**EXHIBIT 10.29**
364-DAY CREDIT AGREEMENT
Dated as of March 2, 2004
TELECOMUNICACIONES DE PUERTO RICO, INC., a Puerto Rico corporation (the“Borrower”), PUERTO RICO TELEPHONE COMPANY, INC., a Puerto Rico corporation(“PRTC” and, collectively with each Significant Subsidiary (as hereinafterdefined) that shall become a guarantor hereunder in accordance with Section5.01(j), the “Guarantors”), the banks, financial institutions and otherinstitutional lenders (the “Initial Lenders”) listed on the signature pageshereof, Citibank, N.A. (“Citibank”), as administrative agent (in such capacity,the “Agent”) for the Lenders (as hereinafter defined), Banco Bilbao VizcayaArgentaria Puerto Rico, as syndication agent, and Banco Popular de Puerto Rico,FirstBank Puerto Rico and Scotiabank de Puerto Rico, as co-documentationagents, 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 followingmeanings (such meanings to be equally applicable to both the singular andplural forms of the terms defined):
          “Advance” means an advance by a Lender to the Borrower as part of aBorrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance(each of which shall be a “Type” of Advance).
          “Affiliate” means, as to any Person, any other Person that, directlyor indirectly, controls, is controlled by or is under common control withsuch Person or is a director or officer of such Person. For purposes ofthis definition, the term “control” (including the terms “controlling”,“controlled by” and “under common control with”) of a Person means thepossession, 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 themanagement and policies of such Person, whether through the ownership ofVoting Stock, by contract or otherwise.
          “Agent’s Account” means the account of the Agent maintained by theAgent at Citibank with its office at 399 Park Avenue, New York, New York10043, Account No. 36852248, Attention: Loan Investor Services.
          “Applicable Lending Office” means, with respect to each Lender, suchLender’s Domestic Lending Office in the case of a Base Rate Advance andsuch Lender’s Eurodollar Lending Office in the case of a Eurodollar RateAdvance.
          “Applicable Margin” means, as of any date, a percentage per annumdetermined by reference to the Performance Level in effect on such dateas 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%  0.875%Level 2  0.000%  0.125%  0.625%  1.125%Level 3  0.000%  0.250%  0.725%  1.250%Level 4  0.000%  0.750%  0.800%  1.750%Level 5  0.200%  1.500%  1.200%  2.500%
          “Applicable Percentage” means, as of any date prior to the Term LoanConversion Date, a percentage per annum determined by reference to thePerformance Level in effect on such date as set forth below:     **Performance Level** **Applicable Percentage**Level 1  0.100%Level 2  0.125%Level 3  0.150%Level 4  0.200%Level 5  0.300%
          “Applicable Utilization Fee” means, as of any date prior to the TermLoan Conversion Date that the aggregate Advances exceed 50% of theaggregate Commitments, a percentage per annum determined by reference tothe Performance Level in effect on such date as set forth below:     **Performance Level** **Applicable Utilization Fee**Level 1  0.125%Level 2  0.125%Level 3  0.125%Level 4  0.250%Level 5  0.500%
          “Assignment and Acceptance” means an assignment and acceptanceentered into by a Lender and an Eligible Assignee, and accepted by theAgent, in substantially the form of Exhibit C hereto.
          “Base Rate” means a fluctuating interest rate per annum in effectfrom time to time, which rate per annum shall at all times be equal tothe higher of:
               (a) the rate of interest announced publicly by Citibank in NewYork, New York, from time to time, as Citibank’s base rate that isoffered to its customers generally (before giving effect to anyapplicable 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 providedin Section 2.06(a)(i).
          “Borrower” has the meaning specified in the recital of parties.
          “Borrower’s Account” means the account of the Borrower maintained bythe Borrower at Citibank with its office at 399 Park Avenue, New York,New York 10043, Account No. 4078-8269.
          “Borrowing” means a borrowing consisting of simultaneous Advances ofthe same Type made by each of the Lenders pursuant to Section 2.01.
          “Business Day” means a day of the year on which banks are notrequired or authorized by law to close in New York City or San Juan,Puerto Rico, provided that, if the applicable Business Day relates to
 

 

anyEurodollar Rate Advances, “Business Day” means a day of the year on whichbanks are not required or authorized by law to close in New York City orSan Juan, Puerto Rico and on which dealings are carried on in the Londoninterbank market.
          “Commitment” has the meaning specified in Section 2.01.
          “Consolidated” refers to the consolidation of accounts in accordancewith GAAP.
          “Consolidated Assets” means, for any period, the total assets of theBorrower and its Subsidiaries as shown on the audited Consolidatedbalance sheet or unaudited Consolidated balance sheet, as the case maybe, as of the end of the most recent fiscal quarter preceding suchperiod.
          “Controlling Interest” means (a) ownership of at least 35% plus oneshare, of the Voting Stock of the Borrower and (b) the ability to appointa majority of the Board of Directors of the Borrower.
          “Convert”, “Conversion” and “Converted” each refers to a conversionof Advances of one Type into Advances of the other Type pursuant toSection 2.07 or 2.08.
          “Debt” of any Person means, without duplication, (a) allindebtedness of such Person for borrowed money, (b) all obligations ofsuch Person for the deferred purchase price of property or services(other than trade payables incurred in the ordinary course of suchPerson’s business for which collection proceedings have not beencommenced, provided that trade payables for which collection proceedingshave commenced shall not be included in the term “Debt” so long as thepayment of such trade payables is being contested in good faith and byproper proceedings and for which appropriate reserves are beingmaintained), (c) all obligations of such Person evidenced by notes,bonds, debentures or other similar instruments, (d) all obligations ofsuch Person created or arising under any conditional sale or othersimilar title retention agreement with respect to property acquired bysuch Person (even though the rights and remedies of the seller or lenderunder such agreement in the event of default are limited to repossessionor sale of such property), (e) all obligations of such Person as lesseeunder leases that have been, in accordance with GAAP, recorded as capitalleases, (f) all obligations of such Person in respect of acceptances,letters of credit or similar extensions of credit, (g) all netobligations of such Person in respect of Hedge Agreements, (h) all Debtof others referred to in clauses (a) through (g) above or clause (i)below guaranteed directly, or indirectly through a Subsidiary, by suchPerson, or in effect guaranteed directly, or indirectly through aSubsidiary, by such Person through a written agreement either (1) to payor purchase such Debt or to advance or supply funds for the payment orpurchase of such Debt or (2) to purchase, sell or lease (as lessee orlessor) property, or to purchase or sell services, primarily for thepurpose of enabling the debtor to make payment of such Debt or to assurethe holder of such Debt against loss and (i) all Debt referred to inclauses (a) through (h) above secured by (or for which the holder of suchDebt has an existing right, contingent or otherwise, to be secured by)any Lien on property (including, without limitation, accounts andcontract rights) owned by such Person, even though such Person has notassumed or become liable for the payment of such Debt.
          “Debt to EBITDA Ratio” of any Person at any date means the ratio of(a) Debt of the types that, in accordance with GAAP, would be classifiedas indebtedness on a Consolidated balance sheet of suchPerson on such date to (b) EBITDA for the period of four fiscalquarters of such Person ended on or immediately prior to such date,provided that for purposes of clause (a) of this definition, Debt shallnot include (1) the obligations specified in clause (g) of the definitionthereof set forth above or (2) with respect to the Borrower, anyobligations which may be assumed by the Borrower for guaranties of anyindebtedness of the Borrower’s employee stock ownership plan up to anaggregate principal amount of $29,745,000.
          “Default” means any Event of Default or any event that wouldconstitute an Event of Default but for the requirement that notice begiven 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, theoffice of such Lender specified as its “Domestic Lending Office” oppositeits name on Schedule I hereto or in the Assignment and Acceptancepursuant to which it became a Lender, or such other office of such Lenderas such Lender may from time to time specify to the Borrower and theAgent.
          “EBITDA” means the sum, determined on a Consolidated basis, of theBorrower’s (i) net income (or net loss), (ii) interest expense, (iii)income tax expense, (iv) depreciation expense, (v) amortization expenseand (vi) non-cash severance charges in an aggregate amount not to exceed$20,000,000 in calendar year 2004 and $20,000,000 in calendar year 2005.
          “EBITDA to Interest Ratio” of any Person on any date means the ratioof (a) EBITDA for the period of four fiscal quarters of such Person endedon or immediately prior to such date to (b) interest payable on, andamortization of debt discount in respect of, all Debt of such Person forthe period of four fiscal quarters of such Person ended on or immediatelyprior to such date, provided that for purposes of clause (b) of thisdefinition, Debt shall not include the obligations specified in clause(g) of the definition thereof set forth above.
          “Effective Date” has the meaning specified in Section 3.01.
          “Eligible Assignee” means (i) a Lender; (ii) an Affiliate of aLender that is a financial institution and is majority-owned by suchLender; (iii) any commercial bank organized under the laws of theCommonwealth of Puerto Rico having total assets in excess of$1,000,000,000 or any other commercial bank having total assets in excessof $1,000,000,000 that has an Applicable Lending Office that is notsubject to deduction or withholding of Taxes; or (iv) any other Personapproved by the Agent and, so long as no Default has occurred and iscontinuing, 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, demandletter, claim, notice of non-compliance or violation, notice of liabilityor potential liability, investigation, proceeding, consent order orconsent agreement relating in any way to any Environmental Law,Environmental Permit or Hazardous Materials or arising from allegedinjury or threat of injury to health, safety or the environment,including, without limitation, (a) by any governmental or regulatoryauthority for enforcement, cleanup, removal, response, remedial or otheractions or damages and (b) by any governmental or regulatory authority orany third party for damages, contribution, indemnification, costrecovery, compensation or injunctive relief.
          “Environmental Law” means any federal, state, local or foreignstatute, law, ordinance, rule, regulation, code, order, judgment, decreeor judicial or agency interpretation, policy or guidance relating topollution or protection of the environment, health, safety or naturalresources, including, without limitation, those relating to the use,handling, transportation, treatment, storage, disposal, release ordischarge of Hazardous Materials.
          “Environmental Permit” means any permit, approval, identificationnumber, license or other authorization required under any EnvironmentalLaw.
          “ERISA” means the Employee Retirement Income Security Act of 1974,as amended from time to time, and the regulations promulgated and rulingsissued thereunder.
          “ERISA Affiliate” means any Person that for purposes of Title IV ofERISA is a member of the Loan Parties’ controlled group, or under commoncontrol with the Borrower, within the meaning of Section 414 of theInternal Revenue Code.
 

 

          “ERISA Event” means (a) the occurrence of a reportable event, withinthe meaning of Section 4043 of ERISA, with respect to any Plan unless the30-day notice requirement with respect to such event has been waived bythe PBGC; (b) the application for a minimum funding waiver with respectto a Plan; (c) the provision by the administrator of any Plan of a noticeof intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA(including any such notice with respect to a plan amendment referred toin Section 4041(e) of ERISA); (d) the cessation of operations at afacility of any of the Loan Parties or any ERISA Affiliate in thecircumstances described in Section 4062(e) of ERISA; (e) the withdrawalby any of the Loan Parties or any ERISA Affiliate from a MultipleEmployer Plan during a plan year for which it was a substantial employer,as defined in Section 4001(a)(2) of ERISA; (f) the imposition of a lienunder Section 302(f) of ERISA with respect to any Plan; (g) the adoptionof an amendment to a Plan requiring the provision of security to suchPlan pursuant to Section 307 of ERISA; or (h) the institution by the PBGCof proceedings to terminate a Plan pursuant to Section 4042 of ERISA, orthe occurrence of any event or condition described in Section 4042 ofERISA that is reasonably expected to result in the termination of, or theappointment of a trustee to administer, a Plan.
          “Eurocurrency Liabilities” has the meaning assigned to that term inRegulation D of the Board of Governors of the Federal Reserve System, asin effect from time to time.
          “Eurodollar Lending Office” means, with respect to any Lender, theoffice of such Lender specified as its “Eurodollar Lending Office”opposite its name on Schedule I hereto or in the Assignment andAcceptance pursuant to which it became a Lender (or, if no such office isspecified, its Domestic Lending Office), or such other office of suchLender as such Lender may from time to time specify to the Borrower andthe Agent.
          “Eurodollar Rate” means, for any Interest Period for each EurodollarRate Advance comprising part of the same Borrowing, an interest rate perannum equal to the rate per annum obtained by dividing (a) the rate perannum (rounded upward to the nearest whole multiple of 1/16 of 1% perannum) appearing on Moneyline Telerate Markets Page 3750 (or anysuccessor page) as the London interbank offered rate for deposits in U.S.dollars at approximately 11:00 A.M. (London time) two Business Days priorto the first day of such Interest Period for a term comparable to suchInterest Period or, if for any reason such rate is not available, theaverage (rounded upward to the nearest whole multiple of 1/16 of 1% perannum, if such average is not such a multiple) of the rate per annum atwhich deposits in U.S. dollars are offered by the principal office ofeach of the Reference Banks in London, England to prime banks in theLondon interbank market at 11:00 A.M. (London time) two Business Daysbefore the first day of such Interest Period in an amount approximatelyequal to such Reference Bank’s pro rata share of the contemplatedEurodollar Rate Advance comprising part of such Borrowing to beoutstanding during such Interest Period and for a period equal to suchInterest Period by (b) a percentage equal to 100% minus the EurodollarRate Reserve Percentage for such Interest Period. The Eurodollar Ratefor any Interest Period for each Eurodollar Rate Advance comprising partof the same Borrowing shall be determined by the Agent on the basis ofapplicable rates furnished to and received by the Agent from theReference Banks two Business Days before the first day of such InterestPeriod, subject, however, to the provisions of Section 2.07.
          “Eurodollar Rate Advance” means an Advance that bears interest asprovided in Section 2.06(a)(ii).
          “Eurodollar Rate Reserve Percentage” for any Interest Period for allEurodollar Rate Advances comprising part of the same Borrowing means thereserve percentage applicable two Business Days before the first day ofsuch Interest Period under regulations issued from time to time by theBoard of Governors of the Federal Reserve System (or any successor) fordetermining the maximum reserve requirement (including, withoutlimitation, any emergency, supplemental or other marginal reserverequirement) for a member bank of the Federal Reserve System in New YorkCity with respect to liabilities or assets consisting of or includingEurocurrency Liabilities (or with respect to any other category ofliabilities that includes deposits by reference to which the interestrate on Eurodollar Rate Advances is determined) having a term equal tosuch Interest Period.
 

 

          “Events of Default” has the meaning specified in Section 6.01.
          “Federal Funds Rate” means, for any period, a fluctuating interestrate per annum equal for each day during such period to the weightedaverage of the rates on overnight Federal funds transactions with membersof the Federal Reserve System arranged by Federal funds brokers, aspublished for such day (or, if such day is not a Business Day, for thenext preceding Business Day) by the Federal Reserve Bank of New York, or,if such rate is not so published for any day that is a Business Day, theaverage of the quotations for such day on such transactions received bythe Agent from three Federal funds brokers of recognized standingselected by it.
          “GAAP” means (a) in the case of the preparation of all financialreporting requirements, generally accepted accounting principles in theUnited States, as in effect from time to time, and (b) in the case of thecalculation, certification and compliance with all financial tests andcovenants, generally accepted accounting principles in the United States,as in effect on the date of the financial statements delivered to eachLender in accordance with Section 4.01(e), in each case applied on aconsistent basis both as to classification of items and amounts.
          “Guaranteed Obligations” has the meaning specified in Section 7.01.
          “Guaranty” has the meaning specified in Section 7.01.
          “Hazardous Materials” means (a) petroleum and petroleum products,byproducts or breakdown products, radioactive materials,asbestos-containing materials, polychlorinated biphenyls and radon gasand (b) any other chemicals, materials or substances designated,classified or regulated as hazardous or toxic or as a pollutant orcontaminant under any Environmental Law.
          “Hedge Agreements” means interest rate swap, cap or collaragreements, interest rate future or option contracts, currency swapagreements, currency future or option contracts and other similaragreements.
          “Information Memorandum” means the information memorandum datedFebruary 4, 2004 used by the Agent in connection with the syndication ofthe Commitments.
          “Interest Period” means, for each Eurodollar Rate Advance comprisingpart of the same Borrowing, the period commencing on the date of suchEurodollar Rate Advance or the date of the Conversion of any Base RateAdvance into such Eurodollar Rate Advance and ending on the last day ofthe period selected by the Borrower pursuant to the provisions below and,thereafter, with respect to Eurodollar Rate Advances, each subsequentperiod commencing on the last day of the immediately preceding InterestPeriod and ending on the last day of the period selected by the Borrowerpursuant to the provisions below. The duration of each such InterestPeriod shall be one, two, three or six months, and subject to clause(iii) of this definition, any other period, as the Borrower may, uponnotice received by the Agent not later than 11:00 A.M. (New York Citytime) on the third Business Day prior to the first day of such InterestPeriod, select; provided, however, that:
               (i) the Borrower may not select any Interest Period that ends(x) after the Termination Date or (y) if the Advances have beenconverted to a term loan pursuant to Section 2.05 prior to or onthe last day of the prior Interest Period, that ends after theMaturity Date;
               (ii) Interest Periods commencing on the same date forEurodollar Rate Advances comprising part of the same Borrowingshall be of the same duration;
               (iii) in the case of any such Borrowing, the Borrower shallnot be entitled to select an Interest Period having duration of anyperiod other than one, two, three or six months unless, by 2:00P.M. (New York City time) on the third Business Day prior to thefirst day of such Interest
 

 

Period, each Lender notifies the Agentthat such Lender will be providing funding for such Borrowing withsuch Interest Period (the failure of any Lender to so respond bysuch time being deemed for all purposes of this Agreement as anobjection by such Lender to the requested duration of such InterestPeriod, provided that each Lender shall use commercially reasonablegood faith efforts to so respond); provided further that, if any orall of the Lenders object to the requested duration of suchInterest Period, the duration of the Interest Period for suchBorrowing shall be one, two, three or six months, as specified bythe 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 wouldotherwise occur on a day other than a Business Day, the last day ofsuch Interest Period shall be extended to occur on the nextsucceeding Business Day, provided, however, that, if such extensionwould cause the last day of such Interest Period to occur in thenext following calendar month, the last day of such Interest Periodshall occur on the next preceding Business Day; and
               (v) whenever the first day of any Interest Period occurs on aday of an initial calendar month for which there is no numericallycorresponding day in the calendar month that succeeds such initialcalendar month by the number of months equal to the number ofmonths in such Interest Period, such Interest Period shall end onthe last Business Day of such succeeding calendar month.
          “Internal Revenue Code” means the Internal Revenue Code of 1986, asamended from time to time, and the regulations promulgated and rulingsissued thereunder.
          “Lenders” means the Initial Lenders and each Person that shallbecome a party hereto pursuant to Section 9.07.
          “Lien” means any lien, security interest or other charge orencumbrance of any kind.
          “Loan Party” means each of the Borrower and the Guarantors.
          “Material Adverse Change” means any material adverse change in thebusiness, condition (financial or otherwise), operations, performance,properties or prospects of any Loan Party or any Loan Party and itsSubsidiaries taken as a whole.
          “Material Adverse Effect” means a material adverse effect on (a) theability of any Loan Party to conduct its business on substantially thesame basis as conducted on the Effective Date or (b) the ability of anyLoan Party to service its Debt obligations on a timely basis.
          “Maturity Date” means the earlier of (a) the first anniversary ofthe Termination Date and (b) the date of termination in whole of theaggregate Commitments pursuant to Section 2.04 or 6.01.
          “Moody’s” means Moody’s Investors Service, Inc.
          “Multiemployer Plan” means a multiemployer plan, as defined inSection 4001(a)(3) of ERISA, to which any Loan Party or any ERISAAffiliate is making or accruing an obligation to make contributions, orhas within any of the preceding five plan years made or accrued anobligation to make contributions.
          “Multiple Employer Plan” means a single employer plan, as defined inSection 4001(a)(15) of ERISA, that (a) is maintained for employees of anyLoan Party or any ERISA Affiliate and at least one Person other than suchLoan Party and the ERISA Affiliates or (b) was so maintained and inrespect of which any Loan Party or any ERISA Affiliate could haveliability under Section 4064 or 4069 of ERISA in the event such plan hasbeen or were to be terminated.
 

 

          “Note” means a promissory note of the Borrower payable to the orderof any Lender, in substantially the form of Exhibit A hereto, evidencingthe aggregate indebtedness of the Borrower to such Lender resulting fromthe 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).
          “PBGC” means the Pension Benefit Guaranty Corporation (or anysuccessor).
          “Performance Level” means, as of any date of determination, thelevel set forth below as then in effect for the Borrower, as determinedin accordance with the following provisions of this definition:   Level 1: Public Debt Rating of at least A- by S&P or A3 by Moody’s.   Level 2: Public Debt Rating of lower than Level 1 but at least BBB+ by S&P or Baa1 by Moody’s.   Level 3: Public Debt Rating of lower than Level 2 but at least BBB by S&P or Baa2 by Moody’s.   Level 4: Public Debt Rating of lower than Level 3 but at least BBB- by S&P or Baa3 by Moody’s.   Level 5: Public Debt Rating of lower than Level 4.
          For purposes of the foregoing, (a) if only one of S&P and Moody’sshall have in effect a Public Debt Rating, the Performance Level shall bedetermined by reference to the available rating and (b) if the PublicDebt Ratings established by S&P and Moody’s shall fall within differentPerformance Levels, the Performance Level shall be based upon the higherrating unless such Public Debt Ratings differ by two or more levels, inwhich case the rating one level higher than the lower rating level willapply.
          “Permitted Liens” means, with respect to any Person, (a) Liens fortaxes, assessments and governmental charges and levies to the extent notrequired to be paid under Section 5.01(b) hereof; (b) pledges or depositsto secure obligations under workers’ compensation laws or similarlegislation; (c) pledges or deposits to secure performance in connectionwith bids, tenders, contracts (other than contracts for the payment ofmoney) or leases to which such Person is a party; (d) deposits to securepublic or statutory obligations of such Person; (e) materialmen’s,mechanics’, carriers’, workers’, repairmen’s or other like Liens in theordinary course of business, or deposits to obtain the release of suchLiens to the extent such Liens, in the aggregate, would not have aMaterial Adverse Effect; (f) deposits to secure surety and appeal bondsto which such Person is a party; (g) other pledges or deposits forsimilar purposes in the ordinary course of business; (h) Liens created byor resulting from any litigation or legal proceeding which at the time iscurrently being contested in good faith by appropriate proceedings; (i)leases made, or existing on property acquired, in the ordinary course ofbusiness; (j) landlord’s Liens under leases to whichsuch Person is a party; (k) zoning restrictions, easements,licenses, and restrictions on the use of real property or minorirregularities in title thereto, which do not materially impair the useof such property in the operation of the business of such Person or thevalue of such property for the purpose of such business; and (l) bankers’liens, rights of set-off or analogous rights granted or arising byoperation of law to any deposits held by or other indebtedness owing byany lender or any affiliate thereof to or for the credit or account ofsuch Person.
          “Permitted Receivables Financing” means any financing pursuant towhich the Borrower or any Subsidiary of the Borrower may sell, convey, orotherwise transfer to a Receivables Subsidiary or any other Person (inthe case of transfer by a Receivables Subsidiary), or grant a securityinterest in, any accounts
 

 

receivable (and related assets) of the Borroweror such Subsidiary, provided that such financing shall be on customarymarket terms and shall be non-recourse to the Borrower and itsSubsidiaries (other than the Receivables Subsidiary) except to a limitedextent customary for such transactions. The grant of a security interestin any accounts receivable of the Borrower or any Subsidiary of theBorrower (other than a Receivables Subsidiary) to secure Debt under anycredit facility shall not be deemed a Permitted Receivables Financing.
          “Person” means an individual, partnership, corporation (including abusiness trust), joint stock company, trust, unincorporated association,joint venture, limited liability company or other entity, or a governmentor any political subdivision or agency thereof.
          “Plan” means a Single Employer Plan or a Multiple Employer Plan.
          “Public Debt Rating” means, as of any date, the rating that has beenmost recently announced by any of S&P or Moody’s, as the case may be, forany class of non-credit enhanced long-term senior unsecured debt issuedby the Borrower. For purposes of the foregoing, (a) if any ratingestablished by S&P or Moody’s shall be changed, such change shall beeffective as of the date on which such change is first announced publiclyby the rating agency making such change; and (b) if S&P or Moody’s shallchange the basis on which ratings are established, each reference to thePublic Debt Rating announced by S&P or Moody’s, as the case may be, shallrefer to the then equivalent rating by S&P or Moody’s, as the case maybe.
          “Puerto Rico Management Agreement” means the Amended and RestatedPuerto Rico Management Agreement, dated as of March 2, 1999, by and amongthe Borrower, PRTC and GITI Services Puerto Rico Incorporated, asamended, modified, renewed or replaced from time to time.
          “Receivables Subsidiary” means a bankruptcy-remote, special-purposewholly owned Subsidiary formed in connection with a Permitted ReceivablesFinancing.
          “Reference Banks” means initially, Citibank, Banco Bilbao VizcayaArgentaria Puerto Rico and Scotiabank de Puerto Rico or, if less thanthree of such banks are able to furnish timely information in accordancewith Section 2.07, any other commercial bank designated by the Borrowerand approved by the Required Lenders as constituting a “Reference Bank”hereunder.
          “Register” has the meaning specified in Section 9.07(d).
          “Required Lenders” means at any time Lenders owed at least amajority in interest of the then aggregate unpaid principal amount of theAdvances owing to Lenders, or, if no such principal amount is thenoutstanding, Lenders having at least a majority in interest of theCommitments.
          “S&P” means Standard & Poor’s, a division of The McGraw-HillCompanies, Inc.
          “Significant Subsidiary” means at any time, with respect to theBorrower, any Subsidiary, other than a Receivables Subsidiary, the assetsof 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 inSection 4001(a)(15) of ERISA, that (a) is maintained for employees of theBorrower or any ERISA Affiliate and no Person other than the Loan Partiesand the ERISA Affiliates or (b) was so maintained and in respect of whichany Loan Party or any ERISA Affiliate could have liability under Section4069 of ERISA in the event such plan has been or were to be terminated.
          “Solvent” and “Solvency” mean, with respect to any Person on aparticular date, that on such date (a) the fair value of the property ofsuch Person is greater than the total amount of liabilities, including,
 

 

without limitation, contingent liabilities, of such Person, (b) thepresent fair salable value of the assets of such Person is not less thanthe amount that will be required to pay the probable liability of suchPerson on its debts as they become absolute and matured, (c) such Persondoes not intend to, and does not believe that it will, incur debts orliabilities beyond such Person’s ability to pay such debts andliabilities as they mature and (d) such Person is not engaged in businessor a transaction, and is not about to engage in business or atransaction, for which such Person’s property would constitute anunreasonably small capital. The amount of contingent liabilities at anytime shall be computed as the amount that, in the light of all the factsand circumstances existing at such time, represents the amount that canreasonably be expected to become an actual or matured liability aftertaking into account any indemnification pursuant to the terms of anyagreements entered into in connection therewith.
          “Subsidiary” of any Person means any corporation, partnership, jointventure, limited liability company, trust or estate of which (or inwhich) more than 50% of (a) the issued and outstanding capital stockhaving ordinary voting power to elect a majority of the Board ofDirectors of such corporation (irrespective of whether at the timecapital stock of any other class or classes of such corporation shall ormight have voting power upon the occurrence of any contingency), (b) theinterest in the capital or profits of such limited liability company,partnership or joint venture or (c) the beneficial interest in such trustor estate, is at the time directly or indirectly owned or controlled bysuch Person, by such Person and one or more of its other Subsidiaries orby one or more of such Person’s other Subsidiaries.
          “Taxes” has the meaning specified in Section 2.13(a).
          “Term Loan Conversion Date” means the Termination Date on which allAdvances outstanding on such date are converted into a term loan pursuantto Section 2.05.
          “Term Loan Election” has the meaning specified in Section 2.05.
          “Termination Date” means the earlier of March 1, 2005 and the dateof termination in whole of the Commitments pursuant to Section 2.04 or6.01.
          “U.S. Management Agreement” means the Amended and Restated U.S.Management Agreement, dated as of March 2, 1999, by and among theBorrower, PRTC and GTE International Telecommunications Incorporated, asamended, modified, renewed or replaced form time to time.
          “Verizon” means Verizon Communications Inc., a Delaware corporation.
          “Voting Stock” means capital stock issued by a corporation, orequivalent interests in any other Person, the holders of which areordinarily, in the absence of contingencies, entitled to vote for theelection of directors (or persons performing similar functions) of suchPerson, 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 theSenate of the Commonwealth of Puerto Rico of any proposal to changeany applicable law, treaty or government rule, regulation or order whichwould require the Borrower to deduct or withhold any Taxes from or inrespect of any sum payable hereunder or under any Note to any Lender orthe Agent.
          SECTION 1.02. Computation of Time Periods. In this Agreement in thecomputation of periods of time from a specified date to a later specified date,the word “from” means “from and including” and the words “to” and “until” eachmean “to but excluding”.
          SECTION 1.03. Accounting Terms. All terms of an accounting or financialnature not specifically defined herein shall be construed in accordance withGAAP.
ARTICLE II
 

 

AMOUNTS AND TERMS OF THE ADVANCES
          SECTION 2.01. The Advances. Each Lender severally agrees, on the termsand conditions hereinafter set forth, to make Advances to the Borrower fromtime to time on any Business Day during the period from the Effective Dateuntil the Termination Date in an aggregate amount not to exceed at any timeoutstanding the amount set forth opposite such Lender’s name on the signaturepages hereof or, if such Lender has entered into any Assignment and Acceptance,set forth for such Lender in the Register maintained by the Agent pursuant toSection 9.07(d), as such amount may be reduced pursuant to Section 2.04 (suchLender’s “Commitment”). Each Borrowing shall be in an aggregate amount of$10,000,000 or an integral multiple of $1,000,000 in excess thereof and shallconsist of Advances of the same Type made on the same day by the Lendersratably according to their respective Commitments. Within the limits of thisSection 2.01, the Borrower may borrow under this Section 2.01, prepay pursuantto Section 2.09 and reborrow under this Section 2.01.
          SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made onnotice, given not later than 11:00 A.M. (New York City time) on the thirdBusiness Day prior to the date of the proposed Borrowing in the case of aBorrowing consisting of Eurodollar Rate Advances, or the Business Day of theproposed 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 noticethereof by telecopier, facsimile or telex. Each such notice of a Borrowing (a“Notice of Borrowing”) shall be by telephone, confirmed immediately in writing,or telecopier, facsimile or telex in substantially the form of Exhibit Bhereto, specifying therein the requested (i) date of such Borrowing, (ii) Typeof Advances comprising such Borrowing, (iii) aggregate amount of suchBorrowing, and (iv) in the case of a Borrowing consisting of Eurodollar RateAdvances, initial Interest Period for each such Advance. Each Lender shall,before 12:00 noon (New York City time) on the date of such Borrowing, makeavailable for the account of its Applicable Lending Office to the Agent at theAgent’s Account, in same day funds, such Lender’s ratable portion of suchBorrowing. After the Agent’s receipt of such funds and upon fulfillment of theapplicable conditions set forth in Article III, the Agent will make such fundsavailable to the Borrower at the Borrower’s Account.
          (b) Anything in subsection (a) above to the contrary notwithstanding, (i)the Borrower may not select Eurodollar Rate Advances for any Borrowing if theaggregate obligation of the Lenders to make Eurodollar Rate Advances shall thenbe suspended pursuant to Section 2.07 or 2.11 and (ii) the Eurodollar RateAdvances may not be outstanding as part of more than twelve separateBorrowings.
          (c) Each Notice of Borrowing shall be irrevocable and binding on theBorrower. In the case of any Borrowing that the related Notice of Borrowingspecifies is to be comprised of Eurodollar Rate Advances, the Borrower shallindemnify each Lender against any loss, cost or expense incurred by such Lenderas a result of any failure to fulfill on or before the date specified in suchNotice of Borrowing for such Borrowing the applicable conditions set forth inArticle III, including, without limitation, any loss (excluding loss ofanticipated profits), cost or expense incurred by reason of the liquidation orreemployment 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 such failure, is not made on such date.
          (d) Unless the Agent shall have received notice from a Lender prior to thetime of any Borrowing that such Lender will not make available to the Agentsuch Lender’s ratable portion of such Borrowing, the Agent may assume that suchLender has made such portion available to the Agent on the date of suchBorrowing in accordance with subsection (a) of this Section 2.02 and the Agentmay, in reliance upon such assumption, makeavailable to the Borrower on such date a corresponding amount. If and tothe extent that such Lender shall not have so made such ratable portionavailable to the Agent, such Lender and the Borrower severally agree to repayto the Agent forthwith on demand such corresponding amount together withinterest thereon, for each day from the date such amount is made available tothe Borrower until the date such amount is repaid to the Agent, at (i) in thecase of the Borrower, the interest rate applicable at the time to Advancescomprising such Borrowing and (ii) in the case of such Lender, the FederalFunds Rate. If such Lender shall repay to the Agent such corresponding amount,such amount so repaid shall constitute such Lender’s Advance as part of suchBorrowing for purposes of this Agreement and the Borrower shall be relieved ofits 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 partof any Borrowing shall not relieve any other Lender of its obligation hereunderto make its Advance on the date of such Borrowing, but no Lender shall beresponsible for the failure of any other Lender to make the Advance to be madeby such other Lender on the date of any Borrowing.
 

 

          SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay tothe Agent for the account of each Lender a facility fee on the aggregate amountof such Lender’s Commitment from the Effective Date in the case of each InitialLender and from the later of the Effective Date and the effective datespecified in the Assignment and Acceptance pursuant to which it became a Lenderin the case of each other Lender until the Termination Date at a rate per annumequal to the Applicable Percentage in effect from time to time, payable inarrears quarterly on the last day of each March, June, September and December,commencing June 30, 2004, and on the Termination Date.
          (b) Utilization Fee. The Borrower agrees to pay to the Agent for theaccount of each Lender from the Effective Date until the Termination Date aUtilization Fee on the aggregate amount of such Lender’s Advances for each daythat the aggregate Advances exceed 50% of the aggregate Commitments at a rateper annum equal to the Applicable Utilization Fee in effect from time to time,payable in arrears quarterly on the last day of each March, June, September andDecember, commencing June 30, 2004, and on the Termination Date.
          (c) Agent’s Fees. The Borrower shall pay to the Agent for its own accountsuch fees as may from time to time be agreed between the Borrower and theAgent.
          SECTION 2.04. Termination or Reduction of the Commitments. (a)Optional. The Borrower shall have the right, upon at least three BusinessDays’ notice to the Agent, to terminate in whole or reduce ratably in part theunused portions of the respective Commitments of the Lenders, provided thateach partial reduction shall be in the aggregate amount of $10,000,000 or anintegral multiple of $1,000,000 in excess thereof.
          (b) Mandatory. On the Termination Date, if the Borrower has made the TermLoan Election in accordance with Section 2.05 prior to such date, and from timeto time thereafter upon each prepayment of the Advances, the Commitments of theLenders shall be automatically and permanently reduced on a pro rata basis byan amount equal to the amount by which (i) the aggregate Commitmentsimmediately 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 thenext succeeding sentence, repay to the Agent for the ratable account of theLenders on the Termination Date the aggregate principal amount of the Advancesthen outstanding. The Borrower may, upon not less than one Business Day noticeto the Agent, elect (the “Term Loan Election”) to convert all of the Advancesoutstanding on the Termination Date in effect at such time into a term loanwhich the Borrower shall repay in full ratably to the Lenders on the MaturityDate; provided that the Term Loan Election may not be exercised unless theapplicable conditions in Section 3.02 are satisfied on the date of notice ofthe Term Loan Election and on the date on which the Term Loan Election is to beeffected. All Advances converted into a term loan pursuant to this Section2.05 shall continue to constitute Advances except that the Borrower may notreborrow pursuant to Section 2.01 after all or any portion of such Advanceshave been prepaid pursuant to Section 2.09.
          SECTION 2.06. Interest. (a) Scheduled Interest. The Borrower shall payinterest on the unpaid principal amount of each Advance owing to each Lenderfrom the date of such Advance until such principal amount shall be paid infull, at the following rates per annum:
          (i) Base Rate Advances. During such periods as such Advance is aBase Rate Advance, a rate per annum equal at all times to the sum of (x)the Base Rate in effect from time to time plus (y) the Applicable Marginin effect from time to time, payable in arrears quarterly on the last dayof each March, June, September and December during such periods and onthe date such Base Rate Advance shall be Converted or paid in full.
          (ii) Eurodollar Rate Advances. During such periods as such Advanceis a Eurodollar Rate Advance, a rate per annum equal at all times duringeach Interest Period for such Advance to the sum of (x) the EurodollarRate for such Interest Period for such Advance, plus (y) the ApplicableMargin in effect from time to time, payable in arrears on the last day ofsuch Interest Period and, if such Interest Period has a duration of morethan three months, on each day that occurs during such Interest Periodevery three months from the first day of such Interest Period and on thedate such Eurodollar Rate Advance shall be Converted or paid in full.
          (b) Default Interest. Upon the occurrence and during the continuance ofan Event of Default
 

 

under Section 6.01(a), the Borrower shall pay interest on(i) the unpaid principal amount of each Advance owing to each Lender, payablein arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at arate 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) aboveand (ii) to the fullest extent permitted by law, the amount of any interest,fee or other amount payable hereunder that is not paid when due, from the datesuch amount shall be due until such amount shall be paid in full, payable inarrears 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 requiredto be paid on Base Rate Advances pursuant to clause (a)(i) above.
          SECTION 2.07. Interest Rate Determination. (a) Each Reference Bankagrees to furnish to the Agent timely information for the purpose ofdetermining each Eurodollar Rate. If any one or more of the Reference Banksshall not furnish such timely information to the Agent for the purpose ofdetermining any such interest rate, the Agent shall determine such interestrate on the basis of timely information furnished by the remaining ReferenceBanks. The Agent shall give prompt notice to the Borrower and the Lenders ofthe applicable interest rate determined by the Agent for purposes of Section2.06(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 Lendersnotify the Agent that the Eurodollar Rate for any Interest Period for suchAdvances will not adequately reflect the cost to such Required Lenders ofmaking, funding or maintaining their respective Eurodollar Rate Advances forsuch Interest Period, the Agent shall forthwith so notify the Borrower and theLenders, whereupon (i) each Eurodollar Rate Advance will automatically, on thelast day of the then existing Interest Period therefor, Convert into a BaseRate Advance, and (ii) the obligation of the Lenders to make, or to ConvertAdvances into, Eurodollar Rate Advances shall be suspended until the Agentshall notify the Borrower and the Lenders that the circumstances causing suchsuspension no longer exist.
          (c) If the Borrower shall fail to select the duration of any InterestPeriod for any Eurodollar Rate Advances in accordance with the provisionscontained in the definition of “Interest Period” in Section 1.01, the Agentwill forthwith so notify the Borrower and the Lenders and such Advances willautomatically, on the last day of the then existing Interest Period therefor,Convert into Base Rate Advances.
          (d) On the date on which the aggregate unpaid principal amount ofEurodollar Rate Advances comprising any Borrowing shall be reduced, by paymentor prepayment or otherwise, to less than $10,000,000, such Advances shallautomatically Convert into Base Rate Advances.
          (e) Upon the occurrence and during the continuance of any Event of Defaultunder Section 6.01(a), (i) each Eurodollar Rate Advance will automatically, onthe last day of the then existing Interest Period therefor, Convert into a BaseRate Advance and (ii) the obligation of the Lenders to make, or to ConvertAdvances into, Eurodollar Rate Advances shall be suspended.
          (f) If fewer than two Reference Banks determine and furnish timelyinformation to the Agent for determining the Eurodollar Rate for any EurodollarRate Advances,
          (i) the Agent shall forthwith notify the Borrower and the Lendersthat the interest rate cannot be determined for such Eurodollar RateAdvances,
          (ii) each such Advance will automatically, on the last day of thethen existing Interest Period therefor, Convert into a Base Rate Advance(or if such Advance is then a Base Rate Advance, will continue as a BaseRate Advance), and
          (iii) the obligation of the Lenders to make Eurodollar Rate Advancesor to Convert Advances into Eurodollar Rate Advances shall be suspendeduntil the Agent shall notify the Borrower and the Lenders that thecircumstances causing such suspension no longer exist.
          SECTION 2.08. Optional Conversion of Advances. The Borrower may on anyBusiness Day, upon notice given to the Agent not later than 11:00 A.M. (NewYork City time) on the third Business Day prior to the date of the proposedConversion and subject to the provisions of Sections 2.07 and 2.11, Convert allAdvances of one Type comprising the same Borrowing into Advances of the otherType; provided, however, that any Conversion of Eurodollar Rate Advances intoBase Rate Advances shall be made only on the last day of an Interest
 

 

Period forsuch Eurodollar Rate Advances and any Conversion of Base Rate Advances intoEurodollar Rate Advances shall be in an amount not less than $10,000,000. Eachsuch notice of a Conversion shall, within the restrictions specified above,specify (i) the date of such Conversion, (ii) the Advances to be Converted and(iii) if such Conversion is into Eurodollar Rate Advances, the duration of theinitial Interest Period for each such Advance. Each notice of Conversion shallbe irrevocable and binding on the Borrower.
     SECTION 2.09. Optional Prepayments of Advances. The Borrower may, uponnotice not later than 11:00 A.M. (New York City time) for Base Rate Advancesand upon at least two Business Days’ notice to the Agent for Eurodollar RateAdvances stating the proposed date and aggregate principal amount of theprepayment, and if such notice is given the Borrower shall, prepay theoutstanding principal amount of the Advances comprising part of the sameBorrowing in whole or ratably in part, together with accrued interest to thedate of such prepayment on the principal amount prepaid; provided, however,that (x) each partial prepayment shall be in an aggregate principal amount of$10,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) inthe event of any such prepayment of a Eurodollar Rate Advance, the Borrowershall be obligated to reimburse the Lenders in respect thereof pursuant toSection 9.04(c).
     SECTION 2.10. Increased Costs. (a) If, due to either (i) theintroduction of or any change in or in the interpretation of any law orregulation or (ii) the compliance with any written guideline or request fromany central bank or other governmental authority (whether or not having theforce of law), there shall be any increase in the cost to any Lender ofagreeing to make or making, funding or maintaining Eurodollar Rate Advances(excluding for purposes of this Section 2.10 any such increased costs resultingfrom (i) Taxes or Other Taxes (as to which Section 2.13 shall govern) and (ii)changes in the basis of taxation of overall net income or overall gross incomeby the United States or by the foreign jurisdiction or state under the laws ofwhich such Lender is organized or has its Applicable Lending Office or anypolitical subdivision thereof), then the Borrower shall from time to time, upondemand by such Lender (with a copy of such demand to the Agent), pay to theAgent for the account of such Lender additional amounts sufficient tocompensate such Lender for such increased cost (whether or not such increasedcosts arise prior to the receipt of written notification from such central bankor other governmental authority); provided that the Borrower shall not berequired to pay any such increased costs to the extent such increased costsaccrued 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 periodreferred to above shall be extended to include the period of retroactive effectthereof. A certificate as to the amount of such increased cost, submitted tothe Borrower and the Agent by such Lender, shall be conclusive and binding forall purposes, absent error in the calculation of such amount.
     (b) If any Lender determines that compliance with any law or regulation orany written guideline or request from any central bank or other governmentalauthority (whether or not having the force of law) affects or would affect theamount of capital required or expected to be maintained by such Lender or anycorporation controlling such Lender (excluding any reserves included in thecomputation of the Eurodollar Rate) and that the amount of such capital isincreased by or based upon the existence of such Lender’s commitment to lendhereunder and other commitments of this type, then, upon demand by such Lender(with a copy of such demand to the Agent), the Borrower shall pay to the Agentfor the account of such Lender, from time to time as specified by such Lender,additional amounts sufficient to compensate such Lender or suchcorporation (whether or not such amounts arise prior to the receipt of writtennotification from such central bank or other governmental authority) in thelight of such circumstances, to the extent that such Lender reasonablydetermines such increase in capital to be allocable (in the proportion thatsuch Lender’s Commitment hereunder bears to all of such Lender’s commitments ofthis type) to the existence of such Lender’s commitment to lend hereunder;provided that the Borrower shall not be required to compensate such Lender tothe extent such amounts arose prior to the date that is six months prior tosuch notice, provided further that, if the change in law or circumstance givingrise to such increased costs or reductions is retroactive, then the six-monthperiod referred to above shall be extended to include the period of retroactiveeffect thereof. A certificate as to such amounts submitted to the Borrower andthe Agent by such Lender shall be conclusive and binding for all purposes,absent error in the calculation of such amounts.
     (c) Any Lender claiming any additional amounts payable pursuant to thisSection 2.10 agrees to use reasonable efforts (consistent with its internalpolicy and legal and regulatory restrictions) to minimize such additionalamounts and to change the jurisdiction of its Applicable Lending Office if themaking of such a change would avoid the need for, or reduce the amount of, anyadditional amounts that may thereafter accrue and would not, in the reasonablejudgment of such Lender, be otherwise notably disadvantageous to such Lender.The Borrower shall reimburse such Lender for such Lender’s reasonable expensesincurred 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 onsuch Lender’s Commitment and Advances and the total lending commitments andloans of such Lender to its similarly
 

 

situated customers.
     SECTION 2.11. Illegality. Notwithstanding any other provision of thisAgreement, if any Lender shall notify the Agent that the introduction of or anychange in or in the interpretation of any law or regulation makes it unlawful,or any central bank or other governmental authority having relevantjurisdiction asserts that it is unlawful, for any Lender or its EurodollarLending Office to perform its obligations hereunder to make Eurodollar RateAdvances or to fund or maintain Eurodollar Rate Advances hereunder, (i) eachEurodollar Rate Advance made by such Lender will automatically, upon suchdemand, Convert into a Base Rate Advance and (ii) the obligation of such Lenderto make Eurodollar Rate Advances or to Convert Advances into Eurodollar RateAdvances shall be suspended until the Agent shall notify the Borrower and theLenders that the circumstances causing such suspension no longer exist.
     SECTION 2.12. Payments and Computations. (a) The Borrower shall makeeach payment hereunder and under the Notes without counterclaim or set-off notlater than 11:00 A.M. (New York City time) on the day when due in U.S. dollarsto the Agent at the Agent’s Account in same day funds. The Agent will promptlythereafter cause to be distributed like funds relating to the payment ofprincipal or interest or fees ratably (other than amounts payable pursuant toSection 2.03, 2.10, 2.13 or 9.04(c)) to the Lenders for the account of theirrespective Applicable Lending Offices, and like funds relating to the paymentof any other amount payable to any Lender to such Lender for the account of itsApplicable Lending Office, in each case to be applied in accordance with theterms of this Agreement. Upon its acceptance of an Assignment and Acceptanceand recording of the information contained therein in the Register pursuant toSection 9.07(c), from and after the effective date specified in such Assignmentand Acceptance, the Agent shall make all payments hereunder and under the Notesin respect of the interest assigned thereby to the Lender assignee thereunder,and the parties to such Assignment and Acceptance shall make all appropriateadjustments in such payments for periods prior to such effective date directlybetween themselves.
     (b) All computations of interest based on the Base Rate shall be made bythe Agent on the basis of a year of 365 or 366 days, as the case may be, andall computations of interest based on the Eurodollar Rate or the Federal FundsRate and of fees shall be made by the Agent on the basis of a year of 360 days,in each case for the actual number of days (including the first day butexcluding the last day) occurring in the period for which such interest or feesare payable. Each determination by the Agent of an interest rate hereundershall be conclusive and binding for all purposes, absent error in thecalculation of such interest rate.
     (c) Whenever any payment hereunder or under the Notes shall be stated tobe due on a day other than a Business Day, such payment shall be made on thenext succeeding Business Day, and such extension of time shall in such case beincluded in the computation of payment of interest or fee, as the case may be;provided, however, that, if such extension would cause payment of interest onor principal of Eurodollar Advances to be made in the next following calendarmonth, such payment shall be made on the next preceding Business Day.
     (d) Unless the Agent shall have received notice from the Borrower prior tothe time on which any payment is due to the Lenders hereunder that the Borrowerwill not make such payment in full, the Agent mayassume that the Borrower has made such payment in full to the Agent onsuch date and the Agent may, in reliance upon such assumption, cause to bedistributed to each Lender on such due date an amount equal to the amount thendue such Lender. If and to the extent the Borrower shall not have so made suchpayment in full to the Agent, each Lender shall repay to the Agent forthwith ondemand such amount distributed to such Lender together with interest 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.
     SECTION 2.13. Taxes. (a) Subject to subsections (e) and (f) below, anyand all payments by the Borrower hereunder or under the Notes shall be made, inaccordance with Section 2.12, free and clear of and without deduction for anyand all present or future taxes, levies, imposts, deductions, charges orwithholdings, and all liabilities with respect thereto imposed by Puerto Rico,the United States or any political subdivision of either (or in the case of anypayments by or on behalf of the Borrower through an account or branch outsidethe United States or Puerto Rico or by or on behalf of the Borrower by a payorthat is not a United States person or not organized or resident in Puerto Ricosuch payments shall be made free and clear of and without deduction for any andall present or future taxes, levies, imposts, deductions, charges orwithholdings, and all liabilities with respect thereto imposed by a foreignjurisdiction or any political subdivision thereof), excluding, in the case ofeach Lender and the Agent, taxes imposed on its overall net income, andfranchise 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 subdivisionor taxing authority therein) in which it is organized or in which the principaloffice of such Lender, or Applicable Lending Office of such Lender is
 

 

located,or (y) in the case of any payment to the Agent in its capacity as Agent, thejurisdiction (or any political subdivision or taxing authority therein) inwhich it is organized or in which the principal office of the Agent is locatedor in which the office designated by the Agent to act as Agent is located (allsuch non-excluded taxes, levies, imposts, deductions, charges, withholdings andliabilities in respect of payments hereunder or under the Notes beinghereinafter 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 respectof any sum payable hereunder or under any Note to any Lender or the Agent, (i)the sum payable shall be increased as may be necessary so that after making allrequired deductions (including deductions applicable to additional sums payableunder this Section 2.13) such Lender or the Agent (as the case may be) receivesan 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 shallpay the full amount deducted to the relevant taxation authority or otherauthority in accordance with applicable law. Within 30 days after the date ofany payment of Taxes, the Borrower shall furnish to the Agent, at its addressreferred to in Section 9.02, the original or a certified copy of a receiptevidencing payment thereof. For purposes of this subsection (a) and subsection(e), the terms “United States” and “United States person” shall have themeanings specified in Section 7701 of the Internal Revenue Code.
     (b) In addition, the Borrower agrees to pay any stamp or documentary taxesor any other excise or property taxes, charges or similar levies that arisefrom any payment made hereunder or under the Notes or from the execution,delivery or registration of, performing under, or otherwise with respect to,this Agreement or the Notes as a result of the introduction of or any change inor in the interpretation of any law or regulation after the Effective Date(hereinafter referred to as “Other Taxes”).
     (c) Subject to subsections (d), (e) and (f) below, the Borrower shallindemnify each Lender and the Agent for the full amount of Taxes or Other Taxes(to the extent not previously paid under subsection (a) or (b) above) imposedon 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 therefromor with respect thereto. This indemnification shall be made within 30 daysfrom the date such Lender or the Agent (as the case may be) makes writtendemand therefor.
     (d) Each Lender organized under the laws of a jurisdiction outside ofPuerto Rico from time to time, as requested in writing by the Borrower (butonly so long as such Lender remains lawfully able to do so), shall provide eachof the Agent and the Borrower with two properly and accurately completed andduly executed original copies of any form, document or other certificate thatis necessary for such Lender to be exempt from, or entitled to a reduced rateof Taxes or payments hereunder or under the Notes or for the Borrower todetermine the applicable rate of deduction or withholding of any Taxes. If anyLender which is organized under the laws of a jurisdiction outside of PuertoRico is unable to provide the above-described forms, documents or othercertificates for a relevant interest period (or if the Lender’s appropriatepersonnel responsible for providing the forms, documents or other certificatesactually become aware that the forms, documents or other certificates providedby it are inaccurate), such Lender shall notify the Borrower in writing priorto or immediately upon the commencement of such relevant interest period.
     (e) For any period with respect to which a Lender has failed to providethe Borrower with the appropriate form, document or other certificate requestedby the Borrower in accordance with Section 2.13(d) (other than if such failureis due to a change in any applicable law, treaty or government rule, regulationor order, or any change in the interpretation, administration or applicationthereof occurring subsequent to the date hereof such that such Lender is notlawfully able to provide the Borrower with the appropriate form, document orother certificate, or if such form, document or other certificate is no longerrequired to establish an exemption from the applicable tax), such Lender shallnot be entitled to indemnification under Section 2.13(a) or (c) with respect toTaxes by reason of such failure and the Borrower shall be entitled to withholdTaxes from payments to such Lender; provided, however, that should a Lenderbecome subject to Taxes because of its failure to deliver a form, document orother certificate required hereunder, the Borrower shall take such steps atsuch Lender’s expense as such Lender shall reasonably request to assist suchLender to recover such Taxes.
     (f) Notwithstanding anything else contained in this Section 2.13, theBorrower shall only be required to pay additional sums with respect to Taxes(subject to subsection (h) below) to a Lender (or the Agent, as the case maybe) pursuant to subsection (a) or (c) above if the obligation to pay such Taxesresults from such Lender’s inability to obtain a complete exemption from Taxesas a result of (i) any amendment to the laws (or any regulations thereunder),or any amendment to, or change in, an interpretation or application of any suchlaws or regulations by any legislative body, court, governmental agency orregulatory authority adopted or enacted after the date hereof (or in the caseof an entity that becomes a Lender after the date hereof, the date such entitybecomes a
 

 

Lender), (ii) an amendment, modification or revocation of anyexisting applicable tax treaty ratified, enacted or amended after the datehereof (or in the case of an entity that becomes a Lender after the datehereof, the date such entity becomes a Lender), or (iii) the ratification of anew tax treaty ratified after the date hereof (or in the case of an entity thatbecomes a Lender after the date hereof, the date such entity becomes a Lender).
     (g) In the event that the Borrower makes an additional payment underSection 2.13(a) or 2.13(c) for the account of any Lender and such Lender, inits sole opinion, determines that it has finally and irrevocably received orbeen granted a credit against, or relief or remission from, or repayment of,any tax paid or payable by it in respect of or calculated with reference to thededuction or withholding giving rise to such additional payment, such Lendershall, to the extent that it determines that it can do so without prejudice tothe retention of the amount of such credit, relief, remission or repayment, payto the Borrower such amount as such Lender shall, in its sole opinion, havedetermined is attributable to such deduction or withholding and will leave suchLender (after such payment) in no worse position than it would have been hadthe Borrower not been required to make such deduction or withholding. Nothingcontained herein shall (i) interfere with the right of a Lender to arrange itstax affairs in whatever manner it thinks fit or (ii) oblige any Lender to claimany tax credit or to disclose any information relating to its tax affairs orany computations in respect thereof or (iii) require any Lender to take orrefrain from taking any action that would prejudice its ability to benefit fromany other credits, reliefs, remissions or repayments to which it may beentitled. Each Lender and the Agent shall reasonably cooperate with theBorrower at the Borrower’s written request and sole expense, in contesting anyTaxes or Other Taxes the Borrower would bear pursuant to this Section 2.13,provided, however, that (i) no tax return of such Lender or the Agent is orwould be held open as a result of such contest, (ii) neither such Lender northe Agent is required to reopen a tax year that has already closed and (iii)such Lender and the Agent shall, in the sole opinion of such Lender and theAgent, respectively, have determined that such contest will leave such Lenderand the Agent, respectively, in no worse position than it would have been inhad it not contested such Taxes or Other Taxes. Nothing contained herein shallinterfere with the right of a Lender or the Agent to arrange its tax affairs inwhatever manner it thinks fit, if in the sole judgment of such Lender or theAgent, such contest would be disadvantageous to such Lender or the Agent. Inpursuing a contest in the Lender’s or the Agent’s name, such Lender or theAgent will be represented by counsel of such Lender’s or the Agent’s choice,and will defend against, settle or otherwise control the contest and will notrelinquish control or decision making over the contest.
     (h) (i) Any Lender claiming any additional amounts payable pursuant tothis Section 2.13 or (ii) upon a Withholding Tax Change, each Lender, agrees touse reasonable efforts (consistent with its internal policy and legal andregulatory restrictions) to avoid or minimize such additional amounts and tochange the jurisdiction of its Applicable Lending Office if the making of sucha change would avoid the need for, or reduce the amount of, any additionalamounts that may thereafter accrue and would not, in the reasonable judgment ofsuch Lender, be otherwise notably disadvantageous to such Lender. The Borrowershall reimburse such Lender for such Lender’s reasonable expenses incurred inconnection with such change or in considering such a change in an amount not toexceed the Borrower’s pro rata share of such expenses based on such Lender’sCommitment and Advances to the Borrower and the total lending commitments andloans of such Lender to its similarly situated customers.
     SECTION 2.14. Sharing of Payments, Etc.If any Lender shall obtain any payment (whether voluntary, involuntary,through the exercise of any right of set-off, or otherwise) on account of theAdvances owing to it (other than pursuant to Section 2.10, 2.13, 9.01(b),9.04(c) or 9.07) in excess of its ratable share of payments on account of theAdvances obtained by all the Lenders, such Lender shall forthwith purchase fromthe other Lenders such participations in the Advances owing to them as shall benecessary to cause such purchasing Lender to share the excess payment ratablywith each of them; provided, however, that if all or any portion of such excesspayment is thereafter recovered from such purchasing Lender, such purchase fromeach Lender shall be rescinded and such Lender shall repay to the purchasingLender the purchase price to the extent of such recovery together with anamount equal to such Lender’s ratable share (according to the proportion of (i)the amount of such Lender’s required repayment to (ii) the total amount sorecovered from the purchasing Lender) of any interest or other amount paid orpayable by the purchasing Lender in respect of the total amount so recovered.The Borrower agrees that any Lender so purchasing a participation from anotherLender by delivering payment pursuant to this Section 2.14 may, to the fullestextent permitted by law, exercise all its rights of payment (including theright of set-off) with respect to such participation as fully as if such Lenderwere the direct creditor of the Borrower in the amount of such participation.
     SECTION 2.15. Use of Proceeds. The proceeds of the Advances shall beavailable (and the Borrower agrees that it shall use such proceeds) solely forgeneral corporate purposes of the Borrower and its Subsidiaries, including,without limitation, to provide a backstop for commercial paper, provided thatsuch proceeds shall not be used for the purpose of purchasing or carryingmargin stock (within the meaning of Regulation U issued by the Board ofGovernors of the Federal Reserve System).
 

 

ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
          SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01.Section 2.01 of this Agreement shall become effective on and as of the firstdate (the “Effective Date”) on which the following conditions precedent havebeen satisfied:
          (a) There shall have occurred no Material Adverse Change sinceDecember 31, 2002 other than as disclosed in Schedule 3.01(a) hereto.
          (b) There shall exist no action, suit, investigation, litigation orproceeding affecting any of the Loan Parties or any of their respectiveSubsidiaries pending or threatened before any court, governmental agencyor arbitrator that (i) could be reasonably likely to have a MaterialAdverse Effect other than the matters described on Schedule 3.01(b)hereto (the “Disclosed Litigation”) or (ii) is initiated by any Personother than a Lender in its capacity as a Lender that purports to affectthe legality, validity or enforceability of this Agreement or any Note orthe consummation of the transactions contemplated hereby, and there shallhave been no material adverse change in the status, or financial effecton any Loan Party, of the Disclosed Litigation from that described onSchedule 3.01(b) hereto.
          (c) All governmental and third party consents and approvalsnecessary in connection with the execution, delivery and performance ofthis Agreement and the Notes shall have been obtained (without theimposition of any conditions that could reasonably be expected tomaterially adversely affect the ability of any Loan Party to perform itsobligations hereunder) and shall remain in effect, and no law orregulation shall be applicable that restrains, prevents or imposesadverse conditions upon the transactions contemplated hereby that couldreasonably be expected to materially adversely affect the ability of anyLoan Party to perform its obligations hereunder.
          (d) The Borrower shall have notified each Lender and the Agent inwriting as to the proposed Effective Date.
          (e) The Borrower shall have paid all invoiced fees and expenses ofthe Agent and the Lenders (including the invoiced fees and expenses ofcounsel to the Agent).
          (f) On the Effective Date, the following statements shall be trueand the Agent shall have received for the account of each Lender acertificate signed by a duly authorized officer of the Borrower, datedthe Effective Date, stating that:
               (i) The representations and warranties contained in Section4.01 are correct on and as of the Effective Date, and
               (ii) No event has occurred and is continuing that constitutesa Default.
          (g) The Agent shall have received on or before the Effective Datethe following, each dated such day, in form and substance satisfactory tothe Agent and (except for the Notes) in sufficient copies for eachLender:
               (i) The Notes to the order of the Lenders, respectively.
               (ii) Certified copies of the resolutions of the Board ofDirectors of each Loan Party approving the transactionscontemplated by this Agreement and the Notes and of all documentsevidencing 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 Secretaryof each Loan Party certifying the names and true signatures of theofficers of each Loan Party authorized to sign this Agreement andthe Notes and the other documents to be delivered hereunder.
               (iv) A certificate, in substantially the form of Exhibit Dhereto, attesting to the Solvency of each Loan Party after givingeffect to the Borrowings contemplated hereunder, from the chieffinancial officer of each such Loan Party.
               (v) A favorable opinion of Curtis, Mallet-Prevost, Colt &Mosle, New York counsel for the Loan Parties, substantially in theform of Exhibit E hereto.
               (vi) A favorable opinion of Jose Arroyo, Esq., Vice Presidentand General Counsel of the Borrower, substantially in the form ofExhibit F hereto.
               (vii) A favorable opinion of Shearman & Sterling LLP, counselfor the Agent, in form and substance satisfactory to the Agent.
          (h) The termination in whole of the commitments of the lenders partyto the Five-Year Credit Agreement dated as of March 2, 1999 (the“Existing Credit Agreement”) among the Borrower, Puerto Rico TelephoneCompany, Inc. and Celulares Telefonica, Inc., as guarantors, Citibank, asadministrative agent, Bank of America National Trust and SavingsAssociation, as syndication agent, and The Chase Manhattan Bank andMorgan Guaranty Trust Company of New York, as documentation agents, andthe payment in full of all obligations outstanding under the ExistingCredit Agreement. Each of the Initial Lenders that is a party to theExisting Credit Agreement hereby waives the requirement of three BusinessDays notice to terminate the commitments under the Existing CreditAgreement.
          SECTION 3.02. Conditions Precedent to Each Borrowing and the Term LoanConversion Date. The obligation of each Lender to make an Advance on theoccasion of each Borrowing and the Term Loan Election shall be subject to theconditions precedent that the Effective Date shall have occurred and on thedate of such Borrowing or the Term Loan Conversion Date the followingstatements shall be true (and each of the giving of the applicable Notice ofBorrowing, the acceptance by the Borrower of the proceeds of such Borrowing andthe notice of Term Loan Election shall constitute a representation and warrantyby the Borrower that on the date of such Borrowing or the Term Loan ConversionDate such statements are true):
          (a) the representations and warranties contained in Section 4.01 arecorrect in all material respects on and as of the date of such Borrowingor the Term Loan Conversion Date, before and after giving effect to suchBorrowing and to the application of the proceeds therefrom, or the TermLoan Election, as though made on and as of such date, and
          (b) no event has occurred and is continuing, or would result fromsuch Borrowing or from the application of the proceeds therefrom, or theTerm Loan Election, that constitutes a Default.
          SECTION 3.03. Determinations Under Section 3.01. For purposes ofdetermining compliance with the conditions specified in Section 3.01, eachLender shall be deemed to have consented to, approved or accepted or to besatisfied with each document or other matter required thereunder to beconsented to or approved by or acceptable or satisfactory to the Lenders unlessan officer of the Agent responsible for the transactions contemplated by thisAgreement shall have received notice from such Lender prior to the date thatthe Borrower, by notice to the Lenders, designates as the proposed EffectiveDate, specifying its objection thereto. The Agent shall promptly notify theLenders of the occurrence of the Effective Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
          SECTION4.01. Representations and Warranties of the Borrower. TheBorrower represents and
 

 

warrants as follows:
          (a) Each Loan Party is a corporation duly organized, validlyexisting and in good standing under the laws of the jurisdiction of itsincorporation.
          (b) The execution, delivery and performance by each Loan Party ofthis Agreement and the Notes executed by it and the consummation of thetransactions contemplated hereby, are within such Loan Party’s corporatepowers, have been duly authorized by all necessary corporate action, anddo not contravene (i) such Loan Party’s charter or by-laws (or otherequivalent organizational documents) or (ii) any law or any materialcontractual restriction binding on or affecting such Loan Party or, tothe knowledge of the chief financial officer of the Borrower, any othercontract the breach of which would limit the ability of any Loan Party toperform its obligations under this Agreement or the Notes.
          (c) No authorization or approval or other action by, and no noticeto or filing with, any governmental authority or regulatory body or anyother third party is required for the due execution, delivery andperformance by any Loan Party of this Agreement or the Notes.
          (d) This Agreement has been, and each of the Notes when deliveredhereunder will have been, duly executed and delivered by the Borrower.This Agreement has been duly executed and delivered by each Guarantor.Assuming that this Agreement has been duly executed by the Agent and eachof the Initial Lenders, this Agreement is, and each of the Notes whendelivered hereunder will be, the legal, valid and binding obligation ofthe Borrower enforceable against the Borrower in accordance with theirrespective terms. Assuming that this Agreement has been duly executed bythe Agent and each of the Initial Lenders, this Agreement is the legal,valid and binding obligation of each Guarantor enforceable against eachGuarantor in accordance with its terms.
          (e) The Consolidated balance sheet of the Borrower and itsSubsidiaries as at December 31, 2002, and the related Consolidatedstatements of income and cash flows of the Borrower and its Subsidiariesfor the fiscal year then ended, accompanied by an opinion of Ernst &Young LLP, independent public accountants, and the Consolidated balancesheet of the Borrower and its Subsidiaries as at September 30, 2003, andthe related Consolidated statements of income and cash flows of theBorrower and its Subsidiaries for the nine months then ended, dulycertified by the chief financial officer of the Borrower, copies of whichhave been furnished to each Lender, fairly present, subject, in the caseof saidbalance sheet as at September 30, 2003, and said statements ofincome and cash flows for the nine months then ended, to year-end auditadjustments, the Consolidated financial condition of the Borrower and itsSubsidiaries as at such dates and the Consolidated results of theoperations of the Borrower and its Subsidiaries for the periods ended onsuch dates, all in accordance with generally accepted accountingprinciples consistently applied.
          (f) There is no pending or (to the knowledge of any Loan Party)threatened action or proceeding, including, without limitation, anyEnvironmental Action, affecting any Loan Party or any of its Subsidiariesbefore any court, governmental agency or arbitrator that is initiated byany Person other than a Lender in its capacity as a Lender that purportsto affect the legality, validity or enforceability of this Agreement orany Note.
          (g) Neither the Borrower nor any of its Subsidiaries is anInvestment Company, as such term is defined in the Investment Company Actof 1940, as amended.
          (h) No Loan Party is engaged in the business of extending credit forthe purpose of purchasing or carrying margin stock (within the meaning ofRegulation U issued by the Board of Governors of the Federal ReserveSystem), and no proceeds of any Advance will be used to purchase or carryany 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 theobligations of each Guarantor under the Subsidiary Guaranty rank paripassu in right of payment with all other senior unsecured Debt of suchPerson.
ARTICLE V
COVENANTS OF THE LOAN PARTIES
          SECTION 5.01. Affirmative Covenants. So long as any Advance shall remainunpaid or any Lender shall have any Commitment hereunder, each Loan Party will:
          (a) Compliance with Laws, Etc. Comply, and cause each of itsSubsidiaries to comply, in all material respects, with all applicablelaws, rules, regulations and orders, such compliance to include, withoutlimitation, compliance with ERISA and Environmental Laws, except wherethe failure to so comply would not have a Material Adverse Effect.
          (b) Payment of Taxes, Etc. Pay and discharge, and cause each of itsSubsidiaries to pay and discharge, before the same shall becomedelinquent, (i) all taxes, assessments and governmental charges or leviesimposed upon it or upon its property and (ii) all lawful claims that, ifunpaid, might by law become a Lien upon its property; provided, however,that neither any Loan Party nor any of its Subsidiaries shall be requiredto pay or discharge any such tax, assessment, charge or claim that isbeing contested in good faith and by proper proceedings and as to whichappropriate reserves are being maintained, unless and until any Lienresulting therefrom attaches to its property and becomes enforceableagainst its other creditors and the aggregate of such Liens would have aMaterial Adverse Effect.
          (c) Maintenance of Insurance. Maintain, and cause each of itsSubsidiaries to maintain, insurance with responsible and reputableinsurance companies or associations in such amounts and covering suchrisks as is usually carried by companies engaged in similar businessesand owning similar properties in the same general areas in which suchLoan Party or such Subsidiary operates; provided, however, that such LoanParty and its Subsidiaries may self-insure to the extent consistent withprudent business practice.
          (d) Preservation of Corporate Existence, Etc. Preserve andmaintain, and cause each of its Subsidiaries to preserve and maintain,its corporate existence, rights (charter and statutory) and franchises;provided, however, that each Loan Party and its Subsidiaries mayconsummate any transaction permitted under Section 5.02(b) and providedfurther that neither any Loan Party nor any of its Subsidiaries shall berequired to preserve any right or franchise if the senior management ofsuch Loan Party or of such Subsidiary shall determine that thepreservation thereof is no longer desirable in the conduct of thebusiness of such Loan Party or such Subsidiary, as the case may be, andthat the loss thereof is not disadvantageous in any material respect tosuch Loan Party or such Subsidiary.
          (e) Visitation Rights. During normal business hours and uponreasonable notice from time to time, permit the Agent or any of theLenders or any agents or representatives thereof, to examine and makecopies of and abstracts from the records and books of account of(excluding any confidential information), and visit the properties of,such Loan Party and any of its Subsidiaries, and to discuss the affairs,finances and accounts of such Loan Party and any of its Subsidiaries withthe appropriate representatives of such Loan Party and together with theappropriate representatives of such Loan Party’s independent certifiedpublic accountants.
          (f) Keeping of Books. Keep, and cause each of its Subsidiaries tokeep, proper books of record and account, in which full and correctentries shall be made of all financial transactions and the assets andbusiness of such Loan Party and each such Subsidiary in accordance withgenerally accepted accounting principles in effect from time to time.
 

 

          (g) Maintenance of Properties, Etc. Maintain and preserve, andcause each of its Subsidiaries to maintain and preserve, its materialproperties that are used or useful in the conduct of its business in goodworking order and condition, ordinary wear and tear excepted.
          (h) Transactions with Affiliates. Conduct, and cause each of itsSubsidiaries to conduct, all transactions otherwise permitted under thisAgreement with any of their Affiliates, other than another Loan Party,(i) on terms that are fair and reasonable and no less favorable to suchLoan Party or such Subsidiary than it would obtain in a comparablearm’s-length transaction with a Person not an Affiliate except where thefailure to do so, in the aggregate, would not have a Material AdverseEffect, (ii) as required by the Federal Communications Commission’s rulesand regulations for transactions among affiliates or (iii) ascontemplated by the Puerto Rico Management Agreement and the U.S.Management Agreement.
          (i) Reporting Requirements. Furnish to the Lenders:
               (i) as soon as available and in any event within 60 days afterthe end of each of the first three quarters of each fiscal year ofthe Borrower, the Consolidated balance sheet of the Borrower andits Subsidiaries as of the end of such quarter and the Consolidatedstatements of income and cash flows of the Borrower and itsSubsidiaries for the period commencing at the end of the previousfiscal year and ending with the end of such quarter, duly certified(subject to year-end audit adjustments) by the chief financialofficer, treasurer or controller of the Borrower as having beenprepared in accordance with generally accepted accountingprinciples and certificates of the chief financial officer,treasurer or controller of the Borrower as to compliance with theterms of this Agreement and setting forth in reasonable detail thecalculations necessary to demonstrate compliance with Section 5.03,provided that in the event of any change in GAAP used in thepreparation of such financial statements, the Borrower shall alsoprovide, if necessary for the determination of compliance withSection 5.03, a statement of reconciliation showing thecalculations used for purposes of Section 5.03;
               (ii) as soon as available and in any event within 120 daysafter the end of each fiscal year of the Borrower, a copy of theannual audited report for such year for the Borrower and itsSubsidiaries, containing the Consolidated balance sheet of theBorrower and its Subsidiaries as of the end of such fiscal year andthe Consolidated statements of income and cash flows of theBorrower and its Subsidiaries for such fiscal year, in eachcase accompanied by an opinion acceptable to the Required Lendersby Ernst & Young LLP or other independent public accountants ofnationally recognized standing, provided that in the event of anychange in GAAP used in the preparation of such financialstatements, the Borrower shall also provide, if necessary for thedetermination of compliance with Section 5.03, a statement ofreconciliation showing the calculations used for purposes ofSection 5.03;
               (iii) as soon as possible and in any event within fiveBusiness Days after the occurrence of each Default continuing onthe date of such statement, a statement of the chief financialofficer, treasurer or controller of the Borrower setting forthdetails of such Default and the action that the Borrower has takenand proposes to take with respect thereto;
               (iv) promptly after the sending or filing thereof, copies ofany quarterly and annual reports and proxy solicitations that anyLoan Party sends to any of its securityholders, and copies of anyreports on Form 8-K that such Loan Party files with the Securitiesand Exchange Commission (other than reports on Form 8-K filedsolely for the purpose of incorporating exhibits into aregistration statement previously filed with the Securities andExchange Commission);
               (v) prompt notice of all actions and proceedings before anycourt, governmental agency or arbitrator affecting any Loan Partyor any of its Subsidiaries of the type described in Section3.01(b); and
 

 

               (vi) such other information respecting any Loan Party or anyof its Subsidiaries as any Lender through the Agent may from timeto time reasonably request.
          (j) Certain Obligations Respecting Subsidiaries. The Borrower willtake such action, and will cause each of its Significant Subsidiaries andany Significant Subsidiary formed with the intent of merging with or intoa Person that will be a Significant Subsidiary subject to this provisionto take such action, from time to time as shall be necessary to ensurethat all Significant Subsidiaries of the Borrower are party to, as LoanParties, the Guaranty provided in Article VII hereof. Without limitingthe generality of the foregoing, in the event that the Borrower or any ofits Significant Subsidiaries shall form or acquire any new SignificantSubsidiary, the Borrower or the respective Significant Subsidiary willcause such new Significant Subsidiary to (i) become a party hereto and tothe Guaranty pursuant to a written instrument in form and substancesatisfactory to the Agent, and (ii) deliver such proof of corporateaction, incumbency of officers, opinions of counsel and other documentsrelating to the foregoing as is consistent with those delivered by eachLoan Party pursuant to Section 3.01 hereof, or as any Lender or the Agentshall have reasonably requested.
          SECTION 5.02. Negative Covenants. So long as any Advance shallremain unpaid or any Lender shall have any Commitment hereunder, theBorrower will not:
          (a) Liens, Etc. Create or suffer to exist, or permit any of itsSubsidiaries to create or suffer to exist, any Lien on or with respect toany of its properties, whether now owned or hereafter acquired, or assignfor security purposes (but not in connection with a bona fide salethereof), or permit any of its Subsidiaries to assign for securitypurposes (but not in connection with a bona fide sale thereof), any rightto receive income; provided that nothing in this Section 5.02 shall beconstrued to prevent or restrict the following:
               (i) Permitted Liens,
               (ii) purchase money Liens upon or in any real property orequipment acquired or held by the Borrower or any of itsSubsidiaries in the ordinary course of business to secure thepurchase price of such property or equipment or to secure Debtincurred solely for the purpose offinancing the acquisition of such property or equipment, orLiens existing on such property or equipment at the time of itsacquisition or conditional sales or other similar title retentionagreements with respect to property hereafter acquired orextensions, renewals or replacements of any of the foregoing forthe same or a lesser amount, provided, however, that no such Lienshall extend to or cover any properties of any character other thanthe real property or equipment being acquired, and no suchextension, renewal or replacement shall extend to or cover anyproperties not theretofore subject to the Lien being extended,renewed or replaced,
               (iii) the Liens existing on the Effective Date and describedon Schedule 5.02(a) hereto and other undisclosed Liens existing onthe Effective Date securing obligations in aggregate amount not toexceed $10,000,000,
               (iv) Liens on property of a Person existing at the time suchPerson is merged into or consolidated with the Borrower or any ofits Subsidiaries; provided that any such Liens that were createdduring the period immediately prior to such merger, consolidationor acquisition were created in the ordinary course of business ofsuch Person and the Debt secured by such Liens does not exceed thefair market value of the assets (including intangible assets) ofsuch Person so merged into or consolidated with the Borrower or anyof its Subsidiaries,
               (v) the replacement, extension or renewal of any Lienpermitted by clauses (iii) and (iv) above upon or in the sameproperty theretofore subject thereto or the replacement, extensionor renewal (without increase in the amount or extension of thefinal maturity date) of the Debt secured thereby,
 

 

               (vi) Liens not otherwise permitted pursuant to clauses (i)through (v) above securing obligations not to exceed at any onetime the amount of $10,000,000, and
               (vii) Liens on property of a Receivables Subsidiary created inconnection with a Permitted Receivables Financing.
          (b) Mergers, Etc. Merge or consolidate with or into, or convey,transfer, lease or otherwise dispose of (whether in one transaction or ina series of transactions) all or substantially all of its assets (whethernow owned or hereafter acquired) to, any Person, or permit any of itsSubsidiaries to do so, except that (i) any Subsidiary of the Borrower maymerge or consolidate with or into, or dispose of assets to, any otherSubsidiary of the Borrower, (ii) any Subsidiary of the Borrower may mergeinto or dispose of assets to the Borrower, and (iii) the Borrower maymerge with any Subsidiary of Verizon so long as the surviving corporationassumes all obligations of the Borrower hereunder and under the Notes andeach Guarantor confirms in writing its guarantee obligations hereunderupon the occurrence of and following such merger, and provided, in eachcase, that no Default shall have occurred and be continuing at the timeof such proposed transaction or would result therefrom.
          (c) Accounting Changes. Make or permit, or permit any of itsSubsidiaries to make or permit, any change in accounting policies orreporting practices, except (i) as required or permitted by generallyaccepted accounting principles or (ii) where the effect of such change,together with all other changes in accounting policies or reportingpractices made pursuant to this clause (ii) since the Effective Date, isimmaterial to the Borrower and its Subsidiaries taken as a whole.
          (d) Subsidiary Debt. Permit any of its Subsidiaries to create orsuffer to exist, any Debt other than:
               (i) Debt owed to the Borrower or to a wholly owned Subsidiaryof the Borrower,
               (ii) Debt which may be borrowed and outstanding from time totime under the credit agreements existing on and as of theEffective Date and described on Schedule 5.02(d) hereto (the“Existing Debt”), and any Debt extending the maturity of, orrefunding or refinancing, in whole or in part, the Existing Debt,provided that the principal amount of such Existing Debt shall notbe increased above the principal amount thereof outstandingimmediately prior to such extension, refunding or refinancing, andthe direct and contingent obligors therefor shall not be changed,as a result of or in connection with such extension, refunding orrefinancing,
               (iii) unsecured Debt incurred in the ordinary course ofbusiness aggregating not more than $150,000,000 for PRTC and forall of the other Guarantors not more than $75,000,000 in theaggregate at any one time outstanding,
               (iv) Debt in respect of operating leases,
               (v) indorsement of negotiable instruments for deposit orcollection or similar transactions in the ordinary course ofbusiness, and
               (vi) Debt incurred by a Receivables Subsidiary created inconnection with a Permitted Receivables Financing.
          SECTION 5.03. Financial Covenants. So long as any Advance shall remainunpaid or any Lender shall have any Commitment hereunder, the Borrower will:
          (a) Debt to EBITDA Ratio. Maintain a Debt to EBITDA Ratio, as atthe end of each fiscal quarter of the Borrower, of not more than 3.0:1.0.
 

 

          (b) EBITDA to Interest Ratio. Maintain an EBITDA to Interest Ratio,as at the end of each fiscal quarter of the Borrower, of not less than3.5:1.0.
ARTICLE VI
EVENTS OF DEFAULT
          SECTION 6.01. Events of Default. If any of the following events (“Eventsof Default”) shall occur and be continuing:
          (a) The Borrower shall fail to pay any principal of any Advance whenthe same becomes due and payable; or the Borrower shall fail to pay anyinterest on any Advance within five Business Days after the same becomesdue and payable; or any fees or other amounts payable under thisAgreement or any Note are not paid within five Business Days after thesame becomes due and payable; or
          (b) Any representation or warranty made or deemed made by theBorrower herein or by the Borrower (or any of its officers) in connectionwith this Agreement shall prove to have been incorrect in any materialrespect when made or deemed made; or
          (c) (i) Any Loan Party shall fail to perform or observe any term,covenant or agreement contained in Section 5.01(d), (e), (h), (i)(iii),(i)(v) or (j), 5.02 or 5.03, (ii) any Loan Party shall fail to perform orobserve any term, covenant or agreement contained in Section 5.01(i)(other than clauses (iii) and (v) thereof) if such failure shall remainunremedied for five Business Days after written notice thereof shall havebeen given to such Loan Party by the Agent or any Lender or (iii) anyLoan Party shall fail to perform or observe any other term, covenant oragreement contained in this Agreement on its part to be performed orobserved if such failure shall remain unremedied for 30 days afterwritten notice thereof shall have been given to such Loan Party by theAgent or any Lender; or
          (d) Article VII is breached by any Guarantor or shall cease to be infull force and effect or any Guarantor shall so state in writing; or
          (e) The Borrower or any of its Subsidiaries shall fail to pay anyprincipal of or premium or interest on any Debt that is outstanding in aprincipal, or in the case of Hedge Agreements net, amount of at least$20,000,000 in the aggregate (but excluding Debt outstanding hereunder)of the Borrower or such Subsidiary (as the case may be) (the “RequisiteAmount”), when the same becomes due and payable (whether by scheduledmaturity, required prepayment, acceleration, demand or otherwise), andsuch failure shall continue after the later of five Business Days and theapplicable grace period, if any, specified in the agreement or instrumentrelating to such Debt; or any such Debt aggregating the Requisite Amountshall be declared due and payable in accordance with its terms or anyother event shall occur or condition shall exist under any agreement orinstrument relating to any such Debt aggregating the Requisite Amount andshall continue after the applicable grace period, if any, specified insuch agreement or instrument, if the effect of such event or condition isto accelerate the maturity of such Debt; or any such Debt aggregating theRequisite Amount shall be required to be prepaid or redeemed (other thanby a regularly scheduled required prepayment or redemption), purchased ordefeased in accordance with its terms, or any offer to prepay, redeem,purchase or defease such Debt shall be required to be made in accordancewith its terms, in each case prior to the stated maturity thereof wherethe cause of such prepayment, redemption, purchase or defeasance or offertherefor is the occurrence of an event or condition that is premised on amaterial adverse deterioration of the financial condition, results ofoperation or properties of the Borrower or any of its Subsidiaries,provided that with respect to Debt aggregating the Requisite Amount ofthe types described in clauses (h) or (i) of the definition of “Debt” andto the extent such Debt relates to the obligations of any Person otherthan the Borrower or any of its Subsidiaries, no Event of Default shalloccur so long as the payment of such Debt is being contested in goodfaith and by proper proceedings and as to which appropriate reserves arebeing maintained; or any event shall occur or condition shall exist underany agreement or instrument relating to any Debt that is outstanding in aprincipal, or in the case of
 

 

Hedge Agreements net, amount of at least$40,000,000 and shall continue after the applicable grace period, if any,specified in such agreement or instrument, if the effect of such event orcondition is to accelerate, or permit the acceleration of, the maturityof such Debt; or
          (f) The Borrower or any of its Subsidiaries shall generally not paytheir respective debts as such debts become due, or shall admit inwriting its inability to pay its debts generally, or shall make a generalassignment for the benefit of creditors; or any proceeding shall beinstituted by or against the Borrower or its Subsidiaries seeking toadjudicate it a bankrupt or insolvent, or seeking liquidation, windingup, reorganization, arrangement, adjustment, protection, relief, orcomposition of it or its debts under any law relating to bankruptcy,insolvency or reorganization or relief of debtors, or seeking the entryof an order for relief or the appointment of a receiver, trustee,custodian or other similar official for it or for any substantial part ofits property and, in the case of any such proceeding instituted againstit (but not instituted by it), either such proceeding shall remainundismissed or unstayed for a period of 60 days, or any of the actionssought in such proceeding (including, without limitation, the entry of anorder for relief against, or the appointment of a receiver, trustee,custodian or other similar official for, it or for any substantial partof its property) shall occur; or the Borrower or its Subsidiaries shalltake any corporate action to authorize any of the actions set forth inthis subsection (f) under any law relating to bankruptcy, insolvency orreorganization or relief of debtors; or
          (g) Judgments or orders for the payment of money in excess of$30,000,000 in the aggregate shall be rendered against the Borrower orits Subsidiaries and enforcement proceedings shall have been commenced byany creditor upon such judgment or order for which a stay of enforcementof such judgment or order, by reason of a pending appeal or otherwise,shall not be in effect; provided, however, that any such judgment ororder shall not be an Event of Default under this Section 6.01(g) if andfor so long as (i) (A) the amount of such judgment or order is covered bya valid and binding policy of insurance between the defendant and theinsurer or insurers covering payment thereof, (B) such insurer shall berated, or, if more than one insurer, at least 90% of such insurers asmeasured by the amount of risk insured, shall be rated, at least “A-” byA.M. Best Company or its successor or its successors and (C) suchinsurer(s) has been notified of, and has not disputed the claim made forpayment of, the amount of such judgment or order or (ii) (A) the amountof such judgment or order is covered by a valid and bindingindemnification agreement between the defendant and an indemnitor, (B)such indemnitor shall have a rating for any classof its non-credit enhanced long-term senior unsecured debt of notlower than BBB+ by S&P or Baa3 by Moody’s and (C) such indemnitor hasbeen notified of, and has not disputed the claim made for payment of, theamount of such judgment or order; or
          (h) (i) Verizon shall cease for any reason to maintain, directly orindirectly, the Controlling Interest; or (ii) the Borrower shall for anyreason cease to own 100% of the Voting Stock of any Guarantor; or
          (i) Any Loan Party or its ERISA Affiliates shall incur, or shall bereasonably likely to incur, liability that would have a Material AdverseEffect as a result of one or more of the following: (i) the occurrenceof any ERISA Event; (ii) the partial or complete withdrawal of such LoanParty or its ERISA Affiliates from a Multiemployer Plan; or (iii) thereorganization or termination of a Multiemployer Plan;
then, and in any such event, the Agent (i) shall at the request, or may withthe consent, of the Required Lenders, by notice to the Borrower, declare theobligation of each Lender to make Advances to be terminated, whereupon the sameshall 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 interest thereon and all other amounts payable under this Agreement to beforthwith due and payable, whereupon the Notes, all such interest and all suchamounts shall become and be forthwith due and payable, without presentment,demand, protest or further notice of any kind, all of which are herebyexpressly waived by the Borrower; provided, however, that in the event of anactual or deemed entry of an order for relief with respect to the Borrowerunder the Federal Bankruptcy Code, (A) the obligation of each Lender to makeAdvances shall automatically be terminated and (B) the Notes, all such interestand all such amounts shall
 

 

automatically become and be due and payable, withoutpresentment, demand, protest or any notice of any kind, all of which are herebyexpressly waived by the Borrower.
ARTICLE VII
GUARANTY
          SECTION 7.01. Guaranty; Limitation of Liability. (a) Each Guarantorhereby jointly and severally unconditionally and irrevocably guarantees thepunctual payment when due, whether at stated maturity, by acceleration orotherwise, of all obligations of each other Loan Party now or hereafterexisting under this Agreement or any Note, whether for principal, interest,fees, expenses or otherwise (such obligations, to the extent not paid by suchLoan Party or specifically waived in accordance with Section 9.01, being the“Guaranteed Obligations”), and agrees to pay any and all expenses (includingreasonable counsel fees and expenses) incurred by the Agent or the Lenders inenforcing any rights under this Article VII (this “Guaranty”). Withoutlimiting the generality of the foregoing, each Guarantor’s liability shallextend to all amounts that constitute part of the Guaranteed Obligations andwould be owed by any Loan Party to the Agent or any Lender under this Agreementor any Note but for the fact that they are unenforceable or not allowable dueto the existence of a bankruptcy, reorganization or similar proceedinginvolving such Loan Party.
          (b) (i) Each Guarantor and, by its acceptance of this Guaranty, the Agentand each other Lender, hereby confirms that it is the intention of all suchparties that this Guaranty not constitute a fraudulent transfer or fraudulentconveyance for purposes of Bankruptcy Law, the Uniform Fraudulent ConveyanceAct, the Uniform Fraudulent Transfer Act or any similar Federal, state orCommonwealth of Puerto Rico law to the extent applicable to this Guaranty. Toeffectuate the foregoing intention, the Agent, each other Lender and eachGuarantor hereby irrevocably agrees that the obligations of each Guarantorunder this Guaranty shall not exceed the greater of (A) the benefit realized bysuch Guarantor from the proceeds of the Advances made from time to time by theBorrower to such Guarantor and (B) the maximum amount that will, after givingeffect to such maximum amount and all other probable contingent and fixedliabilities of such Guarantor that are relevant under applicable law, and aftergiving effect to any collections from, rights to receive contribution from, orpayments made by or on behalf of each other Guarantor in respect of theobligations of such other Guarantor under this Guaranty, result in theobligations of such Guarantor under this Guaranty not constituting a fraudulenttransfer or fraudulent conveyance. For purposes hereof, “Bankruptcy Law” meansTitle 11, United States Code, or any similar Federal, state or Commonwealth ofPuerto Rico law for the relief of debtors.
          (ii) Each Guarantor agrees that in the event any payment shall berequired to be made to the Lenders under this Guaranty, such Guarantorwill contribute, to the maximum extent such that the contribution willnot result in a fraudulent transfer or fraudulent conveyance, suchamounts to each other Guarantor so as to maximize the aggregate amountpaid to the Lenders under this Agreement and the Notes.
          SECTION 7.02. Guaranty Absolute. Each Guarantor guarantees that theGuaranteed Obligations will be paid strictly in accordance with the terms ofthis Agreement and the Notes, regardless of any law, regulation or order now orhereafter in effect in any jurisdiction affecting any of such terms or therights of the Agent or the Lenders with respect thereto. The obligations ofeach Guarantor under this Guaranty are independent of the GuaranteedObligations, and a separate action or actions may be brought and prosecutedagainst such Guarantor to enforce this Guaranty, irrespective of whether anyaction is brought against the Borrower or any other Guarantor or whether theBorrower or any other Guarantor is joined in any such action or actions. Theliability of each Guarantor under this Guaranty shall be irrevocable, absoluteand unconditional irrespective of, and, to the maximum extent permitted by law,each Guarantor hereby irrevocably waives, any defenses it may now or hereafterhave in any way relating to, any or all of the following:
          (a) any lack of validity or enforceability of this Agreement or anyagreement or instrument relating hereto;
 

 

          (b) any change in the time, manner or place of payment of, or in anyother term of, all or any of the Guaranteed Obligations, or any otheramendment or waiver of or any consent to departure from this Agreement orany Note, including, without limitation, any increase in the GuaranteedObligations resulting from the extension of additional credit to theBorrower or otherwise;
          (c) any taking, exchange, release or non-perfection of anycollateral, or any taking, release or amendment or waiver of or consentto departure from any other guaranty, for all or any of the GuaranteedObligations;
          (d) any change, restructuring or termination of the corporatestructure or existence of the Borrower; or
          (e) any other circumstance (including, without limitation, anystatute of limitations) or any existence of or reliance on anyrepresentation by the Agent or any Lender that might otherwise constitutea defense available to, or a discharge of, any Guarantor, the Borrower orany other guarantor or surety other than payment when due.
This Guaranty shall continue to be effective or be reinstated, as the case maybe, if at any time any payment of any of the Guaranteed Obligations isrescinded or must otherwise be returned by the Agent or any Lender upon theinsolvency, bankruptcy or reorganization of the Borrower or any Guarantor orotherwise, all as though such payment had not been made.
          SECTION 7.03. Waiver. Each Guarantor hereby waives promptness,diligence, notice of acceptance and any other notice with respect to any of theGuaranteed Obligations and this Guaranty, the right to require applicationagainst the property of the Borrower or any other Guarantor, and anyrequirement that the Agent or any Lender exhaust any right or take any actionagainst the Borrower or any other Person or any collateral. Each Guarantoracknowledges that it will receive direct and indirect benefits from thefinancing arrangements contemplated herein and that the waiver set forth inthis Section 7.03 is knowingly made in contemplation of such benefits. EachGuarantor hereby waives any right to revoke this Guaranty, and acknowledgesthat this Guaranty is continuing in nature and applies to all GuaranteedObligations, whether existing now or in the future.
          SECTION 7.04. Continuing Guaranty; Assignments. This Guaranty is acontinuing guaranty and shall (a) remain in full force and effect until thelater of the cash payment in full of the Guaranteed Obligations and all otheramounts payable under thisGuaranty and the Termination Date, (b) be binding upon each Guarantor, itssuccessors and assigns and (c) inure to the benefit of and be enforceable bythe Lenders, the Agent and their successors, transferees and assigns. Withoutlimiting the generality of the foregoing clause (c), any Lender may assign orotherwise transfer all or any portion of its rights and obligations hereunder(including, without limitation, all or any portion of its Commitment, theAdvances owing to it and the Note or Notes held by it) to any other Person, andsuch other Person shall thereupon become vested with all the benefits inrespect thereof granted to such Lender herein or otherwise, in each case asprovided in Section 9.07.
          SECTION 7.05. Subrogation. No Guarantor will exercise any rights that itmay now or hereafter acquire against the Borrower or any other insiderguarantor that arise from the existence, payment, performance or enforcement ofsuch Guarantor’s obligations under this Guaranty, including, withoutlimitation, any right of subrogation, reimbursement, exoneration, contributionor indemnification and any right to participate in any claim or remedy of theAgent or any Lender against the Borrower, any other Guarantor or any otherinsider guarantor or any collateral, whether or not such claim, remedy or rightarises in equity or under contract, statute or common law, including, withoutlimitation, the right to take or receive from the Borrower, any other Guarantoror any other insider guarantor, directly or indirectly, in cash or otherproperty or by set-off or in any other manner, payment or security solely onaccount of such claim, remedy or right, unless and until all of the GuaranteedObligations and all other amounts payable under this Guaranty shall have beenpaid in full in cash and the Termination Date shall have occurred. If anyamount shall be paid to any Guarantor in violation of the preceding sentence atany time prior to the later of the payment in full in cash of the GuaranteedObligations and all other amounts payable under this Guaranty and theTermination Date, such amount shall be held in trust for the benefit of theAgent and the Lenders and shall forthwith be paid to the Agent to be creditedand applied to the Guaranteed Obligations and all other amounts payable underthis Guaranty, whether matured or unmatured, in accordance with the terms ofthis Guaranty, or to be held as collateral for any Guaranteed Obligations orother amounts payable under this Guaranty thereafter
 

 

arising. If (i) anyGuarantor shall make payment to the Agent or any Lender of all or any part ofthe Guaranteed Obligations, (ii) all of the Guaranteed Obligations and allother amounts payable under this Guaranty shall be paid in full in cash and(iii) the Termination Date shall have occurred, the Agent and the Lenders will,at such Guarantor’s request and expense, execute and deliver to such Guarantorappropriate documents, without recourse and without representation or warranty,necessary to evidence the transfer by subrogation to such Guarantor of aninterest in the Guaranteed Obligations resulting from such payment by suchGuarantor.
ARTICLE VIII
THE AGENT
          SECTION 8.01. Authorization and Action. Each Lender hereby appoints andauthorizes the Agent to take such action as agent on its behalf and to exercisesuch powers and discretion under this Agreement as are delegated to the Agentby the terms hereof, together with such powers and discretion as are reasonablyincidental thereto. As to any matters not expressly provided for by thisAgreement (including, without limitation, enforcement or collection of theNotes), the Agent shall not be required to exercise any discretion or take anyaction, but shall be required to act or to refrain from acting (and shall befully protected in so acting or refraining from acting) upon the instructionsof the Required Lenders and such instructions shall be binding upon all Lendersand all holders of Notes; provided, however, that the Agent shall not berequired to take any action that exposes the Agent to personal liability orthat is contrary to this Agreement or applicable law. The Agent agrees to giveto each Lender prompt notice of each notice given to it by the Borrowerpursuant to the terms of this Agreement.
          SECTION 8.02. Agent’s Reliance, Etc. Neither the Agent nor any of itsdirectors, officers, agents or employees shall be liable for any action takenor omitted to be taken by it or them under or in connection with thisAgreement, except for its or their own gross negligence or willful 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 andaccepts an Assignment and Acceptance entered into by the Lender that is thepayee of such Note, as assignor, and an Eligible Assignee, as assignee, asprovided in Section 9.07; (ii) may consult with legal counsel (includingcounsel for the Borrower), independent public accountants and other expertsselected by it and shall not be liable for any action taken or omitted to betaken in good faith by it in accordance with the advice of such counsel,accountants or experts; (iii) makes no warranty or representation to any Lenderand shall not be responsible to any Lender for any statements, warranties orrepresentations (whether written or oral) made in or in connection with thisAgreement; (iv) shall not have any dutyto ascertain or to inquire as to the performance or observance of any ofthe 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 LoanParty except as specifically set forth in this Agreement; (v) shall not beresponsible to any Lender for the due execution, legality, validity,enforceability, genuineness, sufficiency or value of this Agreement or anyother instrument or document furnished pursuant hereto; and (vi) shall incur noliability under or in respect of this Agreement by acting upon any notice,consent, certificate or other instrument or writing (which may be bytelecopier, facsimile, telegram or telex) believed by it to be genuine andsigned or sent by the proper party or parties.
          SECTION 8.03. Citibank and Affiliates. With respect to its Commitment,the Advances made by it and the Note or Notes issued to it, Citibank shall havethe same rights and powers under this Agreement as any other Lender and mayexercise the same as though it were not the Agent; and the term “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 as trustee under indentures of, accept investment bankingengagements from and generally engage in any kind of business with, any LoanParty, any of its Subsidiaries and any Person who may do business with or ownsecurities of any Loan Party or any of its Subsidiaries, all as if Citibankwere not the Agent and without any duty to account therefor to the Lenders.
          SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that ithas, independently and without reliance upon the Agent or any other Lender andbased on the financial statements referred to in Section 4.01 and such otherdocuments and information as it has deemed appropriate, made its own creditanalysis and decision to enter into this Agreement. Each Lender alsoacknowledges that it will, independently and without reliance upon the Agent orany other Lender and based on such documents and information as it shall deemappropriate at the time, continue to make its own credit decisions in taking ornot taking action under this Agreement.
          SECTION 8.05. Indemnification. The Lenders agree to indemnify the Agent(to the extent not
 

 

reimbursed by the Borrower), ratably according to therespective principal amounts of the Advances owed each of them (or if noAdvances are at the time outstanding, ratably according to their Commitments),from and against any and all liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, expenses or disbursements of anykind or nature whatsoever that may be imposed on, incurred by, or assertedagainst the Agent in any way relating to or arising out of this Agreement orany action taken or omitted by the Agent under this Agreement, in each casewhether or not such investigation, litigation or proceeding is brought by anyLender, its directors, shareholders or creditors or the Agent is otherwise aparty thereto, provided that no Lender shall be liable for any portion of suchliabilities, obligations, losses, damages, penalties, actions, judgments,suits, costs, expenses or disbursements resulting from the Agent’s grossnegligence or willful misconduct. Without limitation of the foregoing, eachLender agrees to reimburse the Agent promptly upon demand for its ratable shareof any out-of-pocket expenses (including reasonable counsel fees) incurred bythe Agent in connection with the preparation, execution, delivery,administration, modification, amendment or enforcement (whether throughnegotiations, legal proceedings or otherwise) of, or legal advice in respect ofrights or responsibilities under, this Agreement, to the extent that the Agentis not reimbursed for such expenses by the Borrower.
          SECTION 8.06. Successor Agent. The Agent may resign at any time bygiving written notice thereof to the Lenders and the Borrower and may beremoved at any time with or without cause by the Required Lenders. Upon anysuch resignation or removal, the Required Lenders shall have the right toappoint a successor Agent which, so long as no Default shall have occurred andbe continuing, shall be subject to the Borrower’s approval, which approvalshall not be unreasonably withheld. If no successor Agent shall have been soappointed by the Required Lenders, and shall have accepted such appointment,within 30 days after the retiring Agent’s giving of notice of resignation orthe Required Lenders’ removal of the retiring Agent, then the retiring Agentmay, on behalf of the Lenders, appoint a successor Agent, which shall be acommercial bank organized or licensed under the laws of the United States ofAmerica or of any State thereof or the Commonwealth of Puerto Rico and having acombined capital and surplus of at least $500,000,000. Upon the acceptance ofany appointment as Agent hereunder by a successor Agent, such successor Agentshall thereupon succeed to and become vested with all the rights, powers,discretion, privileges and duties of the retiring Agent, and the retiringAgent, upon appointment of such successor Agent, shall be discharged from itsduties and obligations under this Agreement. After any retiring Agent’sresignation or removal hereunder as Agent, the provisions of this Article VIIIshall inure to its benefit as to any actions taken or omitted to be taken by itwhile it was Agent under this Agreement.
          SECTION 8.07. Other Agents. Banco Bilbao Vizcaya Argentaria Puerto Ricohave been designated as syndication agent, Banco Popular de Puerto Rico,FirstBank PuertoRico and Scotiabank de Puerto Rico have been designated asco-documentation agents, and certain other Lenders have been designated asmanaging agents or co-agents and the use of such titles does not impose onBanco Bilbao Vizcaya Argentaria Puerto Rico, Banco Popular de Puerto Rico,FirstBank Puerto Rico, Scotiabank de Puerto Rico or such other Lender anyrights, duties or obligations greater than those of any other Lender.
ARTICLE IX
MISCELLANEOUS
          SECTION 9.01. Amendments, Etc. (a) No amendment or waiver of anyprovision of this Agreement or the Notes, nor consent to any departure by anyLoan Party therefrom, shall in any event be effective unless the same shall bein writing and signed by the Required Lenders, and then such waiver or consentshall be effective only in the specific instance and for the specific purposefor which given; provided, however, that (i) no amendment, waiver or consentshall, unless in writing and signed by all the Lenders, do any of thefollowing: (A) waive any of the conditions specified in Section 3.01, (B)change the percentage of the Commitments or of the aggregate unpaid principalamount of the Notes, or the number of Lenders, that shall be required for theLenders 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 thisSection 9.01; and (ii) no amendment, waiver or consent shall, unless in writingand signed by the Required Lenders and each Lender that has or is owedobligations under this Agreement or the Notes that are modified by suchamendment, waiver or consent, (A) increase the Commitment of such Lender orsubject such Lender to any additional obligations, (B) reduce the principal of,or interest on, the Note held by such Lender or any fees or other amountspayable hereunder to such Lender, (C) postpone any date fixed for any paymentof 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 ofSection 2.14; and provided further that no amendment, waiver or consent shall,unless in writing and signed by the Agent in addition to the Lenders requiredabove to take such action, affect the rights or duties of the Agent under thisAgreement or any Note.
 

 

          (b) Each Lender grants (x) to the Agent the right to purchase all (but notless than all) of such Lender’s Commitments and Advances owing to it and theNotes held by it and all of its rights and obligations hereunder and under theNotes at a price equal to the aggregate amount of outstanding Advances owed tosuch Lender (together with all accrued and unpaid interest, fees and otheramounts owed to such Lender), and (y) to the Borrower the right to cause anassignment 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 andobligations hereunder and under the Notes to Eligible Assignees at a priceequal to the aggregate amount of outstanding Advances (together with allaccrued and unpaid interest, fees and other amounts owed to such Lender) owedto such Lender, which right may be exercised by the Agent or the Borrower, asthe case may be, if such Lender refuses to execute any amendment, waiver orconsent which requires the written consent of all the Lenders and to whichLenders owed at least 90% of the aggregate unpaid principal amount of Advancesor, if no such principal amount is then outstanding, Lenders having at least90% of the Commitments, the Agent and the Borrower have agreed. Each Lenderagrees that if the Agent or the Borrower, as the case may be, exercises itsoption hereunder, it shall promptly execute and deliver all agreements anddocumentation necessary to effectuate such assignment as set forth in Section9.07.
          SECTION 9.02. Notices, Etc. All notices and other communicationsprovided for hereunder shall be in writing (including telecopier and facsimilecommunication) and mailed, telecopied, faxed or delivered by hand or bycourier, 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) 282-0958), with a copy toMaria Elena de la Cruz (fax no. (787) 783-2919); if to any Initial Lender, atits Domestic Lending Office specified opposite its name on Schedule I hereto;if to any other Lender, at its Domestic Lending Office specified in theAssignment and Acceptance pursuant to which it became a Lender; and if to theAgent, at its address at Two Penns Way, New Castle, Delaware 19720, Attention:Loan Investor Services; or, as to any Loan Party or the Agent, at such otheraddress 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 bedesignated by such party in a written notice to the Borrower and the Agent.All such notices and communications shall, when mailed, telecopied or faxed, beeffective when deposited in the first class mails or, in the case ofinternational delivery, when deposited with mails or couriers that deliverwithin two Business Days or telecopied or faxed, provided that notices andcommunications to the Agent pursuant to Article II, III or VIII shall not beeffective until received by the Agent, and provided, further, that notices andcommunications 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 orwaiver of any provision of this Agreement or the Notes or of any Exhibit heretoto be executed and delivered hereunder shall be effective as delivery of amanually executed counterpart thereof.
          SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lenderor the Agent to exercise, and no delay in exercising, any right hereunder orunder any Note shall operate as a waiver thereof; nor shall any single orpartial exercise of any such right preclude any other or further exercisethereof 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 ondemand all reasonable out-of-pocket costs and expenses of the Agent and theArranger in connection with the preparation, execution, delivery,administration, modification and amendment of this Agreement, the Notes and theother documents to be delivered hereunder, including, without limitation, (A)all due diligence, syndication (including printing and distribution),transportation, computer, duplication, appraisal, audit and insurance expensesand (B) the reasonable fees and expenses of counsel for the Agent with respectthereto and with respect to advising the Agent as to its rights andresponsibilities under this Agreement. Such expenses shall be paid by theBorrower upon presentation of an itemized invoice (after reasonable time forthe Borrower to review such invoice), regardless of whether the transactionscontemplated by this Agreement are consummated. The Borrower further agrees topay on demand all costs and expenses of the Agent and the Lenders, if any(including, without limitation, reasonable counsel fees and expenses), inconnection with the enforcement (whether through negotiations, legalproceedings or otherwise) of this Agreement, the Notes and the other documentsto be delivered hereunder, including, without limitation, reasonable fees andexpenses of counsel for the Agent and each Lender in connection with theenforcement of rights under this Section 9.04(a).
          (b) The Borrower agrees to indemnify and hold harmless the Agent and eachLender and each of their Affiliates and their officers, directors, employees,agents and advisors (each, an “Indemnified Party”) from and against any and allclaims, damages, losses, liabilities and expenses (including, withoutlimitation, reasonable fees and expenses of counsel) that may be incurred by orasserted or awarded against any Indemnified Party, in each case arising out ofor in connection with or by reason of, or in connection with the preparationfor a defense of, any
 

 

investigation, litigation or proceeding arising out of,related to or in connection with (i) the Notes, this Agreement, any of thetransactions contemplated herein or the actual or proposed use of the proceedsof the Advances or (ii) the actual or alleged presence of Hazardous Materialson any property of the Borrower or any of its Subsidiaries or any EnvironmentalAction relating in any way to the Borrower or any of its Subsidiaries, in eachcase whether or not such investigation, litigation or proceeding is brought byany Loan Party, its directors, shareholders or creditors or an IndemnifiedParty or any other Person or any Indemnified Party is otherwise a party theretoand whether or not the transactions contemplated hereby are consummated, exceptto the extent such claim, damage, loss, liability or expense (A) is found by acourt of competent jurisdiction to have resulted from such Indemnified Party’sgross negligence or willful misconduct, (B) arises from disputes among two ormore Lenders (but not including any such dispute that involves a Lender to theextent such Lender is acting in any different capacity (i.e., Agent orArranger) under the Credit Agreement or the Notes or to the extent that itinvolves the Agent’s syndication activities) or (C) arises from or relates to abreach by such Indemnified Party of its obligations under this Agreement. TheBorrower also agrees not to assert any claim against the Agent, any Lender, anyof their Affiliates, or any of their respective directors, officers, employees,attorneys and agents, on any theory of liability, for special, indirect,consequential or punitive damages arising out of or otherwise relating to theNotes, this Agreement, any of the transactions contemplated herein or theactual or proposed use of the proceeds of the Advances.
          (c) If any payment of principal of, or Conversion of, any Eurodollar RateAdvance is made by the Borrower (or pursuant to Section 9.01(b)) to or for theaccount of a Lender other than on the last day of the Interest Period for suchAdvance, as a result of a payment, prepayment or Conversion pursuant to thisAgreement or acceleration of the maturity of the Notes pursuant to Section6.01, the Borrower shall, upon demand by such Lender (with a copy of suchdemand to the Agent), pay to the Agent for the account of such Lender anyamounts required to compensate such Lender for any additional losses, costs orexpenses that it may reasonably incur as a result of such payment orConversion, including, without limitation, any loss (excluding loss ofanticipated profits), cost or expense incurred by reason of the liquidation orreemployment of deposits or other funds acquired by any Lender to fund ormaintain such Advance.
          (d) Without prejudice to the survival of any other agreement of theBorrower hereunder, the agreements and obligations of the Borrower contained inSections 2.10, 2.13 and 9.04 shall survive the payment in full of principal,interest and all other amounts payable hereunder and under the Notes.
          SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during thecontinuance of any Event of Default and (ii) the making of the request or thegranting of the consent specified by Section 6.01 by the Required Lenders toauthorize the Agent to declare the Notes due and payable pursuant to theprovisions 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 timeand from time to time, to the fullest extent permitted by law, to set off andapply any and all deposits (general or special, time or demand, provisional orfinal) at any time held and other indebtedness at any time owing by such Lenderor such Affiliate to or for the credit or the account of any Loan Party againstany and all of the obligations of such Loan Party now or hereafter existingunder this Agreement and the Note held by such Lender, whether or not suchLender shall have made any demand under this Agreement or such Note andalthough such obligations may be unmatured. Each Lender agrees promptly tonotify the applicable Loan Party after any such set-off and application,provided that the failure to give such notice shall not affect the validity ofsuch set-off and application. The rights of each Lender and its Affiliatesunder this Section are in addition to other rights and remedies (including,without limitation, other rights of set-off) that such Lender and itsAffiliates may have.
          SECTION 9.06. Binding Effect. This Agreement shall become effective(other than Section 2.01, which shall only become effective upon satisfactionof the conditions precedent set forth in Section 3.01) when it shall have beenexecuted by the Borrower and the Agent and when the Agent shall have beennotified by each Initial Lender that such Initial Lender has executed it andthereafter shall be binding upon and inure to the benefit of the Borrower, theAgent and each Lender and their respective successors and assigns, except thatthe Borrower shall not have the right to assign its rights hereunder or anyinterest herein without the prior written consent of all of the Lenders.
          SECTION 9.07. Assignments and Participations. (a) Each Lender may, withthe consent of the Agent (except as provided in clause (g) below) and, so longas no Default has occurred and is continuing, the Borrower (such consent, inthe case of the Agent or the Borrower, not to be unreasonably withheld) and, solong as no Default has occurred and is continuing, if demanded by the Borrower(1) pursuant to Section 9.01(b), (2) following a request for a payment to or onbehalf of such Lender under Section 2.10 or Section 2.13, (3) following aWithholding Tax Change affecting payments to such Lender or (4) following anotice given by such Lender pursuant to Section 2.11, upon at least tenBusiness 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, without limitation, all or
 

 

a portion of its Commitment, theAdvances owing to it and the Note or Notes held by it); provided, that theBorrower may make demand with respect to a Lender that has given noticepursuant to Section 2.11 only if the Borrower makes such demand of all Lenderssimilarly situated that have given such notice; provided, further, that (i)each such assignment shall be of a constant, and not a varying, percentage ofall rights and obligations under this Agreement and the Notes, (ii) except inthe case of an assignment to a Person that, immediately prior to suchassignment, was a Lender or an assignment of all of a Lender’s rights andobligations under this Agreement, the amount of the Commitment of the assigningLender being assigned pursuant to each such assignment (determined as of thedate of the Assignment and Acceptance with respect to such assignment) shall inno event be less than $10,000,000 or an integral multiple of $1,000,000 inexcess thereof, (iii) each such assignment shall be to an Eligible Assignee,(iv) each such assignment made as a result of a demand by the Borrower shall bearranged by the Borrower after consultation with the Agent and shall be eitheran assignment of all of the rights and obligations of the assigning Lenderunder this Agreement or an assignment of a portion of such rights andobligations made concurrently with another such assignment or other suchassignments that together cover all of the rights and obligations of theassigning Lender under this Agreement, (v) no Lender shall be obligated to makeany such assignment as a result of a demand by the Borrower unless and untilsuch Lender shall have received one or more payments from either the Borroweror 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 accrued interest thereon to the date of payment of such principaland all other amounts payable to such Lender under this Agreement and (vi) theparties to each such assignment shall execute and deliver to the Agent, for itsacceptance and recording in the Register, an Assignment and Acceptance,together with any Notes subject to such assignment and a processing andrecordation fee of $3,500 (which shall be paid by Persons other than theBorrower unless such assignment is made as a result of a demand by theBorrower). Upon such execution, delivery, acceptance and recording, from andafter the effective date specified in each Assignment and Acceptance, (x) theassignee thereunder shall be a party hereto and, to the extent that rights andobligations hereunder have been assigned to it pursuant to such Assignment andAcceptance, have the rights and obligations of a Lender hereunder and (y) theLender assignor thereunder shall, to the extent that rights and obligationshereunder have been assigned by it pursuant to such Assignment and Acceptance,relinquish its rights other than rights of indemnification under Section 9.04or otherwise relating to a time prior to the effective date of such Assignmentand Acceptance and be released from its obligations under this Agreement (and,in the case of an Assignment andAcceptance covering all or the remaining portion of an assigning Lender’srights and obligations under this Agreement, such Lender shall cease to be aparty hereto).
          (b) By executing and delivering an Assignment and Acceptance, the Lenderassignor thereunder and the assignee thereunder confirm to and agree with eachother and the other parties hereto as follows: (i) other than as provided insuch Assignment and Acceptance, such assigning Lender makes no representationor warranty and assumes no responsibility with respect to any statements,warranties or representations made in or in connection with this Agreement orthe execution, legality, validity, enforceability, genuineness, sufficiency orvalue of this Agreement or any other instrument or document furnished pursuanthereto; (ii) such assigning Lender makes no representation or warranty andassumes no responsibility with respect to the financial condition of any LoanParty or the performance or observance by any Loan Party of any of itsobligations under this Agreement or any other instrument or document furnishedpursuant hereto; (iii) such assignee confirms that it has received a copy ofthis Agreement, together with copies of the financial statements referred to inSection 4.01 and such other documents and information as it has deemedappropriate to make its own credit analysis and decision to enter into suchAssignment and Acceptance; (iv) such assignee will, independently and withoutreliance upon the Agent, such assigning Lender or any other Lender and based onsuch documents and information as it shall deem appropriate at the time,continue to make its own credit decisions in taking or not taking action underthis Agreement; (v) such assignee confirms that it is an Eligible Assignee;(vi) such assignee appoints and authorizes the Agent to take such action asagent on its behalf and to exercise such powers and discretion under thisAgreement as are delegated to the Agent by the terms hereof, together with suchpowers and discretion as are reasonably incidental thereto; and (vii) suchassignee agrees that it will perform in accordance with their terms all of theobligations that by the terms of this Agreement are required to be performed byit as a Lender.
          (c) Upon its receipt of an Assignment and Acceptance executed by anassigning Lender, an assignee representing that it is an Eligible Assignee andthe Borrower, together with the Note or Notes subject to such assignment, theAgent shall, if such Assignment and Acceptance has been completed and is insubstantially the form of Exhibit C hereto, (i) accept such Assignment andAcceptance, (ii) record the information contained therein in the Register and(iii) give prompt notice thereof to the Borrower. Within five Business Daysafter its receipt of such notice, the Borrower, at its own expense, shallexecute and deliver to the Agent in exchange for the surrendered Note a newNote to the order of such Eligible Assignee in an amount equal to theCommitment assumed by it pursuant to such Assignment and Acceptance and, if theassigning Lender has retained a Commitment hereunder a
 

 

new Note to the order ofthe assigning Lender in an amount equal to the Commitment retained by ithereunder. Such new Note or Notes shall be in an aggregate principal amountequal to the aggregate principal amount of such surrendered Note or Notes,shall be dated the effective date of such Assignment and Acceptance and shallotherwise be in substantially the form of Exhibit A hereto.
          (d) The Agent shall maintain at its address referred to in Section 9.02 acopy of each Assignment and Acceptance delivered to and accepted by it and aregister for the recordation of the names and addresses of the Lenders and theCommitment of, and principal amount of the Advances owing to, each Lender fromtime to time (the “Register”). The entries in the Register shall be conclusiveand binding for all purposes, absent manifest error, and the Borrower, theAgent and the Lenders may treat each Person whose name is recorded in theRegister as a Lender hereunder for all purposes of this Agreement. TheRegister shall be available for inspection by the Borrower or any Lender at anyreasonable time and from time to time upon reasonable prior notice.
          (e) Each Lender may sell participations to one or more banks or otherentities (other than the Borrower or any of its Affiliates) in or to all or aportion of its rights and obligations under this Agreement (including, withoutlimitation, all or a portion of its Commitment, the Advances owing to it andthe Notes held by it); provided, however, that (i) such Lender’s obligationsunder this Agreement (including, without limitation, its Commitment to theBorrower hereunder) shall remain unchanged, (ii) such Lender shall remainsolely responsible to the other parties hereto for the performance of suchobligations, (iii) such Lender shall remain the holder of any such Note for allpurposes of this Agreement, (iv) the Borrower, the Agent and the other Lendersshall continue to deal solely and directly with such Lender in connection withsuch Lender’s rights and obligations under this Agreement and (v) noparticipant under any such participation shall have any right to approve anyamendment or waiver of any provision of this Agreement or any Note, or anyconsent to any departure by the Borrower therefrom, except that a Lender mayagree with a participant as to the manner in which the Lender shall exercisethe Lender’s rights to approve any amendment, waiver or consent to the extentthat such amendment, waiver or consent would reduce the principal of, orinterest on, the Notes or any fees or other amounts payable hereunder, in eachcase to the extent subject to such participation, or postpone any date fixedfor 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 suchparticipation.
          (f) Any Lender may at any time, without the consent of the Agent or theBorrower, create a security interest in all or any portion of its rights underthis Agreement (including, without limitation, the Advances owing to it and theNote or Notes held by it) in favor of any Federal Reserve Bank in accordancewith Regulation A of the Board of Governors of the Federal Reserve System,provided, however, that no such assignment shall have the effect of increasingthe costs payable by the Borrower.
          (g) Any Lender may at any time, without the consent of, but with notice tothe Agent, assign all or part of its rights or obligations under this Agreementto any Affiliate of such Lender, provided, however, that no such assignmentshall have the effect of increasing the costs payable by the Borrower.
          SECTION 9.08. Nondisclosure. None of the Agent, any Lender or anyAffiliate thereof shall disclose without the prior consent of the Borrower(other than to the Agent, another Lender or any such Affiliate, theirrespective directors, employees, auditors, affiliates or counsel who shallagree to be bound by the terms of this provision) any information with respectto the Loan Parties or any Subsidiary thereof contained in financialstatements, projections or reports provided to the Agent, any Lender or anyAffiliate thereof by, or on behalf of, the Loan Parties or any Subsidiary,provided that the Agent, any Lender or any Affiliate thereof may disclose anysuch information (a) as has become generally available to the public in amanner, or through actions, which do not violate the terms of this Section9.08, (b) to, or as may be required or appropriate in any report, statement ortestimony submitted to, any municipal, state or federal regulatory body havingor claiming to have jurisdiction over the Agent, any Lender or any Affiliatethereof or to the Federal Reserve Board or the Federal Deposit InsuranceCorporation or similar organizations (whether in the United States orelsewhere) or their successors, (c) as may be required or appropriate inresponse to any summons or subpoena or in connection with any litigation, (d)in order to comply with any law, order, regulation or ruling applicable to theAgent, any Lender or any Affiliate thereof and (e) to a prospective co-lenderor participant in the amounts outstanding hereunder or under the Advances,provided, however, that such prospective co-lender or participant executes anagreement containing provisions substantially identical to those contained inthis Section 9.08 and which shall by its terms inure to the benefit of theBorrower and provided, further, that to the extent practicable, the Agent, eachLender and their respective Affiliates shall use reasonable best efforts toprovide prior written notice of such disclosure to the Borrower.
          SECTION 9.09. Governing Law. This Agreement and the Notes shall begoverned by, and construed in accordance with, the laws of the State of NewYork.
 

 

          SECTION 9.10. Execution in Counterparts. This Agreement may be executedin any number of counterparts and by different parties hereto in separatecounterparts, each of which when so executed shall be deemed to be an originaland all of which taken together shall constitute one and the 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 executedcounterpart of this Agreement.
          SECTION 9.11. Jurisdiction, Etc. (a) Each of the parties hereto herebyirrevocably and unconditionally submits, for itself and its property, to thenonexclusive jurisdiction of any New York State court or federal court of theUnited States of America sitting in New York City, and any appellate court fromany thereof, in any action or proceeding arising out of or relating to thisAgreement or the Notes, or for recognition or enforcement of any judgment, andeach of the parties hereto hereby irrevocably and unconditionally agrees thatall claims in respect of any such action or proceeding may be heard anddetermined in any such New York State court or, to the extent permitted by law,in such federal court. Each of the Loan Parties hereby agrees that service ofprocess in any such action or proceeding brought in any such New York Statecourt or in such federal court may be made upon CT Corporation System at itsoffices at 111 Eighth Avenue, 13th Floor, New York, N.Y. 10011 (the “ProcessAgent”) and each Loan Party hereby irrevocably appoints the Process Agent itsauthorized agent to accept such service of process, and agrees that the failureof the Process Agent to give any notice of any such service shall not impair oraffect the validity of such service or of any judgment rendered in any actionor proceeding based thereon. Each of the parties hereto agrees that a finaljudgment in any such action or proceeding shall be conclusive and may beenforced in other jurisdictions by suit on the judgment or in any other mannerprovided by law. Nothing in this Agreement shall affect any right that anyparty may otherwise have to bring any action or proceeding relating to thisAgreement or the Notes in the courts of any jurisdiction.
          (b) Each of the parties hereto irrevocably and unconditionally waives, tothe fullest extent it may legally and effectively do so, any objection that itmay now or hereafter have to the laying of venue of any suit, action orproceeding arising out of or relating to this Agreement or the Notes in any NewYork State or federal court. Each of the parties hereto hereby irrevocablywaives, to the fullest extent permitted by law, the defense of aninconvenient forum to the maintenance of such action or proceeding in anysuch court.
          SECTION 9.12. Waiver of Jury Trial. Each of the Borrower, theGuarantors, the Agent and the Lenders hereby irrevocably waives all right totrial by jury in any action, proceeding or counterclaim (whether based oncontract, tort or otherwise) arising out of or relating to this Agreement orthe 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 beexecuted by their respective officers
 

 

thereunto duly authorized, as of the datefirst above written.       TELECOMUNICACIONES DE PUERTO RICO,