Document:

exv10w29

 

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 hereinafter
defined) that shall become a guarantor hereunder in accordance with Section
5.01(j), the “Guarantors”), the banks, financial institutions and other
institutional lenders (the “Initial Lenders”) listed on the signature pages
hereof, Citibank, N.A. (“Citibank”), as administrative agent (in such capacity,
the “Agent”) for the Lenders (as hereinafter defined), Banco Bilbao Vizcaya
Argentaria Puerto Rico, as syndication agent, and Banco Popular de Puerto Rico,
FirstBank Puerto Rico and Scotiabank de Puerto Rico, as co-documentation
agents, agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

          SECTION 1.01. Certain Defined Terms.

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

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

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

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

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

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

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Applicable	 	 	 	 	 	 	 	 	 	Applicable
	 	 	Margin for Base	 	Applicable Margin	 	Applicable Margin	 	Margin for
	 	 	Rate Advances	 	for Base Rate	 	for Eurodollar	 	Eurodollar
	 	 	Prior to Term	 	Advances On and	 	Rate Advances	 	Rate Advances On
	Performance	 	Loan	 	After Term Loan	 	Prior to Term Loan	 	and After Term Loan
	Level
	 	Conversion Date
	 	Conversion Date
	 	Conversion Date
	 	Conversion Date

	Level 1
	 	 	0.000	%	 	 	0.000	%	 	 	0.400	%	 	 	0.875	%
	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 Loan
Conversion Date, a percentage per annum determined by reference to the
Performance Level in effect on such date as set forth below:

	 	 	 	 	 
	Performance Level
	 	Applicable Percentage

	Level 1
	 	 	0.100	%
	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 Term
Loan Conversion Date that the aggregate Advances exceed 50% of the
aggregate Commitments, a percentage per annum determined by reference to
the Performance Level in effect on such date as set forth below:

	 	 	 	 	 
	Performance Level
	 	Applicable Utilization Fee

	Level 1
	 	 	0.125	%
	Level 2
	 	 	0.125	%
	Level 3
	 	 	0.125	%
	Level 4
	 	 	0.250	%
	Level 5
	 	 	0.500	%

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

          “Base Rate” means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to
the higher of:

               (a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank’s base rate that is
offered to its customers generally (before giving effect to any
applicable margin); and

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

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

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

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

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

          “Business Day” means a day of the year on which banks are not
required or authorized by law to close in New York City or San Juan,
Puerto Rico, provided that, if the applicable Business Day relates to

 

 

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

          “Commitment” has the meaning specified in Section 2.01.

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

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

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

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

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

          “Debt to EBITDA Ratio” of any Person at any date means the ratio of
(a) Debt of the types that, in accordance with GAAP, would be classified
as indebtedness on a Consolidated balance sheet of such
Person on such date to (b) EBITDA for the period of four fiscal
quarters of such Person ended on or immediately prior to such date,
provided that for purposes of clause (a) of this definition, Debt shall
not include (1) the obligations specified in clause (g) of the definition
thereof set forth above or (2) with respect to the Borrower, any
obligations which may be assumed by the Borrower for guaranties of any
indebtedness of the Borrower’s employee stock ownership plan up to an
aggregate principal amount of $29,745,000.

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

 

 

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

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

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

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

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

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

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

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

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

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

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

 

 

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

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

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

          “Eurodollar Rate” means, for any Interest Period for each Eurodollar
Rate Advance comprising part of the same Borrowing, an interest rate per
annum equal to the rate per annum obtained by dividing (a) the rate per
annum (rounded upward to the nearest whole multiple of 1/16 of 1% per
annum) appearing on Moneyline Telerate Markets Page 3750 (or any
successor page) as the London interbank offered rate for deposits in U.S.
dollars at approximately 11:00 A.M. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable to such
Interest Period or, if for any reason such rate is not available, the
average (rounded upward to the nearest whole multiple of 1/16 of 1% per
annum, if such average is not such a multiple) of the rate per annum at
which deposits in U.S. dollars are offered by the principal office of
each of the Reference Banks in London, England to prime banks in the
London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount approximately
equal to such Reference Bank’s pro rata share of the contemplated
Eurodollar Rate Advance comprising part of such Borrowing to be
outstanding during such Interest Period and for a period equal to such
Interest Period by (b) a percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage for such Interest Period. The Eurodollar Rate
for any Interest Period for each Eurodollar Rate Advance comprising part
of the same Borrowing shall be determined by the Agent on the basis of
applicable rates furnished to and received by the Agent from the
Reference Banks two Business Days before the first day of such Interest
Period, subject, however, to the provisions of Section 2.07.

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

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

 

 

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

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

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

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

          “Guaranty” has the meaning specified in Section 7.01.

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

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

          “Information Memorandum” means the information memorandum dated
February 4, 2004 used by the Agent in connection with the syndication of
the Commitments.

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

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

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

               (iii) in the case of any such Borrowing, the Borrower shall
not be entitled to select an Interest Period having duration of any
period other than one, two, three or six months unless, by 2:00
P.M. (New York City time) on the third Business Day prior to the
first day of such Interest

 

 

Period, each Lender notifies the Agent
that such Lender will be providing funding for such Borrowing with
such Interest Period (the failure of any Lender to so respond by
such time being deemed for all purposes of this Agreement as an
objection by such Lender to the requested duration of such Interest
Period, provided that each Lender shall use commercially reasonable
good faith efforts to so respond); provided further that, if any or
all of the Lenders object to the requested duration of such
Interest Period, the duration of the Interest Period for such
Borrowing shall be one, two, three or six months, as specified by
the Borrower in the applicable Notice of Borrowing as the desired
alternative to the selected Interest Period; and

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

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

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

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

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

	 	 	 
	Level 1:

	 	Public Debt Rating of at least A- by S&P or A3 by Moody’s.
	 
	 	 
	Level 2:

	 	Public Debt Rating of lower than Level 1 but at least BBB+ by S&P or Baa1 by Moody’s.
	 
	 	 
	Level 3:

	 	Public Debt Rating of lower than Level 2 but at least BBB by S&P or Baa2 by Moody’s.
	 
	 	 
	Level 4:

	 	Public Debt Rating of lower than Level 3 but at least BBB- by S&P or Baa3 by Moody’s.
	 
	 	 
	Level 5:

	 	Public Debt Rating of lower than Level 4.

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

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

          “Permitted Receivables Financing” means any financing pursuant to
which the Borrower or any Subsidiary of the Borrower may sell, convey, or
otherwise transfer to a Receivables Subsidiary or any other Person (in
the case of transfer by a Receivables Subsidiary), or grant a security
interest in, any accounts

 

 

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

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

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

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

          “Puerto Rico Management Agreement” means the Amended and Restated
Puerto Rico Management Agreement, dated as of March 2, 1999, by and among
the Borrower, PRTC and GITI Services Puerto Rico Incorporated, as
amended, modified, renewed or replaced from time to time.

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

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

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

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

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

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

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

          “Solvent” and “Solvency” mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of
such Person is greater than the total amount of liabilities, including,

 

 

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

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

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

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

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

          “Termination Date” means the earlier of March 1, 2005 and the date
of termination in whole of the Commitments pursuant to Section 2.04 or
6.01.

          “U.S. Management Agreement” means the Amended and Restated U.S.
Management Agreement, dated as of March 2, 1999, by and among the
Borrower, PRTC and GTE International Telecommunications Incorporated, as
amended, 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, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening
of such a contingency.

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

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

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

ARTICLE II

 

 

AMOUNTS AND TERMS OF THE ADVANCES

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

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

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

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

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

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

 

 

          SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay to
the Agent for the account of each Lender a facility fee on the aggregate amount
of such Lender’s Commitment from the Effective Date in the case of each Initial
Lender and from the later of the Effective Date and the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each other Lender until the Termination Date at a rate per annum
equal to the Applicable Percentage in effect from time to time, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing June 30, 2004, and on the Termination Date.

          (b) Utilization Fee. The Borrower agrees to pay to the Agent for the
account of each Lender from the Effective Date until the Termination Date a
Utilization Fee on the aggregate amount of such Lender’s Advances for each day
that the aggregate Advances exceed 50% of the aggregate Commitments at a rate
per annum equal to the Applicable Utilization Fee in effect from time to time,
payable in arrears quarterly on the last day of each March, June, September and
December, commencing June 30, 2004, and on the Termination Date.

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

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

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

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

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

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

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

          (b) Default Interest. Upon the occurrence and during the continuance of
an Event of Default

 

 

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

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

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

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

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

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

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

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

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

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

          SECTION 2.08. Optional Conversion of Advances. The Borrower may on any
Business Day, upon notice given to the Agent not later than 11:00 A.M. (New
York City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Sections 2.07 and 2.11, Convert all
Advances of one Type comprising the same Borrowing into Advances of the other
Type; provided, however, that any Conversion of Eurodollar Rate Advances into
Base Rate Advances shall be made only on the last day of an Interest

 

 

Period for
such Eurodollar Rate Advances and any Conversion of Base Rate Advances into
Eurodollar Rate Advances shall be in an amount not less than $10,000,000. Each
such notice of a Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Advances to be Converted and
(iii) if such Conversion is into Eurodollar Rate Advances, the duration of the
initial Interest Period for each such Advance. Each notice of Conversion shall
be irrevocable and binding on the Borrower.

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

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

     (b) If any Lender determines that compliance with any law or regulation or
any written guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender (excluding any reserves included in the
computation of the Eurodollar Rate) and that the amount of such capital is
increased by or based upon the existence of such Lender’s commitment to lend
hereunder and other commitments of this type, then, upon demand by such Lender
(with a copy of such demand to the Agent), the Borrower shall pay to the Agent
for the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender or such
corporation (whether or not such amounts arise prior to the receipt of written
notification from such central bank or other governmental authority) in the
light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable (in the proportion that
such Lender’s Commitment hereunder bears to all of such Lender’s commitments of
this type) to the existence of such Lender’s commitment to lend hereunder;
provided that the Borrower shall not be required to compensate such Lender to
the extent such amounts arose prior to the date that is six months prior to
such notice, provided further that, if the change in law or circumstance giving
rise to such increased costs or reductions is retroactive, then the six-month
period referred to above shall be extended to include the period of retroactive
effect thereof. A certificate as to such amounts submitted to the Borrower and
the Agent by such Lender shall be conclusive and binding for all purposes,
absent error in the calculation of such amounts.

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

 

 

situated customers.

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

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

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

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

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

     SECTION 2.13. Taxes. (a) Subject to subsections (e) and (f) below, any
and all payments by the Borrower hereunder or under the Notes shall be made, in
accordance with Section 2.12, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto imposed by Puerto Rico,
the United States or any political subdivision of either (or in the case of any
payments by or on behalf of the Borrower through an account or branch outside
the United States or Puerto Rico or by or on behalf of the Borrower by a payor
that is not a United States person or not organized or resident in Puerto Rico
such payments shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto imposed by a foreign
jurisdiction or any political subdivision thereof), excluding, in the case of
each Lender and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it in lieu of net income taxes (x) in the case of a
Lender pursuant to the laws of the jurisdiction (or any political subdivision
or taxing authority therein) in which it is organized or in which the principal
office of such Lender, or Applicable Lending Office of such Lender is

 

 

located,
or (y) in the case of any payment to the Agent in its capacity as Agent, the
jurisdiction (or any political subdivision or taxing authority therein) in
which it is organized or in which the principal office of the Agent is located
or in which the office designated by the Agent to act as Agent is located (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payments hereunder or under the Notes being
hereinafter referred to as “Taxes”). Subject to subsections (e) and (f) below,
if the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any Note to any Lender or the Agent, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.13) such Lender or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law. Within 30 days after the date of
any payment of Taxes, the Borrower shall furnish to the Agent, at its address
referred to in Section 9.02, the original or a certified copy of a receipt
evidencing payment thereof. For purposes of this subsection (a) and subsection
(e), the terms “United States” and “United States person” shall have the
meanings specified in Section 7701 of the Internal Revenue Code.

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

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

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

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

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

 

 

Lender), (ii) an amendment, modification or revocation of any
existing applicable tax treaty ratified, enacted or amended after the date
hereof (or in the case of an entity that becomes a Lender after the date
hereof, the date such entity becomes a Lender), or (iii) the ratification of a
new tax treaty ratified after the date hereof (or in the case of an entity that
becomes a Lender after the date hereof, the date such entity becomes a Lender).

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

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

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

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

 

 

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

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

          (a) There shall have occurred no Material Adverse Change since
December 31, 2002 other than as disclosed in Schedule 3.01(a) hereto.

          (b) There shall exist no action, suit, investigation, litigation or
proceeding affecting any of the Loan Parties or any of their respective
Subsidiaries pending or threatened before any court, governmental agency
or arbitrator that (i) could be reasonably likely to have a Material
Adverse Effect other than the matters described on Schedule 3.01(b)
hereto (the “Disclosed Litigation”) or (ii) is initiated by any Person
other than a Lender in its capacity as a Lender that purports to affect

the legality, validity or enforceability of this Agreement or any Note or
the consummation of the transactions contemplated hereby, and there shall
have been no material adverse change in the status, or financial effect
on any Loan Party, of the Disclosed Litigation from that described on
Schedule 3.01(b) hereto.

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

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

          (h) The termination in whole of the commitments of the lenders party
to the Five-Year Credit Agreement dated as of March 2, 1999 (the
“Existing Credit Agreement”) among the Borrower, Puerto Rico Telephone
Company, Inc. and Celulares Telefonica, Inc., as guarantors, Citibank, as
administrative agent, Bank of America National Trust and Savings
Association, as syndication agent, and The Chase Manhattan Bank and
Morgan Guaranty Trust Company of New York, as documentation agents, and
the payment in full of all obligations outstanding under the Existing
Credit Agreement. Each of the Initial Lenders that is a party to the
Existing Credit Agreement hereby waives the requirement of three Business
Days notice to terminate the commitments under the Existing Credit
Agreement.

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

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

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

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

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

          SECTION
4.01. Representations and Warranties of the Borrower. The
Borrower represents and

 

 

warrants as follows:

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

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

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

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

          (e) The Consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 2002, and the related Consolidated
statements of income and cash flows of the Borrower and its Subsidiaries
for the fiscal year then ended, accompanied by an opinion of Ernst &
Young LLP, independent public accountants, and the Consolidated balance
sheet of the Borrower and its Subsidiaries as at September 30, 2003, and
the related Consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for the nine months then ended, duly
certified by the chief financial officer of the Borrower, copies of which
have been furnished to each Lender, fairly present, subject, in the case
of said
balance sheet as at September 30, 2003, and said statements of
income and cash flows for the nine months then ended, to year-end audit
adjustments, the Consolidated financial condition of the Borrower and its
Subsidiaries as at such dates and the Consolidated results of the
operations of the Borrower and its Subsidiaries for the periods ended on
such dates, all in accordance with generally accepted accounting
principles consistently applied.

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

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

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

 

 

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

ARTICLE V

COVENANTS OF THE LOAN PARTIES

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

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

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

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

          (d) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain,
its corporate existence, rights (charter and statutory) and franchises;
provided, however, that each Loan Party and its Subsidiaries may
consummate any transaction permitted under Section 5.02(b) and provided
further that neither any Loan Party nor any of its Subsidiaries shall be
required to preserve any right or franchise if the senior management of
such Loan Party or of such Subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of such Loan Party or such Subsidiary, as the case may be, and
that the loss thereof is not disadvantageous in any material respect to
such Loan Party or such Subsidiary.

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

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

 

 

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

          (h) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under this
Agreement with any of their Affiliates, other than another Loan Party,
(i) on terms that are fair and reasonable and no less favorable to such
Loan Party or such Subsidiary than it would obtain in a comparable
arm’s-length transaction with a Person not an Affiliate except where the
failure to do so, in the aggregate, would not have a Material Adverse
Effect, (ii) as required by the Federal Communications Commission’s rules
and regulations for transactions among affiliates or (iii) as
contemplated by the 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 after
the end of each of the first three quarters of each fiscal year of
the Borrower, the Consolidated balance sheet of the Borrower and
its Subsidiaries as of the end of such quarter and the Consolidated
statements of income and cash flows of the Borrower and its
Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, duly certified
(subject to year-end audit adjustments) by the chief financial
officer, treasurer or controller of the Borrower as having been
prepared in accordance with generally accepted accounting
principles and certificates of the chief financial officer,
treasurer or controller of the Borrower as to compliance with the
terms of this Agreement and setting forth in reasonable detail the
calculations necessary to demonstrate compliance with Section 5.03,
provided that in the event of any change in GAAP used in the
preparation of such financial statements, the Borrower shall also
provide, if necessary for the determination of compliance with
Section 5.03, a statement of reconciliation showing the
calculations used for purposes of Section 5.03;

               (ii) as soon as available and in any event within 120 days
after the end of each fiscal year of the Borrower, a copy of the
annual audited report for such year for the Borrower and its
Subsidiaries, containing the Consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year and
the Consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for such fiscal year, in each
case accompanied by an opinion acceptable to the Required Lenders
by Ernst & Young LLP or other independent public accountants of
nationally recognized standing, provided that in the event of any
change in GAAP used in the preparation of such financial
statements, the Borrower shall also provide, if necessary for the
determination of compliance with Section 5.03, a statement of
reconciliation showing the calculations used for purposes of
Section 5.03;

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

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

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

 

 

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

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

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

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

               (i) Permitted Liens,

               (ii) purchase money Liens upon or in any real property or
equipment acquired or held by the Borrower or any of its
Subsidiaries in the ordinary course of business to secure the
purchase price of such property or equipment or to secure Debt
incurred solely for the purpose of
financing the acquisition of such property or equipment, or
Liens existing on such property or equipment at the time of its
acquisition or conditional sales or other similar title retention
agreements with respect to property hereafter acquired or
extensions, renewals or replacements of any of the foregoing for
the same or a lesser amount, provided, however, that no such Lien
shall extend to or cover any properties of any character other than
the real property or equipment being acquired, and no such
extension, renewal or replacement shall extend to or cover any
properties not theretofore subject to the Lien being extended,
renewed or replaced,

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

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

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

 

 

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

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

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

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

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

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

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

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

               (iv) Debt in respect of operating leases,

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

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

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

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

 

 

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

ARTICLE VI

EVENTS OF DEFAULT

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

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

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

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

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

          (e) The Borrower or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Debt that is outstanding in a
principal, or in the case of Hedge Agreements net, amount of at least
$20,000,000 in the aggregate (but excluding Debt outstanding hereunder)
of the Borrower or such Subsidiary (as the case may be) (the “Requisite
Amount”), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the later of five Business Days and the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any such Debt aggregating the Requisite Amount
shall be declared due and payable in accordance with its terms or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt aggregating the Requisite Amount and
shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such event or condition is
to accelerate the maturity of such Debt; or any such Debt aggregating the
Requisite Amount shall be required to be prepaid or redeemed (other than
by a regularly scheduled required prepayment or redemption), purchased or
defeased in accordance with its terms, or any offer to prepay, redeem,
purchase or defease such Debt shall be required to be made in accordance
with its terms, in each case prior to the stated maturity thereof where
the cause of such prepayment, redemption, purchase or defeasance or offer
therefor is the occurrence of an event or condition that is premised on a

material adverse deterioration of the financial condition, results of
operation or properties of the Borrower or any of its Subsidiaries,
provided that with respect to Debt aggregating the Requisite Amount of
the types described in clauses (h) or (i) of the definition of “Debt” and
to the extent such Debt relates to the obligations of any Person other
than the Borrower or any of its Subsidiaries, no Event of Default shall
occur so long as the payment of such Debt is being contested in good
faith and by proper proceedings and as to which appropriate reserves are
being maintained; or any event shall occur or condition shall exist under
any agreement or instrument relating to any Debt that is outstanding in a
principal, or in the case of

 

 

Hedge Agreements net, amount of at least
$40,000,000 and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or permit the acceleration of, the maturity
of such Debt; or

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

          (g) Judgments or orders for the payment of money in excess of
$30,000,000 in the aggregate shall be rendered against the Borrower or
its Subsidiaries and enforcement proceedings shall have been commenced by
any creditor upon such judgment or order for which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; provided, however, that any such judgment or
order shall not be an Event of Default under this Section 6.01(g) if and
for so long as (i) (A) the amount of such judgment or order is covered by
a valid and binding policy of insurance between the defendant and the
insurer or insurers covering payment thereof, (B) such insurer shall be
rated, or, if more than one insurer, at least 90% of such insurers as
measured by the amount of risk insured, shall be rated, at least “A-” by
A.M. Best Company or its successor or its successors and (C) such
insurer(s) has been notified of, and has not disputed the claim made for
payment of, the amount of such judgment or order or (ii) (A) the amount
of such judgment or order is covered by a valid and binding
indemnification agreement between the defendant and an indemnitor, (B)
such indemnitor shall have a rating for any class
of its non-credit enhanced long-term senior unsecured debt of not
lower than BBB+ by S&P or Baa3 by Moody’s and (C) such indemnitor has
been notified of, and has not disputed the claim made for payment of, the
amount of such judgment or order; or

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

          (i) Any Loan Party or its ERISA Affiliates shall incur, or shall be
reasonably likely to incur, liability that would have a Material Adverse
Effect as a result of one or more of the following: (i) the occurrence
of any ERISA Event; (ii) the partial or complete withdrawal of such Loan
Party or its ERISA Affiliates from a Multiemployer Plan; or (iii) the
reorganization or termination of a Multiemployer Plan;

then, and in any such event, the Agent (i) shall at the request, or may with
the consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Notes,
all interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Borrower; provided, however, that in the event of an
actual or deemed entry of an order for relief with respect to the Borrower
under the Federal Bankruptcy Code, (A) the obligation of each Lender to make
Advances shall automatically be terminated and (B) the Notes, all such interest
and all such amounts shall

 

 

automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.

ARTICLE VII

GUARANTY

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

          (b) (i) Each Guarantor and, by its acceptance of this Guaranty, the Agent
and each other Lender, hereby confirms that it is the intention of all such
parties that this Guaranty not constitute a fraudulent transfer or fraudulent
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal, state or
Commonwealth of Puerto Rico law to the extent applicable to this Guaranty. To
effectuate the foregoing intention, the Agent, each other Lender and each
Guarantor hereby irrevocably agrees that the obligations of each Guarantor
under this Guaranty shall not exceed the greater of (A) the benefit realized by
such Guarantor from the proceeds of the Advances made from time to time by the
Borrower to such Guarantor and (B) the maximum amount that will, after giving
effect to such maximum amount and all other probable contingent and fixed
liabilities of such Guarantor that are relevant under applicable law, and after
giving effect to any collections from, rights to receive contribution from, or
payments made by or on behalf of each other Guarantor in respect of the
obligations of such other Guarantor under this Guaranty, result in the
obligations of such Guarantor under this Guaranty not constituting a fraudulent
transfer or fraudulent conveyance. For purposes hereof, “Bankruptcy Law” means
Title 11, United States Code, or any similar Federal, state or Commonwealth of
Puerto Rico law for the relief of debtors.

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

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

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

 

 

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

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

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

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

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

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

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

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

 

 

arising. If (i) any
Guarantor shall make payment to the Agent or any Lender of all or any part of
the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all
other amounts payable under this Guaranty shall be paid in full in cash and
(iii) the Termination Date shall have occurred, the Agent and the Lenders will,
at such Guarantor’s request and expense, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by such
Guarantor.

ARTICLE VIII

THE AGENT

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

          SECTION 8.02. Agent’s Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may
treat the payee of any Note as the holder thereof until the Agent receives and
accepts an Assignment and Acceptance entered into by the Lender that is the
payee of such Note, as assignor, and an Eligible Assignee, as assignee, as
provided in Section 9.07; (ii) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement on the part of any Loan
Party or to inspect the property (including the books and records) of any Loan
Party except as specifically set forth in this Agreement; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by
telecopier, facsimile, telegram or telex) believed by it to be genuine and
signed or sent by the proper party or parties.

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

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

          SECTION 8.05. Indemnification. The Lenders agree to indemnify the Agent
(to the extent not

 

 

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

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

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

ARTICLE IX

MISCELLANEOUS

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

 

 

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

          SECTION 9.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier and facsimile
communication) and mailed, telecopied, faxed or delivered by hand or by
courier, if to the Borrower or PRTC, at 1513 Roosevelt Avenue, 10th Floor,
Guaynabo, Puerto Rico 00968 or P.O. Box 360998 San Juan, Puerto Rico
00936-0998, Attention: Adail Ortiz (fax no.(787) 282-0958), with a copy to
Maria Elena de la Cruz (fax no. (787) 783-2919); if to any Initial Lender, at
its Domestic Lending Office specified opposite its name on Schedule I hereto;
if to any other Lender, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender; and if to the
Agent, at its address at Two Penns Way, New Castle, Delaware 19720, Attention:
Loan Investor Services; or, as to any Loan Party or the Agent, at such other
address as shall be designated by such party in a written notice to the other
parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrower and the Agent.
All such notices and communications shall, when mailed, telecopied or faxed, be
effective when deposited in the first class mails or, in the case of
international delivery, when deposited with mails or couriers that deliver
within two Business Days or telecopied or faxed, provided that notices and
communications to the Agent pursuant to Article II, III or VIII shall not be
effective until received by the Agent, and provided, further, that notices and
communications to any Person required to be provided hereunder within five
Business Days shall only be made by hand or via telecopy, facsimile or courier.
Delivery by
telecopier or facsimile of an executed counterpart of any amendment or
waiver of any provision of this Agreement or the Notes or of any Exhibit hereto
to be executed and delivered hereunder shall be effective as delivery of a
manually executed counterpart thereof.

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

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

          (b) The Borrower agrees to indemnify and hold harmless the Agent and each
Lender and each of their Affiliates and their officers, directors, employees,
agents and advisors (each, an “Indemnified Party”) from and against any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of, or in connection with the preparation
for a defense of, any

 

 

investigation, litigation or proceeding arising out of,
related to or in connection with (i) the Notes, this Agreement, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Advances or (ii) the actual or alleged presence of Hazardous Materials
on any property of the Borrower or any of its Subsidiaries or any Environmental
Action relating in any way to the Borrower or any of its Subsidiaries, in each
case whether or not such investigation, litigation or proceeding is brought by
any Loan Party, its directors, shareholders or creditors or an Indemnified
Party or any other Person or any Indemnified Party is otherwise a party thereto
and whether or not the transactions contemplated hereby are consummated, except
to the extent such claim, damage, loss, liability or expense (A) is found by a
court of competent jurisdiction to have resulted from such Indemnified Party’s
gross negligence or willful misconduct, (B) arises from disputes among two or
more Lenders (but not including any such dispute that involves a Lender to the
extent such Lender is acting in any different capacity (i.e., Agent or
Arranger) under the Credit Agreement or the Notes or to the extent that it
involves the Agent’s syndication activities) or (C) arises from or relates to a
breach by such Indemnified Party of its obligations under this Agreement. The
Borrower also agrees not to assert any claim against the Agent, any Lender, any
of their Affiliates, or any of their respective directors, officers, employees,
attorneys and agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to the
Notes, this Agreement, any of the transactions contemplated herein or the
actual or proposed use of the proceeds of the Advances.

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

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

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

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

          SECTION 9.07. Assignments and Participations. (a) Each Lender may, with
the consent of the Agent (except as provided in clause (g) below) and, so long
as no Default has occurred and is continuing, the Borrower (such consent, in
the case of the Agent or the Borrower, not to be unreasonably withheld) and, so
long as no Default has occurred and is continuing, if demanded by the Borrower
(1) pursuant to Section 9.01(b), (2) following a request for a payment to or on
behalf of such Lender under Section 2.10 or Section 2.13, (3) following a
Withholding Tax Change affecting payments to such Lender or (4) following a
notice given by such Lender pursuant to Section 2.11, upon at least ten
Business Days’ notice to such Lender and the Agent, will, assign to one or more
Persons all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or

 

 

a portion of its Commitment, the
Advances owing to it and the Note or Notes held by it); provided, that the
Borrower may make demand with respect to a Lender that has given notice
pursuant to Section 2.11 only if the Borrower makes such demand of all Lenders
similarly situated that have given such notice; provided, further, that (i)
each such assignment shall be of a constant, and not a varying, percentage of
all rights and obligations under this Agreement and the Notes, (ii) except in
the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an assignment of all of a Lender’s rights and
obligations under this Agreement, the amount of the Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall in
no event be less than $10,000,000 or an integral multiple of $1,000,000 in
excess thereof, (iii) each such assignment shall be to an Eligible Assignee,
(iv) each such assignment made as a result of a demand by the Borrower shall be
arranged by the Borrower after consultation with the Agent and shall be either
an assignment of all of the rights and obligations of the assigning Lender
under this Agreement or an assignment of a portion of such rights and
obligations made concurrently with another such assignment or other such
assignments that together cover all of the rights and obligations of the
assigning Lender under this Agreement, (v) no Lender shall be obligated to make
any such assignment as a result of a demand by the Borrower unless and until
such Lender shall have received one or more payments from either the Borrower
or one or more Eligible Assignees in an aggregate amount at least equal to the
aggregate outstanding principal amount of the Advances owing to such Lender,
together with accrued interest thereon to the date of payment of such principal
and all other amounts payable to such Lender under this Agreement and (vi) the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance,
together with any Notes subject to such assignment and a processing and
recordation fee of $3,500 (which shall be paid by Persons other than the
Borrower unless such assignment is made as a result of a demand by the
Borrower). Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights other than rights of indemnification under Section 9.04
or otherwise relating to a time prior to the effective date of such Assignment
and Acceptance and be released from its obligations under this Agreement (and,
in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).

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

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

 

 

new Note to the order of
the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes,
shall be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A hereto.

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

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

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

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

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

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

 

 

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

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

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

          SECTION 9.12. Waiver of Jury Trial. Each of the Borrower, the
Guarantors, the Agent and the Lenders hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Agreement or
the Notes or the actions of the Agent or any Lender in the negotiation,
administration, performance or enforcement thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers

 

 

thereunto duly authorized, as of the date
first above written.

	 	 	 	 	 
	 	 	TELECOMUNICACIONES DE PUERTO RICO,

INC., as Borrower
	 
	 	 	 	 
	

	 	By	 	 
	

	 	 	 	

Title:
	 
	 	 	 	 
	 	 	PUERTO RICO TELEPHONE COMPANY, INC.,

as Guarantor
	 
	 	 	 	 
	

	 	By	 	 
	

	 	 	 	

Title:
	 
	 	 	 	 
	 	 	CITIBANK, N.A.

as Administrative Agent
	 
	 	 	 	 
	

	 	By	 	 
	

	 	 	 	

Title:

 

 

EXECUTION COPY

U.S. $360,000,000

364-DAY CREDIT AGREEMENT

Dated as of March 2, 2004

Among

TELECOMUNICACIONES DE PUERTO RICO, INC.

as Borrower,

PUERTO RICO TELEPHONE COMPANY, INC.

as Guarantor,

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders,

CITIBANK, N.A.

as Administrative Agent,

BANCO BILBAO VIZCAYA ARGENTARIA PUERTO RICO

as Syndication Agent,

BANCO POPULAR DE PUERTO RICO

FIRSTBANK PUERTO RICO

and

SCOTIABANK DE PUERTO RICO

as Documentation Agents

and

CITIGROUP GLOBAL MARKETS INC.

as Lead Arranger and Book Manager

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I
	 	 	 	 
	 
	SECTION 1.02.
	 	Computation of Time Periods	 	10
	 
	SECTION 1.03.
	 	Accounting Terms	 	10
	 
	ARTICLE II
	 	 	 	 
	 
	SECTION 2.01.
	 	The Advances	 	11
	 
	SECTION 2.02.
	 	Making the Advances	 	11
	 
	SECTION 2.03.
	 	Fees	 	12
	 
	SECTION 2.04.
	 	Optional Termination or Reduction of the Commitments	 	12
	 
	SECTION 2.05.
	 	Repayment of Advances.	 	12
	 
	SECTION 2.06.
	 	Interest	 	12
	 
	SECTION 2.07.
	 	Interest Rate Determination	 	13
	 
	SECTION 2.08.
	 	Optional Conversion of Advances	 	13
	 
	SECTION 2.09.
	 	Optional Prepayments of Advances	 	14
	 
	SECTION 2.10.
	 	Increased Costs	 	14
	 
	SECTION 2.11.
	 	Illegality	 	15
	 
	SECTION 2.12.
	 	Payments and Computations	 	15
	 
	SECTION 2.13.
	 	Taxes	 	15
	 
	SECTION 2.14.
	 	Sharing of Payments, Etc.	 	17
	 
	SECTION 2.15.
	 	Use of Proceeds	 	17
	 
	ARTICLE III
	 	 	 	 
	 
	SECTION 3.01.
	 	Conditions Precedent to Effectiveness of Section 2.01	 	18
	 
	SECTION 3.02.
	 	Conditions Precedent to Each
Borrowing and the Term Loan Conversion Date	 	19
	 
	SECTION 3.03.
	 	Determinations Under Section 3.01	 	19
	 
	ARTICLE IV
	 	 	 	 

 

 

	 	 	 	 	 
	 	 	 	 	Page
	SECTION 4.01.
	 	Representations and Warranties of the Borrower	 	19
	 
	ARTICLE V
	 	 	 	 
	 
	SECTION 5.01.
	 	Affirmative Covenants	 	21
	 
	SECTION 5.02.
	 	Negative Covenants	 	23
	 
	SECTION 5.03.
	 	Financial Covenants	 	24
	 
	ARTICLE VI
	 	 	 	 
	 
	SECTION 6.01.
	 	Events of Default	 	25
	 
	ARTICLE VII
	 	 	 	 
	 
	SECTION 7.01.
	 	Guaranty; Limitation of Liability	 	27
	 
	SECTION 7.02.
	 	Guaranty Absolute	 	27
	 
	SECTION 7.03.
	 	Waiver	 	28
	 
	SECTION 7.04.
	 	Continuing Guaranty; Assignments	 	28
	 
	SECTION 7.05.
	 	Subrogation	 	28
	 
	ARTICLE VIII
	 	 	 	 
	 
	SECTION 8.01.
	 	Authorization and Action	 	29
	 
	SECTION 8.02.
	 	Agent’s Reliance, Etc.	 	29
	 
	SECTION 8.03.
	 	Citibank and Affiliates	 	29
	 
	SECTION 8.04.
	 	Lender Credit Decision	 	29
	 
	SECTION 8.05.
	 	Indemnification	 	29
	 
	SECTION 8.06.
	 	Successor Agent	 	30
	 
	SECTION 8.07.
	 	Other Agents	 	30
	 
	ARTICLE IX
	 	 	 	 
	 
	SECTION 9.01.
	 	Amendments, Etc.	 	30
	 
	SECTION 9.02.
	 	Notices, Etc.	 	31
	 
	SECTION 9.03.
	 	No Waiver; Remedies	 	31
	 
	SECTION 9.04.
	 	Costs and Expenses	 	31

 

 

	 	 	 	 	 
	 	 	 	 	Page
	SECTION 9.05.
	 	Right of Set-off	 	32
	 
	SECTION 9.06.
	 	Binding Effect	 	32
	 
	SECTION 9.07.
	 	Assignments and Participations	 	32
	 
	SECTION 9.08.
	 	Nondisclosure	 	34
	 
	SECTION 9.09.
	 	Governing Law	 	34
	 
	SECTION 9.10.
	 	Execution in Counterparts	 	35
	 
	SECTION 9.11.
	 	Jurisdiction, Etc.	 	35
	 
	SECTION 9.12.
	 	Waiver of Jury Trial	 	35

Schedules

Schedule I - List of Applicable Lending Offices

Schedule 3.01(a) - Material Adverse Changes

Schedule 3.01(b) - Disclosed Litigation

Schedule 5.02(a) - Existing Liens

Schedule 5.02(d) - Existing Subsidiary Debt

	 	 	 	 	 
	Exhibits
	 	 	 	 
	Exhibit A

	 	-
	 	Form of Note
	 
	 	 	 	 
	Exhibit B

	 	-
	 	Form of Notice of Borrowing
	 
	 	 	 	 
	Exhibit C

	 	-
	 	Form of Assignment and Acceptance
	 
	 	 	 	 
	Exhibit D

	 	-
	 	Form of Solvency Certificate
	 
	 	 	 	 
	Exhibit E

	 	-
	 	Form of Opinion of New York Counsel for the Loan Parties
	 
	 	 	 	 
	Exhibit F

	 	-
	 	Form of Opinion of Puerto Rico Counsel for the Loan Parties<PAGE>

                                                                     EXHIBIT 4.3

--------------------------------------------------------------------------------

                          SECOND SUPPLEMENTAL INDENTURE

                           DATED AS OF MARCH 16, 1999

                                       TO

                                    INDENTURE

                           DATED AS OF APRIL 10, 1992

                       -----------------------------------

                                     BETWEEN

                              GREYHOUND LINES, INC.

                                       AND

                 STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE

                       -----------------------------------

                8-1/2% CONVERTIBLE DEBENTURES DUE MARCH 31, 2007

--------------------------------------------------------------------------------

<PAGE>

         SECOND SUPPLEMENTAL INDENTURE, dated as of March 16, 1999 (this "Second
Supplemental Indenture"), between GREYHOUND LINES, INC., a Delaware corporation
(the "Company"), and STATE STREET BANK AND TRUST COMPANY, as trustee (the
"Trustee").

         WHEREAS, the Company and the Trustee (as successor to Shawmut Bank
Connecticut, N.A., formerly The Connecticut National Bank) entered into an
Indenture, dated as of April 10, 1992 as supplemented by the First Supplemental
Indenture dated as of December 22, 1994 (the "Indenture"), pursuant to which the
Company issued its 8-1/2% Convertible Subordinated Debentures due March 31, 2007
(the "Debentures"); and

         WHEREAS, pursuant to Section 1301 of the Indenture, Holders of the
Debentures presently have the right prior to Maturity to convert any Debenture
or Debentures into shares of Common Stock of the Company at the rate of 80.81
shares of Common Stock for each $1,000 principal amount of Debentures; and

         WHEREAS, pursuant to Section 1306 of the Indenture, in the case of any
merger of another person into the Company, the Debentures will be convertible
only into the kind and amount of securities, cash and other property receivable
in such merger by a holder of the number of shares of Common Stock of the
Company into which such Debentures might have been converted immediately prior
to such merger; and

         WHEREAS, the Company, Laidlaw Inc., a Canadian corporation ("Laidlaw")
and Laidlaw Transit Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Laidlaw ("Acquisition") have entered into the Amended and Restated
Agreement and Plan of Merger, dated as of November 5, 1998 (the "Merger
Agreement"), pursuant to which Acquisition will be merged with and into the
Company, with the Company being the surviving corporation ("Merger"); and

         WHEREAS, upon completion of the Merger, each share of Common Stock of
the Company will be converted into the right to receive $6.50 in cash; and

         WHEREAS, the Merger was completed on March 16, 1999; and

         WHEREAS, to establish the conversion rights of a Holder of Debentures
following the Merger and in accordance with Section 1306 of the Indenture, the
Company has agreed to execute and deliver this Second Supplemental Indenture;
and

         WHEREAS, the Company has complied with all the conditions and
requirements necessary under the Indenture to effect this Second Supplemental
Indenture, and the execution and delivery of this Second Supplemental Indenture
has been duly authorized in all respects by the Company;

         NOW, THEREFORE, in consideration of the above premises, the Company and
the Trustee agree, for the benefit of the other and for the equal and ratable
benefit of the Holders of the Debentures, as follows:

<PAGE>

                                   ARTICLE I

                             AMENDMENT OF INDENTURE

         Section 1.01  Amendment.  The Indenture is hereby amended as follows:

                  (a)      Notwithstanding anything to the contrary contained in
the Indenture, including Article Thirteen thereof, from and after the date of
this Second Supplemental Indenture, a Holder of any Debenture or Debentures
shall have the right to receive, upon conversion of such Debenture or Debentures
in accordance with the Indenture, an amount in cash equal to $525.27 for each
$1,000 principal amount of Debentures so converted.

                                   ARTICLE II

                            MISCELLANEOUS PROVISIONS

         Section 2.01 Terms Defined. For all purposes of this Second
Supplemental Indenture, except as otherwise defined or unless the context
otherwise requires, terms used in capitalized form in this Second Supplemental
Indenture and defined in the Indenture have the meanings specified in the
Indenture.

         Section 2.02 Indenture. Except as amended by this Second Supplemental
Indenture, the Indenture and the Debentures are in all respects ratified and
confirmed and all the terms shall remain in full force and effect. The Trustee
has no responsibility for correctness of the recitals of facts herein contained
which shall be taken as the statements of the Company, and makes no
representations as to the validity or sufficiency of this Second Supplemental
Indenture and shall incur no liability or responsibility in respect of the
validity thereof.

         Section 2.03 Governing Law. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

         Section 2.04 Successors. All agreements of the Company in this Second
Supplemental Indenture shall bind it successors. All agreements of the Trustee
in this Second Supplemental Indenture shall bind its successors.

         Section 2.05 Multiple Counterparts. The parties may sign multiple
counterparts of this Second Supplemental Indenture. Each signed counterpart
shall be deemed an original, but all of them together represent the same
agreement.

<PAGE>

                                   SIGNATURES

         IT WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed as of the date first written above.

                                             GREYHOUND LINES, INC.

                                             /s/ Craig R. Lentzsch
                                             -----------------------------
ATTEST:                                      Craig R. Lentzsch, President and
                                             Chief Executive Officer

/s/ Mark E. Southerst
-------------------------------------
Mark E. Southerst, Vice President and
General Counsel and Secretary

                                             STATE STREET BANK AND TRUST
                                             COMPANY, as Trustee

                                             By: /s/ Susan C. Merker
                                             -----------------------------------
ATTEST:                                      Name: Susan C. Merker
                                             Title: Vice President

By: /s/ Elizabeth C. Hammer
    ----------------------------------
Name: Elizabeth C. Hammer
Title: Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]