EXHIBIT 10.34

364-DAY CREDIT AGREEMENT

Dated as of March 1, 2005

TELECOMUNICACIONES DE PUERTO RICO, INC., a Puerto Rico corporation (the
“Borrower”), PUERTO RICO TELEPHONE COMPANY, INC., a Puerto Rico corporation
(“PRTC” and, collectively with each Significant Subsidiary (as hereinafter
defined) that shall become a guarantor hereunder in accordance with
Section 5.01(j), the “Guarantors”), the banks, financial institutions and other
institutional lenders (the “Initial Lenders”) listed on the signature pages
hereof and Citibank, N.A. (“Citibank”), as administrative agent (in such
capacity, the “Agent”) for the Lenders (as hereinafter defined), agree as
follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

     SECTION 1.01. Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):

     “Advance” means an advance by a Lender to the Borrower as part of a
Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance (each
of which shall be a “Type” of Advance).

     “Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term “control” (including the terms “controlling”, “controlled
by” and “under common control with”) of a Person means the possession, direct or
indirect, of the power to vote 10% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.

     “Agent’s Account” means the account of the Agent maintained by the Agent at
Citibank with its office at 399 Park Avenue, New York, New York 10043, Account
No. 36852248, Attention: Loan Investor Services.

     “Applicable Lending Office” means, with respect to each Lender, such
Lender’s Domestic Lending Office in the case of a Base Rate Advance and such
Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

 

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     “Applicable Margin” means, as of any date, a percentage per annum
determined by reference to the Performance Level in effect on such date as set
forth below:

                                                        Applicable              
          Applicable           Margin for Base     Applicable Margin    
Applicable Margin     Margin for           Rate Advances     for Base Rate    
for Eurodollar     Eurodollar           Prior to Term     Advances On and    
Rate Advances     Rate Advances On     Performance     Loan     After Term Loan
    Prior to Term Loan     and After Term Loan     Level     Conversion Date    
Conversion Date     Conversion Date     Conversion Date    
Level 1
      0.000 %       0.000 %       0.400 %       0.850 %    
Level 2
      0.000 %       0.00 %       0.500 %       0.975 %    
Level 3
      0.000 %       0.100 %       0.600 %       1.100 %    
Level 4
      0.000 %       0.625 %       0.700 %       1.625 %    
Level 5
      0.000 %       1.275 %       1.000 %       2.275 %    

     “Applicable Percentage” means, as of any date prior to the Term Loan
Conversion Date, a percentage per annum determined by reference to the
Performance Level in effect on such date as set forth below:

                    Performance Level     Applicable Percentage    
Level 1
      0.075 %    
Level 2
      0.100 %    
Level 3
      0.125 %    
Level 4
      0.175 %    
Level 5
      0.275 %    

     “Applicable Utilization Fee” means, as of any date prior to the Term Loan
Conversion Date that the aggregate Advances exceed 50% of the aggregate
Commitments, a percentage per annum determined by reference to the Performance
Level in effect on such date as set forth below:

                    Performance Level     Applicable Utilization Fee    
Level 1
      0.125 %    
Level 2
      0.125 %    
Level 3
      0.125 %    
Level 4
      0.250 %    
Level 5
      0.500 %    

     “Assignment and Acceptance” means an assignment and acceptance entered into
by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit C hereto.

     “Base Rate” means 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 that is offered to its
customers generally (before giving effect to any applicable margin); and

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

     “Base Rate Advance” means an Advance that bears interest as provided in
Section 2.06(a)(i).

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     “Borrower” has the meaning specified in the recital of parties.

     “Borrower’s Account” means the account of the Borrower maintained by the
Borrower at Citibank with its office at 399 Park Avenue, New York, New York
10043, Account No. 4078-8269.

     “Borrowing” means a borrowing consisting of simultaneous Advances of the
same Type made by each of the Lenders pursuant to Section 2.01.

     “Business Day” means a day of the year on which banks are not required or
authorized by law to close in New York City or San Juan, Puerto Rico, provided
that, if the applicable Business Day relates to any Eurodollar Rate Advances,
“Business Day” means a day of the year on which banks are not required or
authorized by law to close in New York City or San Juan, Puerto Rico and on
which dealings are carried on in the London interbank market.

     “Commitment” has the meaning specified in Section 2.01.

     “Consolidated” refers to the consolidation of accounts in accordance with
GAAP.

     “Consolidated Assets” means, for any period, the total assets of the
Borrower and its Subsidiaries as shown on the audited Consolidated balance sheet
or unaudited Consolidated balance sheet, as the case may be, as of the end of
the most recent fiscal quarter preceding such period.

     “Controlling Interest” means (a) ownership of at least 35% plus one share,
of the Voting Stock of the Borrower and (b) the ability to appoint a majority of
the Board of Directors of the Borrower.

     “Convert”, “Conversion” and “Converted” each refers to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section 2.07 or
2.08.

     “Debt” of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person for the
deferred purchase price of property or services (other than trade payables
incurred in the ordinary course of such Person’s business for which collection
proceedings have not been commenced, provided that trade payables for which
collection proceedings have commenced shall not be included in the term “Debt”
so long as the payment of such trade payables is being contested in good faith
and by proper proceedings and for which appropriate reserves are being
maintained), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all obligations of such Person
created or arising under any conditional sale or other similar title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
obligations of such Person as lessee under leases that have been, in accordance
with GAAP, recorded as capital leases, (f) all obligations of such Person in
respect of acceptances, letters of credit or similar extensions of credit,
(g) all net obligations of such Person in respect of Hedge Agreements, (h) all
Debt of others referred to in clauses (a) through (g) above or clause (i) below
guaranteed directly, or indirectly through a Subsidiary, by such Person, or in
effect guaranteed directly, or indirectly through a Subsidiary, by such Person
through a written agreement either (1) to pay or purchase such Debt or to
advance or supply funds for the payment or purchase of such Debt or (2) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Debt or to assure the holder of such Debt against loss and (i) all Debt
referred to in clauses (a) through (h) above secured by (or for which the holder
of such Debt has an existing right, contingent or otherwise, to be secured by)
any Lien on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Debt.

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     “Debt to EBITDA Ratio” of any Person at any date means the ratio of
(a) Debt of the types that, in accordance with GAAP, would be classified as
indebtedness on a Consolidated balance sheet of such Person on such date to
(b) EBITDA for the period of four fiscal quarters of such Person ended on or
immediately prior to such date, provided that for purposes of clause (a) of this
definition, Debt shall not include (1) the obligations specified in clause
(g) of the definition thereof set forth above or (2) with respect to the
Borrower, any obligations which may be assumed by the Borrower for guaranties of
any indebtedness of the Borrower’s employee stock ownership plan up to an
aggregate principal amount of $28,903,500.

     “Default” means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.

     “Disclosed Litigation” has the meaning specified in Section 3.01(b).

     “Domestic Lending Office” means, with respect to any Lender, the office of
such Lender specified as its “Domestic Lending Office” opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Agent.

     “EBITDA” means the sum, determined on a Consolidated basis, of the
Borrower’s (i) net income (or net loss), (ii) interest expense, (iii) income tax
expense, (iv) depreciation expense, (v) amortization expense and (vi) non-cash
severance charges in an aggregate amount not to exceed $20,000,000 in calendar
year 2004 and $20,000,000 in calendar year 2005.

     “EBITDA to Interest Ratio” of any Person on any date means the ratio of (a)
EBITDA for the period of four fiscal quarters of such Person ended on or
immediately prior to such date to (b) interest payable on, and amortization of
debt discount in respect of, all Debt of such Person for the period of four
fiscal quarters of such Person ended on or immediately prior to such date,
provided that for purposes of clause (b) of this definition, Debt shall not
include the obligations specified in clause (g) of the definition thereof set
forth above.

     “Effective Date” has the meaning specified in Section 3.01.

     “Eligible Assignee” means (i) a Lender; (ii) an Affiliate of a Lender that
is a financial institution and is majority-owned by such Lender; (iii) any
commercial bank organized under the laws of the Commonwealth of Puerto Rico
having total assets in excess of $1,000,000,000 or any other commercial bank
having total assets in excess of $1,000,000,000 that has an Applicable Lending
Office that is not subject to deduction or withholding of Taxes; or (iv) any
other Person approved by the Agent and, so long as no Default has occurred and
is continuing, the Borrower, such approval not to be unreasonably withheld;
provided, however, that neither the Borrower nor any Affiliate of the Borrower
shall qualify as an Eligible Assignee.

     “Environmental Action” means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
any third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.

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     “Environmental Law” means any federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, judgment, decree or judicial or
agency interpretation, policy or guidance relating to pollution or protection of
the environment, health, safety or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials.

     “Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.

     “ERISA Affiliate” means any Person that for purposes of Title IV of ERISA
is a member of the Loan Parties’ controlled group, or under common control with
the Borrower, within the meaning of Section 414 of the Internal Revenue Code.

     “ERISA Event” means (a) the occurrence of a reportable event, within the
meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC;
(b) the application for a minimum funding waiver with respect to a Plan; (c) the
provision by the administrator of any Plan of a notice of intent to terminate
such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice
with respect to a plan amendment referred to in Section 4041(e) of ERISA);
(d) the cessation of operations at a facility of any of the Loan Parties or any
ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA;
(e) the withdrawal by any of the Loan Parties or any ERISA Affiliate from a
Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the imposition of a
lien under Section 302(f) of ERISA with respect to any Plan; (g) the adoption of
an amendment to a Plan requiring the provision of security to such Plan pursuant
to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to
terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition described in Section 4042 of ERISA that is reasonably
expected to result in the termination of, or the appointment of a trustee to
administer, a Plan.

     “Eurocurrency Liabilities” has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

     “Eurodollar Lending Office” means, with respect to any Lender, the office
of such Lender specified as its “Eurodollar Lending Office” opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.

     “Eurodollar Rate” means, for any Interest Period for each Eurodollar Rate
Advance comprising part of the same Borrowing, an interest rate per annum equal
to the rate per annum obtained by dividing (a) the rate per annum (rounded
upward to the nearest whole multiple of 1/100 of 1% per annum) appearing on
Moneyline Telerate Markets Page 3750 (or any successor page) as the London
interbank offered rate for deposits in U.S. dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period or, if for any reason such rate is
not available, the average (rounded upward to the nearest whole multiple of
1/100 of 1% per annum, if such average is not such a multiple) of the rate per
annum at which deposits in U.S. dollars are offered by the principal office of
each of the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the first
day of such Interest Period in an amount approximately equal to such Reference
Bank’s pro rata share of the contemplated Eurodollar Rate Advance comprising
part of such Borrowing to be outstanding during such Interest Period

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and for a period equal to such Interest Period by (b) a percentage equal to 100%
minus the Eurodollar Rate Reserve Percentage for such Interest Period. The
Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance
comprising part of the same Borrowing shall be determined by the Agent on the
basis of applicable rates furnished to and received by the Agent from the
Reference Banks two Business Days before the first day of such Interest Period,
subject, however, to the provisions of Section 2.07.

     “Eurodollar Rate Advance” means an Advance that bears interest as provided
in Section 2.06(a)(ii).

     “Eurodollar Rate Reserve Percentage” for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.

     “Events of Default” has the meaning specified in Section 6.01.

     “Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.

     “GAAP” means (a) in the case of the preparation of all financial reporting
requirements, generally accepted accounting principles in the United States, as
in effect from time to time, and (b) in the case of the calculation,
certification and compliance with all financial tests and covenants, generally
accepted accounting principles in the United States, as in effect on the date of
the financial statements delivered to each Lender in accordance with
Section 4.01(e), in each case applied on a consistent basis both as to
classification of items and amounts.

     “Guaranteed Obligations” has the meaning specified in Section 7.01.

     “Guaranty” has the meaning specified in Section 7.01.

     “Hazardous Materials” means (a) petroleum and petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.

     “Hedge Agreements” means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements.

     “Information Memorandum” means the information memorandum dated
February 11, 2005 used by the Agent in connection with the syndication of the
Commitments.

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     “Interest Period” means, for each Eurodollar Rate Advance comprising part
of the same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance and ending on the last day of the period selected by the
Borrower pursuant to the provisions below and, thereafter, with respect to
Eurodollar Rate Advances, each subsequent period commencing on the last day of
the immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The duration
of each such Interest Period shall be one, two, three or six months, and subject
to clause (iii) of this definition, any other period, as the Borrower may, upon
notice received by the Agent not later than 11:00 A.M. (New York City time) on
the third Business Day prior to the first day of such Interest Period, select;
provided, however, that:

     (i) the Borrower may not select any Interest Period that ends (x) after the
Termination Date or (y) if the Advances have been converted to a term loan
pursuant to Section 2.05 prior to or on the last day of the prior Interest
Period, that ends after the Maturity Date;

     (ii) Interest Periods commencing on the same date for Eurodollar Rate
Advances comprising part of the same Borrowing shall be of the same duration;

     (iii) in the case of any such Borrowing, the Borrower shall not be entitled
to select an Interest Period having duration of any period other than one, two,
three or six months unless, by 2:00 P.M. (New York City time) on the third
Business Day prior to the first day of such Interest Period, each Lender
notifies the Agent that such Lender will be providing funding for such Borrowing
with such Interest Period (the failure of any Lender to so respond by such time
being deemed for all purposes of this Agreement as an objection by such Lender
to the requested duration of such Interest Period, provided that each Lender
shall use commercially reasonable good faith efforts to so respond); provided
further that, if any or all of the Lenders object to the requested duration of
such Interest Period, the duration of the Interest Period for such Borrowing
shall be one, two, three or six months, as specified by the Borrower in the
applicable Notice of Borrowing as the desired alternative to the selected
Interest Period; and

     (iv) whenever the last day of any Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, provided, however, that,
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day; and

     (v) whenever the first day of any Interest Period occurs on a day of an
initial calendar month for which there is no numerically corresponding day in
the calendar month that succeeds such initial calendar month by the number of
months equal to the number of months in such Interest Period, such Interest
Period shall end on the last Business Day of such succeeding calendar month.

     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.

     “Lenders” means the Initial Lenders and each Person that shall become a
party hereto pursuant to Section 9.07.

     “Lien” means any lien, security interest or other charge or encumbrance of
any kind.

     “Loan Party” means each of the Borrower and the Guarantors.

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     “Material Adverse Change” means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any Loan Party and its Subsidiaries
taken as a whole.

     “Material Adverse Effect” means a material adverse effect on (a) the
ability of any Loan Party to conduct its business on substantially the same
basis as conducted on the Effective Date or (b) the ability of any Loan Party to
service its Debt obligations on a timely basis.

     “Maturity Date” means the earlier of (a) the first anniversary of the
Termination Date and (b) the date of termination in whole of the aggregate
Commitments pursuant to Section 2.04 or 6.01.

     “Moody’s” means Moody’s Investors Service, Inc.

     “Multiemployer Plan” means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.

     “Multiple Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than such Loan Party
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Loan Party or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.

     “Note” means a promissory note of the Borrower payable to the order of any
Lender, in substantially the form of Exhibit A hereto, evidencing the aggregate
indebtedness of the Borrower to such Lender resulting from the Advances made by
such Lender.

     “Notice of Borrowing” has the meaning specified in Section 2.02(a).

     “Other Taxes” has the meaning specified in Section 2.13(b).

     “Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. 107-56, signed into law October 26, 2001.

     “PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

     “Performance Level” means, as of any date of determination, the level set
forth below as then in effect for the Borrower, as determined in accordance with
the following provisions of this definition:

  Level 1:    Public Debt Rating of at least A- by S&P or A3 by Moody’s.    
Level 2:    Public Debt Rating of lower than Level 1 but at least BBB+ by S&P or
Baa1 by Moody’s.     Level 3:    Public Debt Rating of lower than Level 2 but at
least BBB by S&P or Baa2 by Moody’s.     Level 4:    Public Debt Rating of lower
than Level 3 but at least BBB- by S&P or Baa3 by Moody’s.     Level 5:    Public
Debt Rating of lower than Level 4.

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     For purposes of the foregoing, (a) if only one of S&P and Moody’s shall
have in effect a Public Debt Rating, the Performance Level shall be determined
by reference to the available rating and (b) if the Public Debt Ratings
established by S&P and Moody’s shall fall within different Performance Levels,
the Performance Level shall be based upon the higher rating unless such Public
Debt Ratings differ by two or more levels, in which case the rating one level
higher than the lower rating level will apply.

     “Permitted Liens” means, with respect to any Person, (a) Liens for taxes,
assessments and governmental charges and levies to the extent not required to be
paid under Section 5.01(b) hereof; (b) pledges or deposits to secure obligations
under workers’ compensation laws or similar legislation; (c) pledges or deposits
to secure performance in connection with bids, tenders, contracts (other than
contracts for the payment of money) or leases to which such Person is a party;
(d) deposits to secure public or statutory obligations of such Person;
(e) materialmen’s, mechanics’, carriers’, workers’, repairmen’s or other like
Liens in the ordinary course of business, or deposits to obtain the release of
such Liens to the extent such Liens, in the aggregate, would not have a Material
Adverse Effect; (f) deposits to secure surety and appeal bonds to which such
Person is a party; (g) other pledges or deposits for similar purposes in the
ordinary course of business; (h) Liens created by or resulting from any
litigation or legal proceeding which at the time is currently being contested in
good faith by appropriate proceedings; (i) leases made, or existing on property
acquired, in the ordinary course of business; (j) landlord’s Liens under leases
to which such Person is a party; (k) zoning restrictions, easements, licenses,
and restrictions on the use of real property or minor irregularities in title
thereto, which do not materially impair the use of such property in the
operation of the business of such Person or the value of such property for the
purpose of such business; and (l) bankers’ liens, rights of set-off or analogous
rights granted or arising by operation of law to any deposits held by or other
indebtedness owing by any lender or any affiliate thereof to or for the credit
or account of such Person.

     “Permitted Receivables Financing” means any financing pursuant to which the
Borrower or any Subsidiary of the Borrower may sell, convey, or otherwise
transfer to a Receivables Subsidiary or any other Person (in the case of
transfer by a Receivables Subsidiary), or grant a security interest in, any
accounts receivable (and related assets) of the Borrower or such Subsidiary,
provided that such financing shall be on customary market terms and shall be
non-recourse to the Borrower and its Subsidiaries (other than the Receivables
Subsidiary) except to a limited extent customary for such transactions. The
grant of a security interest in any accounts receivable of the Borrower or any
Subsidiary of the Borrower (other than a Receivables Subsidiary) to secure Debt
under any credit facility shall not be deemed a Permitted Receivables Financing.

     “Person” means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.

     “Plan” means a Single Employer Plan or a Multiple Employer Plan.

     “Public Debt Rating” means, as of any date, the rating that has been most
recently announced by any of S&P or Moody’s, as the case may be, for any class
of non-credit enhanced long-term senior unsecured debt issued by the Borrower.
For purposes of the foregoing, (a) if any rating established by S&P or Moody’s
shall be changed, such change shall be effective as of the date on which such
change is first announced publicly by the rating agency making such change; and
(b) if S&P or Moody’s shall change the basis on which ratings are established,
each reference to the Public Debt Rating announced by S&P or Moody’s, as the
case may be, shall refer to the then equivalent rating by S&P or Moody’s, as the
case may be.

     “Receivables Subsidiary” means a bankruptcy-remote, special-purpose wholly
owned Subsidiary formed in connection with a Permitted Receivables Financing.

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     “Reference Banks” means initially, Citibank, Banco Bilbao Vizcaya
Argentaria Puerto Rico and Bank of Nova Scotia, Hato Rey, Puerto Rico or, if
less than three of such banks are able to furnish timely information in
accordance with Section 2.07, any other commercial bank designated by the
Borrower and approved by the Required Lenders as constituting a “Reference Bank”
hereunder.

     “Register” has the meaning specified in Section 9.07(d).

     “Required Lenders” means at any time Lenders owed at least a majority in
interest of the then aggregate unpaid principal amount of the Advances owing to
Lenders, or, if no such principal amount is then outstanding, Lenders having at
least a majority in interest of the Commitments.

     “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies,
Inc.

     “Services Agreement” means the Services Agreement, dated as of March 2,
2004, by and among the Borrower, PRTC and Verizon Corporate Services Group
Incorporated, as amended, modified renewed or replaced from time to time.

     “Significant Subsidiary” means at any time, with respect to the Borrower,
any Subsidiary, other than a Receivables Subsidiary, the assets of which, in the
aggregate, exceed 5% of the Consolidated Assets, determined in accordance with
GAAP.

     “Single Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or
any ERISA Affiliate and no Person other than the Loan Parties and the ERISA
Affiliates or (b) was so maintained and in respect of which any Loan Party or
any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.

     “Solvent” and “Solvency” mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay such debts
and liabilities as they mature and (d) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person’s property would constitute an unreasonably small capital. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability after taking into account any indemnification pursuant to the
terms of any agreements entered into in connection therewith.

     “Subsidiary” of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such limited
liability company, partnership or joint venture or (c) the beneficial interest
in such trust or estate, is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person’s other Subsidiaries.

     “Taxes” has the meaning specified in Section 2.13(a).

     “Term Loan Conversion Date” means the Termination Date on which all
Advances outstanding on such date are converted into a term loan pursuant to
Section 2.05.

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     “Term Loan Election” has the meaning specified in Section 2.05.

     “Termination Date” means the earlier of February 28, 2006 and the date of
termination in whole of the Commitments pursuant to Section 2.04 or 6.01.

     “Verizon” means Verizon Communications Inc., a Delaware corporation.

     “Voting Stock” means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even if the right so to
vote has been suspended by the happening of such a contingency.

     “Withholding Tax Change” means the approval by either the Chamber of
Representatives or the Senate of the Commonwealth of Puerto Rico of any proposal
to change any applicable law, treaty or government rule, regulation or order
which would require the Borrower to deduct or withhold any Taxes from or in
respect of any sum payable hereunder or under any Note to any Lender or the
Agent.

SECTION 1.02. Computation of Time Periods. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the word
“from” means “from and including” and the words “to” and “until” each mean “to
but excluding”.

SECTION 1.03. Accounting Terms. All terms of an accounting or financial nature
not specifically defined herein shall be construed in accordance with GAAP.

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01. The Advances. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make Advances to the Borrower from time to
time on any Business Day during the period from the Effective Date until the
Termination Date in an aggregate amount not to exceed at any time outstanding
the amount set forth opposite such Lender’s name on Schedule I hereof or, if
such Lender has entered into any Assignment and Acceptance, set forth for such
Lender in the Register maintained by the Agent pursuant to Section 9.07(d), as
such amount may be reduced pursuant to Section 2.04 (such Lender’s
“Commitment”). Each Borrowing shall be in an aggregate amount of $10,000,000 or
an integral multiple of $1,000,000 in excess thereof and shall consist of
Advances of the same Type made on the same day by the Lenders ratably according
to their respective Commitments. Within the limits of this Section 2.01, the
Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.09 and
reborrow under this Section 2.01.

SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made on notice,
given not later than 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed Borrowing in the case of a Borrowing
consisting of Eurodollar Rate Advances, or the Business Day of the proposed
Borrowing in the case of a Borrowing consisting of Base Rate Advances, by the
Borrower to the Agent, which shall give to each Lender prompt notice thereof by
telecopier or facsimile. Each such notice of a Borrowing (a “Notice of
Borrowing”) shall be by telephone, confirmed immediately in writing, or
telecopier or facsimile in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing, (ii) Type of
Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing,
and (iv) in the case of a Borrowing consisting of Eurodollar Rate Advances,
initial Interest Period for each such Advance. Each Lender shall, before 12:00
noon (New York City time) on the date of such Borrowing, make available for the
account of its Applicable Lending Office to the Agent at the Agent’s Account, in
same day funds, such Lender’s ratable portion of such Borrowing. After the
Agent’s receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Agent will make such funds available to the
Borrower at the Borrower’s Account.

(b) Anything in subsection (a) above to the contrary notwithstanding, (i) the
Borrower may not select Eurodollar Rate Advances for any Borrowing if the
aggregate obligation of the Lenders to make Eurodollar Rate Advances shall then
be suspended pursuant to Section 2.07 or 2.11 and (ii) the Eurodollar Rate
Advances may not be outstanding as part of more than twelve separate Borrowings.

(c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower.
In the case of any Borrowing that

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the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss (excluding loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.

(d) Unless the Agent shall have received notice from a Lender prior to the time
of any Borrowing that such Lender will not make available to the Agent such
Lender’s ratable portion of such Borrowing, the Agent may assume that such
Lender has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such ratable portion available to the Agent, such Lender and the
Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to Advances comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Rate. If such Lender shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Lender’s Advance as part of such Borrowing for purposes of this Agreement and
the Borrower shall be relieved of its obligations to repay such amount under
this Section 2.02(d).

(e) The failure of any Lender to make the Advance to be made by it as part of
any Borrowing shall not relieve any other Lender of its obligation hereunder to
make its Advance on the date of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Advance to be made
by such other Lender on the date of any Borrowing.

SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay to the Agent
for the account of each Lender a facility fee on the aggregate amount of such
Lender’s Commitment from the Effective Date in the case of each Initial Lender
and from the later of the Effective Date and the effective date specified in the
Assignment and Acceptance pursuant to which it became a Lender in the case of
each other Lender until the Termination Date at a rate per annum equal to the
Applicable Percentage in effect from time to time, payable in arrears quarterly
on the last day of each March, June, September and December, commencing
March 31, 2005, and on the Termination Date.

(b) Utilization Fee. The Borrower agrees to pay to the Agent for the account of
each Lender from the Effective Date until the Termination Date a Utilization Fee
on the aggregate amount of such Lender’s Advances for each day that the
aggregate Advances exceed 50% of the aggregate Commitments at a rate per annum
equal to the Applicable Utilization Fee in effect from time to time, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing March 31, 2005, and on the Termination Date.

(c) Agent’s Fees. The Borrower shall pay to the Agent for its own account such
fees as may from time to time be agreed between the Borrower and the Agent.

SECTION 2.04. Termination or Reduction of the Commitments. (a) Optional. The
Borrower shall have the right, upon at least three Business Days’ notice to the
Agent, to terminate in whole or reduce ratably in part the unused portions of
the respective Commitments of the Lenders, provided that each partial reduction
shall be in the aggregate amount of $10,000,000 or an integral multiple of
$1,000,000 in excess thereof.

     (b) Mandatory. On the Termination Date, if the Borrower has made the Term
Loan Election in accordance with Section 2.05 prior to such date, and from time
to time thereafter upon each prepayment of the Advances, the Commitments of the
Lenders shall be automatically and permanently reduced on a pro rata basis by an
amount equal to the amount by which (i) the aggregate Commitments immediately
prior to such reduction exceeds (ii) the aggregate unpaid principal amount of
all Advances outstanding at such time.

SECTION 2.05. Repayment of Advances. The Borrower shall, subject to the next
succeeding sentence, repay to the Agent for the ratable account of the Lenders
on the Termination Date the aggregate principal amount of the Advances then
outstanding. The Borrower may, upon not less than one Business Day notice to the
Agent, elect (the “Term Loan Election”) to convert all of the Advances
outstanding on the Termination Date in effect at such time into a term loan
which the Borrower shall repay in full ratably to the Lenders on the Maturity
Date; provided that the Term Loan Election may not be exercised unless the
applicable conditions in Section 3.02 are satisfied on the date of notice of the
Term Loan Election and on the date on which the Term Loan Election is to be
effected. All Advances converted into a term loan pursuant to this Section 2.05
shall continue to constitute Advances except that the Borrower may not reborrow
pursuant to Section 2.01 after all or any portion of such Advances have been
prepaid pursuant to Section 2.09.

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SECTION 2.06. Interest. (a) Scheduled Interest. The Borrower shall pay interest
on the unpaid principal amount of each Advance owing to each Lender from the
date of such Advance until such principal amount shall be paid in full, at the
following rates per annum:

     (i) Base Rate Advances. During such periods as such Advance is a Base Rate
Advance, a rate per annum equal at all times to the sum of (x) the Base Rate in
effect from time to time plus (y) the Applicable Margin in effect from time to
time, payable in arrears quarterly on the last day of each March, June,
September and December during such periods and on the date such Base Rate
Advance shall be Converted or paid in full.

     (ii) Eurodollar Rate Advances. During such periods as such Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of (x) the Eurodollar Rate for such
Interest Period for such Advance, plus (y) the Applicable Margin in effect from
time to time, payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three months, on each day that
occurs during such Interest Period every three months from the first day of such
Interest Period and on the date such Eurodollar Rate Advance shall be Converted
or paid in full.

(b) Default Interest. Upon the occurrence and during the continuance of an Event
of Default under Section 6.01(a), the Borrower shall pay interest on (i) the
unpaid principal amount of each Advance owing to each Lender, payable in arrears
on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid
on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee or other amount
payable hereunder that is not paid when due, from the date such amount shall be
due until such amount shall be paid in full, payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid on Base Rate
Advances pursuant to clause (a)(i) above.

SECTION 2.07. Interest Rate Determination. (a) Each Reference Bank agrees to
furnish to the Agent timely information for the purpose of determining each
Eurodollar Rate. If any one or more of the Reference Banks shall not furnish
such timely information to the Agent for the purpose of determining any such
interest rate, the Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks. The Agent shall
give prompt notice to the Borrower and the Lenders of the applicable interest
rate determined by the Agent for purposes of Section 2.06(a)(i) or (ii), and the
rate, if any, furnished by each Reference Bank for the purpose of determining
the interest rate under Section 2.06(a)(ii).

(b) If, with respect to any Eurodollar Rate Advances, the Required Lenders
notify the Agent that the Eurodollar Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Required Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance, and (ii) the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrower and the Lenders that the circumstances causing such suspension no
longer exist.

(c) If the Borrower shall fail to select the duration of any Interest Period for
any Eurodollar Rate Advances in accordance with the provisions contained in the
definition of “Interest Period” in Section 1.01, the Agent will forthwith so
notify the Borrower and the Lenders and such Advances will automatically, on the
last day of the then existing Interest Period therefor, Convert into Base Rate
Advances.

(d) On the date on which the aggregate unpaid principal amount of Eurodollar
Rate Advances comprising any Borrowing shall be reduced, by payment or
prepayment or otherwise, to less than $10,000,000, such Advances shall
automatically Convert into Base Rate Advances.

(e) Upon the occurrence and during the continuance of any Event of Default under
Section 6.01(a), (i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance and (ii) the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended.

(f) If fewer than two Reference Banks determine and furnish timely information
to the Agent for determining the Eurodollar Rate for any Eurodollar Rate
Advances,

     (i) the Agent shall forthwith notify the Borrower and the Lenders that the
interest rate cannot be determined for such Eurodollar Rate Advances,

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     (ii) each such Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance (or if such
Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and

     (iii) the obligation of the Lenders to make Eurodollar Rate Advances or to
Convert Advances into Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist.

SECTION 2.08. Optional Conversion of Advances. The Borrower may on any Business
Day, upon notice given to the Agent not later than 11:00 A.M. (New York City
time) on the third Business Day prior to the date of the proposed Conversion and
subject to the provisions of Sections 2.07 and 2.11, Convert all Advances of one
Type comprising the same Borrowing into Advances of the other Type; provided,
however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances
shall be made only on the last day of an Interest Period for such Eurodollar
Rate Advances and any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be in an amount not less than $10,000,000. Each such notice of a
Conversion shall, within the restrictions specified above, specify (i) the date
of such Conversion, (ii) the Advances to be Converted and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for each such Advance. Each notice of Conversion shall be
irrevocable and binding on the Borrower.

SECTION 2.09. Optional Prepayments of Advances. The Borrower may, upon notice
not later than 11:00 A.M. (New York City time) for Base Rate Advances and upon
at least two Business Days’ notice to the Agent for Eurodollar Rate Advances
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given the Borrower shall, prepay the outstanding principal
amount of the Advances comprising part of the same Borrowing in whole or ratably
in part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, however, that (x) each partial prepayment
shall be in an aggregate principal amount of $10,000,000 or an integral multiple
of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a
Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 9.04(c).

SECTION 2.10. Increased Costs. (a) If, due to either (i) the introduction of or
any change in or in the interpretation of any law or regulation or (ii) the
compliance with any written guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances (excluding for purposes of this Section
2.10 any such increased costs resulting from (i) Taxes or Other Taxes (as to
which Section 2.13 shall govern) and (ii) changes in the basis of taxation of
overall net income or overall gross income by the United States or by the
foreign jurisdiction or state under the laws of which such Lender is organized
or has its Applicable Lending Office or any political subdivision thereof), then
the Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Agent), pay to the Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased cost
(whether or not such increased costs arise prior to the receipt of written
notification from such central bank or other governmental authority); provided
that the Borrower shall not be required to pay any such increased costs to the
extent such increased costs accrued prior to the date that is six months prior
to such notice, provided further that, if the change in law or circumstance
giving rise to such increased costs or reductions is retroactive, then the
six-month period referred to above shall be extended to include the period of
retroactive effect thereof. A certificate as to the amount of such increased
cost, submitted to the Borrower and the Agent by such Lender, shall be
conclusive and binding for all purposes, absent error in the calculation of such
amount.

(b) If any Lender determines that compliance with any law or regulation or any
written guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender (excluding any reserves included in the
computation of the Eurodollar Rate) and that the amount of such capital is
increased by or based upon the existence of such Lender’s commitment to lend
hereunder and other commitments of this type, then, upon demand by such Lender
(with a copy of such demand to the Agent), the Borrower shall pay to the Agent
for the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender or such corporation
(whether or not such amounts arise prior to the receipt of written notification
from such central bank or other governmental authority) in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable (in the proportion that such Lender’s
Commitment hereunder bears to all of such Lender’s commitments of this type) to
the existence of

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such Lender’s commitment to lend hereunder; provided that the Borrower shall not
be required to compensate such Lender to the extent such amounts arose prior to
the date that is six months prior to such notice, provided further that, if the
change in law or circumstance giving rise to such increased costs or reductions
is retroactive, then the six-month period referred to above shall be extended to
include the period of retroactive effect thereof. A certificate as to such
amounts submitted to the Borrower and the Agent by such Lender shall be
conclusive and binding for all purposes, absent error in the calculation of such
amounts.

(c) Any Lender claiming any additional amounts payable pursuant to this
Section 2.10 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to minimize such additional
amounts and to change the jurisdiction of its Applicable Lending Office if the
making of such a change would avoid the need for, or reduce the amount of, any
additional amounts that may thereafter accrue and would not, in the reasonable
judgment of such Lender, be otherwise notably disadvantageous to such Lender.
The Borrower shall reimburse such Lender for such Lender’s reasonable expenses
incurred in connection with such change or in considering such a change in an
amount not to exceed the Borrower’s pro rata share of such expenses based on
such Lender’s Commitment and Advances and the total lending commitments and
loans of such Lender to its similarly situated customers.

SECTION 2.11. Illegality. Notwithstanding any other provision of this Agreement,
if any Lender shall notify the Agent that the introduction of or any change in
or in the interpretation of any law or regulation makes it unlawful, or any
central bank or other governmental authority having relevant jurisdiction
asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to
perform its obligations hereunder to make Eurodollar Rate Advances or to fund or
maintain Eurodollar Rate Advances hereunder, (i) each Eurodollar Rate Advance
made by such Lender will automatically, upon such demand, Convert into a Base
Rate Advance and (ii) the obligation of such Lender to make Eurodollar Rate
Advances or to Convert Advances into Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrower and the Lenders that the circumstances
causing such suspension no longer exist.

SECTION 2.12. Payments and Computations. (a) The Borrower shall make each
payment hereunder and under the Notes without counterclaim or set-off not later
than 11:00 A.M. (New York City time) on the day when due in U.S. dollars to the
Agent at the Agent’s Account in same day funds. The Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or fees ratably (other than amounts payable pursuant to
Section 2.03, 2.10, 2.13 or 9.04(c)) to the Lenders for the account of their
respective Applicable Lending Offices, and like funds relating to the payment of
any other amount payable to any Lender to such Lender for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 9.07(c), from and after the effective date specified in such Assignment
and Acceptance, the Agent shall make all payments hereunder and under the Notes
in respect of the interest assigned thereby to the Lender assignee thereunder,
and the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.

(b) All computations of interest based on the Base Rate shall be made by the
Agent on the basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Eurodollar Rate or the Federal Funds Rate
and of fees shall be made by the Agent on the basis of a year of 360 days, in
each case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest or fees are
payable. Each determination by the Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent error in the calculation of such
interest rate.

(c) Whenever any payment hereunder or under the Notes shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fee, as the case may be;
provided, however, that, if such extension would cause payment of interest on or
principal of Eurodollar Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.

(d) Unless the Agent shall have received notice from the Borrower prior to the
time on which any payment is due to the Lenders hereunder that the Borrower will
not make such payment in full, the Agent may assume that the Borrower has made
such payment in full to the Agent on such date and the Agent may, in reliance
upon such assumption, cause to be distributed to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrower shall not have so made such payment in full to the Agent, each Lender
shall repay to the Agent forthwith on demand such amount distributed to such
Lender together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Agent, at the Federal Funds Rate.

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SECTION 2.13. Taxes. (a) Subject to subsections (e) and (f) below, any and all
payments by the Borrower hereunder or under the Notes shall be made, in
accordance with Section 2.12, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto imposed by Puerto Rico,
the United States or any political subdivision of either (or in the case of any
payments by or on behalf of the Borrower through an account or branch outside
the United States or Puerto Rico or by or on behalf of the Borrower by a payor
that is not a United States person or not organized or resident in Puerto Rico
such payments shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto imposed by a foreign
jurisdiction or any political subdivision thereof), excluding, in the case of
each Lender and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it in lieu of net income taxes (x) in the case of a
Lender pursuant to the laws of the jurisdiction (or any political subdivision or
taxing authority therein) in which it is organized or in which the principal
office of such Lender, or Applicable Lending Office of such Lender is located,
or (y) in the case of any payment to the Agent in its capacity as Agent, the
jurisdiction (or any political subdivision or taxing authority therein) in which
it is organized or in which the principal office of the Agent is located or in
which the office designated by the Agent to act as Agent is located (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payments hereunder or under the Notes being
hereinafter referred to as “Taxes”). Subject to subsections (e) and (f) below,
if the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any Note to any Lender or the Agent,
(i) the sum payable shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.13) such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law. Within 30 days after the
date of any payment of Taxes, the Borrower shall furnish to the Agent, at its
address referred to in Section 9.02, the original or a certified copy of a
receipt evidencing payment thereof. For purposes of this subsection (a) and
subsection (e), the terms “United States” and “United States person” shall have
the meanings specified in Section 7701 of the Internal Revenue Code.

(b) In addition, the Borrower agrees to pay any stamp or documentary taxes or
any other excise or property taxes, charges or similar levies that arise from
any payment made hereunder or under the Notes or from the execution, delivery or
registration of, performing under, or otherwise with respect to, this Agreement
or the Notes as a result of the introduction of or any change in or in the
interpretation of any law or regulation after the Effective Date (hereinafter
referred to as “Other Taxes”).

(c) Subject to subsections (d), (e) and (f) below, the Borrower shall indemnify
each Lender and the Agent for the full amount of Taxes or Other Taxes (to the
extent not previously paid under subsection (a) or (b) above) imposed on or paid
by such Lender or the Agent (as the case may be) and any liability (including
penalties, interest and expenses but excluding any taxes imposed by any
jurisdiction on amounts payable under this Section 2.13) arising therefrom or
with respect thereto. This indemnification shall be made within 30 days from the
date such Lender or the Agent (as the case may be) makes written demand
therefor.

(d) Each Lender organized under the laws of a jurisdiction outside of Puerto
Rico from time to time, as requested in writing by the Borrower (but only so
long as such Lender remains lawfully able to do so), shall provide each of the
Agent and the Borrower with two properly and accurately completed and duly
executed original copies of any form, document or other certificate that is
necessary for such Lender to be exempt from, or entitled to a reduced rate of
Taxes or payments hereunder or under the Notes or for the Borrower to determine
the applicable rate of deduction or withholding of any Taxes. If any Lender
which is organized under the laws of a jurisdiction outside of Puerto Rico is
unable to provide the above-described forms, documents or other certificates for
a relevant interest period (or if the Lender’s appropriate personnel responsible
for providing the forms, documents or other certificates actually become aware
that the forms, documents or other certificates provided by it are inaccurate),
such Lender shall notify the Borrower in writing prior to or immediately upon
the commencement of such relevant interest period.

(e) For any period with respect to which a Lender has failed to provide the
Borrower with the appropriate form, document or other certificate requested by
the Borrower in accordance with Section 2.13(d) (other than if such failure is
due to a change in any applicable law, treaty or government rule, regulation or
order, or any change in the interpretation, administration or application
thereof occurring subsequent to the date hereof such that such Lender is not
lawfully able to provide the Borrower with the appropriate form, document or
other certificate, or if such form, document or other certificate is no longer
required to establish an exemption from the applicable tax), such Lender shall
not be entitled to indemnification under Section 2.13(a) or (c) with respect to
Taxes by reason of such failure and the Borrower shall be entitled to withhold
Taxes from payments to such Lender; provided, however, that should a Lender
become subject to Taxes because of its failure to deliver a form, document or
other certificate required hereunder, the Borrower shall take such steps at such
Lender’s expense as such Lender shall reasonably request to

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assist such Lender to recover such Taxes.

(f) Notwithstanding anything else contained in this Section 2.13, the Borrower
shall only be required to pay additional sums with respect to Taxes (subject to
subsection (h) below) to a Lender (or the Agent, as the case may be) pursuant to
subsection (a) or (c) above if the obligation to pay such Taxes results from
such Lender’s inability to obtain a complete exemption from Taxes as a result of
(i) any amendment to the laws (or any regulations thereunder), or any amendment
to, or change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority adopted or enacted after the date hereof (or in the case of an entity
that becomes a Lender after the date hereof, the date such entity becomes a
Lender), (ii) an amendment, modification or revocation of any existing
applicable tax treaty ratified, enacted or amended after the date hereof (or in
the case of an entity that becomes a Lender after the date hereof, the date such
entity becomes a Lender), or (iii) the ratification of a new tax treaty ratified
after the date hereof (or in the case of an entity that becomes a Lender after
the date hereof, the date such entity becomes a Lender).

(g) In the event that the Borrower makes an additional payment under
Section 2.13(a) or 2.13(c) for the account of any Lender and such Lender, in its
sole opinion, determines that it has finally and irrevocably received or been
granted a credit against, or relief or remission from, or repayment of, any tax
paid or payable by it in respect of or calculated with reference to the
deduction or withholding giving rise to such additional payment, such Lender
shall, to the extent that it determines that it can do so without prejudice to
the retention of the amount of such credit, relief, remission or repayment, pay
to the Borrower such amount as such Lender shall, in its sole opinion, have
determined is attributable to such deduction or withholding and will leave such
Lender (after such payment) in no worse position than it would have been had the
Borrower not been required to make such deduction or withholding. Nothing
contained herein shall (i) interfere with the right of a Lender to arrange its
tax affairs in whatever manner it thinks fit or (ii) oblige any Lender to claim
any tax credit or to disclose any information relating to its tax affairs or any
computations in respect thereof or (iii) require any Lender to take or refrain
from taking any action that would prejudice its ability to benefit from any
other credits, reliefs, remissions or repayments to which it may be entitled.
Each Lender and the Agent shall reasonably cooperate with the Borrower at the
Borrower’s written request and sole expense, in contesting any Taxes or Other
Taxes the Borrower would bear pursuant to this Section 2.13, provided, however,
that (i) no tax return of such Lender or the Agent is or would be held open as a
result of such contest, (ii) neither such Lender nor the Agent is required to
reopen a tax year that has already closed and (iii) such Lender and the Agent
shall, in the sole opinion of such Lender and the Agent, respectively, have
determined that such contest will leave such Lender and the Agent, respectively,
in no worse position than it would have been in had it not contested such Taxes
or Other Taxes. Nothing contained herein shall interfere with the right of a
Lender or the Agent to arrange its tax affairs in whatever manner it thinks fit,
if in the sole judgment of such Lender or the Agent, such contest would be
disadvantageous to such Lender or the Agent. In pursuing a contest in the
Lender’s or the Agent’s name, such Lender or the Agent will be represented by
counsel of such Lender’s or the Agent’s choice, and will defend against, settle
or otherwise control the contest and will not relinquish control or decision
making over the contest.

(h) (i) Any Lender claiming any additional amounts payable pursuant to this
Section 2.13 or (ii) upon a Withholding Tax Change, each Lender, agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to avoid or minimize such additional amounts and to change the
jurisdiction of its Applicable Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any additional amounts that
may thereafter accrue and would not, in the reasonable judgment of such Lender,
be otherwise notably disadvantageous to such Lender. The Borrower shall
reimburse such Lender for such Lender’s reasonable expenses incurred in
connection with such change or in considering such a change in an amount not to
exceed the Borrower’s pro rata share of such expenses based on such Lender’s
Commitment and Advances to the Borrower and the total lending commitments and
loans of such Lender to its similarly situated customers.

SECTION 2.14. Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Advances owing to it (other than pursuant to
Section 2.10, 2.13, 9.01(b), 9.04(c) or 9.07) in excess of its ratable share of
payments on account of the Advances obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such participations in the
Advances owing to them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender’s ratable share
(according to the proportion of (i) the amount of such Lender’s required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender by delivering payment pursuant to
this Section 2.14 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such

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participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

SECTION 2.15. Use of Proceeds. The proceeds of the Advances shall be available
(and the Borrower agrees that it shall use such proceeds) solely for general
corporate purposes of the Borrower and its Subsidiaries, including, without
limitation, to provide a backstop for commercial paper, provided that such
proceeds shall not be used for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System).

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01.
Section 2.01 of this Agreement shall become effective on and as of the first
date (the “Effective Date”) on which the following conditions precedent have
been satisfied:

     (a) There shall have occurred no Material Adverse Change since December 31,
2003 other than as disclosed in Schedule 3.01(a) hereto.

     (b) There shall exist no action, suit, investigation, litigation or
proceeding affecting any of the Loan Parties or any of their respective
Subsidiaries pending or threatened before any court, governmental agency or
arbitrator that (i) could be reasonably likely to have a Material Adverse Effect
other than the matters described on Schedule 3.01(b) hereto (the “Disclosed
Litigation”) or (ii) is initiated by any Person other than a Lender in its
capacity as a Lender that purports to affect the legality, validity or
enforceability of this Agreement or any Note or the consummation of the
transactions contemplated hereby, and there shall have been no material adverse
change in the status, or financial effect on any Loan Party, of the Disclosed
Litigation from that described on Schedule 3.01(b) hereto.

     (c) All governmental and third party consents and approvals necessary in
connection with the execution, delivery and performance of this Agreement and
the Notes shall have been obtained (without the imposition of any conditions
that could reasonably be expected to materially adversely affect the ability of
any Loan Party to perform its obligations hereunder) and shall remain in effect,
and no law or regulation shall be applicable that restrains, prevents or imposes
adverse conditions upon the transactions contemplated hereby that could
reasonably be expected to materially adversely affect the ability of any Loan
Party to perform its obligations hereunder.

     (d) The Borrower shall have notified each Lender and the Agent in writing
as to the proposed Effective Date.

     (e) The Borrower shall have paid all invoiced fees and expenses of the
Agent and the Lenders (including the invoiced fees and expenses of counsel to
the Agent).

     (f) On the Effective Date, the following statements shall be true and the
Agent shall have received for the account of each Lender a certificate signed by
a duly authorized officer of the Borrower, dated the Effective Date, stating
that:

     (i) The representations and warranties contained in Section 4.01 are
correct on and as of the Effective Date, and

     (ii) No event has occurred and is continuing that constitutes a Default.

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     (g) The Agent shall have received on or before the Effective Date the
following, each dated such day, in form and substance satisfactory to the Agent
and (except for the Notes) in sufficient copies for each Lender:

     (i) The Notes to the order of the Lenders, respectively.

     (ii) Certified copies of the resolutions of the Board of Directors of each
Loan Party approving the transactions contemplated by this Agreement and the
Notes and of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement and such Notes.

     (iii) A certificate of the Secretary or an Assistant Secretary of each Loan
Party certifying the names and true signatures of the officers of each Loan
Party authorized to sign this Agreement and the Notes and the other documents to
be delivered hereunder.

     (iv) A certificate, in substantially the form of Exhibit D hereto,
attesting to the Solvency of each Loan Party after giving effect to the
Borrowings contemplated hereunder, from the chief financial officer of each such
Loan Party.

     (v) A favorable opinion of Curtis, Mallet-Prevost, Colt & Mosle, New York
counsel for the Loan Parties, substantially in the form of Exhibit E hereto.

     (vi) A favorable opinion of Roberto Garcia, Esq., Vice President and
General Counsel of the Borrower, substantially in the form of Exhibit F hereto.

     (vii) A favorable opinion of Shearman & Sterling LLP, counsel for the
Agent, in form and substance satisfactory to the Agent.

     (h) The termination in whole of the commitments of the lenders party to the
364-Day Credit Agreement dated as of March 2, 2004 (the “Existing Credit
Agreement”) among the Borrower, PRTC, as guarantor, Citibank, as administrative
agent, Banco Bilbao Vizcaya Argentaria Puerto Rico, as syndication agent, and
Banco Popular de Puerto Rico, FirstBank Puerto Rico and Scotiabank de Puerto
Rico, as co-documentation agents, and the payment in full of all obligations
outstanding under the Existing Credit Agreement. Each of the Initial Lenders
that is a party to the Existing Credit Agreement hereby waives the requirement
of three Business Days notice to terminate the commitments under the Existing
Credit Agreement.

SECTION 3.02. Conditions Precedent to Each Borrowing and the Term Loan
Conversion Date. The obligation of each Lender to make an Advance on the
occasion of each Borrowing and the Term Loan Election shall be subject to the
conditions precedent that the Effective Date shall have occurred and on the date
of such Borrowing or the Term Loan Conversion Date the following statements
shall be true (and each of the giving of the applicable Notice of Borrowing, the
acceptance by the Borrower of the proceeds of such Borrowing and the notice of
Term Loan Election shall constitute a representation and warranty by the
Borrower that on the date of such Borrowing or the Term Loan Conversion Date
such statements are true):

     (a) the representations and warranties contained in Section 4.01 are
correct in all material respects on and as of the date of such Borrowing or the
Term Loan Conversion Date, before and after giving effect to such Borrowing and
to the application of the proceeds therefrom, or the Term Loan Election, as
though made on and as of such date, and

     (b) no event has occurred and is continuing, or would result from such
Borrowing or from the application of the proceeds therefrom, or the Term Loan
Election, that constitutes a Default.

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SECTION 3.03. Determinations Under Section 3.01. For purposes of determining
compliance with the conditions specified in Section 3.01, each Lender shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to the Lenders unless an officer of the Agent
responsible for the transactions contemplated by this Agreement shall have
received notice from such Lender prior to the date that the Borrower, by notice
to the Lenders, designates as the proposed Effective Date, specifying its
objection thereto. The Agent shall promptly notify the Lenders of the occurrence
of the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:

     (a) Each Loan Party is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation.

     (b) The execution, delivery and performance by each Loan Party of this
Agreement and the Notes executed by it and the consummation of the transactions
contemplated hereby, are within such Loan Party’s corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene
(i) such Loan Party’s charter or by-laws (or other equivalent organizational
documents) or (ii) any law or any material contractual restriction binding on or
affecting such Loan Party or, to the knowledge of the chief financial officer of
the Borrower, any other contract the breach of which would limit the ability of
any Loan Party to perform its obligations under this Agreement or the Notes.

     (c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any other third
party is required for the due execution, delivery and performance by any Loan
Party of this Agreement or the Notes.

     (d) This Agreement has been, and each of the Notes when delivered hereunder
will have been, duly executed and delivered by the Borrower. This Agreement has
been duly executed and delivered by each Guarantor. Assuming that this Agreement
has been duly executed by the Agent and each of the Initial Lenders, this
Agreement is, and each of the Notes when delivered hereunder will be, the legal,
valid and binding obligation of the Borrower enforceable against the Borrower in
accordance with their respective terms. Assuming that this Agreement has been
duly executed by the Agent and each of the Initial Lenders, this Agreement is
the legal, valid and binding obligation of each Guarantor enforceable against
each Guarantor in accordance with its terms.

     (e) The Consolidated balance sheet of the Borrower and its Subsidiaries as
at December 31, 2003, and the related Consolidated statements of income and cash
flows of the Borrower and its Subsidiaries for the fiscal year then ended,
accompanied by an opinion of Ernst & Young LLP, independent public accountants,
and the Consolidated balance sheet of the Borrower and its Subsidiaries as at
September 30, 2004, and the related Consolidated statements of income and cash
flows of the Borrower and its Subsidiaries for the nine months then ended, duly
certified by the chief financial officer of the Borrower, copies of which have
been furnished to each Lender, fairly present, subject, in the case of said
balance sheet as at September 30, 2004, and said statements of income and cash
flows for the nine months then ended, to year-end audit adjustments, the
Consolidated financial condition of the Borrower and its Subsidiaries as at such
dates and the Consolidated results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates, all in accordance with
generally accepted accounting principles consistently applied.

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     (f) There is no pending or (to the knowledge of any Loan Party) threatened
action or proceeding, including, without limitation, any Environmental Action,
affecting any Loan Party or any of its Subsidiaries before any court,
governmental agency or arbitrator that is initiated by any Person other than a
Lender in its capacity as a Lender that purports to affect the legality,
validity or enforceability of this Agreement or any Note.

     (g) Neither the Borrower nor any of its Subsidiaries is an Investment
Company, as such term is defined in the Investment Company Act of 1940, as
amended.

     (h) No Loan Party is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Advance will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock.

     (i) The obligations of the Borrower under this Agreement, and the
obligations of each Guarantor under the Subsidiary Guaranty rank pari passu in
right of payment with all other senior unsecured Debt of such Person.

ARTICLE V

COVENANTS OF THE LOAN PARTIES

SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid
or any Lender shall have any Commitment hereunder, each Loan Party will:

     (a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries
to comply, in all material respects, with all applicable laws, rules,
regulations and orders, such compliance to include, without limitation,
compliance with ERISA, Environmental Laws and the Patriot Act, except where the
failure to so comply would not have a Material Adverse Effect.

     (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges or levies imposed upon it or
upon its property and (ii) all lawful claims that, if unpaid, might by law
become a Lien upon its property; provided, however, that neither any Loan Party
nor any of its Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained, unless
and until any Lien resulting therefrom attaches to its property and becomes
enforceable against its other creditors and the aggregate of such Liens would
have a Material Adverse Effect.

     (c) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries
to maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which such Loan Party or such Subsidiary operates;
provided, however, that such Loan Party and its Subsidiaries may self-insure to
the extent consistent with prudent business practice.

     (d) Preservation of Corporate Existence, Etc. Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that each Loan Party and its Subsidiaries may consummate any transaction
permitted under Section 5.02(b) and provided further that neither any Loan Party
nor any of its Subsidiaries shall be required to preserve any right or franchise
if the senior management of such Loan Party or of such Subsidiary shall
determine that the preservation thereof is no longer desirable in the conduct of
the business

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of such Loan Party or such Subsidiary, as the case may be, and that the loss
thereof is not disadvantageous in any material respect to such Loan Party or
such Subsidiary.

     (e) Visitation Rights. During normal business hours and upon reasonable
notice from time to time, permit the Agent or any of the Lenders or any agents
or representatives thereof, to examine and make copies of and abstracts from the
records and books of account of (excluding any confidential information), and
visit the properties of, such Loan Party and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of such Loan Party and any of its
Subsidiaries with the appropriate representatives of such Loan Party and
together with the appropriate representatives of such Loan Party’s independent
certified public accountants.

     (f) Keeping of Books. Keep, and cause each of its Subsidiaries to keep,
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of such Loan
Party and each such Subsidiary in accordance with generally accepted accounting
principles in effect from time to time.

     (g) Maintenance of Properties, Etc. Maintain and preserve, and cause each
of its Subsidiaries to maintain and preserve, its material properties that are
used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.

     (h) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under this
Agreement with any of their Affiliates, other than another Loan Party, (i) on
terms that are fair and reasonable and no less favorable to such Loan Party or
such Subsidiary than it would obtain in a comparable arm’s-length transaction
with a Person not an Affiliate except where the failure to do so, in the
aggregate, would not have a Material Adverse Effect, (ii) as required by the
Federal Communications Commission’s rules and regulations for transactions among
affiliates or (iii) as contemplated by the Services Agreement.

     (i) Reporting Requirements. Furnish to the Lenders:

     (i) as soon as available and in any event within 60 days after the end of
each of the first three quarters of each fiscal year of the Borrower, the
Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such quarter and the Consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, duly certified
(subject to year-end audit adjustments) by the chief financial officer,
treasurer or controller of the Borrower as having been prepared in accordance
with generally accepted accounting principles and certificates of the chief
financial officer, treasurer or controller of the Borrower as to compliance with
the terms of this Agreement and setting forth in reasonable detail the
calculations necessary to demonstrate compliance with Section 5.03, provided
that in the event of any change in GAAP used in the preparation of such
financial statements, the Borrower shall also provide, if necessary for the
determination of compliance with Section 5.03, a statement of reconciliation
showing the calculations used for purposes of Section 5.03;

     (ii) as soon as available and in any event within 120 days after the end of
each fiscal year of the Borrower, a copy of the annual audited report for such
year for the Borrower and its Subsidiaries, containing the Consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of such fiscal year and
the Consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for such fiscal year, in each case accompanied by an opinion
acceptable to the Required Lenders by Ernst & Young LLP or other independent
public accountants of nationally recognized standing and certificates of the
chief financial officer, treasurer or controller of the Borrower as to
compliance with the terms of this Agreement and

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setting forth in reasonable detail the calculations necessary to demonstrate
compliance with Section 5.03, provided that in the event of any change in GAAP
used in the preparation of such financial statements, the Borrower shall also
provide, if necessary for the determination of compliance with Section 5.03, a
statement of reconciliation showing the calculations used for purposes of
Section 5.03;

     (iii) as soon as possible and in any event within five Business Days after
the occurrence of each Default continuing on the date of such statement, a
statement of the chief financial officer, treasurer or controller of the
Borrower setting forth details of such Default and the action that the Borrower
has taken and proposes to take with respect thereto;

     (iv) promptly after the sending or filing thereof, copies of any quarterly
and annual reports and proxy solicitations that any Loan Party sends to any of
its securityholders, and copies of any reports on Form 8-K that such Loan Party
files with the Securities and Exchange Commission (other than reports on Form
8-K filed solely for the purpose of incorporating exhibits into a registration
statement previously filed with the Securities and Exchange Commission);

     (v) prompt notice of all actions and proceedings before any court,
governmental agency or arbitrator affecting any Loan Party or any of its
Subsidiaries of the type described in Section 3.01(b); and

     (vi) such other information respecting any Loan Party or any of its
Subsidiaries as any Lender through the Agent may from time to time reasonably
request.

     (j) Certain Obligations Respecting Subsidiaries. The Borrower will take
such action, and will cause each of its Significant Subsidiaries and any
Significant Subsidiary formed with the intent of merging with or into a Person
that will be a Significant Subsidiary subject to this provision to take such
action, from time to time as shall be necessary to ensure that all Significant
Subsidiaries of the Borrower are party to, as Loan Parties, the Guaranty
provided in Article VII hereof. Without limiting the generality of the
foregoing, in the event that the Borrower or any of its Significant Subsidiaries
shall form or acquire any new Significant Subsidiary, the Borrower or the
respective Significant Subsidiary will cause such new Significant Subsidiary to
(i) become a party hereto and to the Guaranty pursuant to a written instrument
in form and substance satisfactory to the Agent, and (ii) deliver such proof of
corporate action, incumbency of officers, opinions of counsel and other
documents relating to the foregoing as is consistent with those delivered by
each Loan Party pursuant to Section 3.01 hereof, or as any Lender or the Agent
shall have reasonably requested.

     SECTION 5.02. Negative Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will not:

     (a) Liens, Etc. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien on or with respect to any of
its properties, whether now owned or hereafter acquired, or assign for security
purposes (but not in connection with a bona fide sale thereof), or permit any of
its Subsidiaries to assign for security purposes (but not in connection with a
bona fide sale thereof), any right to receive income; provided that nothing in
this Section 5.02 shall be construed to prevent or restrict the following:

     (i) Permitted Liens,

     (ii) purchase money Liens upon or in any real property or equipment
acquired or held by the Borrower or any of its Subsidiaries in the ordinary
course of business to secure the purchase price of such property or equipment or
to secure Debt incurred solely for the purpose of

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financing the acquisition of such property or equipment, or Liens existing on
such property or equipment at the time of its acquisition or conditional sales
or other similar title retention agreements with respect to property hereafter
acquired or extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount, provided, however, that no such Lien shall extend to or
cover any properties of any character other than the real property or equipment
being acquired, and no such extension, renewal or replacement shall extend to or
cover any properties not theretofore subject to the Lien being extended, renewed
or replaced,

     (iii) the Liens existing on the Effective Date and described on Schedule
5.02(a) hereto and other undisclosed Liens existing on the Effective Date
securing obligations in aggregate amount not to exceed $10,000,000,

     (iv) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Borrower or any of its Subsidiaries;
provided that any such Liens that were created during the period immediately
prior to such merger, consolidation or acquisition were created in the ordinary
course of business of such Person and the Debt secured by such Liens does not
exceed the fair market value of the assets (including intangible assets) of such
Person so merged into or consolidated with the Borrower or any of its
Subsidiaries,

     (v) the replacement, extension or renewal of any Lien permitted by clauses
(iii) and (iv) above upon or in the same property theretofore subject thereto or
the replacement, extension or renewal (without increase in the amount or
extension of the final maturity date) of the Debt secured thereby,

     (vi) Liens not otherwise permitted pursuant to clauses (i) through
(v) above securing obligations not to exceed at any one time the amount of
$10,000,000, and

     (vii) Liens on property of a Receivables Subsidiary created in connection
with a Permitted Receivables Financing.

     (b) Mergers, Etc. Merge or consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or permit any of its Subsidiaries to do so,
except that (i) any Subsidiary of the Borrower may merge or consolidate with or
into, or dispose of assets to, any other Subsidiary of the Borrower, (ii) any
Subsidiary of the Borrower may merge into or dispose of assets to the Borrower,
and (iii) the Borrower may merge with any Subsidiary of Verizon so long as the
surviving corporation assumes all obligations of the Borrower hereunder and
under the Notes and each Guarantor confirms in writing its guarantee obligations
hereunder upon the occurrence of and following such merger, and provided, in
each case, that no Default shall have occurred and be continuing at the time of
such proposed transaction or would result therefrom.

     (c) Accounting Changes. Make or permit, or permit any of its Subsidiaries
to make or permit, any change in accounting policies or reporting practices,
except (i) as required or permitted by generally accepted accounting principles
or (ii) where the effect of such change, together with all other changes in
accounting policies or reporting practices made pursuant to this clause
(ii) since the Effective Date, is immaterial to the Borrower and its
Subsidiaries taken as a whole.

     (d) Subsidiary Debt. Permit any of its Subsidiaries to create or suffer to
exist, any Debt other than:

     (i) Debt owed to the Borrower or to a wholly owned Subsidiary of the
Borrower,

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     (ii) Debt which may be borrowed and outstanding from time to time under the
credit agreements existing on and as of the Effective Date and described on
Schedule 5.02(d) hereto (the “Existing Debt”), and any Debt extending the
maturity of, or refunding or refinancing, in whole or in part, the Existing
Debt, provided that the principal amount of such Existing Debt shall not be
increased above the principal amount thereof outstanding immediately prior to
such extension, refunding or refinancing, and the direct and contingent obligors
therefor shall not be changed, as a result of or in connection with such
extension, refunding or refinancing,

     (iii) unsecured Debt incurred in the ordinary course of business
aggregating not more than $150,000,000 for PRTC and for all of the other
Guarantors not more than $75,000,000 in the aggregate at any one time
outstanding,

     (iv) Debt in respect of operating leases,

     (v) indorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business, and

     (vi) Debt incurred by a Receivables Subsidiary created in connection with a
Permitted Receivables Financing.

SECTION 5.03. Financial Covenants. So long as any Advance shall remain unpaid or
any Lender shall have any Commitment hereunder, the Borrower will:

     (a) Debt to EBITDA Ratio. Maintain a Debt to EBITDA Ratio, as at the end of
each fiscal quarter of the Borrower, of not more than 3.0:1.0.

     (b) EBITDA to Interest Ratio. Maintain an EBITDA to Interest Ratio, as at
the end of each fiscal quarter of the Borrower, of not less than 3.5:1.0.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default. If any of the following events (“Events of
Default”) shall occur and be continuing:

     (a) The Borrower shall fail to pay any principal of any Advance when the
same becomes due and payable; or the Borrower shall fail to pay any interest on
any Advance within five Business Days after the same becomes due and payable; or
any fees or other amounts payable under this Agreement or any Note are not paid
within five Business Days after the same becomes due and payable; or

     (b) Any representation or warranty made or deemed made by the Borrower
herein or by the Borrower (or any of its officers) in connection with this
Agreement shall prove to have been incorrect in any material respect when made
or deemed made; or

     (c) (i) Any Loan Party shall fail to perform or observe any term, covenant
or agreement contained in Section 5.01(d), (e), (h), (i)(iii), (i)(v) or (j),
5.02 or 5.03, (ii) any Loan Party shall fail to perform or observe any term,
covenant or agreement contained in Section 5.01(i) (other than clauses (iii) and
(v) thereof) if such failure shall remain unremedied for five Business Days
after written notice thereof shall have been given to such Loan Party by the
Agent or any Lender or (iii) any Loan Party shall fail to perform or observe any
other term, covenant or agreement contained in this Agreement on its part to be
performed or observed if such failure shall remain unremedied for 30 days after
written notice thereof shall have been given to such Loan Party by the Agent or
any Lender; or

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     (d) Article VII is breached by any Guarantor or shall cease to be in full
force and effect or any Guarantor shall so state in writing; or

     (e) The Borrower or any of its Subsidiaries shall fail to pay any principal
of or premium or interest on any Debt that is outstanding in a principal, or in
the case of Hedge Agreements net, amount of at least $20,000,000 in the
aggregate (but excluding Debt outstanding hereunder) of the Borrower or such
Subsidiary (as the case may be) (the “Requisite Amount”), when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
later of five Business Days and the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any such Debt
aggregating the Requisite Amount shall be declared due and payable in accordance
with its terms or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt aggregating the Requisite
Amount and shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such event or condition is to
accelerate the maturity of such Debt; or any such Debt aggregating the Requisite
Amount shall be required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased in
accordance with its terms, or any offer to prepay, redeem, purchase or defease
such Debt shall be required to be made in accordance with its terms, in each
case prior to the stated maturity thereof where the cause of such prepayment,
redemption, purchase or defeasance or offer therefor is the occurrence of an
event or condition that is premised on a material adverse deterioration of the
financial condition, results of operation or properties of the Borrower or any
of its Subsidiaries, provided that with respect to Debt aggregating the
Requisite Amount of the types described in clauses (h) or (i) of the definition
of “Debt” and to the extent such Debt relates to the obligations of any Person
other than the Borrower or any of its Subsidiaries, no Event of Default shall
occur so long as the payment of such Debt is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being maintained;
or any event shall occur or condition shall exist under any agreement or
instrument relating to any Debt that is outstanding in a principal, or in the
case of Hedge Agreements net, amount of at least $40,000,000 and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or permit
the acceleration of, the maturity of such Debt; or

     (f) The Borrower or any of its Subsidiaries shall generally not pay their
respective debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against the
Borrower or its Subsidiaries seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or unstayed
for a period of 60 days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it
or for any substantial part of its property) shall occur; or the Borrower or its
Subsidiaries shall take any corporate action to authorize any of the actions set
forth in this subsection (f) under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors; or

     (g) Judgments or orders for the payment of money in excess of $30,000,000
in the aggregate shall be rendered against the Borrower or its Subsidiaries and
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order for which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; provided,
however, that any such judgment or order shall not be an Event of Default under
this Section 6.01(g) if and for so long as (i) (A) the amount of such judgment
or order is covered by a valid and binding policy of insurance between the
defendant and the insurer or insurers covering payment thereof, (B) such insurer
shall be rated, or, if

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more than one insurer, at least 90% of such insurers as measured by the amount
of risk insured, shall be rated, at least “A-” by A.M. Best Company or its
successor or its successors and (C) such insurer(s) has been notified of, and
has not disputed the claim made for payment of, the amount of such judgment or
order or (ii) (A) the amount of such judgment or order is covered by a valid and
binding indemnification agreement between the defendant and an indemnitor,
(B) such indemnitor shall have a rating for any class of its non-credit enhanced
long-term senior unsecured debt of not lower than BBB+ by S&P or Baa3 by Moody’s
and (C) such indemnitor has been notified of, and has not disputed the claim
made for payment of, the amount of such judgment or order; or

     (h) (i) Verizon shall cease for any reason to maintain, directly or
indirectly, the Controlling Interest; or (ii) the Borrower shall for any reason
cease to own 100% of the Voting Stock of any Guarantor; or

     (i) Any Loan Party or its ERISA Affiliates shall incur, or shall be
reasonably likely to incur, liability that would have a Material Adverse Effect
as a result of one or more of the following: (i) the occurrence of any ERISA
Event; (ii) the partial or complete withdrawal of such Loan Party or its ERISA
Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination
of a Multiemployer Plan; then, and in any such event, the Agent (i) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare the obligation of each Lender to make Advances to be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare the Notes, all interest thereon and all other amounts payable
under this Agreement to be forthwith due and payable, whereupon the Notes, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower; provided, however, that in
the event of an actual or deemed entry of an order for relief with respect to
the Borrower under the Federal Bankruptcy Code, (A) the obligation of each
Lender to make Advances shall automatically be terminated and (B) the Notes, all
such interest and all such amounts shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower.

ARTICLE VII

GUARANTY

SECTION 7.01. Guaranty; Limitation of Liability. (a) Each Guarantor hereby
jointly and severally unconditionally and irrevocably guarantees the punctual
payment when due, whether at stated maturity, by acceleration or otherwise, of
all obligations of each other Loan Party now or hereafter existing under this
Agreement or any Note, whether for principal, interest, fees, expenses or
otherwise (such obligations, to the extent not paid by such Loan Party or
specifically waived in accordance with Section 9.01, being the “Guaranteed
Obligations”), and agrees to pay any and all expenses (including reasonable
counsel fees and expenses) incurred by the Agent or the Lenders in enforcing any
rights under this Article VII (this “Guaranty”). Without limiting the generality
of the foregoing, each Guarantor’s liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any Loan
Party to the Agent or any Lender under this Agreement or any Note but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such Loan Party.

(b) (i) Each Guarantor and, by its acceptance of this Guaranty, the Agent and
each other Lender, hereby confirms that it is the intention of all such parties
that this Guaranty not constitute a fraudulent transfer or fraudulent conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar Federal, state or Commonwealth of
Puerto Rico law to the extent applicable to this Guaranty. To effectuate the
foregoing intention, the Agent, each other Lender and each Guarantor hereby
irrevocably agrees that the obligations of each Guarantor under this Guaranty
shall not exceed the greater of (A) the benefit realized by such Guarantor from
the proceeds of the Advances made from time to time by the Borrower to such
Guarantor and (B) the maximum amount that will, after giving effect to such
maximum amount and all other probable contingent and fixed liabilities of such
Guarantor that are relevant under applicable law, and

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after giving effect to any collections from, rights to receive contribution
from, or payments made by or on behalf of each other Guarantor in respect of the
obligations of such other Guarantor under this Guaranty, result in the
obligations of such Guarantor under this Guaranty not constituting a fraudulent
transfer or fraudulent conveyance. For purposes hereof, “Bankruptcy Law” means
Title 11, United States Code, or any similar Federal, state or Commonwealth of
Puerto Rico law for the relief of debtors.

     (ii) Each Guarantor agrees that in the event any payment shall be required
to be made to the Lenders under this Guaranty, such Guarantor will contribute,
to the maximum extent such that the contribution will not result in a fraudulent
transfer or fraudulent conveyance, such amounts to each other Guarantor so as to
maximize the aggregate amount paid to the Lenders under this Agreement and the
Notes.

SECTION 7.02. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of this Agreement
and the Notes, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or the Lenders with respect thereto. The obligations of each Guarantor
under this Guaranty are independent of the Guaranteed Obligations, and a
separate action or actions may be brought and prosecuted against such Guarantor
to enforce this Guaranty, irrespective of whether any action is brought against
the Borrower or any other Guarantor or whether the Borrower or any other
Guarantor is joined in any such action or actions. The liability of each
Guarantor under this Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and, to the maximum extent permitted by law, each Guarantor
hereby irrevocably waives, any defenses it may now or hereafter have in any way
relating to, any or all of the following:

     (a) any lack of validity or enforceability of this Agreement or any
agreement or instrument relating hereto;

     (b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations, or any other amendment or
waiver of or any consent to departure from this Agreement or any Note,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Borrower or otherwise;

     (c) any taking, exchange, release or non-perfection of any collateral, or
any taking, release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Guaranteed Obligations;

     (d) any change, restructuring or termination of the corporate structure or
existence of the Borrower; or

     (e) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by the Agent
or any Lender that might otherwise constitute a defense available to, or a
discharge of, any Guarantor, the Borrower or any other guarantor or surety other
than payment when due.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent or any Lender upon the insolvency,
bankruptcy or reorganization of the Borrower or any Guarantor or otherwise, all
as though such payment had not been made.

SECTION 7.03. Waiver. Each Guarantor hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty, the right to require application against the
property of the Borrower or any other Guarantor, and any requirement that the
Agent or any Lender exhaust any right or take any action against the Borrower or
any other Person or any collateral. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated herein and that the waiver set forth in this Section 7.03 is
knowingly made in contemplation of such benefits. Each Guarantor hereby waives
any right to revoke this Guaranty, and acknowledges that this Guaranty is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.

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SECTION 7.04. Continuing Guaranty; Assignments. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the later of the
cash payment in full of the Guaranteed Obligations and all other amounts payable
under this Guaranty and the Termination Date, (b) be binding upon each
Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Lenders, the Agent and their successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Lender
may assign or otherwise transfer all or any portion of its rights and
obligations hereunder (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise, in each
case as provided in Section 9.07.

SECTION 7.05. Subrogation. No Guarantor will exercise any rights that it may now
or hereafter acquire against the Borrower or any other insider guarantor that
arise from the existence, payment, performance or enforcement of such
Guarantor’s obligations under this Guaranty, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Agent
or any Lender against the Borrower, any other Guarantor or any other insider
guarantor or any collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Borrower, any other Guarantor
or any other insider guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security solely on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash and the Termination Date shall have occurred. If any amount
shall be paid to any Guarantor in violation of the preceding sentence at any
time prior to the later of the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty and the
Termination Date, such amount shall be held in trust for the benefit of the
Agent and the Lenders and shall forthwith be paid to the Agent to be credited
and applied to the Guaranteed Obligations and all other amounts payable under
this Guaranty, whether matured or unmatured, in accordance with the terms of
this Guaranty, or to be held as collateral for any Guaranteed Obligations or
other amounts payable under this Guaranty thereafter arising. If (i) any
Guarantor shall make payment to the Agent or any Lender of all or any part of
the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall be paid in full in cash and (iii) the
Termination Date shall have occurred, the Agent and the Lenders will, at such
Guarantor’s request and expense, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by such
Guarantor.

ARTICLE VIII

THE AGENT

SECTION 8.01. Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers and discretion as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders and such instructions shall be binding upon all Lenders and
all holders of Notes; provided, however, that the Agent shall not be required to
take any action that exposes the Agent to personal liability or that is contrary
to this Agreement or applicable law. The Agent agrees to give to each Lender
prompt notice of each notice given to it by the Borrower pursuant to the terms
of this Agreement.

SECTION 8.02. Agent’s Reliance, Etc. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement, except for
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, the Agent: (i) may treat the payee of any Note
as the holder thereof until the Agent receives and accepts an Assignment and
Acceptance entered into by the Lender that is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any

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statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of any Loan Party or to inspect the
property (including the books and records) of any Loan Party except as
specifically set forth in this Agreement; (v) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (vi) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, facsimile or telegram)
believed by it to be genuine and signed or sent by the proper party or parties.

SECTION 8.03. Citibank and Affiliates. With respect to its Commitment, the
Advances made by it and the Note or Notes issued to it, Citibank shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not the Agent; and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated, include Citibank in its individual
capacity. Citibank and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, accept investment banking engagements from
and generally engage in any kind of business with, any Loan Party, any of its
Subsidiaries and any Person who may do business with or own securities of any
Loan Party or any of its Subsidiaries, all as if Citibank were not the Agent and
without any duty to account therefor to the Lenders.

SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.

SECTION 8.05. Indemnification. The Lenders agree to indemnify the Agent (to the
extent not reimbursed by the Borrower), ratably according to the respective
principal amounts of the Advances owed each of them (or if no Advances are at
the time outstanding, ratably according to their Commitments), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the Agent in
any way relating to or arising out of this Agreement or any action taken or
omitted by the Agent under this Agreement, in each case whether or not such
investigation, litigation or proceeding is brought by any Lender, its directors,
shareholders or creditors or the Agent is otherwise a party thereto, provided
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent’s gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that the Agent is not reimbursed for such expenses by the
Borrower.

SECTION 8.06. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor Agent
which, so long as no Default shall have occurred and be continuing, shall be
subject to the Borrower’s approval, which approval shall not be unreasonably
withheld. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent’s giving of notice of resignation or the Required Lenders’
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
or licensed under the laws of the United States of America or of any State
thereof or the Commonwealth of Puerto Rico and having a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring Agent, and the retiring Agent, upon appointment of
such successor Agent, shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent’s resignation or removal hereunder as
Agent, the provisions of this Article VIII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.

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SECTION 8.07. Other Agents. Banco Bilbao Vizcaya Argentaria Puerto Rico and Bank
of Nova Scotia, Hato Rey, Puerto Rico have been designated as co-syndication
agents, Banco Popular de Puerto Rico and FirstBank Puerto Rico have been
designated as co-documentation agents, and certain other Lenders have been
designated as managing agents or co-agents and the use of such titles does not
impose on Banco Bilbao Vizcaya Argentaria Puerto Rico, Banco Popular de Puerto
Rico, FirstBank Puerto Rico, Bank of Nova Scotia, Hato Rey, Puerto Rico or such
other Lender any rights, duties or obligations greater than those of any other
Lender.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01. Amendments, Etc. (a) No amendment or waiver of any provision of
this Agreement or the Notes, nor consent to any departure by any Loan Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that (i) no amendment, waiver or consent shall, unless
in writing and signed by all the Lenders, do any of the following: (A) waive any
of the conditions specified in Section 3.01, (B) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or the
number of Lenders, that shall be required for the Lenders or any of them to take
any action hereunder, (C) release any Guarantor from any of the obligations
imposed upon it by this Agreement or (D) amend this Section 9.01; and (ii) no
amendment, waiver or consent shall, unless in writing and signed by the Required
Lenders and each Lender that has or is owed obligations under this Agreement or
the Notes that are modified by such amendment, waiver or consent, (A) increase
the Commitment of such Lender or subject such Lender to any additional
obligations, (B) reduce the principal of, or interest on, the Note held by such
Lender or any fees or other amounts payable hereunder to such Lender,
(C) postpone any date fixed for any payment of principal of, or interest on, the
Note held by such Lender or any fees or other amounts payable hereunder to such
Lender or (D) waive the application of Section 2.14; and provided further that
no amendment, waiver or consent shall, unless in writing and signed by the Agent
in addition to the Lenders required above to take such action, affect the rights
or duties of the Agent under this Agreement or any Note.

(b) Each Lender grants (x) to the Agent the right to purchase all (but not less
than all) of such Lender’s Commitments and Advances owing to it and the Notes
held by it and all of its rights and obligations hereunder and under the Notes
at a price equal to the aggregate amount of outstanding Advances owed to such
Lender (together with all accrued and unpaid interest, fees and other amounts
owed to such Lender), and (y) to the Borrower the right to cause an assignment
of all (but not less than all) of such Lender’s Commitments and Advances owing
to it and the Notes held by it and all of its rights and obligations hereunder
and under the Notes to Eligible Assignees at a price equal to the aggregate
amount of outstanding Advances (together with all accrued and unpaid interest,
fees and other amounts owed to such Lender) owed to such Lender, which right may
be exercised by the Agent or the Borrower, as the case may be, if such Lender
refuses to execute any amendment, waiver or consent which requires the written
consent of all the Lenders and to which Lenders owed at least 90% of the
aggregate unpaid principal amount of Advances or, if no such principal amount is
then outstanding, Lenders having at least 90% of the Commitments, the Agent and
the Borrower have agreed. Each Lender agrees that if the Agent or the Borrower,
as the case may be, exercises its option hereunder, it shall promptly execute
and deliver all agreements and documentation necessary to effectuate such
assignment as set forth in Section 9.07.

SECTION 9.02. Notices, Etc. (a) All notices and other communications provided
for hereunder shall be in writing (including telecopier, telegraphic or
electronic mail communication) and either (x) mailed, telecopied, telegraphed or
delivered by hand or by courier, or (y) as and to the extent set forth in the
proviso to this first sentence of Section 9.02(a)and in Section 9.02(b), by
e-mail and electronic posting: if to the Borrower or PRTC, at 1513 Roosevelt
Avenue, 10th Floor, Guaynabo, Puerto Rico 00968 or P.O. Box 360998 San Juan,
Puerto Rico 00936-0998, Attention: Adail Ortiz (fax no.(787) 749-9024), with a
copy to Maria Elena de la Cruz (fax no. (787) 783-2919); if to any Initial
Lender, at its Domestic Lending Office specified opposite its name on Schedule I
hereto; if to any other Lender, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender; and if to the
Agent, at its address at Two Penns Way, New Castle, Delaware 19720, Attention:
Loan Investor Services; or, as to any Loan Party or the Agent, at such other
address as shall be designated by such party in a written notice to the other
parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrower and the Agent,
provided that materials required to be delivered pursuant to Section 5.01(i)(i),
(ii) or (iv) shall be delivered to the Agent as specified in Section 9.02(b) and
by the

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Agent to the Lenders as specified in Sections 9.02(b) and (c). All such notices
and communications shall, when mailed, telecopied, faxed or e-mailed, be
effective when deposited in the first class mails or, in the case of
international delivery, when deposited with mails or couriers that deliver
within two Business Days, or telecopied, faxed or confirmed by e-mail, provided
that notices and communications to the Agent pursuant to Article II, III or VIII
shall not be effective until received by the Agent, and provided, further, that
notices and communications to any Person required to be provided hereunder
within five Business Days shall only be made by hand or via telecopy, facsimile
or courier. Delivery by telecopier or facsimile of an executed counterpart of
any amendment or waiver of any provision of this Agreement or the Notes or of
any Exhibit hereto to be executed and delivered hereunder shall be effective as
delivery of a manually executed counterpart thereof.

(b) So long as Citibank or any of its Affiliates is the Agent, materials
required to be delivered pursuant to Section 5.01(i)(i), (ii) and (iv) shall be
delivered to the Agent in an electronic medium in a format acceptable to the
Agent and the Lenders by e-mail at oploanswebadmin@citigroup.com or such other
e-mail address as the Agent shall notify to the Borrower, and such delivery to
the Agent shall constitute delivery by the Borrower to the Agent and the Lenders
for purposes of Section 5.01(i)(i), (ii) or (iv), as the case may be. The
Borrower agrees that the Agent may make such materials, as well as any other
written information, documents, instruments and other material relating to the
Borrower, any of its Subsidiaries or any other materials or matters relating to
this Agreement, the Notes or any of the transactions contemplated hereby
delivered to the Agent by the Borrower hereunder (collectively, the
“Communications”) available to the Lenders by posting such Communications on
Intralinks or a substantially similar electronic system which is in general use
for such purposes (the “Platform”). The Borrower acknowledges that (i) the
distribution of material through an electronic medium is not necessarily secure
and that there are confidentiality and other risks associated with such
distribution, (ii) the Platform is provided “as is” and “as available” and
(iii) neither the Agent nor any of its Affiliates warrants the accuracy,
adequacy or completeness of the Communications or the Platform and each
expressly disclaims liability for errors or omissions in the Communications or
the Platform; provided that (x) the Agent shall use reasonable commercial
efforts to ensure that all Communications delivered by the Borrower to the Agent
for posting on the Platform are posted thereon in their entirety and as
delivered by the Borrower, and (y) in the event that the Agent shall become
aware that the Platform has been subject to unauthorized access or otherwise is
experiencing problems that may lead to breaches of confidentiality or failures
of appropriate posting or access, then the Agent shall promptly notify the
Borrower and shall cease to utilize the Platform for the purposes specified
herein until such problems shall have been resolved. No warranty of any kind,
express, implied or statutory, including, without limitation, any warranty of
merchantability, fitness for a particular purpose, non-infringement of third
party rights or freedom from viruses or other code defects, is made by the Agent
or any of its Affiliates in connection with the Platform.

(c) Each Lender agrees that notice from the Agent to it (as provided in the next
sentence) (a “Notice”) specifying that any Communications have been posted to
the Platform shall constitute effective delivery of such information, documents
or other materials by the Borrower and the Agent to such Lender for purposes of
this Agreement; provided that if requested by any Lender the Agent shall deliver
a copy of the Communications to such Lender by e-mail or telecopier. Each Lender
agrees (i) to notify the Agent in writing of such Lender’s e-mail address to
which a Notice may be sent by electronic transmission (including by electronic
communication) on or before the date such Lender becomes a party to this
Agreement (and from time to time thereafter to ensure that the Agent has on
record an effective e-mail address for such Lender) and (ii) that any Notice may
be sent to such e-mail address.

SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender or the
Agent to exercise, and no delay in exercising, any right hereunder or under any
Note shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

SECTION 9.04. Costs and Expenses. (a) The Borrower agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Agent and the Arranger in
connection with the preparation, execution, delivery, administration,
modification and amendment of this Agreement, the Notes and the other documents
to be delivered hereunder, including, without limitation, (A) all due diligence,
syndication (including printing and distribution), transportation, computer,
duplication, appraisal, audit and insurance expenses and (B) the reasonable fees
and expenses of counsel for the Agent with respect thereto and with respect to
advising the Agent as to its rights and responsibilities under this Agreement.
Such expenses shall be paid by the Borrower upon presentation of an itemized
invoice (after reasonable time for the Borrower to review such invoice),
regardless of whether the transactions contemplated by this Agreement are
consummated. The Borrower further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Notes and
the other documents to be delivered hereunder, including, without limitation,
reasonable

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fees and expenses of counsel for the Agent and each Lender in connection with
the enforcement of rights under this Section 9.04(a).

(b) The Borrower agrees to indemnify and hold harmless the Agent and each Lender
and each of their Affiliates and their officers, directors, employees, agents
and advisors (each, an “Indemnified Party”) from and against any and all claims,
damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of, or in connection with the preparation for a
defense of, any investigation, litigation or proceeding arising out of, related
to or in connection with (i) the Notes, this Agreement, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Advances or (ii) the actual or alleged presence of Hazardous Materials on any
property of the Borrower or any of its Subsidiaries or any Environmental Action
relating in any way to the Borrower or any of its Subsidiaries, in each case
whether or not such investigation, litigation or proceeding is brought by any
Loan Party, its directors, shareholders or creditors or an Indemnified Party or
any other Person or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated, except to
the extent such claim, damage, loss, liability or expense (A) is found by a
court of competent jurisdiction to have resulted from such Indemnified Party’s
gross negligence or willful misconduct, (B) arises from disputes among two or
more Lenders (but not including any such dispute that involves a Lender to the
extent such Lender is acting in any different capacity (i.e., Agent or Arranger)
under the Credit Agreement or the Notes or to the extent that it involves the
Agent’s syndication activities) or (C) arises from or relates to a breach by
such Indemnified Party of its obligations under this Agreement. The Borrower
also agrees not to assert any claim against the Agent, any Lender, any of their
Affiliates, or any of their respective directors, officers, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Notes, this
Agreement, any of the transactions contemplated herein or the actual or proposed
use of the proceeds of the Advances.

(c) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance is made by the Borrower (or pursuant to Section 9.01(b)) to or for the
account of a Lender other than on the last day of the Interest Period for such
Advance, as a result of a payment, prepayment or Conversion pursuant to this
Agreement or acceleration of the maturity of the Notes pursuant to Section 6.01,
the Borrower shall, upon demand by such Lender (with a copy of such demand to
the Agent), pay to the Agent for the account of such Lender any amounts required
to compensate such Lender for any additional losses, costs or expenses that it
may reasonably incur as a result of such payment or Conversion, including,
without limitation, any loss (excluding loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such Advance.

(d) Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in
Sections 2.10, 2.13 and 9.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes.

SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 by the Required Lenders to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01 and notice to the Borrower as required under Section
6.01, each Lender and each of its Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
or such Affiliate to or for the credit or the account of any Loan Party against
any and all of the obligations of such Loan Party now or hereafter existing
under this Agreement and the Note held by such Lender, whether or not such
Lender shall have made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Lender agrees promptly to notify the
applicable Loan Party after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender and its Affiliates under this Section are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender and its Affiliates may have.

SECTION 9.06. Binding Effect. This Agreement shall become effective (other than
Section 2.01, which shall only become effective upon satisfaction of the
conditions precedent set forth in Section 3.01) when it shall have been executed
by the Borrower and the Agent and when the Agent shall have been notified by
each Initial Lender that such Initial Lender has executed it and thereafter
shall be binding upon and inure to the benefit of the Borrower, the Agent and
each Lender and their respective successors and assigns, except that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of all of the Lenders.

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SECTION 9.07. Assignments and Participations. (a) Each Lender may, with the
consent of the Agent (except as provided in clause (g) below) and, so long as no
Default has occurred and is continuing, the Borrower (such consent, in the case
of the Agent or the Borrower, not to be unreasonably withheld) and, so long as
no Default has occurred and is continuing, if demanded by the Borrower
(1) pursuant to Section 9.01(b), (2) following a request for a payment to or on
behalf of such Lender under Section 2.10 or Section 2.13, (3) following a
Withholding Tax Change affecting payments to such Lender or (4) following a
notice given by such Lender pursuant to Section 2.11, upon at least ten Business
Days’ notice to such Lender and the Agent, will, assign to one or more Persons
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Advances owing to it
and the Note or Notes held by it); provided, that the Borrower may make demand
with respect to a Lender that has given notice pursuant to Section 2.11 only if
the Borrower makes such demand of all Lenders similarly situated that have given
such notice; provided, further, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all rights and obligations under this
Agreement and the Notes, (ii) except in the case of an assignment to a Person
that, immediately prior to such assignment, was a Lender or an assignment of all
of a Lender’s rights and obligations under this Agreement, the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, (iii) each such assignment
shall be to an Eligible Assignee, (iv) each such assignment made as a result of
a demand by the Borrower shall be arranged by the Borrower after consultation
with the Agent and shall be either an assignment of all of the rights and
obligations of the assigning Lender under this Agreement or an assignment of a
portion of such rights and obligations made concurrently with another such
assignment or other such assignments that together cover all of the rights and
obligations of the assigning Lender under this Agreement, (v) no Lender shall be
obligated to make any such assignment as a result of a demand by the Borrower
unless and until such Lender shall have received one or more payments from
either the Borrower or one or more Eligible Assignees in an aggregate amount at
least equal to the aggregate outstanding principal amount of the Advances owing
to such Lender, together with accrued interest thereon to the date of payment of
such principal and all other amounts payable to such Lender under this Agreement
and (vi) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Notes subject to such assignment and a processing
and recordation fee of $3,500 (which shall be paid by Persons other than the
Borrower unless such assignment is made as a result of a demand by the
Borrower). Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights other than rights of indemnification under Section 9.04 or
otherwise relating to a time prior to the effective date of such Assignment and
Acceptance and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).

(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any Loan
Party or the performance or observance by any Loan Party of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee;
(vi) such assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Lender.

(c) Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender, an assignee representing that

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it is an Eligible Assignee and the Borrower, together with the Note or Notes
subject to such assignment, the Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit C hereto,
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower.
Within five Business Days after its receipt of such notice, the Borrower, at its
own expense, shall execute and deliver to the Agent in exchange for the
surrendered Note a new Note to the order of such Eligible Assignee in an amount
equal to the Commitment assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained a Commitment hereunder a new Note to
the order of the assigning Lender in an amount equal to the Commitment retained
by it hereunder. Such new Note or Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note or
Notes, shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of Exhibit A hereto.

(d) The Agent shall maintain at its address referred to in Section 9.02 a copy
of each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Lenders and the Commitment
of, and principal amount of the Advances owing to, each Lender from time to time
(the “Register”). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.

(e) Each Lender may sell participations to one or more banks or other entities
(other than the Borrower or any of its Affiliates) in or to all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Commitment, the Advances owing to it and the Notes held
by it); provided, however, that (i) such Lender’s obligations under this
Agreement (including, without limitation, its Commitment to the Borrower
hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (iv) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and (v) no participant
under any such participation shall have any right to approve any amendment or
waiver of any provision of this Agreement or any Note, or any consent to any
departure by the Borrower therefrom, except that a Lender may agree with a
participant as to the manner in which the Lender shall exercise the Lender’s
rights to approve any amendment, waiver or consent to the extent that such
amendment, waiver or consent would reduce the principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation, or postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation.

(f) Any Lender may at any time, without the consent of the Agent or the
Borrower, create a security interest in all or any portion of its rights under
this Agreement (including, without limitation, the Advances owing to it and the
Note or Notes held by it) in favor of any Federal Reserve Bank in accordance
with Regulation A of the Board of Governors of the Federal Reserve System,
provided, however, that no such assignment shall have the effect of increasing
the costs payable by the Borrower.

(g) Any Lender may at any time, without the consent of, but with notice to the
Agent, assign all or part of its rights or obligations under this Agreement to
any Affiliate of such Lender, provided, however, that no such assignment shall
have the effect of increasing the costs payable by the Borrower.

SECTION 9.08. Nondisclosure. None of the Agent, any Lender or any Affiliate
thereof shall disclose without the prior consent of the Borrower (other than to
the Agent, another Lender or any such Affiliate, their respective directors,
employees, auditors, affiliates or counsel who shall agree to be bound by the
terms of this provision) any information with respect to the Loan Parties or any
Subsidiary thereof contained in financial statements, projections or reports
provided to the Agent, any Lender or any Affiliate thereof by, or on behalf of,
the Loan Parties or any Subsidiary, provided that the Agent, any Lender or any
Affiliate thereof may disclose any such information (a) as has become generally
available to the public in a manner, or through actions, which do not violate
the terms of this Section 9.08, (b) to, or as may be required or appropriate in
any report, statement or testimony submitted to, any municipal, state or federal
regulatory body having or claiming to have jurisdiction over the Agent, any
Lender or any Affiliate thereof or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or appropriate
in response to any summons or subpoena or in connection with any litigation,
(d) in order to comply with any law, order, regulation or ruling applicable to
the Agent, any Lender or any Affiliate thereof and (e) to a prospective
co-lender or participant in the amounts outstanding hereunder or under the
Advances, provided, however, that such prospective co-lender or participant
executes an agreement containing provisions substantially identical to those
contained in this Section 9.08 and which shall by its terms inure to the benefit
of the Borrower and provided, further,

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that to the extent practicable, the Agent, each Lender and their respective
Affiliates shall use reasonable best efforts to provide prior written notice of
such disclosure to the Borrower.

SECTION 9.09. Governing Law. This Agreement and the Notes shall be governed by,
and construed in accordance with, the laws of the State of New York.

SECTION 9.10. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier or
facsimile shall be effective as delivery of a manually executed counterpart of
this Agreement.

SECTION 9.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the extent permitted by law,
in such federal court. Each of the Loan Parties hereby agrees that service of
process in any such action or proceeding brought in any such New York State
court or in such federal court may be made upon CT Corporation System at its
offices at 111 Eighth Avenue, 13th Floor, New York, N.Y. 10011 (the “Process
Agent”) and each Loan Party hereby irrevocably appoints the Process Agent its
authorized agent to accept such service of process, and agrees that the failure
of the Process Agent to give any notice of any such service shall not impair or
affect the validity of such service or of any judgment rendered in any action or
proceeding based thereon. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or proceeding relating to this Agreement
or the Notes in the courts of any jurisdiction.

(b) Each of the parties hereto irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the Notes in any New York State
or federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

SECTION 9.12. Patriot Act Notice. Each Lender and the Agent (for itself and not
on behalf of any Lender) hereby notifies the Borrower that pursuant to the
requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
the Agent, as applicable, to identify the Borrower in accordance with the
Patriot Act. The Borrower shall provide, to the extent commercially reasonable,
such information and take such actions as are reasonably requested by the Agent
or any Lenders in order to assist the Agent and the Lenders in maintaining
compliance with the Patriot Act.

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SECTION 9.13. Waiver of Jury Trial. Each of the Borrower, the Guarantors, the
Agent and the Lenders hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the Notes or the
actions of the Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

              TELECOMUNICACIONES DE PUERTO RICO, INC., as Borrower
 
       

  By                                                               

           Title:
 
            PUERTO RICO TELEPHONE COMPANY, INC., as Guarantor
 
       

  By                                                               

           Title:
 
            CITIBANK, N.A.
as Administrative Agent
 
       

  By                                                               

           Title:

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TABLE OF CONTENTS

                              Page ARTICLE I            
 
               

  SECTION 1.02.   Computation of Time Periods     11  
 
               

  SECTION 1.03.   Accounting Terms     11  
 
                ARTICLE II            
 
               

  SECTION 2.01.   The Advances     11  
 
               

  SECTION 2.02.   Making the Advances     11  
 
               

  SECTION 2.03.   Fees     12  
 
               

  SECTION 2.04.   Optional Termination or Reduction of the Commitments     12  
 
               

  SECTION 2.05.   Repayment of Advances.     12  
 
               

  SECTION 2.06.   Interest     13  
 
               

  SECTION 2.07.   Interest Rate Determination     13  
 
               

  SECTION 2.08.   Optional Conversion of Advances     14  
 
               

  SECTION 2.09.   Optional Prepayments of Advances     14  
 
               

  SECTION 2.10.   Increased Costs     14  
 
               

  SECTION 2.11.   Illegality     15  
 
               

  SECTION 2.12.   Payments and Computations     15  
 
               

  SECTION 2.13.   Taxes     16  
 
               

  SECTION 2.14.   Sharing of Payments, Etc.     17  
 
               

  SECTION 2.15.   Use of Proceeds     18  
 
                ARTICLE III            
 
               

  SECTION 3.01.   Conditions Precedent to Effectiveness of Section 2.01     18  
 
               

  SECTION 3.02.   Conditions Precedent to Each Borrowing and the Term Loan
Conversion Date     19  
 
               

  SECTION 3.03.   Determinations Under Section 3.01     20  
 
                ARTICLE IV            
 
               

  SECTION 4.01.   Representations and Warranties of the Borrower     20  
 
                ARTICLE V            
 
               

  SECTION 5.01.   Affirmative Covenants     21  

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                              Page

  SECTION 5.02.   Negative Covenants     23  
 
               

  SECTION 5.03.   Financial Covenants     25  
 
                ARTICLE VI            
 
               

  SECTION 6.01.   Events of Default     25  
 
                ARTICLE VII            
 
               

  SECTION 7.01.   Guaranty; Limitation of Liability     27  
 
               

  SECTION 7.02.   Guaranty Absolute     28  
 
               

  SECTION 7.03.   Waiver     28  
 
               

  SECTION 7.04.   Continuing Guaranty; Assignments     29  
 
               

  SECTION 7.05.   Subrogation     29  
 
                ARTICLE VIII            
 
               

  SECTION 8.01.   Authorization and Action     29  
 
               

  SECTION 8.02.   Agent’s Reliance, Etc.     29  
 
               

  SECTION 8.03.   Citibank and Affiliates     30  
 
               

  SECTION 8.04.   Lender Credit Decision     30  
 
               

  SECTION 8.05.   Indemnification     30  
 
               

  SECTION 8.06.   Successor Agent     30  
 
               

  SECTION 8.07.   Other Agents     31  
 
                ARTICLE IX            
 
               

  SECTION 9.01.   Amendments, Etc.     31  
 
               

  SECTION 9.02.   Notices, Etc.     31  
 
               

  SECTION 9.03.   No Waiver; Remedies     32  
 
               

  SECTION 9.04.   Costs and Expenses     32  
 
               

  SECTION 9.05.   Right of Set-off     33  
 
               

  SECTION 9.06.   Binding Effect     33  
 
               

  SECTION 9.07.   Assignments and Participations     34  
 
               

  SECTION 9.08.   Nondisclosure     35  
 
               

  SECTION 9.09.   Governing Law     36  
 
               

  SECTION 9.10.   Execution in Counterparts     36  

39

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                              Page

  SECTION 9.11.   Jurisdiction, Etc.     36  
 
               

  SECTION 9.12.   Patriot Act Notice     36  
 
               

  SECTION 9.13.   Waiver of Jury Trial     37  

40