**EXHIBIT 10.34**
364-DAY CREDIT AGREEMENT
Dated as of March 1, 2005
TELECOMUNICACIONES DE PUERTO RICO, INC., a Puerto Rico corporation (the “Borrower”), PUERTORICO TELEPHONE COMPANY, INC., a Puerto Rico corporation (“PRTC” and, collectively with eachSignificant Subsidiary (as hereinafter defined) that shall become a guarantor hereunder inaccordance with Section 5.01(j), the “Guarantors”), the banks, financial institutions andother institutional lenders (the “Initial Lenders”) listed on the signature pages hereofand 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 tobe 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 Borrowingand 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 orindirectly, controls, is controlled by or is under common control with such Person or is adirector 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 aPerson means the possession, direct or indirect, of the power to vote 10% or more of theVoting Stock of such Person or to direct or cause the direction of the management andpolicies of such Person, whether through the ownership of Voting Stock, by contract orotherwise.
     “Agent’s Account” means the account of the Agent maintained by the Agent atCitibank 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’sDomestic Lending Office in the case of a Base Rate Advance and such Lender’s EurodollarLending Office in the case of a Eurodollar Rate Advance.
 

 

     “Applicable Margin” means, as of any date, a percentage per annum determined byreference 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 ConversionDate, a percentage per annum determined by reference to the Performance Level in effect onsuch 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 LoanConversion Date that the aggregate Advances exceed 50% of the aggregate Commitments, apercentage per annum determined by reference to the Performance Level in effect on such dateas 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 bya Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form ofExhibit C hereto.
     “Base Rate” means a fluctuating interest rate per annum in effect from time totime, 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 customersgenerally (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 Section2.06(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 theBorrower at Citibank with its office at 399 Park Avenue, New York, New York 10043, AccountNo. 4078-8269.
     “Borrowing” means a borrowing consisting of simultaneous Advances of the sameType 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 orauthorized 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” meansa day of the year on which banks are not required or authorized by law to close in New YorkCity or San Juan, Puerto Rico and on which dealings are carried on in the London interbankmarket.
     “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 Borrowerand its Subsidiaries as shown on the audited Consolidated balance sheet or unauditedConsolidated balance sheet, as the case may be, as of the end of the most recent fiscalquarter preceding such period.
     “Controlling Interest” means (a) ownership of at least 35% plus one share, ofthe Voting Stock of the Borrower and (b) the ability to appoint a majority of the Board ofDirectors of the Borrower.
     “Convert”, “Conversion” and “Converted” each refers to aconversion of Advances of one Type into Advances of the other Type pursuant to Section 2.07or 2.08.
     “Debt” of any Person means, without duplication, (a) all indebtedness of suchPerson for borrowed money, (b) all obligations of such Person for the deferred purchaseprice of property or services (other than trade payables incurred in the ordinary course ofsuch Person’s business for which collection proceedings have not been commenced,provided that trade payables for which collection proceedings have commenced shallnot be included in the term “Debt” so long as the payment of such trade payables is beingcontested in good faith and by proper proceedings and for which appropriate reserves arebeing maintained), (c) all obligations of such Person evidenced by notes, bonds, debenturesor other similar instruments, (d) all obligations of such Person created or arising underany conditional sale or other similar title retention agreement with respect to propertyacquired by such Person (even though the rights and remedies of the seller or lender undersuch agreement in the event of default are limited to repossession or sale of suchproperty), (e) all obligations of such Person as lessee under leases that have been, inaccordance with GAAP, recorded as capital leases, (f) all obligations of such Person inrespect of acceptances, letters of credit or similar extensions of credit, (g) all netobligations of such Person in respect of Hedge Agreements, (h) all Debt of others referredto in clauses (a) through (g) above or clause (i) below guaranteed directly, or indirectlythrough a Subsidiary, by such Person, or in effect guaranteed directly, or indirectlythrough a Subsidiary, by such Person through a written agreement either (1) to pay orpurchase 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 sellservices, primarily for the purpose of enabling the debtor to make payment of such Debt orto 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, withoutlimitation, accounts and contract rights) owned by such Person, even though such Person hasnot 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 ofthe types that, in accordance with GAAP, would be classified as indebtedness on aConsolidated balance sheet of such Person on such date to (b) EBITDA for the period of fourfiscal quarters of such Person ended on or immediately prior to such date, providedthat for purposes of clause (a) of this definition, Debt shall not include (1) theobligations specified in clause (g) of the definition thereof set forth above or (2) withrespect to the Borrower, any obligations which may be assumed by the Borrower for guarantiesof any indebtedness of the Borrower’s employee stock ownership plan up to an aggregateprincipal amount of $28,903,500.
     “Default” means any Event of Default or any event that would constitute anEvent 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 suchLender specified as its “Domestic Lending Office” opposite its name on Schedule I hereto orin the Assignment and Acceptance pursuant to which it became a Lender, or such other officeof 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 anaggregate amount not to exceed $20,000,000 in calendar year 2004 and $20,000,000 in calendaryear 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 priorto 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 orimmediately prior to such date, provided that for purposes of clause (b) of thisdefinition, Debt shall not include the obligations specified in clause (g) of the definitionthereof 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 afinancial institution and is majority-owned by such Lender; (iii) any commercial bankorganized 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 $1,000,000,000that has an Applicable Lending Office that is not subject to deduction or withholding ofTaxes; or (iv) any other Person approved by the Agent and, so long as no Default hasoccurred and is continuing, the Borrower, such approval not to be unreasonably withheld;provided, however, that neither the Borrower nor any Affiliate of theBorrower 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 anyEnvironmental Law, Environmental Permit or Hazardous Materials or arising from allegedinjury or threat of injury to health, safety or the environment, including, withoutlimitation, (a) by any governmental or regulatory authority for enforcement, cleanup,removal, response, remedial or other actions or damages and (b) by any governmental orregulatory authority or any third party for damages, contribution, indemnification, costrecovery, 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 agencyinterpretation, policy or guidance relating to pollution or protection of the environment,health, safety or natural resources, including, without limitation, those relating to theuse, handling, transportation, treatment, storage, disposal, release or discharge ofHazardous 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 amendedfrom 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 amember 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 themeaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day noticerequirement with respect to such event has been waived by the PBGC; (b) the application fora minimum funding waiver with respect to a Plan; (c) the provision by the administrator ofany Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) ofERISA (including any such notice with respect to a plan amendment referred to in Section4041(e) of ERISA); (d) the cessation of operations at a facility of any of the Loan Partiesor any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) thewithdrawal by any of the Loan Parties or any ERISA Affiliate from a Multiple Employer Planduring 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 anyPlan; (g) the adoption of an amendment to a Plan requiring the provision of security to suchPlan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings toterminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event orcondition described in Section 4042 of ERISA that is reasonably expected to result in thetermination of, or the appointment of a trustee to administer, a Plan.
     “Eurocurrency Liabilities” has the meaning assigned to that term in RegulationD 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 ofsuch Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule Ihereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if nosuch office is specified, its Domestic Lending Office), or such other office of such Lenderas such Lender may from time to time specify to the Borrower and the Agent.
     “Eurodollar Rate” means, for any Interest Period for each Eurodollar RateAdvance comprising part of the same Borrowing, an interest rate per annum equal to the rateper annum obtained by dividing (a) the rate per annum (rounded upward to the nearest wholemultiple of 1/100 of 1% per annum) appearing on Moneyline Telerate Markets Page 3750 (or anysuccessor page) as the London interbank offered rate for deposits in U.S. dollars atapproximately 11:00 A.M. (London time) two Business Days prior to the first day of suchInterest Period for a term comparable to such Interest Period or, if for any reason suchrate is not available, the average (rounded upward to the nearest whole multiple of 1/100 of1% per annum, if such average is not such a multiple) of the rate per annum at whichdeposits in U.S. dollars are offered by the principal office of each of the Reference Banksin 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 approximatelyequal to such Reference Bank’s pro rata share of the contemplated Eurodollar Rate Advancecomprising 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% minusthe Eurodollar Rate Reserve Percentage for such Interest Period. The Eurodollar Rate forany Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowingshall be determined by the Agent on the basis of applicable rates furnished to and receivedby the Agent from the Reference Banks two Business Days before the first day of suchInterest Period, subject, however, to the provisions of Section 2.07.
     “Eurodollar Rate Advance” means an Advance that bears interest as provided inSection 2.06(a)(ii).
     “Eurodollar Rate Reserve Percentage” for any Interest Period for all EurodollarRate Advances comprising part of the same Borrowing means the reserve percentage applicabletwo Business Days before the first day of such Interest Period under regulations issued fromtime to time by the Board of Governors of the Federal Reserve System (or any successor) fordetermining the maximum reserve requirement (including, without limitation, any emergency,supplemental or other marginal reserve requirement) for a member bank of the Federal ReserveSystem in New York City with respect to liabilities or assets consisting of or includingEurocurrency Liabilities (or with respect to any other category of liabilities that includesdeposits 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 perannum equal for each day during such period to the weighted average of the rates onovernight Federal funds transactions with members of the Federal Reserve System arranged byFederal funds brokers, as published for such day (or, if such day is not a Business Day, forthe next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rateis not so published for any day that is a Business Day, the average of the quotations forsuch day on such transactions received by the Agent from three Federal funds brokers ofrecognized standing selected by it.
     “GAAP” means (a) in the case of the preparation of all financial reportingrequirements, generally accepted accounting principles in the United States, as in effectfrom time to time, and (b) in the case of the calculation, certification and compliance withall financial tests and covenants, generally accepted accounting principles in the UnitedStates, as in effect on the date of the financial statements delivered to each Lender inaccordance with Section 4.01(e), in each case applied on a consistent basis both as toclassification 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 orbreakdown products, radioactive materials, asbestos-containing materials, polychlorinatedbiphenyls 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 anyEnvironmental Law.
     “Hedge Agreements” means interest rate swap, cap or collar agreements, interestrate future or option contracts, currency swap agreements, currency future or optioncontracts 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 ofthe same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or thedate of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and endingon 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 onthe last day of the immediately preceding Interest Period and ending on the last day of theperiod selected by the Borrower pursuant to the provisions below. The duration of each suchInterest Period shall be one, two, three or six months, and subject to clause (iii) of thisdefinition, any other period, as the Borrower may, upon notice received by the Agent notlater than 11:00 A.M. (New York City time) on the third Business Day prior to the first dayof such Interest Period, select; provided, however, that:
     (i) the Borrower may not select any Interest Period that ends (x) after theTermination Date or (y) if the Advances have been converted to a term loan pursuantto Section 2.05 prior to or on the last day of the prior Interest Period, that endsafter the Maturity Date;
     (ii) Interest Periods commencing on the same date for Eurodollar Rate Advancescomprising 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 toselect an Interest Period having duration of any period other than one, two, threeor six months unless, by 2:00 P.M. (New York City time) on the third Business Dayprior to the first day of such Interest Period, each Lender notifies the Agent thatsuch 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 purposesof this Agreement as an objection by such Lender to the requested duration of suchInterest Period, provided that each Lender shall use commercially reasonable goodfaith efforts to so respond); provided further that, if any or all of the Lendersobject to the requested duration of such Interest Period, the duration of theInterest Period for such Borrowing shall be one, two, three or six months, asspecified by the Borrower in the applicable Notice of Borrowing as the desiredalternative to the selected Interest Period; and
     (iv) whenever the last day of any Interest Period would otherwise occur on aday other than a Business Day, the last day of such Interest Period shall beextended to occur on the next succeeding Business Day, provided,however, that, if such extension would cause the last day of such InterestPeriod to occur in the next following calendar month, the last day of such InterestPeriod shall occur on the next preceding Business Day; and
     (v) whenever the first day of any Interest Period occurs on a day of an initialcalendar month for which there is no numerically corresponding day in the calendarmonth that succeeds such initial calendar month by the number of months equal to thenumber of months in such Interest Period, such Interest Period shall end on the lastBusiness Day of such succeeding calendar month.
     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amendedfrom time to time, and the regulations promulgated and rulings issued thereunder.
     “Lenders” means the Initial Lenders and each Person that shall become a partyhereto pursuant to Section 9.07.
     “Lien” means any lien, security interest or other charge or encumbrance of anykind.
     “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 anyLoan Party or any Loan Party and its Subsidiaries taken as a whole.
     “Material Adverse Effect” means a material adverse effect on (a) the ability ofany Loan Party to conduct its business on substantially the same basis as conducted on theEffective Date or (b) the ability of any Loan Party to service its Debt obligations on atimely basis.
     “Maturity Date” means the earlier of (a) the first anniversary of theTermination Date and (b) the date of termination in whole of the aggregate Commitmentspursuant to Section 2.04 or 6.01.
     “Moody’s” means Moody’s Investors Service, Inc.
     “Multiemployer Plan” means a multiemployer plan, as defined in Section4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or accruing anobligation to make contributions, or has within any of the preceding five plan years made oraccrued an obligation to make contributions.
     “Multiple Employer Plan” means a single employer plan, as defined in Section4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISAAffiliate 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 haveliability under Section 4064 or 4069 of ERISA in the event such plan has been or were to beterminated.
     “Note” means a promissory note of the Borrower payable to the order of anyLender, in substantially the form of Exhibit A hereto, evidencing the aggregate indebtednessof 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 ProvidingAppropriate 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 forthbelow as then in effect for the Borrower, as determined in accordance with the followingprovisions 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 BBBby 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 effecta Public Debt Rating, the Performance Level shall be determined by reference to theavailable rating and (b) if the Public Debt Ratings established by S&P and Moody’s shallfall within different Performance Levels, the Performance Level shall be based upon thehigher rating unless such Public Debt Ratings differ by two or more levels, in which casethe 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 underSection 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 inconnection with bids, tenders, contracts (other than contracts for the payment of money) orleases to which such Person is a party; (d) deposits to secure public or statutoryobligations of such Person; (e) materialmen’s, mechanics’, carriers’, workers’, repairmen’sor other like Liens in the ordinary course of business, or deposits to obtain the release ofsuch Liens to the extent such Liens, in the aggregate, would not have a Material AdverseEffect; (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) Lienscreated by or resulting from any litigation or legal proceeding which at the time iscurrently being contested in good faith by appropriate proceedings; (i) leases made, orexisting on property acquired, in the ordinary course of business; (j) landlord’s Liensunder 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, whichdo not materially impair the use of such property in the operation of the business of suchPerson 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 anydeposits held by or other indebtedness owing by any lender or any affiliate thereof to orfor the credit or account of such Person.
     “Permitted Receivables Financing” means any financing pursuant to which theBorrower or any Subsidiary of the Borrower may sell, convey, or otherwise transfer to aReceivables Subsidiary or any other Person (in the case of transfer by a ReceivablesSubsidiary), 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 customarymarket terms and shall be non-recourse to the Borrower and its Subsidiaries (other than theReceivables Subsidiary) except to a limited extent customary for such transactions. Thegrant of a security interest in any accounts receivable of the Borrower or any Subsidiary ofthe Borrower (other than a Receivables Subsidiary) to secure Debt under any credit facilityshall not be deemed a Permitted Receivables Financing.
     “Person” means an individual, partnership, corporation (including a businesstrust), joint stock company, trust, unincorporated association, joint venture, limitedliability company or other entity, or a government or any political subdivision or agencythereof.
     “Plan” means a Single Employer Plan or a Multiple Employer Plan.
     “Public Debt Rating” means, as of any date, the rating that has been mostrecently announced by any of S&P or Moody’s, as the case may be, for any class of non-creditenhanced long-term senior unsecured debt issued by the Borrower. For purposes of theforegoing, (a) if any rating established by S&P or Moody’s shall be changed, such changeshall be effective as of the date on which such change is first announced publicly by therating agency making such change; and (b) if S&P or Moody’s shall change the basis on whichratings are established, each reference to the Public Debt Rating announced by S&P orMoody’s, as the case may be, shall refer to the then equivalent rating by S&P or Moody’s, asthe case may be.
     “Receivables Subsidiary” means a bankruptcy-remote, special-purpose whollyowned Subsidiary formed in connection with a Permitted Receivables Financing.
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     “Reference Banks” means initially, Citibank, Banco Bilbao Vizcaya ArgentariaPuerto Rico and Bank of Nova Scotia, Hato Rey, Puerto Rico or, if less than three of suchbanks are able to furnish timely information in accordance with Section 2.07, any othercommercial bank designated by the Borrower and approved by the Required Lenders asconstituting 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 ininterest 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 ininterest 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, asamended, modified renewed or replaced from time to time.
     “Significant Subsidiary” means at any time, with respect to the Borrower, anySubsidiary, 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 Section4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or any ERISAAffiliate and no Person other than the Loan Parties and the ERISA Affiliates or (b) was somaintained and in respect of which any Loan Party or any ERISA Affiliate could haveliability under Section 4069 of ERISA in the event such plan has been or were to beterminated.
     “Solvent” and “Solvency” mean, with respect to any Person on aparticular date, that on such date (a) the fair value of the property of such Person isgreater than the total amount of liabilities, including, without limitation, contingentliabilities, of such Person, (b) the present fair salable value of the assets of such Personis not less than the amount that will be required to pay the probable liability of suchPerson 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 abilityto pay such debts and liabilities as they mature and (d) such Person is not engaged inbusiness or a transaction, and is not about to engage in business or a transaction, forwhich such Person’s property would constitute an unreasonably small capital. The amount ofcontingent liabilities at any time shall be computed as the amount that, in the light of allthe facts and circumstances existing at such time, represents the amount that can reasonablybe expected to become an actual or matured liability after taking into account anyindemnification pursuant to the terms of any agreements entered into in connectiontherewith.
     “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) theissued and outstanding capital stock having ordinary voting power to elect a majority of theBoard of Directors of such corporation (irrespective of whether at the time capital stock ofany other class or classes of such corporation shall or might have voting power upon theoccurrence of any contingency), (b) the interest in the capital or profits of such limitedliability company, partnership or joint venture or (c) the beneficial interest in such trustor estate, is at the time directly or indirectly owned or controlled by such Person, by suchPerson and one or more of its other Subsidiaries or by one or more of such Person’s otherSubsidiaries.
     “Taxes” has the meaning specified in Section 2.13(a).
     “Term Loan Conversion Date” means the Termination Date on which all Advancesoutstanding 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 oftermination 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 equivalentinterests in any other Person, the holders of which are ordinarily, in the absence ofcontingencies, entitled to vote for the election of directors (or persons performing similarfunctions) of such Person, even if the right so to vote has been suspended by the happeningof such a contingency.
     “Withholding Tax Change” means the approval by either the Chamber ofRepresentatives or the Senate of the Commonwealth of Puerto Rico of any proposal to changeany applicable law, treaty or government rule, regulation or order which would require theBorrower to deduct or withhold any Taxes from or in respect of any sum payable hereunder orunder any Note to any Lender or the Agent.
SECTION 1.02. Computation of Time Periods. In this Agreement in the computation ofperiods of time from a specified date to a later specified date, the word “from” means “from andincluding” and the words “to” and “until” each mean “to but excluding”.
SECTION 1.03. Accounting Terms. All terms of an accounting or financial nature notspecifically 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 conditionshereinafter set forth, to make Advances to the Borrower from time to time on any Business Dayduring the period from the Effective Date until the Termination Date in an aggregate amount not toexceed at any time outstanding the amount set forth opposite such Lender’s name on Schedule Ihereof or, if such Lender has entered into any Assignment and Acceptance, set forth for such Lenderin the Register maintained by the Agent pursuant to Section 9.07(d), as such amount may be reducedpursuant to Section 2.04 (such Lender’s “Commitment”). Each Borrowing shall be in anaggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and shallconsist of Advances of the same Type made on the same day by the Lenders ratably according to theirrespective Commitments. Within the limits of this Section 2.01, the Borrower may borrow under thisSection 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 notlater than 11:00 A.M. (New York City time) on the third Business Day prior to the date of theproposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances, or theBusiness 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 telecopieror facsimile. Each such notice of a Borrowing (a “Notice of Borrowing”) shall be bytelephone, confirmed immediately in writing, or telecopier or facsimile in substantially the formof Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type ofAdvances comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the caseof a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each suchAdvance. 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’sAccount, in same day funds, such Lender’s ratable portion of such Borrowing. After the Agent’sreceipt 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 notselect Eurodollar Rate Advances for any Borrowing if the aggregate obligation of the Lenders tomake Eurodollar Rate Advances shall then be suspended pursuant to Section 2.07 or 2.11 and (ii) theEurodollar 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 anyBorrowing that
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the related Notice of Borrowing specifies is to be comprised of Eurodollar RateAdvances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred bysuch Lender as a result of any failure to fulfill on or before the date specified in such Notice ofBorrowing for such Borrowing the applicable conditions set forth in Article III, including, withoutlimitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason ofthe liquidation or reemployment of deposits or other funds acquired by such Lender to fund theAdvance to be made by such Lender as part of such Borrowing when such Advance, as a result of suchfailure, is not made on such date.
(d) Unless the Agent shall have received notice from a Lender prior to the time of any Borrowingthat such Lender will not make available to the Agent such Lender’s ratable portion of suchBorrowing, the Agent may assume that such Lender has made such portion available to the Agent onthe date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Agentmay, in reliance upon such assumption, make available to the Borrower on such date a correspondingamount. If and to the extent that such Lender shall not have so made such ratable portionavailable to the Agent, such Lender and the Borrower severally agree to repay to the Agentforthwith on demand such corresponding amount together with interest thereon, for each day from thedate such amount is made available to the Borrower until the date such amount is repaid to theAgent, at (i) in the case of the Borrower, the interest rate applicable at the time to Advancescomprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If suchLender shall repay to the Agent such corresponding amount, such amount so repaid shall constitutesuch Lender’s Advance as part of such Borrowing for purposes of this Agreement and the Borrowershall 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 shallnot relieve any other Lender of its obligation hereunder to make its Advance on the date of suchBorrowing, but no Lender shall be responsible for the failure of any other Lender to make theAdvance 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 Agentfor the account of each Lender a facility fee on the aggregate amount of such Lender’s Commitmentfrom the Effective Date in the case of each Initial Lender and from the later of the Effective Dateand the effective date specified in the Assignment and Acceptance pursuant to which it became aLender in the case of each other Lender until the Termination Date at a rate per annum equal to theApplicable Percentage in effect from time to time, payable in arrears quarterly on the last day ofeach 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 eachLender from the Effective Date until the Termination Date a Utilization Fee on the aggregate amountof such Lender’s Advances for each day that the aggregate Advances exceed 50% of the aggregateCommitments at a rate per annum equal to the Applicable Utilization Fee in effect from time totime, 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 mayfrom time to time be agreed between the Borrower and the Agent.
SECTION 2.04. Termination or Reduction of the Commitments. (a) Optional. TheBorrower shall have the right, upon at least three Business Days’ notice to the Agent, to terminatein whole or reduce ratably in part the unused portions of the respective Commitments of theLenders, 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 LoanElection in accordance with Section 2.05 prior to such date, and from time to time thereafter uponeach prepayment of the Advances, the Commitments of the Lenders shall be automatically andpermanently reduced on a pro rata basis by an amount equal to the amount by which (i) the aggregateCommitments immediately prior to such reduction exceeds (ii) the aggregate unpaid principalamount of all Advances outstanding at such time.
SECTION 2.05. Repayment of Advances. The Borrower shall, subject to the next succeedingsentence, repay to the Agent for the ratable account of the Lenders on the Termination Date theaggregate principal amount of the Advances then outstanding. The Borrower may, upon not less thanone Business Day notice to the Agent, elect (the “Term Loan Election”) to convert all ofthe Advances outstanding on the Termination Date in effect at such time into a term loan which theBorrower shall repay in full ratably to the Lenders on the Maturity Date; provided that theTerm Loan Election may not be exercised unless the applicable conditions in Section 3.02 aresatisfied on the date of notice of the Term Loan Election and on the date onwhich the Term Loan Election is to be effected. All Advances converted into a term loan pursuantto this Section 2.05 shall continue to constitute Advances except that the Borrower may notreborrow pursuant to Section 2.01 after all or any portion of such Advances have been prepaidpursuant to Section 2.09.
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SECTION 2.06. Interest. (a) Scheduled Interest. The Borrower shall pay intereston the unpaid principal amount of each Advance owing to each Lender from the date of such Advanceuntil 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 RateAdvance, a rate per annum equal at all times to the sum of (x) the Base Rate in effect fromtime to time plus (y) the Applicable Margin in effect from time to time, payable inarrears quarterly on the last day of each March, June, September and December during suchperiods 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 aEurodollar Rate Advance, a rate per annum equal at all times during each Interest Period forsuch Advance to the sum of (x) the Eurodollar Rate for such Interest Period for suchAdvance, plus (y) the Applicable Margin in effect from time to time, payable inarrears on the last day of such Interest Period and, if such Interest Period has a durationof more than three months, on each day that occurs during such Interest Period every threemonths from the first day of such Interest Period and on the date such Eurodollar RateAdvance shall be Converted or paid in full.
(b) Default Interest. Upon the occurrence and during the continuance of an Event ofDefault under Section 6.01(a), the Borrower shall pay interest on (i) the unpaid principal amountof 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 annumrequired to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to thefullest extent permitted by law, the amount of any interest, fee or other amount payable hereunderthat is not paid when due, from the date such amount shall be due until such amount shall be paidin full, payable in arrears on the date such amount shall be paid in full and on demand, at a rateper annum equal at all times to 2% per annum above the rate per annum required to be paid on BaseRate Advances pursuant to clause (a)(i) above.
SECTION 2.07. Interest Rate Determination. (a) Each Reference Bank agrees to furnish tothe Agent timely information for the purpose of determining each Eurodollar Rate. If any one ormore of the Reference Banks shall not furnish such timely information to the Agent for the purposeof determining any such interest rate, the Agent shall determine such interest rate on the basis oftimely information furnished by the remaining Reference Banks. The Agent shall give prompt noticeto the Borrower and the Lenders of the applicable interest rate determined by the Agent forpurposes of Section 2.06(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank forthe 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 thatthe Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the costto such Required Lenders of making, funding or maintaining their respective Eurodollar RateAdvances for such Interest Period, the Agent shall forthwith so notify the Borrower and theLenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the last day of the thenexisting Interest Period therefor, Convert into a Base Rate Advance, and (ii) the obligation of theLenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until theAgent shall notify the Borrower and the Lenders that the circumstances causing such suspension nolonger exist.
(c) If the Borrower shall fail to select the duration of any Interest Period for any EurodollarRate Advances in accordance with the provisions contained in the definition of “Interest Period” inSection 1.01, the Agent will forthwith so notify the Borrower and the Lenders and such Advanceswill automatically, on the last day of the then existing Interest Period therefor, Convert intoBase Rate Advances.
(d) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advancescomprising 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 InterestPeriod 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 fordetermining the Eurodollar Rate for any Eurodollar Rate Advances,
     (i) the Agent shall forthwith notify the Borrower and the Lenders that the interestrate 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 existingInterest Period therefor, Convert into a Base Rate Advance (or if such Advance is then aBase Rate Advance, will continue as a Base Rate Advance), and
     (iii) the obligation of the Lenders to make Eurodollar Rate Advances or to ConvertAdvances into Eurodollar Rate Advances shall be suspended until the Agent shall notify theBorrower 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, uponnotice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business Dayprior to the date of the proposed Conversion and subject to the provisions of Sections 2.07 and2.11, Convert all Advances of one Type comprising the same Borrowing into Advances of the otherType; provided, however, that any Conversion of Eurodollar Rate Advances into BaseRate Advances shall be made only on the last day of an Interest Period for such Eurodollar RateAdvances and any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in anamount not less than $10,000,000. Each such notice of a Conversion shall, within the restrictionsspecified 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 InterestPeriod for each such Advance. Each notice of Conversion shall be irrevocable and binding on theBorrower.
SECTION 2.09. Optional Prepayments of Advances. The Borrower may, upon notice not laterthan 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 principalamount of the prepayment, and if such notice is given the Borrower shall, prepay the outstandingprincipal 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 aggregateprincipal amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) inthe event of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated toreimburse 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 anychange in or in the interpretation of any law or regulation or (ii) the compliance with any writtenguideline or request from any central bank or other governmental authority (whether or not havingthe force of law), there shall be any increase in the cost to any Lender of agreeing to make ormaking, funding or maintaining Eurodollar Rate Advances (excluding for purposes of this Section2.10 any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.13shall govern) and (ii) changes in the basis of taxation of overall net income or overall grossincome by the United States or by the foreign jurisdiction or state under the laws of which suchLender 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 demandto the Agent), pay to the Agent for the account of such Lender additional amounts sufficient tocompensate such Lender for such increased cost (whether or not such increased costs arise prior tothe 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 theextent such increased costs accrued prior to the date that is six months prior to such notice,providedfurther that, if the change in law or circumstance giving rise to suchincreased costs or reductions is retroactive, then the six-month period referred to above shall beextended to include the period of retroactive effect thereof. A certificate as to the amount ofsuch increased cost, submitted to the Borrower and the Agent by such Lender, shall be conclusiveand 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 orrequest from any central bank or other governmental authority (whether or not having the force oflaw) affects or would affect the amount of capital required or expected to be maintained by suchLender or any corporation controlling such Lender (excluding any reserves included in thecomputation of the Eurodollar Rate) and that the amount of such capital is increased by or basedupon the existence of such Lender’s commitment to lend hereunder and other commitments of thistype, then, upon demand by such Lender (with a copy of such demand to the Agent), the Borrowershall pay to the Agent for the account of such Lender, from time to time as specified by suchLender, additional amounts sufficient to compensate such Lender or such corporation (whether or notsuch amounts arise prior to the receipt ofwritten notification from such central bank or other governmental authority) in the light of suchcircumstances, to the extent that such Lender reasonably determines such increase in capital to beallocable (in the proportion that such Lender’s Commitment hereunder bears to all of such Lender’scommitments 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 extentsuch amounts arose prior to the date that is six months prior to such notice, providedfurther that, if the change in law or circumstance giving rise to such increased costs orreductions is retroactive, then the six-month period referred to above shall be extended to includethe period of retroactive effect thereof. A certificate as to such amounts submitted to theBorrower and the Agent by such Lender shall be conclusive and binding for all purposes, absenterror in the calculation of such amounts.
(c) Any Lender claiming any additional amounts payable pursuant to this Section 2.10 agrees to usereasonable efforts (consistent with its internal policy and legal and regulatory restrictions) tominimize such additional amounts and to change the jurisdiction of its Applicable Lending Office ifthe making of such a change would avoid the need for, or reduce the amount of, any additionalamounts that may thereafter accrue and would not, in the reasonable judgment of such Lender, beotherwise notably disadvantageous to such Lender. The Borrower shall reimburse such Lender forsuch Lender’s reasonable expenses incurred in connection with such change or in considering such achange in an amount not to exceed the Borrower’s pro rata share of such expenses based on suchLender’s Commitment and Advances and the total lending commitments and loans of such Lender to itssimilarly situated customers.
SECTION 2.11. Illegality. Notwithstanding any other provision of this Agreement, if anyLender shall notify the Agent that the introduction of or any change in or in the interpretation ofany law or regulation makes it unlawful, or any central bank or other governmental authority havingrelevant jurisdiction asserts that it is unlawful, for any Lender or its Eurodollar Lending Officeto perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintainEurodollar Rate Advances hereunder, (i) each Eurodollar Rate Advance made by such Lender willautomatically, upon such demand, Convert into a Base Rate Advance and (ii) the obligation of suchLender to make Eurodollar Rate Advances or to Convert Advances into Eurodollar Rate Advances shallbe suspended until the Agent shall notify the Borrower and the Lenders that the circumstancescausing such suspension no longer exist.
SECTION 2.12. Payments and Computations. (a) The Borrower shall make each paymenthereunder and under the Notes without counterclaim or set-off not later than 11:00 A.M. (New YorkCity time) on the day when due in U.S. dollars to the Agent at the Agent’s Account in same dayfunds. The Agent will promptly thereafter cause to be distributed like funds relating to thepayment of principal or interest or fees ratably (other than amounts payable pursuant to Section2.03, 2.10, 2.13 or 9.04(c)) to the Lenders for the account of their respective Applicable LendingOffices, and like funds relating to the payment of any other amount payable to any Lender to suchLender for the account of its Applicable Lending Office, in each case to be applied in accordancewith the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance andrecording of the information contained therein in the Register pursuant to Section 9.07(c), fromand after the effective date specified in such Assignment and Acceptance, the Agent shall make allpayments hereunder and under the Notes in respect of the interest assigned thereby to the Lenderassignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriateadjustments 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 ofa year of 365 or 366 days, as the case may be, and all computations of interest based on theEurodollar Rate or the Federal Funds Rate and of fees shall be made by the Agent on the basis of ayear of 360 days, in each case for the actual number of days (including the first day but excludingthe last day) occurring in the period for which such interest or fees are payable. Eachdetermination by the Agent of an interest rate hereunder shall be conclusive and binding for allpurposes, 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 thana Business Day, such payment shall be made on the next succeeding Business Day, and such extensionof time shall in such case be included in the computation of payment of interest or fee, as thecase may be; provided, however, that, if such extension would cause payment ofinterest 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 anypayment is due to the Lenders hereunder that the Borrower will not make such payment in full, theAgent may assume that the Borrower has made such payment in full to the Agent on such date and theAgent may, in reliance upon such assumption, cause to be distributed to each Lender on such duedate an amount equal to the amount then due such Lender. If and to the extent the Borrower shallnot have so made such payment in full to the Agent, each Lendershall repay to the Agent forthwith on demand such amount distributed to such Lender together withinterest thereon, for each day from the date such amount is distributed to such Lender until thedate 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 paymentsby the Borrower hereunder or under the Notes shall be made, in accordance with Section 2.12, freeand 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 PuertoRico, the United States or any political subdivision of either (or in the case of any payments byor on behalf of the Borrower through an account or branch outside the United States or Puerto Ricoor by or on behalf of the Borrower by a payor that is not a United States person or not organizedor resident in Puerto Rico such payments shall be made free and clear of and without deduction forany and all present or future taxes, levies, imposts, deductions, charges or withholdings, and allliabilities with respect thereto imposed by a foreign jurisdiction or any political subdivisionthereof), excluding, in the case of each Lender and the Agent, taxes imposed on its overallnet income, and franchise taxes imposed on it in lieu of net income taxes (x) in the case of aLender pursuant to the laws of the jurisdiction (or any political subdivision or taxing authoritytherein) in which it is organized or in which the principal office of such Lender, or ApplicableLending Office of such Lender is located, or (y) in the case of any payment to the Agent in itscapacity as Agent, the jurisdiction (or any political subdivision or taxing authority therein) inwhich it is organized or in which the principal office of the Agent is located or in which theoffice 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 orunder 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 anysum payable hereunder or under any Note to any Lender or the Agent, (i) the sum payable shall beincreased as may be necessary so that after making all required deductions (including deductionsapplicable to additional sums payable under this Section 2.13) such Lender or the Agent (as thecase may be) receives an amount equal to the sum it would have received had no such deductions beenmade, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amountdeducted 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, atits address referred to in Section 9.02, the original or a certified copy of a receipt evidencingpayment thereof. For purposes of this subsection (a) and subsection (e), the terms “UnitedStates” and “United States person” shall have the meanings specified in Section 7701 ofthe Internal Revenue Code.
(b) In addition, the Borrower agrees to pay any stamp or documentary taxes or any other excise orproperty taxes, charges or similar levies that arise from any payment made hereunder or under theNotes or from the execution, delivery or registration of, performing under, or otherwise withrespect to, this Agreement or the Notes as a result of the introduction of or any change in or inthe 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 theAgent for the full amount of Taxes or Other Taxes (to the extent not previously paid undersubsection (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 byany jurisdiction on amounts payable under this Section 2.13) arising therefrom or with respectthereto. 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 totime, as requested in writing by the Borrower (but only so long as such Lender remains lawfullyable to do so), shall provide each of the Agent and the Borrower with two properly and accuratelycompleted and duly executed original copies of any form, document or other certificate that isnecessary for such Lender to be exempt from, or entitled to a reduced rate of Taxes or paymentshereunder or under the Notes or for the Borrower to determine the applicable rate of deduction orwithholding of any Taxes. If any Lender which is organized under the laws of a jurisdictionoutside of Puerto Rico is unable to provide the above-described forms, documents or othercertificates for a relevant interest period (or if the Lender’s appropriate personnel responsiblefor 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 theBorrower 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 theappropriate form, document or other certificate requested by the Borrower in accordance withSection 2.13(d) (otherthan if such failure is due to a change in any applicablelaw, 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 Lenderis not lawfully able to provide the Borrower with the appropriate form, document or othercertificate, or if such form,document or other certificate is no longer required to establish an exemption from the applicabletax), such Lender shall not be entitled to indemnification under Section 2.13(a) or (c) withrespect to Taxes by reason of such failure and the Borrower shall be entitled to withhold Taxesfrom payments to such Lender; provided, however, that should a Lender becomesubject to Taxes because of its failure to deliver a form, document or other certificate requiredhereunder, the Borrower shall take such steps at such Lender’s expense as such Lender shallreasonably 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 berequired 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 paysuch Taxes results from such Lender’s inability to obtain a complete exemption from Taxes as aresult of (i) any amendment to the laws (or any regulations thereunder), or any amendment to, orchange in, an interpretation or application of any such laws or regulations by any legislativebody, 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 entitybecomes a Lender), (ii) an amendment, modification or revocation of any existing applicable taxtreaty ratified, enacted or amended after the date hereof (or in the case of an entity that becomesa Lender after the date hereof, the date such entity becomes a Lender), or (iii) the ratificationof a new tax treaty ratified after the date hereof (or in the case of an entity that becomes aLender 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) forthe account of any Lender and such Lender, in its sole opinion, determines that it has finally andirrevocably received or been granted a credit against, or relief or remission from, or repaymentof, any tax paid or payable by it in respect of or calculated with reference to the deduction orwithholding giving rise to such additional payment, such Lender shall, to the extent that itdetermines 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 soleopinion, have determined is attributable to such deduction or withholding and will leave suchLender (after such payment) in no worse position than it would have been had the Borrower not beenrequired to make such deduction or withholding. Nothing contained herein shall (i) interfere withthe right of a Lender to arrange its tax affairs in whatever manner it thinks fit or (ii) obligeany Lender to claim any tax credit or to disclose any information relating to its tax affairs orany computations in respect thereof or (iii) require any Lender to take or refrain from taking anyaction that would prejudice its ability to benefit from any other credits, reliefs, remissions orrepayments to which it may be entitled. Each Lender and the Agent shall reasonably cooperate withthe Borrower at the Borrower’s written request and sole expense, in contesting any Taxes or OtherTaxes 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 suchcontest, (ii) neither such Lender nor the Agent is required to reopen a tax year that has alreadyclosed 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 taxaffairs in whatever manner it thinks fit, if in the sole judgment of such Lender or the Agent, suchcontest would be disadvantageous to such Lender or the Agent. In pursuing a contest in theLender’s or the Agent’s name, such Lender or the Agent will be represented by counsel of suchLender’s or the Agent’s choice, and will defend against, settle or otherwise control the contestand 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 itsinternal policy and legal and regulatory restrictions) to avoid or minimize such additional amountsand to change the jurisdiction of its Applicable Lending Office if the making of such a changewould avoid the need for, or reduce the amount of, any additional amounts that may thereafteraccrue and would not, in the reasonable judgment of such Lender, be otherwise notablydisadvantageous to such Lender. The Borrower shall reimburse such Lender for such Lender’sreasonable expenses incurred in connection with such change or in considering such a change in anamount not to exceed the Borrower’s pro rata share of such expenses based on such Lender’sCommitment and Advances to the Borrower and the total lending commitments and loans of such Lenderto its similarly situated customers.
SECTION 2.14. Sharing of Payments, Etc. If any Lender shall obtain any payment (whethervoluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account ofthe Advances owing to it (other than pursuant to Section 2.10, 2.13, 9.01(b), 9.04(c) or 9.07) inexcess 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 Advancesowing to them as shall be necessary to cause such purchasing Lender to share the excess paymentratably with each of them; provided, however, that if all or any portion of suchexcess payment is thereafter recovered from such purchasing Lender, such purchase from each Lendershall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to theextent ofsuch recovery together with an amount equal to such Lender’s ratable share (according to theproportion of (i) the amount of such Lender’s required repayment to (ii) the total amount sorecovered from the purchasing Lender) of any interest or other amount paid or payable by thepurchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lenderso purchasing a participation from another Lender by delivering payment pursuant to this Section2.14 may, to the fullest extent permitted by law, exercise all its rights of payment (including theright of set-off) with respect to such
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participation as fully as if such Lender were the directcreditor of the Borrower in the amount of such participation.
SECTION 2.15. Use of Proceeds. The proceeds of the Advances shall be available (and theBorrower agrees that it shall use such proceeds) solely for general corporate purposes of theBorrower and its Subsidiaries, including, without limitation, to provide a backstop for commercialpaper, provided that such proceeds shall not be used for the purpose of purchasing orcarrying margin stock (within the meaning of Regulation U issued by the Board of Governors of theFederal Reserve System).
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01. Section 2.01 of thisAgreement shall become effective on and as of the first date (the “Effective Date”) onwhich the following conditions precedent have been satisfied:
     (a) There shall have occurred no Material Adverse Change since December 31, 2003 otherthan as disclosed in Schedule 3.01(a) hereto.
     (b) There shall exist no action, suit, investigation, litigation or proceedingaffecting any of the Loan Parties or any of their respective Subsidiaries pending orthreatened before any court, governmental agency or arbitrator that (i) could be reasonablylikely to have a Material Adverse Effect other than the matters described on Schedule3.01(b) hereto (the “Disclosed Litigation”) or (ii) is initiated by any Person otherthan a Lender in its capacity as a Lender that purports to affect the legality, validity orenforceability of this Agreement or any Note or the consummation of the transactionscontemplated hereby, and there shall have been no material adverse change in the status, orfinancial effect on any Loan Party, of the Disclosed Litigation from that described onSchedule 3.01(b) hereto.
     (c) All governmental and third party consents and approvals necessary in connectionwith the execution, delivery and performance of this Agreement and the Notes shall have beenobtained (without the imposition of any conditions that could reasonably be expected tomaterially adversely affect the ability of any Loan Party to perform its obligationshereunder) and shall remain in effect, and no law or regulation shall be applicable thatrestrains, prevents or imposes adverse conditions upon the transactions contemplated herebythat could reasonably be expected to materially adversely affect the ability of any LoanParty to perform its obligations hereunder.
     (d) The Borrower shall have notified each Lender and the Agent in writing as to theproposed Effective Date.
     (e) The Borrower shall have paid all invoiced fees and expenses of the Agent and theLenders (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 shallhave received for the account of each Lender a certificate signed by a duly authorizedofficer of the Borrower, dated the Effective Date, stating that:
     (i) The representations and warranties contained in Section 4.01 are correct onand 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, eachdated 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 LoanParty approving the transactions contemplated by this Agreement and the Notes and ofall documents evidencing other necessary corporate action and governmentalapprovals, if any, with respect to this Agreement and such Notes.
     (iii) A certificate of the Secretary or an Assistant Secretary of each LoanParty certifying the names and true signatures of the officers of each Loan Partyauthorized to sign this Agreement and the Notes and the other documents to bedelivered hereunder.
     (iv) A certificate, in substantially the form of Exhibit D hereto, attesting tothe Solvency of each Loan Party after giving effect to the Borrowings contemplatedhereunder, from the chief financial officer of each such Loan Party.
     (v) A favorable opinion of Curtis, Mallet-Prevost, Colt & Mosle, New Yorkcounsel for the Loan Parties, substantially in the form of Exhibit E hereto.
     (vi) A favorable opinion of Roberto Garcia, Esq., Vice President and GeneralCounsel of the Borrower, substantially in the form of Exhibit F hereto.
     (vii) A favorable opinion of Shearman & Sterling LLP, counsel for the Agent, inform and substance satisfactory to the Agent.
     (h) The termination in whole of the commitments of the lenders party to the 364-DayCredit Agreement dated as of March 2, 2004 (the “Existing Credit Agreement”) amongthe Borrower, PRTC, as guarantor, Citibank, as administrative agent, Banco Bilbao VizcayaArgentaria Puerto Rico, as syndication agent, and Banco Popular de Puerto Rico, FirstBankPuerto Rico and Scotiabank de Puerto Rico, as co-documentation agents, and the payment infull of all obligations outstanding under the Existing Credit Agreement. Each of theInitial Lenders that is a party to the Existing Credit Agreement hereby waives therequirement of three Business Days notice to terminate the commitments under the ExistingCredit 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 TermLoan Election shall be subject to the conditions precedent that the Effective Date shall haveoccurred and on the date of such Borrowing or the Term Loan Conversion Date the followingstatements shall be true (and each of the giving of the applicable Notice of Borrowing, theacceptance by the Borrower of the proceeds of such Borrowing and the notice of Term Loan Electionshall constitute a representation and warranty by the Borrower that on the date of such Borrowingor the Term Loan Conversion Date such statements are true):
     (a) the representations and warranties contained in Section 4.01 are correct in allmaterial 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 proceedstherefrom, 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 orfrom the application of the proceeds therefrom, or the Term Loan Election, that constitutesa Default.
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SECTION 3.03. Determinations Under Section 3.01. For purposes of determining compliancewith 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 tobe consented to or approved by or acceptable or satisfactory to the Lenders unless an officer ofthe Agent responsible for the transactions contemplated by this Agreement shall have receivednotice from such Lender prior to the date that the Borrower, by notice to the Lenders, designatesas the proposed Effective Date, specifying its objection thereto. The Agent shall promptly notifythe 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 andwarrants as follows:
     (a) Each Loan Party is a corporation duly organized, validly existing and in goodstanding under the laws of the jurisdiction of its incorporation.
     (b) The execution, delivery and performance by each Loan Party of this Agreement andthe Notes executed by it and the consummation of the transactions contemplated hereby, arewithin such Loan Party’s corporate powers, have been duly authorized by all necessarycorporate action, and do not contravene (i) such Loan Party’s charter or by-laws (or otherequivalent organizational documents) or (ii) any law or any material contractual restrictionbinding on or affecting such Loan Party or, to the knowledge of the chief financial officerof the Borrower, any other contract the breach of which would limit the ability of any LoanParty 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 thedue 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 havebeen, duly executed and delivered by the Borrower. This Agreement has been duly executedand delivered by each Guarantor. Assuming that this Agreement has been duly executed by theAgent and each of the Initial Lenders, this Agreement is, and each of the Notes whendelivered hereunder will be, the legal, valid and binding obligation of the Borrowerenforceable against the Borrower in accordance with their respective terms. Assuming thatthis Agreement has been duly executed by the Agent and each of the Initial Lenders, thisAgreement is the legal, valid and binding obligation of each Guarantor enforceable againsteach Guarantor in accordance with its terms.
     (e) The Consolidated balance sheet of the Borrower and its Subsidiaries as at December31, 2003, and the related Consolidated statements of income and cash flows of the Borrowerand 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 theBorrower and its Subsidiaries as at September 30, 2004, and the related Consolidatedstatements of income and cash flows of the Borrower and its Subsidiaries for the nine monthsthen ended, duly certified by the chief financial officer of the Borrower, copies of whichhave been furnished to each Lender, fairly present, subject, in the case of said balancesheet as at September 30, 2004, and said statements of income and cash flows for the ninemonths then ended, to year-end audit adjustments, the Consolidated financial condition ofthe Borrower and its Subsidiaries as at such dates and the Consolidated results of theoperations of the Borrower and itsSubsidiaries for the periods ended on such dates, all in accordance with generallyaccepted accounting principles consistently applied.
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     (f) There is no pending or (to the knowledge of any Loan Party) threatened action orproceeding, including, without limitation, any Environmental Action, affecting any LoanParty or any of its Subsidiaries before any court, governmental agency or arbitrator that isinitiated by any Person other than a Lender in its capacity as a Lender that purports toaffect 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 suchterm 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 ofpurchasing or carrying margin stock (within the meaning of Regulation U issued by the Boardof Governors of the Federal Reserve System), and no proceeds of any Advance will be used topurchase or carry any margin stock or to extend credit to others for the purpose ofpurchasing or carrying any margin stock.
     (i) The obligations of the Borrower under this Agreement, and the obligations of eachGuarantor under the Subsidiary Guaranty rank pari passu in right of payment with all othersenior 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 anyLender shall have any Commitment hereunder, each Loan Party will:
     (a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries tocomply, in all material respects, with all applicable laws, rules, regulations and orders,such compliance to include, without limitation, compliance with ERISA, Environmental Lawsand the Patriot Act, except where the failure to so comply would not have a Material AdverseEffect.
     (b) Payment of Taxes, Etc. Pay and discharge, and cause each of itsSubsidiaries 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 Subsidiariesshall be required to pay or discharge any such tax, assessment, charge or claim that isbeing contested in good faith and by proper proceedings and as to which appropriate reservesare being maintained, unless and until any Lien resulting therefrom attaches to its propertyand becomes enforceable against its other creditors and the aggregate of such Liens wouldhave a Material Adverse Effect.
     (c) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries tomaintain, insurance with responsible and reputable insurance companies or associations insuch amounts and covering such risks as is usually carried by companies engaged in similarbusinesses and owning similar properties in the same general areas in which such Loan Partyor such Subsidiary operates; provided, however, that such Loan Party and itsSubsidiaries may self-insure to the extent consistent with prudent business practice.
     (d) Preservation of Corporate Existence, Etc. Preserve and maintain, and causeeach of its Subsidiaries to preserve and maintain, its corporate existence, rights (charterand statutory) and franchises; provided, however, that each Loan Party andits Subsidiaries may consummate any transaction permitted under Section 5.02(b) andprovidedfurther that neither any Loan Party nor any of its Subsidiariesshall berequired to preserve any right or franchise if the senior management of such Loan Partyor of such Subsidiary shall determine that the preservation thereof is no longer desirablein 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 Partyor such Subsidiary.
     (e) Visitation Rights. During normal business hours and upon reasonable noticefrom time to time, permit the Agent or any of the Lenders or any agents or representativesthereof, to examine and make copies of and abstracts from the records and books of accountof (excluding any confidential information), and visit the properties of, such Loan Partyand any of its Subsidiaries, and to discuss the affairs, finances and accounts of such LoanParty and any of its Subsidiaries with the appropriate representatives of such Loan Partyand together with the appropriate representatives of such Loan Party’s independent certifiedpublic accountants.
     (f) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, properbooks of record and account, in which full and correct entries shall be made of allfinancial transactions and the assets and business of such Loan Party and each suchSubsidiary in accordance with generally accepted accounting principles in effect from timeto time.
     (g) Maintenance of Properties, Etc. Maintain and preserve, and cause each ofits Subsidiaries to maintain and preserve, its material properties that are used or usefulin the conduct of its business in good working order and condition, ordinary wear and tearexcepted.
     (h) Transactions with Affiliates. Conduct, and cause each of its Subsidiariesto conduct, all transactions otherwise permitted under this Agreement with any of theirAffiliates, other than another Loan Party, (i) on terms that are fair and reasonable and noless favorable to such Loan Party or such Subsidiary than it would obtain in a comparablearm’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 FederalCommunications 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 eachof the first three quarters of each fiscal year of the Borrower, the Consolidatedbalance sheet of the Borrower and its Subsidiaries as of the end of such quarter andthe Consolidated statements of income and cash flows of the Borrower and itsSubsidiaries for the period commencing at the end of the previous fiscal year andending with the end of such quarter, duly certified (subject to year-end auditadjustments) by the chief financial officer, treasurer or controller of the Borroweras having been prepared in accordance with generally accepted accounting principlesand certificates of the chief financial officer, treasurer or controller of theBorrower as to compliance with the terms of this Agreement and setting forth inreasonable detail the calculations necessary to demonstrate compliance with Section5.03, provided that in the event of any change in GAAP used in thepreparation of such financial statements, the Borrower shall also provide, ifnecessary for the determination of compliance with Section 5.03, a statement ofreconciliation 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 ofeach fiscal year of the Borrower, a copy of the annual audited report for such yearfor the Borrower and its Subsidiaries, containing the Consolidated balance sheet ofthe Borrower and its Subsidiaries as of the end of such fiscal year and theConsolidated statements of income and cash flows of the Borrower and itsSubsidiaries for such fiscal year, in each case accompanied by an opinion acceptableto the Required Lenders by Ernst & Young LLP or other independent publicaccountants of nationally recognized standing and certificates of the chieffinancial officer, treasurer or controller of the Borrower as to compliance with theterms of this Agreement and
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setting forth in reasonable detail the calculationsnecessary to demonstrate compliance with Section 5.03, provided that in theevent of any change in GAAP used in the preparation of such financial statements,the Borrower shall also provide, if necessary for the determination of compliancewith Section 5.03, a statement of reconciliation showing the calculations used forpurposes of Section 5.03;
     (iii) as soon as possible and in any event within five Business Days after theoccurrence of each Default continuing on the date of such statement, a statement ofthe chief financial officer, treasurer or controller of the Borrower setting forthdetails of such Default and the action that the Borrower has taken and proposes totake with respect thereto;
     (iv) promptly after the sending or filing thereof, copies of any quarterly andannual reports and proxy solicitations that any Loan Party sends to any of itssecurityholders, and copies of any reports on Form 8-K that such Loan Party fileswith the Securities and Exchange Commission (other than reports on Form 8-K filedsolely for the purpose of incorporating exhibits into a registration statementpreviously filed with the Securities and Exchange Commission);
     (v) prompt notice of all actions and proceedings before any court, governmentalagency or arbitrator affecting any Loan Party or any of its Subsidiaries of the typedescribed in Section 3.01(b); and
     (vi) such other information respecting any Loan Party or any of itsSubsidiaries as any Lender through the Agent may from time to time reasonablyrequest.
     (j) Certain Obligations Respecting Subsidiaries. The Borrower will take suchaction, and will cause each of its Significant Subsidiaries and any Significant Subsidiaryformed with the intent of merging with or into a Person that will be a SignificantSubsidiary subject to this provision to take such action, from time to time as shall benecessary to ensure that all Significant Subsidiaries of the Borrower are party to, as LoanParties, the Guaranty provided in Article VII hereof. Without limiting the generality ofthe foregoing, in the event that the Borrower or any of its Significant Subsidiaries shallform or acquire any new Significant Subsidiary, the Borrower or the respective SignificantSubsidiary will cause such new Significant Subsidiary to (i) become a party hereto and tothe Guaranty pursuant to a written instrument in form and substance satisfactory to theAgent, and (ii) deliver such proof of corporate action, incumbency of officers, opinions ofcounsel and other documents relating to the foregoing as is consistent with those deliveredby each Loan Party pursuant to Section 3.01 hereof, or as any Lender or the Agent shall havereasonably requested.
     SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaidor any Lender shall have any Commitment hereunder, the Borrower will not:
     (a) Liens, Etc. Create or suffer to exist, or permit any of its Subsidiariesto create or suffer to exist, any Lien on or with respect to any of its properties, whethernow owned or hereafter acquired, or assign for security purposes (but not in connection witha 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 restrictthe following:
     (i) Permitted Liens,
     (ii) purchase money Liens upon or in any real property or equipment acquired orheld by the Borrower or any of its Subsidiaries in the ordinary course of businessto secure the purchase price of such property or equipment or to secure Debtincurred solely for the purpose of
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financing the acquisition of such property orequipment, or Liens existing on such property or equipment at the time of itsacquisition or conditional sales or other similar title retention agreements withrespect to property hereafter acquired or extensions, renewals or replacements ofany of the foregoing for the same or a lesser amount, provided,however, that no such Lien shall extend to or cover any properties of anycharacter other than the real property or equipment being acquired, and no suchextension, renewal or replacement shall extend to or cover any properties nottheretofore subject to the Lien being extended, renewed or replaced,
     (iii) the Liens existing on the Effective Date and described on Schedule5.02(a) hereto and other undisclosed Liens existing on the Effective Date securingobligations in aggregate amount not to exceed $10,000,000,
     (iv) Liens on property of a Person existing at the time such Person is mergedinto or consolidated with the Borrower or any of its Subsidiaries; providedthat any such Liens that were created during the period immediately prior to suchmerger, consolidation or acquisition were created in the ordinary course of businessof such Person and the Debt secured by such Liens does not exceed the fair marketvalue of the assets (including intangible assets) of such Person so merged into orconsolidated 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 thereplacement, extension or renewal (without increase in the amount or extension ofthe final maturity date) of the Debt secured thereby,
     (vi) Liens not otherwise permitted pursuant to clauses (i) through (v) abovesecuring 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 witha 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, anyPerson, or permit any of its Subsidiaries to do so, except that (i) any Subsidiary of theBorrower may merge or consolidate with or into, or dispose of assets to, any otherSubsidiary of the Borrower, (ii) any Subsidiary of the Borrower may merge into or dispose ofassets to the Borrower, and (iii) the Borrower may merge with any Subsidiary of Verizon solong as the surviving corporation assumes all obligations of the Borrower hereunder andunder the Notes and each Guarantor confirms in writing its guarantee obligations hereunderupon the occurrence of and following such merger, and provided, in each case, thatno Default shall have occurred and be continuing at the time of such proposed transaction orwould result therefrom.
     (c) Accounting Changes. Make or permit, or permit any of its Subsidiaries tomake or permit, any change in accounting policies or reporting practices, except (i) asrequired or permitted by generally accepted accounting principles or (ii) where the effectof such change, together with all other changes in accounting policies or reportingpractices made pursuant to this clause (ii) since the Effective Date, is immaterial to theBorrower and its Subsidiaries taken as a whole.
     (d) Subsidiary Debt. Permit any of its Subsidiaries to create or suffer toexist, 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 thecredit agreements existing on and as of the Effective Date and described on Schedule5.02(d) hereto (the “Existing Debt”), and any Debt extending the maturityof, or refunding or refinancing, in whole or in part, the Existing Debt,provided that the principal amount of such Existing Debt shall not beincreased above the principal amount thereof outstanding immediately prior to suchextension, refunding or refinancing, and the direct and contingent obligors thereforshall not be changed, as a result of or in connection with such extension, refundingor refinancing,
     (iii) unsecured Debt incurred in the ordinary course of business aggregatingnot more than $150,000,000 for PRTC and for all of the other Guarantors not morethan $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 similartransactions in the ordinary course of business, and
     (vi) Debt incurred by a Receivables Subsidiary created in connection with aPermitted Receivables Financing.
SECTION 5.03. Financial Covenants. So long as any Advance shall remain unpaid or anyLender shall have any Commitment hereunder, the Borrower will:
     (a) Debt to EBITDA Ratio. Maintain a Debt to EBITDA Ratio, as at the end ofeach 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 theend 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 ofDefault”) shall occur and be continuing:
     (a) The Borrower shall fail to pay any principal of any Advance when the same becomesdue and payable; or the Borrower shall fail to pay any interest on any Advance within fiveBusiness Days after the same becomes due and payable; or any fees or other amounts payableunder this Agreement or any Note are not paid within five Business Days after the samebecomes due and payable; or
     (b) Any representation or warranty made or deemed made by the Borrower herein or by theBorrower (or any of its officers) in connection with this Agreement shall prove to have beenincorrect 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 agreementcontained in Section 5.01(d), (e), (h), (i)(iii), (i)(v) or (j), 5.02 or 5.03, (ii) any LoanParty shall fail to perform or observe any term, covenant or agreement contained in Section5.01(i) (other than clauses (iii) and (v) thereof) if such failure shall remain unremediedfor five Business Days after written notice thereof shall have been given to such Loan Partyby the Agent or any Lender or (iii) any Loan Party shall fail to perform or observe anyother term, covenant or agreement contained in this Agreement on its part to beperformed or observed if such failure shall remain unremedied for 30 days after writtennotice 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 andeffect or any Guarantor shall so state in writing; or
     (e) The Borrower or any of its Subsidiaries shall fail to pay any principal of orpremium or interest on any Debt that is outstanding in a principal, or in the case of HedgeAgreements net, amount of at least $20,000,000 in the aggregate (but excluding Debtoutstanding hereunder) of the Borrower or such Subsidiary (as the case may be) (the“Requisite Amount”), when the same becomes due and payable (whether by scheduledmaturity, required prepayment, acceleration, demand or otherwise), and such failure shallcontinue 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 aggregatingthe Requisite Amount shall be declared due and payable in accordance with its terms or anyother event shall occur or condition shall exist under any agreement or instrument relatingto any such Debt aggregating the Requisite Amount and shall continue after the applicablegrace period, if any, specified in such agreement or instrument, if the effect of such eventor condition is to accelerate the maturity of such Debt; or any such Debt aggregating theRequisite Amount shall be required to be prepaid or redeemed (other than by a regularlyscheduled required prepayment or redemption), purchased or defeased in accordance with itsterms, or any offer to prepay, redeem, purchase or defease such Debt shall be required to bemade in accordance with its terms, in each case prior to the stated maturity thereof wherethe cause of such prepayment, redemption, purchase or defeasance or offer therefor is theoccurrence of an event or condition that is premised on a material adverse deterioration ofthe financial condition, results of operation or properties of the Borrower or any of itsSubsidiaries, provided that with respect to Debt aggregating the Requisite Amount ofthe types described in clauses (h) or (i) of the definition of “Debt” and to the extent suchDebt relates to the obligations of any Person other than the Borrower or any of itsSubsidiaries, no Event of Default shall occur so long as the payment of such Debt is beingcontested in good faith and by proper proceedings and as to which appropriate reserves arebeing maintained; or any event shall occur or condition shall exist under any agreement orinstrument relating to any Debt that is outstanding in a principal, or in the case of HedgeAgreements net, amount of at least $40,000,000 and shall continue after the applicable graceperiod, if any, specified in such agreement or instrument, if the effect of such event orcondition 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 respectivedebts as such debts become due, or shall admit in writing its inability to pay its debtsgenerally, or shall make a general assignment for the benefit of creditors; or anyproceeding shall be instituted by or against the Borrower or its Subsidiaries seeking toadjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,arrangement, adjustment, protection, relief, or composition of it or its debts under any lawrelating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking theentry of an order for relief or the appointment of a receiver, trustee, custodian or othersimilar official for it or for any substantial part of its property and, in the case of anysuch proceeding instituted against it (but not instituted by it), either such proceedingshall remain undismissed or unstayed for a period of 60 days, or any of the actions soughtin 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 orfor any substantial part of its property) shall occur; or the Borrower or its Subsidiariesshall 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 theaggregate shall be rendered against the Borrower or its Subsidiaries and enforcementproceedings shall have been commenced by any creditor upon such judgment or order for whicha stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise,shall not be in effect; provided, however, that anysuch judgment or order shall not be an Event of Default under this Section 6.01(g) ifand for so long as (i) (A) the amount of such judgment or order is covered by a valid andbinding policy of insurance between the defendant and the insurer or insurers coveringpayment 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-” byA.M. Best Company or its successor or its successors and (C) such insurer(s) has beennotified of, and has not disputed the claim made for payment of, the amount of such judgmentor order or (ii) (A) the amount of such judgment or order is covered by a valid and bindingindemnification agreement between the defendant and an indemnitor, (B) such indemnitor shallhave a rating for any class of its non-credit enhanced long-term senior unsecured debt ofnot 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, theControlling Interest; or (ii) the Borrower shall for any reason cease to own 100% of theVoting Stock of any Guarantor; or
     (i) Any Loan Party or its ERISA Affiliates shall incur, or shall be reasonably likelyto incur, liability that would have a Material Adverse Effect as a result of one or more ofthe following: (i) the occurrence of any ERISA Event; (ii) the partial or completewithdrawal 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, theAgent (i) shall at the request, or may with the consent, of the Required Lenders, by noticeto 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 theconsent, of the Required Lenders, by notice to the Borrower, declare the Notes, all interestthereon 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 forthwithdue and payable, without presentment, demand, protest or further notice of any kind, all ofwhich are hereby expressly waived by the Borrower; provided, however, thatin the event of an actual or deemed entry of an order for relief with respect to theBorrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to makeAdvances shall automatically be terminated and (B) the Notes, all such interest and all suchamounts 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 andseverally unconditionally and irrevocably guarantees the punctual payment when due, whether atstated maturity, by acceleration or otherwise, of all obligations of each other Loan Party now orhereafter 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 specificallywaived in accordance with Section 9.01, being the “Guaranteed Obligations”), and agrees topay any and all expenses (including reasonable counsel fees and expenses) incurred by the Agent orthe Lenders in enforcing any rights under this Article VII (this “Guaranty”). Withoutlimiting the generality of the foregoing, each Guarantor’s liability shall extend to all amountsthat constitute part of the Guaranteed Obligations and would be owed by any Loan Party to the Agentor any Lender under this Agreement or any Note but for the fact that they are unenforceable or notallowable due to the existence of a bankruptcy, reorganization or similar proceeding involving suchLoan 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 afraudulent transfer or fraudulent conveyance for purposes of Bankruptcy Law, the Uniform FraudulentConveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal, state or Commonwealthof Puerto Rico law to the extent applicable to this Guaranty. To effectuate the foregoingintention, the Agent, each other Lender and each Guarantor hereby irrevocably agrees that theobligations 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 timeby the Borrower to such Guarantor and (B) the maximum amount that will, after giving effect to suchmaximum amount and all other probable contingent and fixed liabilities of such Guarantor that arerelevant under applicable law, and
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after giving effect to any collections from, rights to receivecontribution from, or payments made by or on behalf of each other Guarantor in respect of theobligations of such other Guarantor under this Guaranty, result in the obligations of suchGuarantor under this Guaranty not constituting a fraudulent transfer or fraudulent conveyance. Forpurposes hereof, “Bankruptcy Law” means Title 11, United States Code, or any similarFederal, 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 madeto the Lenders under this Guaranty, such Guarantor will contribute, to the maximum extentsuch that the contribution will not result in a fraudulent transfer or fraudulentconveyance, such amounts to each other Guarantor so as to maximize the aggregate amount paidto the Lenders under this Agreement and the Notes.
SECTION 7.02. Guaranty Absolute. Each Guarantor guarantees that the GuaranteedObligations 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 affectingany of such terms or the rights of the Agent or the Lenders with respect thereto. The obligationsof each Guarantor under this Guaranty are independent of the Guaranteed Obligations, and a separateaction 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 orwhether the Borrower or any other Guarantor is joined in any such action or actions. The liabilityof each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespectiveof, and, to the maximum extent permitted by law, each Guarantor hereby irrevocably waives, anydefenses 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 orinstrument relating hereto;
     (b) any change in the time, manner or place of payment of, or in any other term of, allor any of the Guaranteed Obligations, or any other amendment or waiver of or any consent todeparture from this Agreement or any Note, including, without limitation, any increase inthe Guaranteed Obligations resulting from the extension of additional credit to the Borroweror 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 allor any of the Guaranteed Obligations;
     (d) any change, restructuring or termination of the corporate structure or existence ofthe 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 mightotherwise constitute a defense available to, or a discharge of, any Guarantor, the Borroweror 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 timeany payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by theAgent or any Lender upon the insolvency, bankruptcy or reorganization of the Borrower or anyGuarantor or otherwise, all as though such payment had not been made.
SECTION 7.03. Waiver. Each Guarantor hereby waives promptness, diligence, notice ofacceptance and any other notice with respect to any of the Guaranteed Obligations and thisGuaranty, the right to require application against the property of the Borrower or any otherGuarantor, and any requirement that the Agent or any Lender exhaust any right or take any actionagainst the Borrower or any other Person or any collateral. Each Guarantor acknowledges that itwill receive direct and indirect benefits from the financing arrangements contemplated herein andthat the waiver set forth in this Section 7.03 is knowingly made incontemplation 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 GuaranteedObligations, whether existing now or in the future.
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SECTION 7.04. Continuing Guaranty; Assignments. This Guaranty is a continuingguaranty and shall (a) remain in full force and effect until the later of the cash payment in fullof the Guaranteed Obligations and all other amounts payable under this Guaranty and the TerminationDate, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefitof 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 otherwisetransfer 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) toany other Person, and such other Person shall thereupon become vested with all the benefits inrespect thereof granted to such Lender herein or otherwise, in each case as provided in Section9.07.
SECTION 7.05. Subrogation. No Guarantor will exercise any rights that it may now orhereafter acquire against the Borrower or any other insider guarantor that arise from theexistence, payment, performance or enforcement of such Guarantor’s obligations under this Guaranty,including, without limitation, any right of subrogation, reimbursement, exoneration, contributionor indemnification and any right to participate in any claim or remedy of the Agent or any Lenderagainst the Borrower, any other Guarantor or any other insider guarantor or any collateral, whetheror 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 Guarantoror any other insider guarantor, directly or indirectly, in cash or other property or by set-off orin any other manner, payment or security solely on account of such claim, remedy or right, unlessand until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shallhave been paid in full in cash and the Termination Date shall have occurred. If any amount shallbe paid to any Guarantor in violation of the preceding sentence at any time prior to the later ofthe payment in full in cash of the Guaranteed Obligations and all other amounts payable under thisGuaranty and the Termination Date, such amount shall be held in trust for the benefit of the Agentand the Lenders and shall forthwith be paid to the Agent to be credited and applied to theGuaranteed Obligations and all other amounts payable under this Guaranty, whether matured orunmatured, in accordance with the terms of this Guaranty, or to be held as collateral for anyGuaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) anyGuarantor shall make payment to the Agent or any Lender of all or any part of the GuaranteedObligations, (ii) all of the Guaranteed Obligations and all other amounts payable under thisGuaranty shall be paid in full in cash and (iii) the Termination Date shall have occurred, theAgent and the Lenders will, at such Guarantor’s request and expense, execute and deliver to suchGuarantor appropriate documents, without recourse and without representation or warranty, necessaryto evidence the transfer by subrogation to such Guarantor of an interest in the GuaranteedObligations resulting from such payment by such Guarantor.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Lender hereby appoints and authorizes theAgent to take such action as agent on its behalf and to exercise such powers and discretion underthis Agreement as are delegated to the Agent by the terms hereof, together with such powers anddiscretion as are reasonably incidental thereto. As to any matters not expressly provided for bythis Agreement (including, without limitation, enforcement or collection of the Notes), the Agentshall not be required to exercise any discretion or take any action, but shall be required to actor 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 allLenders and all holders of Notes; provided, however, that the Agent shall not berequired to take any action that exposes the Agent to personal liability or that is contrary tothis Agreement or applicable law. The Agent agrees to give to each Lender prompt notice of eachnotice 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 orthem under or in connection with this Agreement, except for its or their own gross negligence orwillful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) maytreat the payee of any Note as the holder thereof until the Agent receives and accepts anAssignment 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 consultwith legal counsel (including counsel for the Borrower), independent public accountants and otherexperts selected by it and shall not be liable for any action taken or omitted to be taken in goodfaith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes nowarranty 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 withthis Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance orobservance of any of the terms, covenants or conditions of this Agreement on the part of any LoanParty or to inspect the property (including the books and records) of any Loan Party except asspecifically set forth in this Agreement; (v) shall not be responsible to any Lender for the dueexecution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreementor any other instrument or document furnished pursuant hereto; and (vi) shall incur no liabilityunder or in respect of this Agreement by acting upon any notice, consent, certificate or otherinstrument or writing (which may be by telecopier, facsimile or telegram) believed by it to begenuine and signed or sent by the proper party or parties.
SECTION 8.03. Citibank and Affiliates. With respect to its Commitment, the Advances madeby it and the Note or Notes issued to it, Citibank shall have the same rights and powers under thisAgreement as any other Lender and may exercise the same as though it were not the Agent; and theterm “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Citibank in itsindividual capacity. Citibank and its Affiliates may accept deposits from, lend money to, act astrustee under indentures of, accept investment banking engagements from and generally engage in anykind of business with, any Loan Party, any of its Subsidiaries and any Person who may do businesswith or own securities of any Loan Party or any of its Subsidiaries, all as if Citibank were notthe Agent and without any duty to account therefor to the Lenders.
SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that it has, independentlyand without reliance upon the Agent or any other Lender and based on the financial statementsreferred 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 alsoacknowledges that it will, independently and without reliance upon the Agent or any other Lenderand based on such documents and information as it shall deem appropriate at the time, continue tomake 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 extentnot reimbursed by the Borrower), ratably according to the respective principal amounts of theAdvances owed each of them (or if no Advances are at the time outstanding, ratably according totheir Commitments), from and against any and all liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or naturewhatsoever that may be imposed on, incurred by, or asserted against the Agent in any way relatingto or arising out of this Agreement or any action taken or omitted by the Agent under thisAgreement, in each case whether or not such investigation, litigation or proceeding is brought byany 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 resultingfrom the Agent’s gross negligence or willful misconduct. Without limitation of the foregoing, eachLender agrees to reimburse the Agent promptly upon demand for its ratable share of anyout-of-pocket expenses (including reasonable counsel fees) incurred by the Agent in connection withthe preparation, execution, delivery, administration, modification, amendment or enforcement(whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect ofrights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursedfor such expenses by the Borrower.
SECTION 8.06. Successor Agent. The Agent may resign at any time by giving written noticethereof to the Lenders and the Borrower and may be removed at any time with or without cause by theRequired Lenders. Upon any such resignation or removal, the Required Lenders shall have the rightto 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. Ifno successor Agent shall have been so appointed by the Required Lenders, and shall have acceptedsuch appointment, within 30 days after the retiring Agent’s giving of notice of resignation or theRequired Lenders’ removal of the retiring Agent, then the retiring Agent may, on behalf of theLenders, appoint a successor Agent, which shall be a commercial bank organized or licensed underthe laws of the United States of America or of any State thereof or the Commonwealth of Puerto Ricoand having a combined capital and surplus of at least $500,000,000. Upon the acceptance of anyappointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeedto and become vested with all the rights, powers, discretion, privileges and duties of the retiringAgent, and the retiring Agent, upon appointmentof 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 thisArticle VIII shall inure to its benefit as to any actions taken or omitted to be taken by it whileit was Agent under this Agreement.
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SECTION 8.07. Other Agents. Banco Bilbao Vizcaya Argentaria Puerto Rico and Bank of NovaScotia, Hato Rey, Puerto Rico have been designated as co-syndication agents, Banco Popular dePuerto Rico and FirstBank Puerto Rico have been designated as co-documentation agents, and certainother Lenders have been designated as managing agents or co-agents and the use of such titles doesnot impose on Banco Bilbao Vizcaya Argentaria Puerto Rico, Banco Popular de Puerto Rico, FirstBankPuerto Rico, Bank of Nova Scotia, Hato Rey, Puerto Rico or such other Lender any rights, duties orobligations greater than those of any other Lender.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. (a) No amendment or waiver of any provision of thisAgreement or the Notes, nor consent to any departure by any Loan Party therefrom, shall in anyevent be effective unless the same shall be in writing and signed by the Required Lenders, and thensuch waiver or consent shall be effective only in the specific instance and for the specificpurpose for which given; provided, however, that (i) no amendment, waiver orconsent shall, unless in writing and signed by all the Lenders, do any of the following: (A) waiveany of the conditions specified in Section 3.01, (B) change the percentage of the Commitments or ofthe aggregate unpaid principal amount of the Notes, or the number of Lenders, that shall berequired for the Lenders or any of them to take any action hereunder, (C) release any Guarantorfrom 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 Lendersand each Lender that has or is owed obligations under this Agreement or the Notes that are modifiedby such amendment, waiver or consent, (A) increase the Commitment of such Lender or subject suchLender to any additional obligations, (B) reduce the principal of, or interest on, the Note held bysuch Lender or any fees or other amounts payable hereunder to such Lender, (C) postpone any datefixed for any payment of principal of, or interest on, the Note held by such Lender or any fees orother amounts payable hereunder to such Lender or (D) waive the application of Section 2.14; andprovidedfurther that no amendment, waiver or consent shall, unless in writing andsigned by the Agent in addition to the Lenders required above to take such action, affect therights 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 ofits rights and obligations hereunder and under the Notes at a price equal to the aggregateamount of outstanding Advances owed to such Lender (together with all accrued and unpaidinterest, fees and other amounts owed to such Lender), and (y) to the Borrower the right tocause an assignment of all (but not less than all) of such Lender’s Commitments andAdvances owing to it and the Notes held by it and all of its rights and obligationshereunder and under the Notes to Eligible Assignees at a price equal to the aggregateamount of outstanding Advances (together with all accrued and unpaid interest, fees andother amounts owed to such Lender) owed to such Lender, which right may be exercised by theAgent 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 whichLenders owed at least 90% of the aggregate unpaid principal amount of Advances or, if nosuch 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 theBorrower, as the case may be, exercises its option hereunder, it shall promptly execute anddeliver all agreements and documentation necessary to effectuate such assignment as setforth in Section 9.07.
SECTION 9.02. Notices, Etc. (a) All notices and other communications provided forhereunder 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 tothe extent set forth in the proviso to this first sentence of Section 9.02(a)and in Section9.02(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 Rico00936-0998, 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 specifiedopposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Officespecified in the Assignment andAcceptance pursuant to which it became a Lender; and if to the Agent, at its address at Two PennsWay, New Castle, Delaware 19720, Attention: Loan Investor Services; or, as to any Loan Party or theAgent, at such other address as shall be designated by such party in a written notice to the otherparties and, as to each other party, at such other address as shall be designated by such party ina written notice to the Borrower and the Agent, provided that materials required to bedelivered pursuant to Section 5.01(i)(i), (ii) or (iv) shall be delivered to the Agent as specifiedin Section 9.02(b) and by the
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Agent to the Lenders as specified in Sections 9.02(b) and (c). Allsuch notices and communications shall, when mailed, telecopied, faxed or e-mailed, be effectivewhen deposited in the first class mails or, in the case of international delivery, when depositedwith mails or couriers that deliver within two Business Days, or telecopied, faxed or confirmed bye-mail, provided that notices and communications to the Agent pursuant to Article II, IIIor 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 fiveBusiness Days shall only be made by hand or via telecopy, facsimile or courier. Delivery bytelecopier or facsimile of an executed counterpart of any amendment or waiver of any provision ofthis Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shallbe 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 deliveredpursuant to Section 5.01(i)(i), (ii) and (iv) shall be delivered to the Agent in an electronicmedium in a format acceptable to the Agent and the Lenders by e-mail atoploanswebadmin@citigroup.com or such other e-mail address as the Agent shall notify to theBorrower, and such delivery to the Agent shall constitute delivery by the Borrower to the Agent andthe Lenders for purposes of Section 5.01(i)(i), (ii) or (iv), as the case may be. The Borroweragrees 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 othermaterials or matters relating to this Agreement, the Notes or any of the transactions contemplatedhereby delivered to the Agent by the Borrower hereunder (collectively, the“Communications”) available to the Lenders by posting such Communications on Intralinks ora substantially similar electronic system which is in general use for such purposes (the“Platform”). The Borrower acknowledges that (i) the distribution of material through anelectronic medium is not necessarily secure and that there are confidentiality and other risksassociated 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 completenessof the Communications or the Platform and each expressly disclaims liability for errors oromissions in the Communications or the Platform; provided that (x) the Agent shall usereasonable commercial efforts to ensure that all Communications delivered by the Borrower to theAgent for posting on the Platform are posted thereon in their entirety and as delivered by theBorrower, and (y) in the event that the Agent shall become aware that the Platform has been subjectto unauthorized access or otherwise is experiencing problems that may lead to breaches ofconfidentiality or failures of appropriate posting or access, then the Agent shall promptly notifythe Borrower and shall cease to utilize the Platform for the purposes specified herein until suchproblems 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 bythe 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 shallconstitute effective delivery of such information, documents or other materials by the Borrower andthe Agent to such Lender for purposes of this Agreement; provided that if requested by anyLender 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 aNotice may be sent by electronic transmission (including by electronic communication) on or beforethe date such Lender becomes a party to this Agreement (and from time to time thereafter to ensurethat the Agent has on record an effective e-mail address for such Lender) and (ii) that any Noticemay be sent to such e-mail address.
SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender or the Agent toexercise, and no delay in exercising, any right hereunder or under any Note shall operate as awaiver thereof; nor shall any single or partial exercise of any such right preclude any other orfurther exercise thereof or the exercise of any other right. The remedies herein provided arecumulative and not exclusive of any remedies provided by law.
SECTION 9.04. Costs and Expenses. (a) The Borrower agrees to pay on demand allreasonable out-of-pocket costs and expenses of the Agent and the Arranger in connection with thepreparation, execution, delivery, administration, modification and amendment of this Agreement, theNotes and the other documents to be delivered hereunder, including, without limitation, (A) all duediligence, syndication (including printing and distribution), transportation, computer,duplication, appraisal, audit and insurance expenses and (B) the reasonable fees and expenses ofcounsel for the Agent with respect thereto and with respect to advisingthe Agent as to its rights and responsibilities under this Agreement. Such expenses shall be paidby the Borrower upon presentation of an itemized invoice (after reasonable time for the Borrower toreview such invoice), regardless of whether the transactions contemplated by this Agreement areconsummated. The Borrower further agrees to pay on demand all costs and expenses of the Agent andthe Lenders, if any (including, without limitation, reasonable counsel fees and expenses), inconnection with the enforcement (whether through negotiations, legal proceedings or otherwise) ofthis Agreement, the Notes and the other documents to be delivered hereunder, including, withoutlimitation, reasonable
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fees and expenses of counsel for the Agent and each Lender in connectionwith 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 theirAffiliates and their officers, directors, employees, agents and advisors (each, an “IndemnifiedParty”) 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 orasserted or awarded against any Indemnified Party, in each case arising out of or in connectionwith 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, thisAgreement, any of the transactions contemplated herein or the actual or proposed use of theproceeds of the Advances or (ii) the actual or alleged presence of Hazardous Materials on anyproperty of the Borrower or any of its Subsidiaries or any Environmental Action relating in any wayto 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 oran Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto andwhether or not the transactions contemplated hereby are consummated, except to the extent suchclaim, damage, loss, liability or expense (A) is found by a court of competent jurisdiction to haveresulted from such Indemnified Party’s gross negligence or willful misconduct, (B) arises fromdisputes among two or more Lenders (but not including any such dispute that involves a Lender tothe extent such Lender is acting in any different capacity (i.e., Agent or Arranger) underthe Credit Agreement or the Notes or to the extent that it involves the Agent’s syndicationactivities) or (C) arises from or relates to a breach by such Indemnified Party of its obligationsunder this Agreement. The Borrower also agrees not to assert any claim against the Agent, anyLender, 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 punitivedamages arising out of or otherwise relating to the Notes, this Agreement, any of the transactionscontemplated 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 theBorrower (or pursuant to Section 9.01(b)) to or for the account of a Lender other than on the lastday of the Interest Period for such Advance, as a result of a payment, prepayment or Conversionpursuant 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 tothe Agent for the account of such Lender any amounts required to compensate such Lender for anyadditional losses, costs or expenses that it may reasonably incur as a result of such payment orConversion, including, without limitation, any loss (excluding loss of anticipated profits), costor expense incurred by reason of the liquidation or reemployment of deposits or other fundsacquired by any Lender to fund or maintain such Advance.
(d) Without prejudice to the survival of any other agreement of the Borrower hereunder, theagreements and obligations of the Borrower contained in Sections 2.10, 2.13 and 9.04 shall survivethe payment in full of principal, interest and all other amounts payable hereunder and under theNotes.
SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during the continuance of anyEvent of Default and (ii) the making of the request or the granting of the consent specified bySection 6.01 by the Required Lenders to authorize the Agent to declare the Notes due and payablepursuant to the provisions of Section 6.01 and notice to the Borrower as required under Section6.01, each Lender and each of its Affiliates is hereby authorized at any time and from time totime, to the fullest extent permitted by law, to set off and apply any and all deposits (general orspecial, time or demand, provisional or final) at any time held and other indebtedness at any timeowing by such Lender or such Affiliate to or for the credit or the account of any Loan Partyagainst any and all of the obligations of such Loan Party now or hereafter existing under thisAgreement and the Note held by such Lender, whether or not such Lender shall have made any demandunder this Agreement or such Note and although such obligations may be unmatured. Each Lenderagrees 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-offand application. The rights of each Lender and its Affiliates under this Section are in additionto other rights and remedies (including, without limitation, other rights of set-off) that suchLender 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 conditionsprecedent set forth in Section 3.01) when it shall have been executed by the Borrower and the Agentand when the Agent shall have been notified by each Initial Lender that such Initial Lender hasexecuted it and thereafter shall be binding upon and inure to the benefit of the Borrower, theAgent and each Lender and their respective successors and assigns, except that the Borrower shallnot have the right to assign its rights hereunder or any interest herein without the prior writtenconsent of all of the Lenders.
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SECTION 9.07. Assignments and Participations. (a) Each Lender may, with the consent ofthe Agent (except as provided in clause (g) below) and, so long as no Default has occurred and iscontinuing, the Borrower (such consent, in the case of the Agent or the Borrower, not to beunreasonably withheld) and, so long as no Default has occurred and is continuing, if demanded bythe Borrower (1) pursuant to Section 9.01(b), (2) following a request for a payment to or on behalfof such Lender under Section 2.10 or Section 2.13, (3) following a Withholding Tax Change affectingpayments 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 morePersons all or a portion of its rights and obligations under this Agreement (including, withoutlimitation, all or a portion of its Commitment, the Advances owing to it and the Note or Notes heldby it); provided, that the Borrower may make demand with respect to a Lender that has givennotice pursuant to Section 2.11 only if the Borrower makes such demand of all Lenders similarlysituated that have given such notice; provided, further, that (i) each suchassignment shall be of a constant, and not a varying, percentage of all rights and obligationsunder 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 andobligations under this Agreement, the amount of the Commitment of the assigning Lender beingassigned pursuant to each such assignment (determined as of the date of the Assignment andAcceptance with respect to such assignment) shall in no event be less than $10,000,000 or anintegral multiple of $1,000,000 in excess thereof, (iii) each such assignment shall be to anEligible Assignee, (iv) each such assignment made as a result of a demand by the Borrower shall bearranged by the Borrower after consultation with the Agent and shall be either an assignment of allof the rights and obligations of the assigning Lender under this Agreement or an assignment of aportion of such rights and obligations made concurrently with another such assignment or other suchassignments that together cover all of the rights and obligations of the assigning Lender underthis Agreement, (v) no Lender shall be obligated to make any such assignment as a result of ademand by the Borrower unless and until such Lender shall have received one or more payments fromeither the Borrower or one or more Eligible Assignees in an aggregate amount at least equal to theaggregate outstanding principal amount of the Advances owing to such Lender, together with accruedinterest thereon to the date of payment of such principal and all other amounts payable to suchLender under this Agreement and (vi) the parties to each such assignment shall execute and deliverto 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 resultof a demand by the Borrower). Upon such execution, delivery, acceptance and recording, from andafter the effective date specified in each Assignment and Acceptance, (x) the assignee thereundershall be a party hereto and, to the extent that rights and obligations hereunder have been assignedto it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lenderhereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligationshereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish itsrights other than rights of indemnification under Section 9.04 or otherwise relating to a timeprior to the effective date of such Assignment and Acceptance and be released from its obligationsunder this Agreement (and, in the case of an Assignment and Acceptance covering all or theremaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lendershall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder andthe assignee thereunder confirm to and agree with each other and the other parties hereto asfollows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makesno 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 anyother instrument or document furnished pursuant hereto; (ii) such assigning Lender makes norepresentation or warranty and assumes no responsibility with respect to the financial condition ofany Loan Party or the performance or observance by any Loan Party of any of its obligations underthis Agreement or any other instrument or document furnished pursuant hereto; (iii) such assigneeconfirms that it has received a copy of this Agreement, together with copies of the financialstatements referred to in Section 4.01 and such other documents and information as it has deemedappropriate to make its own credit analysis and decision to enter into such Assignment andAcceptance;(iv) such assignee will, independently and without reliance upon the Agent, such assigning Lenderor any other Lender and based on such documents and information as it shall deem appropriate at thetime, continue to make its own credit decisions in taking or not taking action under thisAgreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appointsand authorizes the Agent to take such action as agent on its behalf and to exercise such powers anddiscretion under this Agreement as are delegated to the Agent by the terms hereof, together withsuch powers and discretion as are reasonably incidental thereto; and (vii) such assignee agreesthat it will perform in accordance with their terms all of the obligations that by the terms ofthis 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 assigneerepresenting that
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it is an Eligible Assignee and the Borrower, together with the Note or Notessubject to such assignment, the Agent shall, if such Assignment and Acceptance has been completedand 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 thereofto the Borrower. Within five Business Days after its receipt of such notice, the Borrower, at itsown expense, shall execute and deliver to the Agent in exchange for the surrendered Note a new Noteto the order of such Eligible Assignee in an amount equal to the Commitment assumed by it pursuantto such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereundera new Note to the order of the assigning Lender in an amount equal to the Commitment retained by ithereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregateprincipal amount of such surrendered Note or Notes, shall be dated the effective date of suchAssignment 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 Assignmentand Acceptance delivered to and accepted by it and a register for the recordation of the names andaddresses of the Lenders and the Commitment of, and principal amount of the Advances owing to, eachLender from time to time (the “Register”). The entries in the Register shall be conclusiveand binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lendersmay treat each Person whose name is recorded in the Register as a Lender hereunder for all purposesof this Agreement. The Register shall be available for inspection by the Borrower or any Lender atany 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 theBorrower or any of its Affiliates) in or to all or a portion of its rights and obligations underthis Agreement (including, without limitation, all or a portion of its Commitment, the Advancesowing to it and the Notes held by it); provided, however, that (i) such Lender’sobligations under this Agreement (including, without limitation, its Commitment to the Borrowerhereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the otherparties hereto for the performance of such obligations, (iii) such Lender shall remain the holderof any such Note for all purposes of this Agreement, (iv) the Borrower, the Agent and the otherLenders shall continue to deal solely and directly with such Lender in connection with suchLender’s rights and obligations under this Agreement and (v) no participant under any suchparticipation shall have any right to approve any amendment or waiver of any provision of thisAgreement or any Note, or any consent to any departure by the Borrower therefrom, except that aLender may agree with a participant as to the manner in which the Lender shall exercise theLender’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 otheramounts payable hereunder, in each case to the extent subject to such participation, or postponeany date fixed for any payment of principal of, or interest on, the Notes or any fees or otheramounts 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 securityinterest 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 inaccordance 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 thecosts payable by the Borrower.
(g) Any Lender may at any time, without the consent of, but with notice to the Agent, assign all orpart 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 thecosts payable by the Borrower.
SECTION 9.08. Nondisclosure. None of the Agent, any Lender or any Affiliate thereof shalldisclose without the prior consent of the Borrower (other than to the Agent, another Lender or anysuch Affiliate, their respective directors, employees, auditors, affiliates or counsel who shallagree to be bound by the terms of this provision) any information with respect to the Loan Partiesor any Subsidiary thereof contained in financial statements, projections or reports provided to theAgent, 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 suchinformation (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 appropriatein any report, statement or testimony submitted to, any municipal, state or federal regulatory bodyhaving or claiming to have jurisdiction over the Agent, any Lender or any Affiliate thereof or tothe 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 orappropriate in response to any summons or subpoena or in connection with any litigation, (d) inorder to comply with any law, order, regulation or ruling applicable to the Agent, any Lender orany Affiliate thereof and (e) to a prospective co-lender or participant in the amounts outstandinghereunder or under the Advances, provided, however, that such prospective co-lenderor participant executes an agreement containing provisions substantially identical to thosecontained in this Section 9.08 and which shall by its terms inure to the benefit of the Borrowerand provided, further,
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that to the extent practicable, the Agent, each Lender andtheir respective Affiliates shall use reasonable best efforts to provide prior written notice ofsuch disclosure to the Borrower.
SECTION 9.09. Governing Law. This Agreement and the Notes shall be governed by, andconstrued 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 ofcounterparts and by different parties hereto in separate counterparts, each of which when soexecuted shall be deemed to be an original and all of which taken together shall constitute one andthe same agreement. Delivery of an executed counterpart of a signature page to this Agreement bytelecopier or facsimile shall be effective as delivery of a manually executed counterpart of thisAgreement.
SECTION 9.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably andunconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any NewYork State court or federal court of the United States of America sitting in New York City, and anyappellate court from any thereof, in any action or proceeding arising out of or relating to thisAgreement or the Notes, or for recognition or enforcement of any judgment, and each of the partieshereto hereby irrevocably and unconditionally agrees that all claims in respect of any such actionor proceeding may be heard and determined in any such New York State court or, to the extentpermitted by law, in such federal court. Each of the Loan Parties hereby agrees that service ofprocess in any such action or proceeding brought in any such New York State court or in suchfederal court may be made upon CT Corporation System at its offices at 111 Eighth Avenue, 13thFloor, New York, N.Y. 10011 (the “Process Agent”) and each Loan Party hereby irrevocablyappoints the Process Agent its authorized agent to accept such service of process, and agrees thatthe failure of the Process Agent to give any notice of any such service shall not impair or affectthe 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 beconclusive and may be enforced in other jurisdictions by suit on the judgment or in any othermanner provided by law. Nothing in this Agreement shall affect any right that any party mayotherwise have to bring any action or proceeding relating to this Agreement or the Notes in thecourts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it maylegally and effectively do so, any objection that it may now or hereafter have to the laying ofvenue of any suit, action or proceeding arising out of or relating to this Agreement or the Notesin any New York State or federal court. Each of the parties hereto hereby irrevocably waives, tothe fullest extent permitted by law, the defense of an inconvenient forum to the maintenance ofsuch action or proceeding in any such court.
SECTION 9.12. Patriot Act Notice. Each Lender and the Agent (for itself and not on behalfof 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, whichinformation includes the name and address of the Borrower and other information that will allowsuch Lender or the Agent, as applicable, to identify the Borrower in accordance with the PatriotAct. The Borrower shall provide, to the extent commercially reasonable, such information and takesuch actions as are reasonably requested by the Agent or any Lenders in order to assist the Agentand 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 andthe Lenders hereby irrevocably waives all right to trial by jury in any action, proceeding orcounterclaim (whether based on contract, tort or otherwise) arising out of or relating to thisAgreement 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 theirrespective officers thereunto duly authorized, as of the date first above written.       TELECOMUNICACIONES DE PUERTO RICO, INC., asBorrower      By                                                                     Title:       PUERTO RICO TELEPHONE COMPANY, INC.,as Guarantor      By                                                                     Title:       CITIBANK, N.A.