Bridge Loan Agreement

EXHIBIT 10.44


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BRIDGE LOAN AGREEMENT


dated as of May 27, 1999


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by and among


PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V.
as Borrower


THE MEMBERS OF BORROWER GROUP NAMED HEREIN


THE LENDERS PARTY HERETO


CITIBANK, N.A.
as Administrative Agent


SOCIETE GENERALE
as Syndication Agent


and


ABN AMRO BANK N.V.
as Documentation Agent


Milbank, Tweed, Hadley & McCloy LLP


TABLE OF CONTENTS


PAGE
---- SECTION 1. DEFINITIONS.......................................................................... 2


1.1 DEFINED TERMS......................................................................... 2
1.2 OTHER INTERPRETIVE PROVISIONS......................................................... 23
1.3 ACCOUNTING TERMS; GAAP................................................................ 23


SECTION 2. THE CREDITS......................................................................... 24


2.1 SYNDICATED WORKING CAPITAL FACILITY................................................... 24
2.2 VENDOR WORKING CAPITAL FACILITY....................................................... 25
2.3 CAPITALIZED INTEREST FACILITY......................................................... 25
2.4 LETTERS OF CREDIT..................................................................... 25
2.5 LOANS AND BORROWINGS.................................................................. 30
2.6 REQUESTS FOR BORROWINGS............................................................... 31
2.7 FUNDING OF BORROWINGS................................................................. 34
2.8 INTEREST ELECTIONS.................................................................... 35
2.9 TERMINATION AND REDUCTION OF, AND INCREASES IN, COMMITMENTS; FURTHER SYNDICATION...... 36
2.10 REPAYMENT OF LOANS.................................................................... 39
2.11 EVIDENCE OF DEBT...................................................................... 39
2.12 INTEREST.............................................................................. 41
2.13 ADDITIONAL INTEREST ON EURODOLLAR LOANS; INTEREST RATE DETERMINATIONS;
ALTERNATE RATE OF INTEREST............................................................ 43
2.14 VOLUNTARY PREPAYMENTS................................................................. 43
2.15 MANDATORY PREPAYMENTS................................................................. 44
2.16 SYNDICATION........................................................................... 45


SECTION 3. FEES; CONSIDERATION FOR QUALCOMM GUARANTY........................................... 45


3.1 FEES.................................................................................. 45
3.2 CONSIDERATION FOR QUALCOMM GUARANTY................................................... 46


SECTION 4. YIELD PROTECTION; PAYMENTS; TAXES; ETC.............................................. 46


4.1 INCREASED COSTS....................................................................... 46
4.2 BREAK FUNDING PAYMENTS................................................................ 47
4.3 ILLEGALITY............................................................................ 47
4.4 TAXES................................................................................. 48
4.5 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS........................... 49
4.6 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS........................................ 51


SECTION 5. CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT................................. 52


5.1 CONDITIONS PRECEDENT TO THE INITIAL SYNDICATED WORKING CAPITAL LOANS AND THE
FIRST LETTER OF CREDIT................................................................ 52
5.2 CONDITIONS PRECEDENT TO THE INITIAL VENDOR WORKING CAPITAL LOANS, THE INITIAL
CAPITALIZED INTEREST LOANS, AND THE QUALCOMM SATISFACTION OF CONDITIONS PRECEDENT
LETTER................................................................................ 54
5.3 FURTHER CONDITIONS PRECEDENT TO CERTAIN LOANS AND LETTERS OF CREDIT................... 57
5.4 CONDITIONS PRECEDENT TO CAPITALIZED INTEREST LOANS AND TO CERTAIN TERM LOANS.......... 57
5.5 FURTHER CONDITIONS PRECEDENT TO SYNDICATED WORKING CAPITAL LOANS AND LETTERS OF
CREDIT................................................................................ 58


SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.......................................... 58


6.1 SENIOR DEBT; NON-VENDOR FINANCING..................................................... 59
6.2 APPROVALS............................................................................. 59
6.3 CORPORATE STATUS...................................................................... 59


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PAGE
----
6.4 CORPORATE POWER AND AUTHORITY......................................................... 59
6.5 VALID AND BINDING OBLIGATION.......................................................... 59
6.6 NO VIOLATION.......................................................................... 60
6.7 PERMITS............................................................................... 60
6.8 FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED LIABILITIES; ETC............... 60
6.9 LITIGATION; LABOR DISPUTES............................................................ 61
6.10 TAX RETURNS AND PAYMENTS.............................................................. 61
6.11 CAPITALIZATION........................................................................ 62
6.12 SUBSIDIARIES.......................................................................... 62
6.13 COMPLIANCE WITH APPLICABLE LAW........................................................ 63
6.14 PROPERTY RIGHTS....................................................................... 63
6.15 SINGLE-PURPOSE........................................................................ 63
6.16 FEES AND ENFORCEMENT.................................................................. 63
6.17 FOREIGN EXCHANGE APPROVALS............................................................ 64
6.18 LIENS................................................................................. 64
6.19 TITLE................................................................................. 64
6.20 LOAN DOCUMENTS........................................................................ 64
6.21 CERTAIN ANCILLARY SERVICES............................................................ 65
6.22 ENVIRONMENTAL MATTERS................................................................. 65
6.23 INVESTMENT COMPANY ACT................................................................ 65
6.24 TRUE AND COMPLETE DISCLOSURE.......................................................... 65
6.25 NO ADDITIONAL FEES.................................................................... 66
6.26 USE OF PROCEEDS....................................................................... 66
6.27 INSURANCE............................................................................. 66
6.28 PRIVATE ACTIVITIES; IMMUNITY.......................................................... 66
6.29 NO SUBORDINATION...................................................................... 67
6.30 LICENSES.............................................................................. 67
6.31 OPERATOR AGREEMENTS................................................................... 67
6.32 EMPLOYEE BENEFIT PLANS; EMPLOYMENT MATTERS............................................ 67
6.33 YEAR 2000............................................................................. 68
6.34 INDEBTEDNESS.......................................................................... 68
6.35 BUDGET................................................................................ 68


SECTION 7. AFFIRMATIVE COVENANTS............................................................... 68


7.1 INFORMATION COVENANTS................................................................. 69
7.2 PERMITS; ENFORCEMENT OF TRANSACTION DOCUMENTS......................................... 72
7.3 PROPER LEGAL FORM..................................................................... 73
7.4 TRANSLATIONS.......................................................................... 73
7.5 NEW SUBSIDIARIES...................................................................... 73
7.6 CONSENTS, APPROVALS................................................................... 74
7.7 USURY PERMIT.......................................................................... 74


SECTION 8. NEGATIVE COVENANTS.................................................................. 74


8.1 NO PREPAYMENTS........................................................................ 74
8.2 FUNDAMENTAL CHANGES................................................................... 74
8.3 IMMUNITY.............................................................................. 74
8.4 ASSET SALES........................................................................... 75
8.5 RESTRICTED PAYMENTS................................................................... 75


SECTION 9. EVENTS OF DEFAULT................................................................... 75


9.1 EVENTS OF DEFAULT..................................................................... 75
9.2 REMEDIES.............................................................................. 78
9.3 EXERCISE OF REMEDIES.................................................................. 78


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PAGE
---- SECTION 10. ADMINISTRATIVE AGENT................................................................ 79


10.1 APPOINTMENT OF ADMINISTRATIVE AGENT................................................... 79
10.2 RIGHTS AND POWERS AS LENDER........................................................... 79
10.3 DELEGATION OF DUTIES BY ADMINISTRATIVE AGENT.......................................... 79
10.4 LIABILITY OF ADMINISTRATIVE AGENT..................................................... 79
10.5 RELIANCE BY ADMINISTRATIVE AGENT...................................................... 80
10.6 NON-RELIANCE BY LENDERS............................................................... 80
10.7 INDEMNIFICATION....................................................................... 80
10.8 SUCCESSOR ADMINISTRATIVE AGENT........................................................ 81


SECTION 11. MISCELLANEOUS....................................................................... 81


11.1 NOTICES............................................................................... 81
11.2 WAIVERS; AMENDMENTS................................................................... 82
11.3 EXPENSES, INDEMNITY, DAMAGE WAIVER.................................................... 83
11.4 SUCCESSORS AND ASSIGNS; PARTICIPATIONS................................................ 84
11.5 SURVIVAL.............................................................................. 86
11.6 COUNTERPARTS; INTEGRATION; EFFECTIVENESS.............................................. 87
11.7 RIGHT OF SET-OFF...................................................................... 87
11.8 SEVERABILITY.......................................................................... 87
11.9 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS............................ 87
11.10 WAIVER OF JURY TRIAL.................................................................. 89
11.11 HEADINGS.............................................................................. 89
11.12 CONFIDENTIALITY....................................................................... 89
11.13 INTEREST RATE LIMITATION.............................................................. 90
11.14 CURRENCY OF PAYMENT................................................................... 90
11.15 JUDGMENT CURRENCY..................................................................... 90
11.16 ENGLISH LANGUAGE...................................................................... 90
11.17 REINSTATEMENT......................................................................... 91
11.18 QUALCOMM RIGHT OF SUBROGATION......................................................... 91
11.19 NO THIRD-PARTY BENEFICIARIES.......................................................... 91


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EXHIBITS


Exhibit A Form of Pagare Exhibit B-1 Form of Borrowing Request Exhibit B-2 Form of Budget Breakdown Certificate Exhibit C Form of Capitalized Interest Loan Request Exhibit D Form of Interest Election Request Exhibit E Form of Assignment and Assumption Agreement Exhibit F Amendment No. 1 to Common Agreement Exhibit G Amendment No. 1 to QUALCOMM Credit Agreement Exhibit H Form of Administrative Questionnaire


SCHEDULES


Schedule 2.1 Syndicated Working Capital Commitments Schedule 2.2 Vendor Working Capital Commitments Schedule 2.3 Capitalized Interest Commitments Schedule 6.10 Withholding Taxes Schedule 6.11 Capitalization Schedule 6.16 Unpaid Taxes Schedule 6.22 Environmental Matters Schedule 6.25 Broker's Fees Schedule 6.30 Licenses Schedule 6.34 Indebtedness


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BRIDGE LOAN AGREEMENT


This BRIDGE LOAN AGREEMENT (this "Agreement"), dated as of May 27, 1999, among PEGASO COMUNICACIONES Y SISTEMAS, S.A. DE C.V., a sociedad anonima de capital variable organized under the laws of Mexico ("Borrower"), PEGASO TELECOMUNICACIONES, S.A. DE C.V., a sociedad anonima de capital variable organized under the laws of Mexico, PEGASO PCS, S.A. DE C.V., a sociedad anonima de capital variable organized under the laws of Mexico, PEGASO RECURSOS HUMANOS, S.A. DE C.V., a sociedad anonima de capital variable organized under the laws of Mexico, QUALCOMM INCORPORATED, a corporation organized under the laws of Delaware, ("QUALCOMM") and the Syndicated Lenders (as defined below) from time to time party hereto (each Syndicated Lender, together with QUALCOMM, a "Lender" and, collectively, "Lenders"), CITIBANK, N.A., a national banking association, in its capacity as administrative agent for Lenders ("Administrative Agent"), SOCIETE GENERALE, as Syndication Agent, and ABN AMRO BANK N.V., as Documentation Agent.


WITNESSETH


A. Borrower desires to obtain from the Working Capital Lenders (as defined below) Working Capital Facilities (as defined below) in the aggregate principal amount of up to One Hundred Million Dollars ($100,000,000) for the purposes of financing Borrower's working capital needs and for capital expenditures and other purposes, all as more particularly described below;


B. Borrower desires to obtain from the Capitalized Interest Lenders (as defined below) a credit facility to finance the interest payments, when and as due, under the Working Capital Facilities, in an aggregate principal amount of up to Fifteen Million Dollars ($15,000,000), all as more particularly described below; and


C. Lenders are willing to supply such financing subject to the terms and conditions and in reliance on the representations and warranties set forth in this Agreement and the other documents executed in connection herewith;


NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants set forth below, Borrower, Lenders and Administrative Agent agree as follows:


SECTION 1. DEFINITIONS


1.1 Defined Terms. As used in this Agreement, the following terms have the respective meanings set forth below or set forth in the referenced provision following such term:


"Additional Lender" shall have the meaning assigned in Section 2.9(f).


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"Administrative Agent" shall have the meaning provided in the first paragraph of this Agreement.


"Administrative Agent's Account" shall mean such account located in New York, New York as is specified in writing by Administrative Agent to Borrower and Lenders from time to time.


"Administrative Agent's Fee Letter" shall mean that letter agreement dated the date hereof by and between Borrower and Administrative Agent regarding payment of fees in connection with Administrative Agent's duties in its capacity as Administrative Agent.


"Administrative Questionnaire" shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent.


"Affiliate" shall mean, with respect to a specified Person, any other Person which directly or indirectly controls, or is under common control with, such Person. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event, any Person which owns directly or indirectly 10% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 10% or more of the partnership or other ownership interests of any other Person will be deemed to control such corporation or other Person. Notwithstanding the foregoing, (i) no individual shall be deemed to be an Affiliate of a Person solely by reason of his or her being a director, committee member, officer or employee of such person and (ii) each member of the Borrower Group and each of their respective Affiliates shall be deemed to be an Affiliate of each other member of the Borrower Group.


"Agreement" shall mean this Bridge Loan Agreement, as the same may be from time to time further modified, amended, supplemented or restated.


"Alcatel" shall mean Alcatel, a corporation duly organized under the laws of France.


"Alcatel Credit Agreement" shall mean the Credit Agreement, dated as of December 15, 1998, among Borrower, the lenders thereunder and Citibank International plc, as Alcatel Administrative Agent.


"Applicable Law" shall mean any constitution, statute, law, rule, regulation, ordinance, judgment, order, decree, Permit, or any published directive, guideline, requirement or other governmental restriction which has the force of law, or any determination by, or interpretation of any of the foregoing by, any judicial authority, binding on a given Person whether in effect as of the date hereof or as of any date thereafter, including all applicable Environmental Laws.


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"Applicable Margin" shall mean (i) for Eurodollar Loans, six percent (6%); and (ii) for Base Rate Loans, five percent (5%); provided that in each case, the Applicable Margin shall increase by one-half of one percent (0.5%) on each Interest Adjustment Date.


"Assignment Agreement" shall mean the Assignment and Assumption Agreement in the form of Exhibit E (appropriately completed).


"Authorized Officer" shall mean, with respect to any Person, the Managing Director, the President, the Vice President, the Chief Financial Officer, the Assistant Vice President, the Treasurer, the Assistant Treasurer or equivalent officers of such Person and, with respect to Borrower, shall include any officer or representative holding any of the foregoing positions (or their equivalent) whose name appears on a certificate of incumbency delivered concurrently with the execution of this Agreement, as such certificate of incumbency may be amended, supplemented or replaced from time to time to identify names of the individuals then holding such offices or the names of such representatives and the capacity in which they are acting.


"Availability Period" shall mean, for any Lender, (i) with respect to such Lender's Syndicated Working Capital Commitment, the period from the Closing Date until the Commitment Termination Date applicable to the Syndicated Working Capital Facility, (ii) with respect to such Lender's Vendor Working Capital Commitment, the period from (A) the date that is 90 days after the Closing Date, if such Lender is QUALCOMM, or such earlier date as QUALCOMM may elect by written notice to Borrower and Administrative Agent, or (B) the Closing Date, if such Lender is an Additional Lender acquiring such Vendor Working Capital Commitment in accordance with Section 2.9(f), until, in each case, the Commitment Termination Date applicable to the Vendor Working Capital Facility, (iii) with respect to such Lender's Term Loan Commitment, the Commitment Termination Date applicable to the Syndicated Working Capital Facility, and (iv) with respect to such Lender's Capitalized Interest Commitment, the period from the Closing Date until the Commitment Termination Date applicable to the Capitalized Interest Facility.


"Base Rate" shall mean, for any period, a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the higher of:


(a) the rate of interest announced publicly by Citibank in New York, New York from time to time as Citibank's base rate; and


(b) 1/2 of one percent per annum above the Federal Funds Rate for such period.


"Base Rate Loan" shall mean any Loan bearing interest at the Base Rate.


"Borrower" shall have the meaning provided in the first paragraph of this Agreement.


"Borrower Group" shall mean (i) Borrower, (ii) Holdings, (iii) Pegaso PCS, (iv) Personnel Co. (v) the respective Subsidiaries of each of the foregoing in existence as of the


3


Closing Date, and (vi) any Subsidiary of any of the foregoing which is formed, established, purchased or acquired after the Closing Date as described in Section 7.5. Any reference to a "member" or to a "member of the Borrower Group" shall mean one or more of the Persons described in clause (i) through (vi) of this definition.


"Borrower Obligations" shall mean all obligations of Borrower now existing or hereinafter arising, direct or indirect, absolute or contingent, due or to become due, under this Agreement, the Pagares or any other Loan Document to which Borrower is a party, including, without duplication, (i) payment of the principal of and interest on the Loans and the reimbursement obligations of Borrower in connection with the Letters of Credit, (ii) payment of all fees, expenses, indemnities and other amounts under the Loan Documents, and (iii) all other obligations, duties and liabilities of Borrower under or in connection with the Loan Documents (whether or not evidenced by any note, bond or other instrument and whether or not for the payment of money).


"Borrowing" shall mean the incurrence by Borrower of Loans of the same Type, on the same date, and under the same Facility, and, in the case of Eurodollar Loans, having the same Interest Period.


"Borrowing Request" shall mean a request by Borrower for a Borrowing in accordance with Section 2.6.


"Budget" shall mean the Initial Budget, as the same shall be updated by Borrower with the prior written consent of QUALCOMM.


"Budget Breakdown" shall have the meaning assigned in Section 2.6(b).


"Business" shall mean the business of development, operation and use of the Licenses (and, subject to the terms and conditions set forth in the Vendor Facilities, other new licenses and/or concessions issued to any member of the Borrower Group) and pursuant thereto the installation and operation of terrestrial-based wireless telecommunications systems in Mexico and, to the extent integral to such wireless terrestrial-based telecommunications systems, long-distance telecommunications systems in Mexico.


"Business Day" shall mean any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required by law to close in New York City or in the Federal District of Mexico; provided that, when used in conjunction with any Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.


"Business Plan" shall mean the Business Plan dated as of March 19, 1999, as updated from time to time as provided in Section 7.1(d).


"Capital Lease" as applied to any Person, shall mean any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of such Person.


4


"Capital Stock" of any Person shall mean any and all shares, interest, rights to purchase, warrants, options, participations or other equivalents of or interest in (however designated) the common or preferred equity or preference share capital of such Person, including partnership interests.


"Capitalized Interest Commitment" shall mean, with respect to each Capitalized Interest Lender, th ...