are EXIM Qualified will be made under Facility-2 after the Facility-2 EXIM Loans Closing Date. Once repaid, Facility-2 Loans may not be reborrowed. (c) Loans under the VAT Facility (each, a "VAT Loan" and, collectively, the "VAT Loans") (i) shall, except for the Existing VAT Loans, be made at any time and from time to time on a Business Day during the VAT Facility Availability Period, (ii) may be repaid and reborrowed in accordance with the provisions hereof and (iii) shall not exceed (inclusive of the Existing VAT Loans and giving effect to any incurrence) for any Lender in aggregate principal amount at the time of the incurrence thereof the VAT Loan Commitment of such Lender at such time. (d) Notwithstanding anything in this Agreement to the contrary, no Lender shall be obliged to make any Loan, to the extent that the initial aggregate principal amount of all Loans (other than Loans representing the capitalization of interest pursuant to SECTION 1.8) made hereunder shall exceed the Total Commitment. (e) Long-Term Loans which are incurred on or after the Effective Date shall be allocated among Tranche A, Tranche B and Tranche C Loans in the following priority: First, to Tranche A Loans to the extent of 85% of each Invoice for QUALCOMM Costs allocable to the sale of equipment and to the provision of services in the U.S.; Second, to Tranche C Loans to the extent of the availability thereof; and Third, to Tranche B Loans to the extent of the availability thereof; provided, however, that upon receiving confirmation satisfactory to QUALCOMM from the Export Import Bank of the U.S. that costs reflected in any Invoice are, or are not, EXIM Qualified, QUALCOMM may, but shall not be obligated to, redesignate Tranche A Loans, in whole or part, in order of priority according to availability, to be Tranche C Loans or Tranche B Loans and, upon written notice to Administrative Agent, with a copy thereof to Borrower, the interest accrued pursuant to each such redesignated Loan shall be retroactively adjusted and paid, or credited, as applicable, on the next succeeding Interest Payment Date; provided further, that with respect to Loans made under Facility- 2. 2, the foregoing references to Tranche C Loans, and designation and redesignation of Loans as Tranche C Loans shall be ignored. 1.2 TYPES OF LONG-TERM LOANS. Each Long-Term Loan shall, in accordance with the terms of this Agreement, be in the form of either a Base Rate Loan or a Eurodollar Loan; provided, however, that, notwithstanding anything to the contrary herein, each initial borrowing of Long-Term Loans pursuant to SECTION 1.5(b) hereof shall be comprised solely of Base Rate Loans until the first Business Day of the calendar month next succeeding the effective date of such initial borrowing of such Loans but may as of such Business Day be converted into Eurodollar Loans and continued as provided in SECTION 1.3 hereof. At no time may Borrower maintain Eurodollar Loans in more than six (6) separate Interest Periods in respect of Facility-1 Loans and six (6) separate Interest Periods in respect of Facility-2 Loans. 1.3 CONVERSION AND CONTINUATION ELECTIONS. Borrower may, upon irrevocable written notice to Administrative Agent, with reference to the Long-Term Loans: (a) elect to convert on any Business Day, Base Rate Loans in an amount equal to Two Million Five Hundred Thousand ($2,500,000) (or any integral multiple of One Hundred Thousand Dollars ($100,000) in excess thereof) into Eurodollar Loans; or (b) elect to convert any Eurodollar Loans into Base Rate Loans on the last day of the Interest Period applicable to such Eurodollar Loans; or (c) elect to continue any Eurodollar Loans (or any part thereof in an amount equal to Two Million Five Hundred Thousand Dollars ($2,500,000) or any integral multiple of One Hundred Thousand Dollars ($100,000) in excess thereof) as Eurodollar Loans on the last day of the Interest Period applicable to such Eurodollar Loans. 1.4 DURATION OF INTEREST PERIODS. (a) Subject to the provisions of the definition of Interest Period and SECTION 1.2 and SECTION 1.3 above, the duration of each Interest Period applicable to a Eurodollar Loan shall be as specified in the applicable Notice of Conversion/Continuation. (b) If Administrative Agent does not receive a notice of election of duration of an Interest Period with respect to a borrowing of Eurodollar Loans pursuant to SUBSECTION (a) above within the applicable time limits specified herein, Borrower shall be deemed to have elected to make or convert such Loans in whole into Eurodollar Loans with an Interest Period of one month on the last day of the then current Interest Period with respect thereto. Notwithstanding anything to the contrary herein, any and all Eurodollar Loans shall be converted in whole into Base Rate Loans on the last day of the then existing Interest Period with respect thereto if Administrative Agent shall have received notice from Borrower or a Lender that an Event of Default exists and Administrative Agent, at the direction of Required Lenders shall have delivered to Borrower notice that such conversion is required. 3. 1.5 EXISTING LOANS AND NOTICE AND MANNER OF MAKING ADDITIONAL LOANS OR CONVERTING/CONTINUING LONG-TERM LOANS. (a) EXISTING LOANS. Set forth on SCHEDULE 1.5 hereto is a schedule of all amounts currently due or to become due under the QUALCOMM Procurement Agreements which the parties have agreed, on the Effective Date, are to be financed under Facility-1. Each such amount shall be deemed to be Tranche A Loans, Tranche B Loans or Tranche C Loans thereunder, outstanding under the Notes, if applicable, on and after the Effective Date. SCHEDULE 1.5 also sets forth a schedule of all Pagares outstanding on the Effective Date which the parties have agreed will be financed under the VAT Facility and shall continue to be outstanding on the terms set forth therein and shall be treated as VAT Loans hereunder on and after the Effective Date. (b) NOTICE AND MANNER OF MAKING ADDITIONAL LOANS. (i) Not fewer than five (5) Business Days prior to the date Borrower desires to borrow hereunder, Borrower shall deliver by electronic facsimile transmission: (A) to each of Administrative Agent and QUALCOMM, written notice specifying (1) whether the requested Loan shall be made in cash (a "Cash Advance") or by means of a credit (a "Credit Advance") against amounts due to the applicable Vendor under the QUALCOMM Procurement Agreements, (2) the amount of such Borrowing which, in the case of a Cash Advance under either Long-Term Facility shall not be less than the Minimum Borrowing Amount, (3) with respect to requests of Cash Advances not made to Borrower, the Person to which such Cash Advance is requested to be made on behalf of Borrower and (4) the effective date for such Borrowing of Loans (which for Credit Advances shall be no earlier than the date on which payment is due under the QUALCOMM Procurement Agreements), which notice shall be in the form of EXHIBIT C to this Agreement (an "Loan Request"); and (B) to QUALCOMM, all invoices and any other supporting documentary information necessary to evidence the QUALCOMM Costs and VAT, if applicable, giving rise to such Loan Request (the "Invoices). After the date on which QUALCOMM receives each Loan Request and the accompanying Invoices, QUALCOMM shall have four (4) Business Days (the "Loan Request Review Period") during which to acknowledge receipt of the same and transmit such to Administrative Agent. Provided that QUALCOMM has acknowledged receipt of such Loan Request and such Invoices to Administrative Agent in writing or, if QUALCOMM has not so acknowledged within the Loan Request Review Period, the effective date for such borrowing of such Loans under Credit Advances shall be the first (1(st)) Business Day after the final day of such Loan Request Review Period and the applicable Invoice shall be deemed paid to the extent of such Loan. (ii) On each date prior to the end of the Facility-1 Availability Period or the Facility-2 Availability Period, as applicable, on which payment under the QUALCOMM Procurement Agreements is due to QUALCOMM for which Borrower has delivered an Invoice, and such payment has not been made or a borrowing of Long-Term Loans has not been requested by Borrower pursuant to SECTION 1.5(b)(i) hereof, QUALCOMM shall deliver to Administrative Agent by electronic facsimile transmission written notice of such due date and the amount of such payment due under the QUALCOMM Procurement Agreements (less any amounts as to which QUALCOMM and the Administrative Agent have received written notice from Borrower of any dispute with respect to such amount being due and payable), which notice 4. shall be in the form of EXHIBIT D to this Agreement (a "Notice of Deemed Loan"), and a borrowing of Base Rate Loans (which Loans shall be Tranche A Loans, Tranche B Loans or Tranche C Loans as shall be determined pursuant to SECTION 1.1(e)) shall be deemed to have been made as of the date on which such payment was due pursuant to the QUALCOMM Procurement Agreements and the amount of Long-Term Loans owing to each Lender shall automatically be increased as of such date to add to the principal amount thereof the amount of such required payment according to the Commitment of each Lender making such Long-Term Loan; provided, however, that Borrower may thereafter, elect to convert such Long-Term Loans in whole or in part to Eurodollar Loans in accordance with SECTION 1.5(c) below. (iii) With regard to Long-Term Loans which are Credit Advances: (A) to the extent that, with respect to any Lender, the amount equal to such Lender's Percentage under the applicable Facility multiplied by the aggregate amount required to be paid by Borrower at such time under the QUALCOMM Procurement Agreements exceeds amounts owing to such Lender under the QUALCOMM Procurement Agreements on such date, such Lender shall, by 12:00 noon New York time on such date, remit by wire transfer such excess to Administrative Agent; and (B) to the extent that, with respect to any Lender, the amount equal to such Lender's Percentage under the applicable Facility multiplied by the aggregate amount required to be paid by Borrower at such time under the QUALCOMM Procurement Agreements is less than the amount reported by QUALCOMM to Administrative Agent as amounts owing to such Lender under the QUALCOMM Procurement Agreements on such date, Administrative Agent shall promptly remit (from amounts received by Administrative Agent pursuant to (A) above) by wire transfer such shortfall to such Lender. (iv) With regard to Loan Requests for Cash Advances, Administrative Agent shall promptly notify each Lender having a Commitment with respect thereto as to the content of each Loan Request for Cash Advances and whether or not QUALCOMM has advised Administrative Agent that the conditions set forth in the second sentence of SECTION 1.5(b)(i) have been satisfied. Provided that QUALCOMM has acknowledged Borrower's Loan Request to Administrative Agent in writing, such Lenders shall disburse to Administrative Agent in immediately available funds by 12:00 noon New York time on the requested funding date an amount equal to their respective Percentages multiplied by the amount of the borrowing requested in such Loan Request, and Administrative Agent shall promptly disburse the aggregate of such amounts in immediately available funds to Borrower or such other Person designated by Borrower in the Loan Request. (c) CONVERSIONS/CONTINUATIONS OF LOANS. On each date on which Borrower desires, with respect to Long-Term Loans to (A) continue any such Long-Term Loans that are Eurodollar Loans for another Interest Period, or (B) convert any such outstanding Long-Term Loans into Long-Term Loans of another type provided for in this Agreement, Borrower shall notify Administrative Agent (which notice shall be irrevocable) in writing by electronic facsimile transmission received no later than 1:00 p.m. New York time on the date one (1) Business Day before the day on which such requested Long-Term Loans are to be converted into Base Rate Loans, and received no later than 1:00 p.m. New York time on the date three (3) Business Days before the date on which such requested Long-Term Loans are to be continued for another Interest Period as or converted into Eurodollar Loans. Such notice shall specify (i) the effective date and amount of such Long-Term Loans or portion thereof to be continued or converted, 5. subject to the limitations set forth in SECTION 1.3 hereof, (ii) the interest rate option to be applicable thereto, and (iii) the duration of the applicable Interest Period, if any (subject to the provisions of the definition of Interest Period and SECTION 1.4) hereof. Each such notification (a "Notice of Conversion/Continuation") shall be in the form of EXHIBIT E to this Agreement. (d) Administrative Agent shall promptly notify each Lender as to the content of each Loan Request, Notice of Deemed Loan, and Notice of Conversion/Continuation. (e) Unless Administrative Agent shall have been notified by any Lender no later than the Business Day prior to the respective funding date of any borrowing of Loans that such Lender does not intend to make available to Administrative Agent immediately available funds equal to such Lender's Percentage under the relevant Facility of the total principal amount of such borrowing, Administrative Agent may (in its sole and absolute discretion) assume that such Lender has advanced funds in the amount of such Lender's relevant Percentage of such borrowing to Administrative Agent on the applicable funding date and Administrative Agent may, in reliance upon such assumption, make available to Borrower corresponding funds. Administrative Agent agrees to give prompt notice to Borrower in the event it advances funds on behalf of a Lender under this SECTION 1.5(e); provided that failure to give such notice shall in no way limit, restrict or otherwise affect Borrower's obligations or Administrative Agent's or any Lender's rights or remedies under this Agreement and the other Credit Documents. If Administrative Agent has made funds available to Borrower based on such assumption and such Loan is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover the corresponding amount of such Long-Term Loan on demand from such Lender. If such Lender does not promptly pay such corresponding amount upon Administrative Agent's demand, Administrative Agent shall notify Borrower and Borrower shall repay such Long-Term Loan to Administrative Agent, together with accrued interest thereon. Administrative Agent also shall be entitled to recover from such Lender interest on such Long- Term Loan in respect of each day from the date such Long-Term Loan was made by Administrative Agent to Borrower to the date such corresponding amount is recovered by Administrative Agent at the Federal Funds Effective Rate. (f) Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights which Borrower may have against any Lender as a result of any default by such Lender hereunder. 1.6 EVIDENCE OF DEBT. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (b) Administrative Agent shall maintain the Lender Register pursuant to SECTION 11.16, and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder, and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from Borrower to each Lender hereunder (including the amount of any capitalized interest under 6. SECTION 1.8(e)) and (iii) both the amount of any sum received by Administrative Agent hereunder from Borrower and each Lender's share thereof. (c) The entries made in the Lender Register and the accounts of each Lender maintained pursuant to SECTION 1.6(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of Borrower therein recorded; provided, that the failure of Administrative Agent or any Lender to maintain the Lender Register or any such account, or any error therein, shall not in any manner affect the obligation of Borrower to repay (with applicable interest) the Loans of each Lender in accordance with the terms of this Agreement. (d) Borrower agrees that, upon the request to Administrative Agent by any Lender under any Facility other than the VAT Facility, Borrower will execute and deliver to such Lender a promissory note of Borrower, which shall be jointly and severally guaranteed "avalados" by the Guarantors, dated the first day of the Availability Period for such Facility evidencing the Loans under such Facility of such Lender, substantially in the form of EXHIBIT A with appropriate insertions as to date and principal amount (each, a "Note"). Thereafter, the Loans evidenced by any such Note and interest thereon shall at all times (including after assignment pursuant to SECTION 11.4) be represented by one or more promissory notes in such form payable to the order of the payee named therein. (e) Borrower agrees that Borrower will execute and deliver to each Lender making a VAT Loan a Pagare, which shall be jointly and severally guaranteed "avalados" by the Guarantors, dated the date of issuance of such Pagare evidencing the VAT Loan made on that date. Thereafter, the VAT Loan evidenced by such Pagare and interest thereon shall at all times (including after assignment pursuant to SECTION 11.4) be represented by such Pagare in such form payable to the order of the payee named therein. 1.7 PRO RATA BORROWINGS. All Loans under this Agreement shall be made by the Lenders pro rata on the basis of Commitments of the Lenders with a Commitment under the Facility under which such Loan is being made. It is understood that no Lender shall be responsible for any default by any other Lender in its obligation to make Loans hereunder and that each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fulfill its commitments hereunder. 1.8 INTEREST. (a) Except as provided in the next sentence with respect to VAT Loans and as contemplated in SECTION 1.1(e), the unpaid principal amount of each Loan shall bear interest from the date of the incurrence thereof until payment maturity (whether by acceleration or otherwise) at a rate per annum which shall at all times (i) in the case of Eurodollar Loans, and during each Interest Period applicable thereto, be the Eurodollar Rate for such Interest Period plus the relevant Applicable Margin and (ii) in the case of Base Rate Loans, be the Base Rate plus the relevant Applicable Margin. The unpaid principal amount of each VAT Loan shall bear interest from the date of the incurrence thereof until payment maturity (whether by acceleration or otherwise) at a fixed rate per annum which shall at all times be the Applicable VAT Margin 7. plus the Eurodollar Rate in effect on the date of issuance of the Pagare associated with such VAT Loan (assuming an Interest Period of six months commencing on such date). (b) All overdue principal and, to the extent permitted by law, overdue interest in respect of each Loan and any other overdue amount payable hereunder shall bear interest at a rate per annum equal to the rate otherwise applicable thereto plus two percent (2%) per annum. (c) Except as provided in the next sentence with respect to VAT Loans, interest shall accrue from and including the date of the incurrence of Loans to but excluding the date of any repayment thereof and shall be payable (i) in the case of Base Rate Loans, on the last Business Day of each calendar quarter, and (ii) in the case of each Eurodollar Loan, on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on each date occurring at three month intervals after the first day of such Interest Period and (iii) in the case of all Loans, on any prepayment (on the amount prepaid), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand. Interest shall accrue from and including the date of the incurrence of each VAT Loan to but excluding the date of any repayment thereof and shall be payable on any prepayment (on the amount prepaid), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand. (d) All computations of interest hereunder shall be made in accordance with SECTION 11.7(b). (e) Anything in this Agreement to the contrary notwithstanding, and unless Borrower shall notify Administrative Agent that this SECTION 1.8(e) shall not be applicable to any of the interest payments on the Tranche A Loans or the Tranche C Loans otherwise covered hereby, (i) the interest that accrues on Tranche A Loans shall not be required to be paid in cash on any Interest Payment Date occurring prior to the Facility-1 Refinancing Date and (ii) the interest that accrues on Tranche C Loans shall not be required to be paid in cash on any Interest Payment Date occurring prior to the first anniversary of the Effective Date, but, in each case, on each such Interest Payment Date such accrued interest will be capitalized and added to the principal of the Tranche A Loans or Tranche C Loans of each Lender as to which such interest accrued. (f) Administrative Agent, upon determining the interest rate for any Borrowing of Eurodollar Loans for any Interest Period shall promptly notify Borrower and the Lenders thereof. 1.9 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in the case of clause (i) below, Administrative Agent or (y) in the case of clauses (ii) and (iii) below, any Lender shall have determined in good faith (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto): (i) on any date for determining the Eurodollar Rate for any Interest Period that, by reason of any changes arising after the date of this Agreement affecting the interbank Eurodollar market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Eurodollar Rate; or 8. (ii) at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Eurodollar Loans (other than taxes covered by SECTION 3.4 and any increased cost or reduction in the amount received or receivable resulting from the imposition of or a change in the rate of taxes or similar charges) because of (x) any change since the Effective Date in any applicable law, governmental rule, regulation, guideline or order (or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, guideline or order) (such as, for example, but not limited to, a change in official reserve requirements) and/or (y) other circumstances affecting the interbank Eurodollar market or the position of such Lender in such market; or (iii) at any time, that the making or continuance of any Eurodollar Loan has become unlawful by compliance by such Lender in good faith with any law, governmental rule, regulation or guideline introduced or changed after the Effective Date; then, and in any such event, such Lender (or Administrative Agent in the case of clause (i) above) shall (x) on such date and (y) within ten Business Days of the date on which such event no longer exists give notice (by telephone confirmed in writing) to Borrower and to Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in the case of clause (i) above, until such time as Administrative Agent notifies Borrower and the Lenders that the circumstances giving rise to such notice by Administrative Agent no longer exist, all new Loans, and all outstanding Loans as to which existing Interest Periods expire, shall bear interest at a rate per annum equal to (A) the Base Rate plus (B) the Applicable Margin, (y) in the case of clause (ii) above, Borrower shall pay to such Lender, upon written demand therefor, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its reasonable discretion shall determine after consultation with Borrower) as shall be required to compensate such Lender for such increased costs or reductions in amounts receivable hereunder (a written notice as to the additional amounts owed to such Lender, describing the basis for such increased costs and showing the calculation thereof, submitted to Borrower by such Lender shall, absent manifest error, be final and conclusive and binding upon all parties hereto) and (z) in the case of clause (iii) above, the obligations of such Lender to make and maintain Loans hereunder under the respective Facilities shall terminate and all of the outstanding Loans made by it shall be repaid. (b) If any Lender shall have determined that the adoption or effectiveness after the Effective Date of any applicable law, rule or regulation regarding capital adequacy, or any change therein after the Effective Date, or any change after the Effective Date in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Lender or its parent corporation with any request or directive made after the Effective Date regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's or its parent corporation's capital or assets as a consequence of its commitments or obligations hereunder to a level below that which such Lender or its parent corporation could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Lender's or its parent corporation's policies with respect to capital adequacy), 9. then from time to time, within 15 days after demand by such Lender (with a copy to Administrative Agent), Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or its parent corporation for such reduction. Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this SECTION 1.9(b), will give prompt written notice thereof to Borrower, which notice shall describe the basis for such claim and set forth the calculation of such additional amounts, although the failure to give any such notice shall not release or diminish any of Borrower's obligations to pay additional amounts pursuant to this SECTION 1.9(b) upon the subsequent receipt of such notice; (c) Notwithstanding the foregoing, a Lender shall not be entitled to receive reimbursement for claimed costs pursuant to this SECTION 1.9 incurred more than 15 months prior to the date Lender provides notice of a claim for reimbursement. 1.10 COMPENSATION. Borrower shall compensate each Lender, upon its written request (which request shall set forth the basis for requesting such compensation), for all losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Eurodollar Loans but excluding in any event the loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender or Administrative Agent) Eurodollar Loans are not incurred on a date specified therefor in a Borrowing Notice (whether or not withdrawn by Borrower); (ii) if any prepayment or repayment of any of its Eurodollar Loans (other than VAT Loans) occurs on a date which is not the last day of an Interest Period applicable thereto; (iii) if any prepayment of any of its Eurodollar Loans (other than VAT Loans) is not made on any date specified in a notice of prepayment given by Borrower; or (iv) as a consequence of any other default by Borrower to repay its Eurodollar Loans when required by the terms of this Agreement. 1.11 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of SECTION 1.9(a)(ii) or (iii), 1.9(b) or 3.4 with respect to such Lender, it will, if requested by Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event, provided that such designation is made on such terms that such Lender and its lending office suffer no material economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such Section. Nothing in this SECTION 1.11 shall affect or postpone any of the obligations of Borrower or the right of any Lender provided in SECTION 1.9, 1.10 or 3. 1.12 EXIM FINANCING, ETC. QUALCOMM shall have the right to (i) attempt to arrange and arrange at any time one or more EXIM Financings for each or both Long-Term Facilities, with the entering into of such EXIM Financings to reduce the respective Facility-1 Commitments and Facility-2 Commitments, as the case may be, as provided for in SECTION 2.3; and/or (ii) attempt to arrange and arrange for the Loans to be refinanced by other means, including a subparticipation of the Commitments or a debt issue in the public markets (each refinancing described in clause (i) or (ii), a "Refinancing") provided, however, that Borrower shall not be obliged to agree to any Refinancing if the structure, costs, and other terms and conditions and other relevant factors concerning the financing provided under any such Refinancing are not in the best commercial interests of Borrower as compared to the structure, 10. costs, and other terms and conditions and other relevant factors concerning the financing provided under this Agreement as they relate to the Loans and/or Commitments to be refinanced, provided, further, that if Borrower and QUALCOMM disagree as to whether the terms of any proposed Refinancing are in the best commercial interests of Borrower, the parties shall submit the matter to an independent, third party and internationally recognized investment banking firm mutually agreeable to the parties for its determination, which determination shall be binding on the parties hereto; and/or (iii) attempt to arrange and arrange for a syndication that complies with the requirements of SECTION 11.4 of the Commitments and Loans (a "Syndication"), it being agreed that Borrower and each Credit Party will cooperate with QUALCOMM to negotiate in good faith any such Refinancing and facilitate any such Syndication, provided, however, that QUALCOMM shall not within the 18 month period following the Effective Date, (x) the Borrower shall not be obligated to, and QUALCOMM shall not attempt to arrange, any refinancing of the type referred to in clause (ii) above and (y) QUALCOMM shall not solicit any potential Lender in connection with such Syndication which potential Lender is actively participating in the market for transactions similar to the Senior Bank Financing or the High Yield Debt financing; provided, further, that Borrower shall not be obligated to cooperate in any such attempted Syndication by QUALCOMM more than three (3) times. In connection with any such Refinancing or Syndication, Borrower may request that proposed participants therein shall enter into a Common Terms Agreement and if so requested, it shall also be a condition of such Refinancing or Syndication that such proposed participants enter the Common Terms Agreement. 1.13 COMMON TERMS AGREEMENT; CONFORMANCE TO PARI PASSU DEBT. (a) A Borrower expects that it will desire to enter into an agreement (the "Common Terms Agreement") with all holders from time to time of Pari Passu Debt setting forth the intercreditor arrangements among all such holders and creating certain common terms. Each Lender hereto hereby agrees that they will become party to the Common Terms Agreement to the extent reasonably satisfactory to QUALCOMM and such Lender. Notwithstanding anything in this Agreement to the contrary, neither Administrative Agent, Collateral Agent nor any Lender shall be obligated to enter into any agreement whereby it is required to waive or modify the conditions precedent set forth in SECTION 4, or any obligation relating to the Collateral or Borrower's obligation to satisfy such conditions as required under SECTION 6.17. (b) SENIOR BANK FINANCING COMMON TERMS. Borrower and each Lender hereby agree that in connection with Borrower's negotiation of the Senior Bank Financing they shall negotiate with each other in good faith to promptly amend and restate this Agreement, and enter into a Common Terms Agreement with the holders of Pari Passu Debt, as necessary and appropriate to conform covenants and events of defaults in this Agreement with those applicable to the Senior Bank Financing to the extent such terms of the Alcatel Credit Agreement are conformed to such terms governing the Pari Passu Debt. (c) ALCATEL COMMON TERMS. Borrower and each Lender hereby agree that upon completion of the Alcatel Credit Agreement they shall negotiate with each other in good faith to promptly amend and restate this Agreement, and enter into a Common Terms Agreement with Alcatel Lender, as necessary and appropriate to make any inconsistencies between the terms of this Agreement which relate to interest rate, amortization, fees, representations and warranties, 11. covenants, conforming changes, and events of default and the comparable terms in the Alcatel Credit Agreement conform to the Alcatel Credit Agreement; provided, however, that no such amendment shall have the effect of changing the terms of this Agreement retroactively to apply to any period prior to the date of the Alcatel Credit Agreement. (d) ADDITIONAL CREDIT SUPPORT. To the extent that Alcatel Lender or any other provider of vendor financing to the Borrower Group shall, during any period from the date hereof through that date eighteen (18) months following the Effective Date, enjoy any credit support or security therefor from any shareholder of Holdings or their Affiliates, then such credit support and any security therefor, shall be immediately provided to Administrative Agent and Lenders hereunder on a pari passu basis. 1.14 NO NET PAYMENTS. Borrower's obligation to make payments and perform all other obligations hereunder, and the rights of Administrative Agent and Lenders in and to such payments and performance, shall be absolute and unconditional and shall not be subject to any abatement, reduction, set-off, defense, counterclaim or recoupment for any reason whatsoever, including, without limitation, abatements or reductions due to any present or future claims of any Credit Party or their respective Affiliates against Administrative Agent, Collateral Agent or any Lender under this Agreement, the QUALCOMM Procurement Agreements or otherwise, against any vendor of equipment or services used or planned to be used as part of the System, or against any other Person for whatever reason. Except as otherwise expressly provided herein, this Agreement shall not terminate, nor shall the obligations of Borrower be affected, by reason of (a) any defect in or damage to, or any loss or destruction of, any of the equipment or services provided pursuant to the QUALCOMM Procurement Agreements or otherwise becoming part of the System from any cause whatsoever, (b) the interference with the use of the System by Administrative Agent, Collateral Agent, any Lender or any other Person, (c) any defect in title to the System or any part thereof or any Lien on such title, or (d) any bankruptcy, insolvency, reorganization or other proceeding relating to, or any action taken by any trustee or receiver of, Administrative Agent, any Lender or any other Person, or (e) for any other cause, whether similar or dissimilar to the foregoing, any present or future law or regulation to the contrary notwithstanding, whether or not such cause shall give rise to a claim by any Credit Party or their respective Affiliates against any Lender under the QUALCOMM Procurement Agreements or otherwise, it being the express intention of the parties hereto that all amounts payable by Borrower hereunder shall be, and continue to be, payable in all events unless the obligation to pay shall be terminated pursuant to the express provisions of this Agreement. All payments made by Borrower hereunder as required hereby shall be final, and Borrower shall not seek to recover any such payment or any part thereof for any reason whatsoever. Nothing in this Agreement shall, however, release or waive any claim Borrower may have against Administrative Agent, any Lender or any other Person, whether in connection with the QUALCOMM Procurement Agreements or otherwise. If for any reason whatsoever this Agreement shall be terminated in whole or in part by operation of law or otherwise, Borrower shall nonetheless, to the extent permitted by applicable law, pay to Administrative Agent, on behalf of Lenders, an amount equal to each payment payable hereunder at the time and in the manner that such payment would have become due and payable under the terms of this Agreement if it had not been terminated in whole or in part. 12. 1.15 REPLACEMENT OF LENDERS Upon the occurrence of any event giving rise to the operation of SECTION 1.9(b) or SECTION 3.04 with respect to any Lender which results in such Lender charging to the Borrower increased costs in excess of those being charged generally by the Lenders or if a Lender has defaulted on its obligation to make Loans hereunder, Borrower shall have the right, if no Default or Event of Default then exists, to replace such Lender (the "Replaced Lender") with one or more other Eligible Transferee (collectively, the "Replacement Lender") reasonably acceptable to the Administrative Agent, provided that (i) at the time of any replacement pursuant to this SECTION 1.15, the Replacement Lender shall enter into one or more Assignment Agreements pursuant to SECTION 11.4(b) (and with all fees payable pursuant to said SECTION 11.4(b) to be paid by the Replacement Lender) pursuant to which the Replacement Lender shall acquire all of the Commitments and outstanding Loans of the Replaced Lender and, in connection therewith, shall pay to the Replaced Lender in respect thereof an amount equal to the sum of (A) an amount equal to the principal of, and all accrued but unpaid interest on, all outstanding Loans of the Replaced Lender and (B) an amount equal to all accrued, but unpaid, Commitment Fees owing to the Replaced Lender pursuant to SECTION 2.1, (ii) all obligations of the Borrower owing to the Replaced Lender (other than those specifically described in clause (i) above in respect of which the assignment purchase price has been, or is concurrently being, paid) shall be paid in full to such Replaced Lender concurrently with such replacement. Upon the execution of the respective Assignment Agreement, the payment of amounts referred to in clauses (i) and (ii) above and, if so requested by the Replacement Lender, delivery to the Replacement Lender of the appropriate Note or Notes executed by the Borrower, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to constitute a Lender hereunder, except with respect to indemnification provisions applicable to the Replaced Lender under this Agreement, which shall survive as to such Replaced Lender. SECTION 2. FEES; COMMITMENTS. 2.1 FEES. (a) Borrower agrees to pay to Administrative Agent a commitment fee ("Commitment Fee") (x) for the account of each Lender with a Facility-1 Commitment, for each day during the Facility-1 Availability Period computed at the rate of .50% per annum on the average daily Facility-1 Commitment of such Lender, (y) for the account of each Lender with a Facility-2 Commitment, for each day during each of the Facility-1 Availability Period and the Facility-2 Availability Period computed at the rate of (i) .25% per annum during the Facility-1 Availability Period on the daily average Facility-2 Commitment of such Lender and (ii) .50% per annum during the Facility-2 Availability Period on the daily average Facility-2 Commitment of such Lender, and (z) for the account of each Lender with a VAT Loan Commitment, for each day during the VAT Facility Availability Period, computed at the rate of .50% per annum on the daily average unutilized VAT Loan Commitment of such Lender. All such Commitment Fees shall be due and payable in arrears on the last Business Day of each March, June, September and December. (b) Borrower shall pay to QUALCOMM, for its own account, such fees as are set forth in the QUALCOMM Fee Letter when and as due. 13. (c) All computations of Fees shall be made in accordance with SECTION 11.7(b). 2.2 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least five (5) Business Days' prior written notice (or telephonic notice confirmed in writing) to Administrative Agent (which notice shall be deemed to be given on a certain day only if given before 1:00 p.m. (New York time) on such day and shall be promptly transmitted by Administrative Agent to each of the Lenders), Borrower shall have the right, without premium or penalty, to terminate or partially reduce (x) the Total Facility-1 Commitment and/or the Total Facility-2 Commitment, provided that any such partial reduction shall apply to proportionately and permanently reduce the Commitments of each Lender under the affected Facility and/or (y) the unutilized Total VAT Loan Commitment. Any partial reduction pursuant to this Section 2.2 shall be in the amount of at least $1,000,000. 2.3 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Facility-1 Commitment and Facility-2 Commitment of each Lender shall be permanently reduced upon the making of any Facility-1 Loan or Facility-2 Loan, as the case may be, by such Lender in the principal amount of such Facility-1 Loan or Facility-2 Loan, respectively. (b) The Total Facility-1 Commitment shall be reduced on each day on which a borrowing is incurred by Borrower under any EXIM Financing entered into to finance Facility-1 Availability Period Costs in the amount of such borrowing, with any such reduction to be applied pro rata to the Facility-1 Commitment of each Lender. (c) The Total Facility-2 Commitment shall be reduced on each day on which a borrowing is incurred by Borrower under any EXIM Financing entered into to finance Facility-2 Availability Period Costs in the amount of such borrowing, with any such reduction to be applied pro rata to the Facility-2 Commitment of each Lender. (d) The Total Facility-1 Commitment (and the Facility-1 Commitment of each Lender) shall terminate in its entirety on the last day of the Facility-1 Availability Period. (e) The Total Facility-2 Commitment (and the Facility-2 Commitment of each Lender) shall terminate in its entirety on the last day of the Facility-2 Availability Period. (f) The Total VAT Loan Commitment (and the VAT Loan Commitment of each Lender) shall terminate in its entirety on the last day of the VAT Facility Availability Period. SECTION 3. PAYMENTS. 3.1 VOLUNTARY PREPAYMENTS. Subject to the terms of SECTION 1.10, Borrower shall have the right to prepay Loans in whole or in part, without premium or penalty, from time to time on the following terms and conditions: (i) Borrower shall give Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of its intent to prepay the Loans, whether such Loans are Facility-1 Loans, Facility-2 Loans or VAT Loans, the amount of 14. such prepayment and the specific Borrowing(s) pursuant to which made, which notice shall be given by Borrower no later than 1:00 p.m. (New York time) three (3) Business Days' prior to the date of such prepayment, and which notice shall promptly be transmitted by Administrative Agent to each of the Lenders; (ii) each partial prepayment of any Borrowing shall be in an aggregate principal amount of at least $1,000,000, provided that no partial prepayment of Loans made pursuant to a Borrowing shall reduce the aggregate principal amount of the Loans outstanding pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount applicable thereto; (iii) each prepayment in respect of Loans under any Facility made pursuant to a Borrowing shall be applied pro rata among such Loans; and (iv) each prepayment of Facility-1 Loans or Facility-2 Loans pursuant to this SECTION 3.1 shall be applied to reduce pro rata the amount of the then remaining Scheduled Repayments under Facility-1 or Facility-2, as the case may be. 3.2 MANDATORY PREPAYMENTS AND REPAYMENTS. (a) Borrower shall repay all Tranche A Loans which are outstanding under Facility-1 and Facility-2, as the case may be, on the Facility-1 EXIM Loans Closing Date and Facility-2 EXIM Loans Closing Date, as the case may be. (b) Borrower shall repay Tranche B Loans made in any Borrowing Year in three consecutive annual installments commencing on the third anniversary of the last day of such Borrowing Year and ending on the fifth anniversary thereof (each a "Scheduled Repayment"), with each Scheduled Repayment being in an aggregate principal amount equal to the respective percentages set forth below opposite such anniversaries of the aggregate principal amount of Tranche B Loans made during such Borrowing Year: ANNIVERSARY PERCENTAGE Third 20% Fourth 30% Fifth 50% For the purposes of this SECTION 3.2(b), any Tranche B Loan into which a Tranche A Loan or Tranche C Loan has been converted shall be deemed to be a Tranche B Loan which was made in the Borrowing Year that such converted Tranche A Loan or Tranche C Loan was originally made. (c) All Tranche C Loans which are outstanding under Facility-1 on the first anniversary of the Effective Date (including any interest capitalized in respect thereto) shall be automatically converted into Tranche B Loans under such Facility on such date. (d) Borrower shall repay the aggregate outstanding principal amount of each VAT Loan, including all accrued and unpaid interest thereon, on the earlier of: (i) five (5) Business Days after the date the Secretariat of Finance and Public Credit of Mexico reimburses all or any portion of the VAT which was advanced on behalf of Borrower or Pegaso PCS by the Lenders in connection with such VAT Loan; or (ii) the VAT Loan Maturity Date of such VAT Loan. 15. (e) All Tranche A Loans which are outstanding under Facility-1 and Facility- 2 on the Facility-1 Refinancing Date or the Facility-2 Refinancing Date, as the case may be, shall be automatically converted into Tranche B Loans under Facility-1 or Facility-2, as the case may be, on such date. 3.3 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically provided herein, all payments under this Agreement or any Note or Pagare shall be made to Administrative Agent for the ratable account of the Lenders entitled thereto at Administrative Agent's Account not later than 1:00 p.m. (New York time) on the date when due and shall be made in immediately available funds and in lawful money of the United States of America. Any payments under this Agreement or under any Note or Pagare which are made later than 1:00 p.m. (New York time) shall be deemed to have been made on the next succeeding Business Day. Whenever any payment to be made hereunder or under any Note or Pagare shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable during such extension at the applicable rate in effect immediately prior to such extension. 3.4 NET PAYMENTS. (a) All payments made by Borrower hereunder or under any Note or Pagare will be made without setoff, counterclaim or other defense. All such payments will be made free and clear of, and without deduction or withholding for, any present or future federal, state, or local income, payroll, withholding, social security, sales, use, service, leasing excise, franchise, value added, estimated, occupation, real and personal property, stamp, transfer, workers' compensation, severance or other taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding, except as provided in the third succeeding sentence, any tax imposed on or measured by the net income or net profits of a Lender pursuant to the laws of the jurisdiction in which it is organized or any jurisdiction in which such Lender maintains a place of business or any subdivision thereof or therein) and all interest, penalties addition thereto or similar liabilities with respect to such nonexcluded taxes, levies, imposts, duties, fees, assessments or other charges (all such nonexcluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as "Taxes"). In addition, Borrower shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Credit Documents (hereinafter referred to as "Other Taxes"). If any Taxes or Other Taxes are so levied or imposed, Borrower agrees to pay the full amount of such Taxes or Other Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under any Note or Pagare, after withholding or deduction for or on account of any Taxes or Other Taxes, will not be less than the amount provided for herein or in such Note or Pagare. If any amounts are payable in respect of Taxes or Other Taxes pursuant to the foregoing, Borrower agrees to reimburse such amounts to each Lender, upon the written request of such Lender, such Taxes or Other Taxes as are imposed on or measured by the net income or net profits of such Lender pursuant to the laws of the jurisdiction in which the principal office or applicable lending office of such Lender is located or under the laws of any political subdivision or taxing authority of any such jurisdiction 16. in which the principal office or applicable lending office of such Lender is located and for any withholding of taxes as such Lender shall determine are payable by, or withheld from, such Lender, in each case in respect of such amounts so paid to or on behalf of such Lender pursuant to the foregoing and in respect of any amounts paid to or on behalf of such Lender pursuant to this sentence. Borrower will furnish to Administrative Agent within 45 days (or as soon thereafter as available) after the date the payment of any Taxes or Other Taxes is due pursuant to applicable law certified copies of receipts evidencing such payment by Borrower. Borrower agrees to indemnify and hold harmless each Lender, and immediately reimburse such Lender upon its written request, for the amount of any Taxes or Other Taxes so levied or imposed and paid by such Lender. (b) If Borrower pays any additional amount under this SECTION 3.4 to a Lender and such Lender, in such Lender's sole and absolute determination, has received or realized in connection therewith any refund or any reduction of, or credit against, its tax liabilities in or with respect to the taxable year in which the additional amount is paid, such Lender shall pay to Borrower an amount equal to the net benefit, after tax, which was obtained by the Lender in such year as a consequence of such refund, reduction or credit. Such amount shall be paid as soon as practicable after receipt or realization by such Lender of such refund, reduction or credit. (c) Each Lender shall use reasonable efforts (consistent with legal and regulatory restrictions and subject to overall policy considerations of such Lender) to file any certificate or document or to furnish any information as reasonably requested by Borrower pursuant to any applicable treaty, law or regulation, if the making of such filing or the furnishing of such information would avoid the need for or reduce the amount of any amounts payable by Borrower under SECTION 3.4(a); provided, however, that the failure of any Lender to use such efforts shall not in any way diminish the obligations of Borrower under this SECTION 3.4 or otherwise under this Agreement. (d) Notwithstanding anything in this SECTION 3.4 to the contrary, Borrower shall have no obligation to make any payment of Taxes pursuant to this SECTION 3.4 to any Lender, other than QUALCOMM, in excess of such Gross Up Amounts which would be applicable in the case of payments to a Registered Financial Institution. SECTION 4. CONDITIONS PRECEDENT TO ADDITIONAL LOANS. 4.1 CONDITIONS PRECEDENT TO ADDITIONAL LOANS ON ADDITIONAL LOANS CLOSING DATE. The obligation of the Lenders to make Additional Loans on the Additional Loans Closing Date is subject to the satisfaction of each of the following conditions at such time: (a) EFFECTIVENESS; NOTES. (i) The Effective Date shall have occurred and (ii) there shall have been delivered to Administrative Agent for the account of each Lender requesting same the appropriate Note or Notes executed by Borrower, in each case, in the amount, maturity and as otherwise provided herein. (b) OPINION OF COUNSEL. Administrative Agent shall have received opinions, addressed to Administrative Agent and each of the Lenders, dated the Additional Loans Closing Date and in form and substance satisfactory to QUALCOMM, Administrative Agent and 17. Collateral Agent, from White & Case LLP, and White & Case S.C., each special counsel to the Credit Parties. (c) CORPORATE PROCEEDINGS. (i) Administrative Agent shall have received a certificate, dated the Additional Loans Closing Date, signed by an Authorized Officer of each Credit Party with appropriate insertions and deletions, together with (x) copies of the certificate of the organizational documents of each Credit Party, (y) the resolutions of each Credit Party referred to in such certificate and all of the foregoing shall be reasonably satisfactory to Administrative Agent, and (z) a statement that all of the applicable conditions, assuming Administrative Agent's, QUALCOMM's or Lender's satisfaction where applicable, set forth in SECTION 4.2 exist as of such date. (ii) On the Additional Loans Closing Date, all corporate and legal proceedings and all instruments and agreements in connection with the transactions contemplated by this Agreement and the other Credit Documents shall be reasonably satisfactory in form and substance to Administrative Agent, and Administrative Agent shall have received all information and copies of all certificates, documents and papers, and any other records of corporate proceedings and governmental approvals, if any, which Administrative Agent may have reasonably requested in connection therewith, such documents and papers, where appropriate, to be certified by proper corporate or governmental authorities. (d) GUARANTY. Holdings, Pegaso PCS, Personnel Co. and each Subsidiary of any of them and/or of Borrower then in existence shall have duly authorized, executed and delivered a joint and several Guaranty in form and substance satisfactory to QUALCOMM (as modified, amended or supplemented from time to time in accordance with the terms hereof and thereof, a "Guaranty"), and the Guaranty shall be in full force and effect and each of them shall have executed the Notes and each Pagare "avalados;" provided, however, that the Guaranty of Holdings shall provide that such Guaranty shall automatically terminate on the issuance of High- Yield Debt. (e) SECURITY DOCUMENTS. (i) The Mortgage in form and substance satisfactory to QUALCOMM creating first priority perfected security interests in and Liens on all of the assets of Borrower, including, without limitation, the Licenses, (ii) security documents in form and substance satisfactory to QUALCOMM which QUALCOMM may elect to require creating first priority perfected security interests in and Liens on all the assets of Pegaso PCS and Personnel Co., (iii) the Pledge Agreements on the stock of, Borrower, Pegaso PCS and Personnel, representing 100% of the capital stock of each such Person, (iv) Collateral Assignment Agreements to provide for the conditional assignment of all existing Site Lease Agreements, the PCS Services Agreements and the Personnel Services Agreement, all for the benefit of Secured Creditors, shall have been duly authorized, executed and delivered by, Borrower and each Guarantor, as applicable, and shall be in full force and effect and all filings, recordations and notices required to perfect such security interests and Liens shall have been effected or given. All agreements entered into pursuant to this SECTION 4.1(e) are hereinafter called the "Security Documents" and all such Security Documents shall secure the Obligations and the Pari Passu Debt on pro rata basis. 18. (f) CONSENT LETTER. Administrative Agent shall have received a letter from CT Corporation System, hereto, indicating its consent to its appointment by each Credit Party as its agent to receive service of process and confirming that its fees have been fully paid for the term of this Agreement on behalf of each Credit Party. (g) QUALCOMM PROCUREMENT AGREEMENTS AND OTHER AGREEMENTS. The QUALCOMM Procurement Agreements, the PCS Service Agreement and the Personnel Co. Services Agreement shall have been authorized, executed and delivered by the parties thereto and a copy thereof, certificated by an Authorized Officer as true and complete, shall have been delivered to Administrative Agent. (h) OFFICER'S CERTIFICATE. Administrative Agent and Collateral Agent shall have received certificates dated such date, signed by the president and chief financial officer (such certificate and all other certificates delivered under this Agreement to be in such Person's corporate, not individual, capacity) of Borrower and each Guarantor, as applicable, stating that all of the applicable conditions set forth in this SECTION 4.1 have been satisfied as of such date. (i) ADVERSE CHANGE. There shall have occurred no developments, events or circumstances that individually or in the aggregate have had, or are reasonably likely to have, a Material Adverse Effect. (j) CONSENTS, APPROVALS. The Credit Parties shall have received the material consents, approvals and releases of all appropriate Governmental Authorities and all other third parties in connection with the transactions contemplated by the QUALCOMM Procurement Agreements and the Credit Documents (the "Governmental Consents"), including, without limitation, all required consents from contractual counterparties of the Credit Parties required to be obtained to permit the assignment to Collateral Agent or Lenders, or their designees, of the Collateral and all applicable waiting periods shall have expired without any action being taken by any competent Governmental Authority which restrains, prevents or imposes materially adverse conditions upon the consummation of this Agreement the Alcatel Procurement Agreement or the QUALCOMM Procurement Agreements or building the System to the extent such are then required to be obtained on the Additional Loans Closing Date. (k) LITIGATION. There shall be no actions, suits or proceedings pending or threatened with respect to Borrower or any Subsidiary that (i) is reasonably likely to have a Material Adverse Effect, or (ii) have a material adverse effect on the ability of Borrower or Guarantors to perform their respective obligations under the Alcatel Procurement Agreement or the QUALCOMM Procurement Agreements or the rights or remedies of Lenders. There shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other material restraint pending or notified with respect to the performance of the Alcatel Procurement Agreements, the QUALCOMM Procurement Agreements, the Credit Documents, the making of any Loan hereunder or Borrower's use of the Licenses. (l) INCUMBENCY CERTIFICATES. Administrative Agent and Lenders shall have received signature and incumbency certificates of Borrower's, each Guarantor's and each of their respective Subsidiaries' officers executing this Agreement or the other Credit Documents to which it is or is to be a party. 19. (m) EVIDENCE OF INSURANCE. Collateral Agent and Lenders shall have received certificates or other evidence of the existence of the insurance required by this Agreement with loss payee endorsements reasonably satisfactory to Collateral Agent and Lenders. (n) FEE LETTER. QUALCOMM shall have received the QUALCOMM Fee Letter, in each case together with the payment of such fees as are set forth in each such letter to be paid on the Additional Loans Closing Date (the payment of which shall be deemed to be a concurrent condition). (o) CAPITAL CONTRIBUTIONS. Holdings shall have received (x) cash equity contributions or, in the event contributions are not required to be made until a date following the Additional Loans Closing Date, irrevocable cash equity commitments, of at least $175,000,000 from the Sponsors to be invested as needed to satisfy License requirements, (y) irrevocable cash equity commitments from Sponsors for $50,000,000 in 1999 and for $50,000,000 in 2000 and (z) an additional $100,000,000 in equity contributions and/or commitments, as such contributions and commitments are required in the Joint Venture Agreement. (p) LICENSE FEES. Administrative Agent shall be reasonably satisfied that Holdings will be able to pay all applicable fees for the Licenses from equity, other than the payment of the 15% VAT, which may be financed. (q) ALL INTEGRAL ASSETS IN BORROWER; HOLDINGS UNDERTAKING. Administrative Agent and Collateral Agent shall have received (i) evidence satisfactory to them that all Integral Assets then owned by the Borrower Group shall be fully vested in and owned by Borrower and Asset Ownership Concentration shall exceed 95% and (ii) an undertaking from Holdings, in the Pledge Agreements or separately, that Holdings holds and will continue to hold as its only assets the equity stock of Borrower, Pegaso PCS and Personnel Co. (with all debt or other obligations owing from any such entity to Holdings having been contributed to such entity as additional capital). (r) SPANISH TRANSLATIONS. Administrative Agent shall have received certified Spanish translations of this Agreement and any other agreement which the Administrative Agent might reasonably request. (s) GOVERNMENT AUTHORIZATIONS. Administrative Agent shall have received a copy of the notice to the Secretariat of Communications and Transport of the Borrower's country for the pledge of the capital stock of the Borrower pursuant to the corresponding Pledge Agreement duly sealed by such Secretariat. (t) MORTGAGE. Administrative Agent shall have received a copy of the second testimony of the public deed evidencing the creation of the Mortgage, together with a certificate of the relevant Public Notary that the first testimony of such public deed has been presented for registration at (i) the Public Registry of Commerce of the Federal District of Mexico, and (ii) the Telecommunications Registry. 20. (u) FREQUENCY BAND LICENSE. Administrative Agent shall have received a copy of the License issued by the Secretariat of Communications and Transport in favor of the Borrower for the Frequency Band License. (v) ADDITIONAL MATTERS, DOCUMENTS OR INFORMATION. Lenders shall have received each additional document, instrument, legal opinion or item of information reasonably requested by any Lender, including, without limitation, a copy of any debt instrument, security agreement or other material contract to which Borrower, Guarantors or any of their Subsidiaries may be a party, and all corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement, the other Credit Documents, and the QUALCOMM Procurement Agreements shall be reasonably satisfactory in form and substance to Lenders. 4.2 CONDITIONS PRECEDENT TO ALL ADDITIONAL LOANS. The obligation of each Lender to make Additional Loans (including Additional Loans made on the Additional Loans Closing Date) is subject at the time of each such Loan, to the satisfaction of the following conditions: (a) BORROWING NOTICE. Administrative Agent shall have received a Borrowing Notice meeting the requirements of SECTION 1.2. (b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of the making of each Loan and also after giving effect thereto, (i) there shall exist no Default or Event of Default and (ii) all representations and warranties made by any Credit Party contained herein or in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Loans, except to the extent that such representations and warranties expressly relate to an earlier date. (c) GOVERNMENT APPROVALS. Administrative Agent shall have received evidence satisfactory to QUALCOMM showing receipt of all applicable material Governmental Approvals necessary to the extent then required to be obtained in connection with the sale, importation, payment, or Loans in respect of the equipment and services under the QUALCOMM Procurement Agreements. The acceptance of the benefits of each Loan shall constitute a representation and warranty by Borrower to Administrative Agent and each of the Lenders that all of the applicable conditions specified in SECTION 4.2 exist as of that time. All of the certificates, legal opinions and other documents and papers referred to in SECTION 4.1, unless otherwise specified, shall be delivered to Administrative Agent for the account of each of the Lenders and, except for the Notes and Pagares, in sufficient counterparts for each of the Lenders and shall be reasonably satisfactory in form and substance to Administrative Agent. SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to induce the Lenders to enter into this Agreement and to make the Loans, Borrower, each Guarantor by execution of the Guaranty and the Pledge Agreements, as applicable, jointly and severally makes with respect to Borrower, each Guarantor and their respective Subsidiaries the following representations and warranties to, and agreements with, the 21. Lenders, all of which shall survive the execution and delivery of this Agreement and the making of the Loans: 5.1 CORPORATE STATUS. Each Credit Party (i) is a variable capital limited liability stock corporation duly organized and validly existing under the laws of Mexico and (ii) has the requisite corporate power and authority to own, lease or otherwise hold its property and assets and to carry on the Business as contemplated by the Business Plan and are qualified as foreign corporations and are in good standing in each jurisdiction where the nature of their business or assets requires such qualification or good standing. 5.2 CORPORATE POWER AND AUTHORITY. Each Credit Party has the requisite capacity, power and authority to execute the Credit Documents to which it is a party and to perform the transactions contemplated therein and its obligations thereunder and has duly authorized the execution and performance of the Credit Documents to which it is a party. Each Credit Party has duly executed each Credit Document to which it is a party. 5.3 NO VIOLATION. The execution by each Credit Party of the Credit Documents to which it is party does not, and the performance by each Credit Party of the transactions contemplated by each such Credit Document to be performed by it does not and will not: (a) contravene such Person's certificate of incorporation or bylaw, (b) conflict with, or result in any violation of, or constitute a default under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a benefit under, any contract, permit, order, judgment or decree to which any Credit Party is a party (including, without limitation, the Network License and the Frequency Band License once the latter have been paid and issued by the respective authorities); (c) constitute a violation of any statute, law, rule or regulation ("Law") applicable to such Credit Party; or (d) result in the creation of any Lien upon any of the stocks, assets or properties of such Credit Party other than the Liens created pursuant to the Credit Documents. No consent, approval, order or authorization of, or registration, declaration or filing with, any third party or Mexican court, Mexican government (including its ministries) or Mexican governmental agency, authority, entity or instrumentality ("Governmental Entity") is required to be obtained or made by or with respect to any Credit Party in connection with the execution and performance of any Credit Document by such Credit Party, except for the authorizations and consents listed or described on SCHEDULE 5.3 hereto. 5.4 ENFORCEABILITY. This Agreement is, and each other Credit Document to which Borrower or any Guarantor is or will be a party when delivered hereunder will be, legal, valid and binding obligations of such Person enforceable against it in accordance with their respective terms, provided that the enforceability of any of such documents may be subject to or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally and the application of equitable principles. 5.5 LITIGATION. There are no actions, suits or proceedings pending or, to the best of its knowledge, threatened with respect to any Credit Party (i) that is reasonably likely to have a Material Adverse Effect or (ii) that is reasonably likely to have a material adverse effect on the rights or remedies of the Lenders or on the ability of the Credit Parties taken as a whole to perform their obligations under the other Credit Documents. 22. 5.6 USE OF PROCEEDS. (a) The proceeds of all Facility-1 Loans and Facility-2 Loans shall be utilized to finance QUALCOMM Costs. (b) The proceeds of VAT Loans may be used only to finance VAT charges imposed by Mexico in respect of the QUALCOMM Costs. 5.7 GOVERNMENTAL APPROVALS. Except for filings and recordings in connection with the Security Documents, no order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any foreign or domestic governmental or public body or authority, or any subdivision thereof, is required to authorize or is required in connection with (i) the execution, delivery and performance of any Credit Document or (ii) the legality, validity, binding effect or enforceability of any Credit Document. 5.8 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) The consolidated and consolidating balance sheet of the Borrower Group required to be delivered pursuant to SECTION 6.1, and the related consolidated and consolidating statements of income and retained earnings of Borrower and each Guarantor for the fiscal year then ended, copies of which have been furnished to Lenders, fairly present in all material respects the financial condition of Borrower and each Guarantor on a consolidated and consolidating basis as at such date and the results of the operations of Borrower and each Guarantor for the period ended on such date, all in accordance with GAAP consistently applied. (b) As to any current version of the Business Plan in effect from time to time, the detailed projections contained in such version of the Business Plan were prepared in good faith on the basis of the assumptions described in the Business Plan, which assumptions were believed by the Credit Parties in good faith to be reasonable in light of conditions existing at the time of preparation thereof, it being understood by Administrative Agent and the Lenders that actual results may vary from the projected results contained therein. (c) Since the date of the last financial statements of Borrower submitted to Agent and Lenders under Section 6.1, there has been no material adverse change in the condition (financial or otherwise) or operations of the Borrower, except for the operating losses contemplated by the most recent Business Plan required to be delivered pursuant to SECTION 6.1(c). 5.9 SECURITY INTERESTS. On and after the Additional Loans Closing Date, each of the Security Documents creates, as security for the obligations purported to be secured thereby, a valid and enforceable perfected security interest in and Lien on all of the Collateral subject thereto, superior to and prior to the rights of all third Persons and subject to no other Liens (other than Permitted Liens relating thereto), in favor of Collateral Agent for the benefit of the Secured Creditors. On and after the Additional Loans Closing Date, no filings or recordings are required in order to perfect the security interests created under any Security Document except for filings or recordings (i) required in connection with any such Security Document which shall have been made upon or prior to (or are the subject of arrangements, reasonably satisfactory to 23. Administrative Agent, for filing on or promptly after the date of) the execution and delivery thereof and (ii) that are required by the relevant Security Document to be made thereafter. 5.10 SUBSIDIARIES. On and as of the Effective Date, Holdings has no subsidiaries other than Borrower, Pegaso PCS and Personnel Co. Holdings is, as of the Effective Date, the owner, directly or indirectly of 100% of the shares representing the capital stock of all such Subsidiaries. 5.11 INTELLECTUAL PROPERTY. The Credit Parties have obtained all material patents, trademarks, service marks, trade names, copyrights, licenses and other rights, free from materially burdensome restrictions, that are necessary for the operation of the Business as presently conducted. 5.12 COMPLIANCE WITH LAW; LICENSES. Each Credit Party is in material compliance with each Law to which the Business, and/or the operations of such Credit Party are subject. The Network License has been duly granted to Borrower, is legal, valid, binding and enforceable, and is free of any Liens (other than Liens created pursuant to the Security Documents) and conditions (other than those conditions set forth in the corresponding concession title, a copy of which has been delivered to Administrative Agent). Borrower holds legal, valid, binding and enforceable title to the Frequency Band License (once they have been paid in full and the applicable concession agreements have been delivered by the respective authorities), free of any Liens (other than Liens created pursuant to the Security Documents) and conditions (other than those conditions set forth in the corresponding concession titles). 5.13 ENVIRONMENTAL MATTERS. The operation of the Business is in compliance with all applicable Environmental Law except where the effect of noncompliance is not reasonably likely to have a Material Adverse Effect. The Credit Parties have obtained and currently maintain all environmental permits necessary for their current operations and are in compliance therewith, there are no judicial or administrative actions, proceedings or investigations pending against any Credit Party that is reasonably likely to have a Material Adverse Effect and no Credit Party has received any notice from any Governmental Entity to the effect that they are not in compliance with any Environment Law where the effect of such noncompliance is reasonably likely to have a Material Adverse Effect. 5.14 YEAR 2000. Borrower reasonably believes that all computer applications that are material to any Credit Party's 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, 2000 (that is, be "Year 2000 compliant"), except to the extent that a failure to do so is not reasonably likely to have Material Adverse Effect. 5.15 NO SUBORDINATION. The obligations of each Guarantor under the Guaranty and Borrower under this Agreement or under any other contracts or instruments executed by Guarantors or Borrower in connection therewith and herewith (i) are not subordinated in right of payment to any other obligation of Borrower 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 Borrower, as applicable, except, in either case, to the extent required by law. 24. 5.16 TAXES. Each of Borrower and Guarantors has filed or has caused to be filed all material tax returns which it is required to file or has obtained extensions for the filing thereof, and each of Borrower and Guarantors has paid (i) all taxes shown to be due and payable on said returns or on any assessments made against it or against any of its property (other than those the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of Borrower or Guarantors, as the case may be) and (ii) all other material taxes, fees or other charges imposed on it or imposed on any of its property by any Governmental Authority (other than those the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of Borrower or Guarantors, as the case may be), and no material claims are being asserted with respect to any such taxes, fees or other charges (other than those the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of Borrower or Guarantors, as the case may be). No tax Liens have been filed with respect to any such taxes, fees or other charges (other than those the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of Borrower or Guarantors, as the case may be). 5.17 OWNERSHIP AND LIENS. Subject to the sale of equipment and services under the QUALCOMM Procurement Agreements and the Alcatel Procurement Agreements, Borrower owns and has good and marketable title to all assets comprising any of the Integral Assets and Borrower and Pegaso PCS own and have good and marketable title in fee simple absolute to, or a valid leasehold interest in, all property necessary and appropriate to operate the System to the extent, in each case, such assets are owned by any Guarantor. Each member of the Borrower Group owns and has good title to, all assets held by such member (except those disposed of in the ordinary course of business or otherwise in compliance with this Agreement), and, except as set forth on SCHEDULE 5.17, none of the properties and assets owned by any member of the Borrowing Group and none of their leasehold interests are subject to any Lien, except Permitted Liens. 5.18 INDEBTEDNESS. As of the date hereof, SCHEDULE 5.18 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 Borrower or any Guarantor 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. 5.19 ACCURACY OF INFORMATION FURNISHED; COMPLETE DISCLOSURE. Neither this Agreement nor any certificate, data, report, statement or other information furnished to Lenders by or on behalf of Borrower or any Guarantor in connection with the transactions contemplated hereby or by the other Credit Documents taken as a whole contains any untrue statement of a 25. material fact or omits or will omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the Effective Date, there is no fact known to Borrower or any Guarantor which would be reasonably likely to have a Material Adverse Effect which has not been disclosed herein or in such other documents, certificates and statements furnished to Lenders for use in connection with the transaction contemplated hereby. 5.20 OTHER REGULATORY COMPLIANCE. Neither Borrower nor any Guarantor is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Borrower is not engaged principally, or as one of the important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has not violated any statutes, laws, ordinances or rules applicable to them, violation of which would be reasonably likely to have a Material Adverse Effect. 5.21 EMPLOYEE BENEFIT PLANS; EMPLOYMENT MATTERS. (a) EMPLOYEE BENEFITS: (i) Each employee benefit plan, if any, has been maintained, operated and administered in accordance with its terms and with applicable law, and all notices, filings and disclosures required by terms or law have been timely made as of the date hereof, except when the failure to maintain, operate, or administer, or to notify, file or disclose, could not reasonably be expected to 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 could reasonably be expected to have a Material Adverse Effect or create any material Lien 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 IMSS, INFONAVIT, accrued payroll and payroll taxes payments for their respective employees have been timely paid and properly reported in the financial statements required to be delivered under SECTION 6.1(a) AND (b) in accordance with GAAP except where the failure to make such payments could not reasonably be expected to have a Material Adverse Effect or create any material Lien. (iii) The Borrower Group has no liability for retiree benefits. (b) EMPLOYMENT PRACTICES: (i) prior to the date of any borrowing hereunder, 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 such a violation against the Borrower pending or threatened, or before any federal or local labor board, tribunal or CONSAR; and 26. (c) there is no labor strike, request for representation, slowdown or stoppage actually pending or, to the knowledge of the Borrower Group, threatened against or affecting it which could reasonably be expected to have an Material Adverse Effect. (d) FILINGS: Each 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 Entities, including without limitation state and federal insurance and health regulatory authorities except where the failure to file could not reasonably be expected to have a Material Adverse Effect or create a material Lien. 5.22 SOVEREIGN IMMUNITY. This Agreement, the other Credit Documents and the Loans are of a commercial rather than the public or governmental nature and Borrower is not entitled to claim immunity from legal proceedings with respect to itself or any of its properties or assets on any grounds of sovereignty or otherwise under any Mexican law. To the extent that Borrower 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 of any grounds of sovereignty or otherwise (whether under the laws of Mexico or any other jurisdiction), to the extent permitted by applicable law Borrower hereby irrevocably waives such right to immunity for itself and its properties and assets in respect of its obligations arising under or relating to this Agreement or any other Credit Document. SECTION 6. AFFIRMATIVE COVENANTS. By their execution of this Agreement, the Guaranty and the Pledge Agreements, as applicable, each of Borrower and each Guarantor jointly and severally covenants and agrees with respect to Borrower, each Guarantor, and their respective Subsidiaries that for so long as this Agreement is in effect and until the Commitments have terminated, and the Loans, together with interest, Fees and all other Obligations incurred hereunder, are paid in full: 6.1 INFORMATION COVENANTS. Borrower will furnish to each Lender: (a) ANNUAL FINANCIAL STATEMENTS. Within 120 days after the close of each fiscal year of Borrower, the audited combined balance sheet of Borrower Group, as at the end of such fiscal year and the related combined statements of income, of stockholders' equity and of cash flows for such fiscal year, in each case setting forth comparative combined figures for the preceding fiscal year, and reported on by Price Waterhouse or other independent certified public accountants of recognized national standing whose opinion shall not be qualified as to the scope of audit, together with a certificate of such accounting firm stating that in the course of its regular audit of the business of Borrower Group, which audit was conducted in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge of any Event of Default which has occurred and is continuing or, if in the opinion of such accounting firm such a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof . (b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any event within 90 days after the close of each of the first three quarterly accounting periods in each fiscal 27. year, the unaudited combined balance sheet of 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 elapsed portion of the fiscal year ended with the last day of such quarterly period, and in each case setting forth comparative combined figures for the related periods in the prior fiscal year, all of which shall be certified by the chief financial officer or controller of Borrower, subject to changes resulting from audit and normal year-end audit adjustments. (c) BUSINESS PLAN. Promptly after completed and approved by Holdings' Board of Directors, each update and revision to the Business Plan (which update will be made no less frequently than once in any twelve (12) month period). (d) OFFICER'S CERTIFICATES. At the time of the delivery of the financial statements provided for in SECTIONS 6.1(a) AND (b), a certificate of the chief financial officer, controller or other Authorized Officer of Borrower to the effect that no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof, which certificate shall set forth the calculations required to establish whether Borrower Group was in compliance with the provisions of SECTION 7.10 as at the end of such fiscal period. (e) NOTICE OF DEFAULT, LITIGATION OR ENVIRONMENTAL CLAIM. Promptly, and in any event within three Business Days after any Responsible Officer of Borrower obtains knowledge thereof, notice of (w) the occurrence of any event which constitutes a Default or Event of Default (x) any default or event of default under any contractual obligation of Borrower or any Guarantor or any force majeure event which in either case is reasonably likely to have a Material Adverse Effect or the termination of any of the Alcatel Procurement Agreement or the QUALCOMM Procurement Agreements, (y) the commencement of, or any significant development in, any litigation, governmental proceeding or Environmental Claim pending against Borrower Group which is reasonably expected to have a Material Adverse Effect and (z) any change in the ownership of Holdings, Borrower or any Guarantor 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, Borrower proposes to take with respect thereto. (f) YEAR 2000 COMPLIANCE. Promptly notify Administrative Agent in the event Borrower 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 is not reasonably likely to have a Material Adverse Effect. (g) OTHER INFORMATION. Promptly upon transmission thereof, (i) copies of any filings and registrations with, and reports to, the SEC or any comparable Mexican Governmental Entity by Holdings or any of its Subsidiaries, (ii) copies of all financial statements, proxy statements, notices and reports as Holdings or any of its Subsidiaries shall send generally to public shareholders and (iii) with reasonable promptness, such other information or documents (financial or otherwise) as Administrative Agent on behalf of Required Lenders may reasonably request from time to time. 28. 6.2 BOOKS, RECORDS AND INSPECTIONS. Holdings will, and will cause its Subsidiaries to, keep and maintain accurate books of record and account in accordance with GAAP consistently applied and permit, upon reasonable notice to the chief financial officer, controller or any other Authorized Officer, officers and designated representatives of Administrative Agent or Required Lenders to visit and inspect any of the properties or assets of Holdings and any of its Subsidiaries in whomsoever's possession, and to examine the books of account of Holdings and any of its Subsidiaries and discuss the affairs, finances and accounts of Holdings and of any of its Subsidiaries with, and be advised as to the same by, its and their officers and independent accountants, all at such reasonable times and intervals and to such reasonable extent as Administrative Agent or Required Lenders may desire. 6.3 INSURANCE. Holdings will, and will cause each of its Subsidiaries to, at all times maintain in full force and effect insurance with responsible and reputable insurance companies and associations in such amounts, covering such risks and liabilities and with such deductibles or self-insured retentions as are in accordance with normal industry practice in Mexico. Holdings will, and will cause each of its Subsidiaries to, furnish to Administrative Agent on the Additional Loans Closing Date and thereafter, upon request of Administrative Agent and reasonable notice, a summary of the insurance carried together with certificates of insurance and other evidence of such insurance, if any, naming Collateral Agent as an additional insured and naming Collateral Agent, on behalf of Secured Creditors, loss payee and providing that if at any time any such insurance shall be canceled, or coverage be reduced in a way which materially affects the interests of Lenders, Administrative Agent or Collateral Agent, such cancellation or reduction shall not be effective as to Lenders, Administrative Agent or Collateral Agent for thirty (30) days after receipt by Administrative Agent and Collateral agent of written notice from such insurer of such cancellation or reduction. In the event Required Lenders determine that the requirements of this SECTION 6.3 have not been met, then Administrative Agent shall provide notice of such determination to Borrower, whereupon Borrower and Collateral Agent shall mutually agree upon an independent, internationally recognized insurance consultant or broker and such consultant or brokers determination as to compliance with this SECTION 6.3 shall be binding on the parties. 6.4 PAYMENT OF TAXES. Holdings will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all taxes imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, provided that neither Holdings nor any Subsidiary shall be required to pay any such tax which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP. 6.5 CORPORATE FRANCHISES. Holdings will do, and will cause each Subsidiary to do, or cause to be done, all things reasonably necessary to preserve and keep in full force and effect its existence and to preserve its material rights and franchises, other than those the failure to preserve which is not reasonably likely to have a Material Adverse Effect, provided that any transaction permitted by SECTION 7.2 will not constitute a breach of this SECTION 6.5. 6.6 COMPLIANCE WITH STATUTES, ETC. Holdings will, and will cause each Subsidiary to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental entities, domestic or foreign, in respect of the conduct of the 29. Business and the ownership of its property (including, in any event, all Environmental Laws) other than those the noncompliance with which is not likely to have a Material Adverse Effect. 6.7 GOOD REPAIR. Holdings will, and will cause each of its Subsidiaries to, ensure that its material properties and equipment necessary in the operation of its business are kept in generally good repair, working order and condition, normal wear and tear excepted, and, subject to SECTION 7.5, that from time to time there are made in such properties and equipment all needful 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 in management's judgment. 6.8 ALCATEL PROCUREMENT AGREEMENT AND ALCATEL CREDIT AGREEMENT. Prior to December 31, 1998, Borrower shall have authorized, executed and delivered (i) an agreement (the "Alcatel Procurement Agreement") with Alcatel Indetel Industria de Telecomunicacion S.A. de CV (the "Alcatel Vendor") substantially similar to the form most recently provided to QUALCOMM prior to the Effective Date hereof, and (ii) a Credit Agreement (the "Alcatel Credit Agreement") with Alcatel Alsthom or lender(s) arranged by such party ("Alcatel Lender"), which Alcatel Credit Agreement provides that Alcatel Lender is committed to provide not less than 100% of the financing for the equipment (other than towers and shelters) and services provided under the Alcatel Procurement Agreement (plus amounts to finance some portion of VAT payments required in connection therewith), copies of each of which have been certified by an Authorized Officer as true and complete, and shall have been delivered to Administrative Agent and each Lender, and all conditions precedent to the making of initial loans under the Alcatel Credit Agreement shall have occurred or been waived. 6.9 SHAREHOLDER PLEDGE OF HOLDINGS STOCK. Borrower shall use its best efforts to have delivered to Collateral Agent the Pledge Agreements in respect of the pledge of 100% the capital stock of Holdings. Prior to October 31, 1998, Borrower shall have caused to be obtained the undertaking of each shareholder of Holdings in favor of Collateral Agent that no such shareholder will pledge its shares in Holdings without the consent of Collateral Agent. 6.10 INTRAGROUP SERVICE AGREEMENTS. Prior to October 31, 1998, the PCS Services Agreement and the Personnel Co. Services Agreement shall have been duly authorized, executed and delivered by the parties thereto, the same shall be in form and substance reasonably satisfactory to QUALCOMM and, a copy thereof, certified by an Authorized Officer of Borrower as true and complete, shall have been delivered to Administrative Agent and each Lender. Borrower agrees not to materially amend, supplement or modify any such agreement in any way which would be reasonably likely have a negative impact on the interests of any Lender. 6.11 BUSINESS PLAN. Prior to December 31, 1998, a Business Plan shall have been finalized and a true and complete copy thereof shall have been delivered to each Lender. 6.12 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) Borrower will, and each other member of the Borrower Group will, upon request of the Required Lenders grant to Collateral Agent security interests and mortgages in any material personal or real property, whether acquired before or after the Effective Date, as may be 30. reasonably requested from time to time by Required Lenders. All such security interests and mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to Administrative Agent and Collateral Agent and shall constitute valid and enforceable Liens superior to and prior to the rights of all third Persons and subject to no other Liens except as are permitted by SECTION 7.3. The mortgages or instruments related thereto shall have been duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of Collateral Agent required to be granted pursuant to such mortgages and instruments and all taxes, fees and other charges payable in connection therewith shall have been paid in full. (b) Each Credit Party will, at the expense of such Credit Party, make, execute, endorse, acknowledge, file and/or deliver to Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, reports and other assurances or instruments and take such further steps relating to the collateral covered by any of the Security Documents as Collateral Agent may reasonably require. Furthermore, Borrower shall cause to be delivered to Collateral Agent such opinions of counsel and other related documents as may be reasonably requested by Administrative Agent to assure itself that this SECTION 6.12 has been complied with. (c) Each Credit Party will, at the expense of such Credit Party, make, execute, endorse, acknowledge and/or deliver to Administrative Agent from time to time such amendments hereto as shall be reasonably requested by Administrative Agent or Required Lenders for the purposes of establishing and maintaining efficient funds transfer, invoicing, interest collection and other administrative procedures. (d) Each action required by this SECTION 6.12 shall be completed as soon as possible, but in no event later than 60 days after such action is requested to be taken by Administrative Agent, Collateral Agent or Required Lenders, as the case may be, provided that in no event shall any Credit Party be required to take any action, other than using its reasonable commercial efforts without any material expenditure, to obtain consents from third parties with respect to its compliance with this SECTION 6.12. (e) In addition to the obligations and documents which this Agreement expressly requires Borrower or any Guarantor to execute, acknowledge, deliver and perform, Borrower and each Guarantor shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to Administrative Agent or Collateral Agent all documents, and take all actions, that may be reasonably requested by Administrative Agent, Collateral Agent or Lenders from time to time to confirm the rights created by the terms of any Credit Document to be covered by the Collateral Documents, or otherwise to carry out the purposes of the Credit Documents and the transactions contemplated hereunder and thereunder. 6.13 CONSENTS, APPROVALS. From time to time obtain all material governmental and third party consents, approvals and licenses required to be obtained by such time in connection with the transactions contemplated by the Alcatel Procurement Agreement, the QUALCOMM Procurement Agreements and the Credit Documents and such consents, approvals and licenses shall be kept in effect for so long as required, including, without limitation, (i) any required consent of any Governmental Entity required to be obtained to permit the assignment for security 31. purposes of the License and all additional licenses granted to Borrower or its Subsidiaries and (ii) all required consents from Borrower's, Holdings' any Guarantor's or their Subsidiaries' contractual counterparties required to be obtained to permit the assignment to Collateral Agent of the Collateral. 6.14 MAINTENANCE OF LICENSES AND COMPLIANCE WITH REGULATIONS AND RELATED AGREEMENTS. (i) Take any and all action necessary to maintain the Licenses; (ii) Not, without the prior written consent of Collateral Agent and Required Lenders, sell, assign, transfer or partition the Licenses, and if Administrative Agent and Lenders consent to such sale, assignment, transfer or partition, Borrower and each Guarantor shall cause each purchaser, assignee, transferee or partitionee to become a party to or otherwise specifically assume Borrower's obligations under the Credit Documents; (iii) Not take any action which would violate any federal, state, national, provincial or local statute, rule, regulation or order relating to the Licenses; (iv) Not, without the prior written consent of Collateral Agent and Requisite Lenders, materially modify or amend the Licenses; (v) Enter into all interconnection agreements required under or by the Licenses, if any; (vi) Not take any action which would violate any License or any agreement relating to the Licenses which might be reasonably likely to have a Material Adverse Effect; or (vii) Not, without the prior written consent of Collateral Agent and Required Lenders, pledge as collateral the License, nor subject the License or any Other License to any claim, Lien, security interest or other encumbrance; provided, however, that nothing in this SECTION 6.14 shall limit Borrower's ability to sell or dispose of assets, including a portion of the Licenses or Other Licenses, to the extent expressly permitted in SECTION 7.2(f). 6.15 SITE ACQUISITION. (a) In connection with site acquisition for the placement or installation of Intelligent Base Station Controllers ("BSCs"), Base Station Transceivers ("BTSs"), Mobile Switching Centers ("MSCs") or other infrastructure equipment, enter into a Site Lease Agreement with minor modifications as shall be reasonably necessary to negotiate with particular landlords and, as to leases not yet distributed