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EXHIBIT 10.26
COMMERCIAL PAPER DEALER AGREEMENT
4(2) PROGRAM
AMONG
TELECOMUNICACIONES DE PUERTO RICO, INC., AS ISSUER;
PUERTO RICO TELEPHONE COMPANY, INC AND CELULARES TELEFONICA, INC.,
AS GUARANTORS;
AND
XXXXXXX XXXXX XXXXXX INC., AS DEALER
CONCERNING NOTES TO BE ISSUED PURSUANT TO AN ISSUING AND PAYING
AGENCY AGREEMENT DATED AS OF NOVEMBER 9, 2000 BETWEEN THE ISSUER
AND THE CHASE MANHATTAN BANK, AS ISSUING AND PAYING AGENT
DATED AS OF
NOVEMBER 9, 2000
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COMMERCIAL PAPER DEALER AGREEMENT
4(2) PROGRAM
This agreement ("Agreement") sets forth the understandings among the
Issuer, the Guarantors and the Dealer in connection with the issuance and sale
by the Issuer of its short-term promissory notes through the Dealer (the
"Notes").
Each of the Guarantors, jointly and severally, has agreed
unconditionally and irrevocably to guarantee payment in full of the principal
and interest (if any) on all such Notes of the Issuer, pursuant to guarantees,
dated the date hereof, in the form of Exhibit C hereto (the "Guarantee").
Certain terms used in this Agreement are defined in Section 6
hereof.
The Addendum to this Agreement, and any Annexes or Exhibits
described in this Agreement or such Addendum, are hereby incorporated into this
Agreement and made fully a part hereof.
Section 1. Offers, Sales and Resales of Notes
1.1 While (i) the Issuer has and shall have no obligation to sell
the Notes to the Dealer or to permit the Dealer to arrange any sale of the Notes
for the account of the Issuer, and (ii) the Dealer has and shall have no
obligation to purchase the Notes from the Issuer or to arrange any sale of the
Notes for the account of the Issuer, the parties hereto agree that in any case
where the Dealer purchases Notes from the Issuer, or arranges for the sale of
Notes by the Issuer, such Notes will be purchased or sold by the Dealer in
reliance on the representations, warranties, covenants and agreements of the
Issuer contained herein or made pursuant hereto and on the terms and conditions
and in the manner provided herein.
1.2 So long as this Agreement shall remain in effect, and in
addition to the limitations contained in Section 1.7 hereof, the Issuer shall
not, without the consent of the Dealer, offer, solicit or accept offers to
purchase, or sell, any Notes except (a) in transactions with one or more dealers
which may from time to time after the date hereof become dealers with respect to
the Notes by executing with the Issuer one or more agreements which contain
provisions substantially identical to Section 1 of this Agreement, of which the
Issuer hereby undertakes to provide the Dealer prompt notice or (b) in
transactions with the other dealers listed on the Addendum hereto, which are
executing agreements with the Issuer which contain provisions substantially
identical to Section 1 of this Agreement contemporaneously herewith. In no event
shall the Issuer offer, solicit or accept offers to purchase, or sell, any Notes
directly on its own behalf in transactions with persons other than
broker-dealers as specifically permitted in this Section 1.2.
1.3 The Notes shall be in a minimum denomination or minimum amount,
whichever is applicable, of $250,000 or integral multiples of $1,000 in excess
thereof, will bear such interest rates, if interest bearing, or will be sold at
such discount from their face amounts, as shall be agreed upon by the Dealer and
the Issuer, shall have a maturity not exceeding 365 days from the date of
issuance (exclusive of days of grace) and shall not contain any provision for
extension, renewal or automatic "rollover."
1.4 The authentication, delivery and payment of the Notes shall be
effected in accordance with the Issuing and Paying Agency Agreement and the
Notes shall be either individual bearer physical certificates or represented by
book-entry Notes registered in the name of DTC or its nominee in the form or
forms annexed to the Issuing and Paying Agency Agreement.
1.5 If the Issuer and the Dealer shall agree on the terms of the
purchase of any Note by the Dealer or the sale of any Note arranged by the
Dealer (including, but not limited to, agreement with respect to the date of
issue, purchase price, principal amount, maturity and interest rate (in the case
of interest-bearing Notes) or discount thereof (in the case of Notes issued on a
discount basis), and appropriate
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compensation for the Dealer's services hereunder) pursuant to this Agreement,
the Issuer shall cause such Note to be issued and delivered in accordance with
the terms of the Issuing and Paying Agency Agreement and payment for such Note
shall be made by the purchaser thereof, either directly or through the Dealer,
to the Issuer. Except as otherwise agreed, in the event that the Dealer is
acting as an agent and a purchaser shall either fail to accept delivery of or
make payment for a Note on the date fixed for settlement, the Dealer shall
promptly notify the Issuer, and if the Dealer has theretofore paid the Issuer
for the Note, the Issuer will promptly return such funds to the Dealer against
its return of the Note to the Issuer, in the case of a certificated Note, and
upon notice of such failure in the case of a book-entry Note. If such failure
occurred for any reason other than default by the Dealer, the Issuer shall
reimburse the Dealer on an equitable basis for the Dealer's loss of the use of
such funds for the period such funds were credited to the Issuer's account.
1.6 The Dealer and the Issuer hereby establish and agree to observe
the following procedures in connection with offers, sales and subsequent resales
or other transfers of the Notes:
(a) Offers and sales of the Notes by or through the Dealer shall
be made only to the following types of investors: (i) investors
reasonably believed by the Dealer to be Institutional Accredited
Investors, (ii) non-bank fiduciaries or agents that will be
purchasing Notes for one or more accounts, each of which is an
Institutional Accredited Investor, and (iii) Qualified Institutional
Buyers.
(b) Resales and other transfers of the Notes by the holders
thereof shall be made only in accordance with the restrictions in
the legends described in clause (e) below.
(c) No general solicitation or general advertising shall be used
in connection with the offering of the Notes. Without limiting the
generality of the foregoing, without the prior written approval of
Dealer, the Issuer shall not issue any press release or place or
publish any "tombstone" or other advertisement relating to the
Notes.
(d) No sale of Notes to any one purchaser shall be for less than
$250,000 principal or face amount, and no Note shall be issued in a
smaller principal or face amount. If the purchaser is a non-bank
fiduciary acting on behalf of others, each person for whom such
purchaser is acting must purchase at least $250,000 principal or
face amount of Notes.
(e) Offers and sales of the Notes by the Issuer through the
Dealer acting as agent for the Issuer shall be made in accordance
with Rule 506 under the Securities Act, and shall be subject to the
restrictions described in the legend appearing on Exhibit A hereto.
A legend substantially to the effect of such Exhibit A shall appear
as part of the Private Placement Memorandum used in connection with
offers and sales of Notes hereunder, as well as on each Note offered
and sold pursuant to this Agreement.
(f) Dealer shall furnish or shall have furnished to each
purchaser of Notes being sold to an ultimate purchaser for the first
time a copy of the then-current Private Placement Memorandum unless
such purchaser has previously received a copy of the Private
Placement Memorandum as then in effect. The Private Placement
Memorandum shall expressly state that any person to whom Notes are
offered shall have an opportunity to ask questions of, and receive
information from, the Issuer and the Dealer and shall provide the
names, addresses and telephone numbers of the persons from whom
information regarding the Issuer may be obtained.
(g) The Issuer agrees, for the benefit of the Dealer and each of
the holders and prospective purchasers from time to time of the
Notes that, if at any time the Issuer shall not be subject to
Section 13 or 15(d) of the Exchange Act, the Issuer will furnish,
upon request and at its expense, to the Dealer and to holders and
prospective purchasers of Notes information required by Rule
144A(d)(4)(i) in compliance with Rule 144A(d).
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(h) In the event that any Note offered or to be offered by Dealer
would be ineligible for resale under Rule 144A, the Issuer shall
immediately notify Dealer (by telephone, confirmed in writing) of
such fact and shall promptly prepare and deliver to Dealer an
amendment or supplement to the Private Placement Memorandum
describing the Notes that are ineligible, the reason for such
ineligibility and any other relevant information relating thereto.
(i) The Issuer represents that it is not currently issuing
commercial paper in the United States market in reliance upon, and
in compliance with, the exemption provided by Section 3(a)(3) of the
Securities Act. In the event the issuer launches a 3(a)(3)
commercial paper program, the Issuer agrees that (a) the proceeds
from the sale of the Notes will be segregated from the proceeds of
the sale of any such commercial paper by being placed in a separate
account; (b) the Issuer will institute appropriate corporate
procedures to ensure that the offers and sales of notes issued by
the Issuer pursuant to the Section 3(a)(3) exemption are not
integrated with offerings and sales of Notes hereunder; and (c) the
Issuer will comply with each of the requirements of Section 3(a)(3)
of the Act in selling commercial paper or other short-term debt
securities other than the Notes in the United States.
1.7 The Issuer hereby represents and warrants to the Dealer, in
connection with offers, sales and resales of Notes, as follows:
(a) Issuer hereby confirms to the Dealer that (except as
permitted by Section 1.6(i)) within the preceding six months neither
the Issuer nor any person other than the Dealer or the other dealers
referred to in Section 1.2 hereof acting on behalf of the Issuer has
offered or sold any Notes, or any substantially similar security of
the Issuer (including, without limitation, medium-term notes issued
by the Issuer), to, or solicited offers to buy any such security
from, any person other than the Dealer or the other dealers referred
to in Section 1.2 hereof. The Issuer also agrees that, as long as
the Notes are being offered for sale by the Dealer and the other
dealers referred to in Section 1.2 hereof as contemplated hereby and
until at least six months after the offer of Notes hereunder has
been terminated, neither the Issuer nor any person other than the
Dealer or the other dealers referred to in Section 1.2 hereof
(except as contemplated by Section 1.2 hereof) will offer the Notes
or any substantially similar security of the Issuer for sale to, or
solicit offers to buy any such security from, any person other than
the Dealer and the other dealers referred to in Section 1.2 hereof,
it being understood that such agreement is made with a view to
bringing the offer and sale of the Notes within the exemption
provided by Section 4(2) of the Securities Act and Rule 506
thereunder and shall survive any termination of this Agreement. The
Issuer hereby represents and warrants that it has not taken or
omitted to take, and will not take or omit to take, any action that
would cause the offering and sale of Notes hereunder to be
integrated with any other offering of securities, whether such
offering is made by the Issuer or some other party or parties.
(b) The Issuer represents and agrees that the proceeds of the
sale of the Notes are not currently contemplated to be used for the
purpose of buying, carrying or trading securities within the meaning
of Regulation T and the interpretations thereunder by the Board of
Governors of the Federal Reserve System. In the event that the
Issuer determines to use such proceeds for the purpose of buying,
carrying or trading securities, whether in connection with an
acquisition of another company or otherwise, the Issuer shall give
the Dealer at least five business days' prior written notice to that
effect. The Issuer shall also give the Dealer prompt notice of the
actual date that it commences to purchase securities with the
proceeds of the Notes. Thereafter, in the event that the Dealer
purchases Notes as principal and does not resell such Notes on the
day of such purchase, to the extent necessary to comply with
Regulation T and the interpretations thereunder, the Dealer will
sell such Notes only to offerees it reasonably believes to be QIBs
or to QIBs it reasonably believes are acting for other QIBs, in each
case in accordance with Rule 144A.
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Section 2. Representations and Warranties of Issuer
The Issuer, with respect to Sections 2.1 through 2.10, and each of the
Guarantors, with respect to Sections 2.11 through 2.17, represents and warrants
that:
2.1 The Issuer is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all the requisite power and authority to execute, deliver and perform its
obligations under the Notes, this Agreement and the Issuing and Paying Agency
Agreement.
2.2 This Agreement and the Issuing and Paying Agency Agreement have
been duly authorized, executed and delivered by the Issuer and constitute legal,
valid and binding obligations of the Issuer enforceable against the Issuer in
accordance with their terms subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
2.3 The Notes have been duly authorized, and when issued and
delivered as provided in the Issuing and Paying Agency Agreement, will be duly
and validly issued and delivered and will constitute legal, valid and binding
obligations of the Issuer enforceable against the Issuer in accordance with
their terms subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
2.4 The offer and sale of Notes in the manner contemplated hereby do
not require registration of the Notes under the Securities Act, pursuant to the
exemption from registration contained in Section 4(2) thereof and Regulation D
thereunder, and no indenture in respect of the Notes is required to be qualified
under the Trust Indenture Act of 1939, as amended.
2.5 The Notes will rank at least pari passu with all other unsecured
and unsubordinated indebtedness of the Issuer.
2.6 No consent or action of, or filing or registration with, any
governmental or public regulatory body or authority, including the SEC, is
required to authorize, or is otherwise required in connection with the
execution, delivery or performance of, this Agreement, the Notes or the Issuing
and Paying Agency Agreement, except as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Notes.
2.7 Neither the execution and delivery of this Agreement and the
Issuing and Paying Agency Agreement, nor the issuance and delivery of the Notes
in accordance with the Issuing and Paying Agency Agreement, nor the fulfillment
of or compliance with the terms and provisions hereof or thereof by the Issuer,
will (i) result in the creation or imposition of any mortgage, lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Issuer, or (ii) violate or result in a breach or an event of default under any
of the terms of the Issuer's charter documents or by-laws, any contract or
instrument to which the Issuer is a party or by which it or its property is
bound, or any law or regulation, or any order, writ, injunction or decree of any
court or government instrumentality, to which the Issuer is subject or by which
it or its property is bound, which breach or event of default might have a
material adverse effect on the condition (financial or otherwise), operations or
business prospects of the Issuer or the ability of the Issuer to perform its
obligations under this Agreement, the Notes or the Issuing and Paying Agency
Agreement.
2.8 There is no litigation or governmental proceeding pending, or to
the knowledge of the Issuer threatened, against or affecting the Issuer or any
of its subsidiaries which might result in a material adverse change in the
condition (financial or otherwise), operations or business prospects of the
Issuer or the ability of the Issuer to perform its obligations under this
Agreement, the Notes or the Issuing and Paying Agency Agreement.
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2.9 The Issuer is not an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
2.10 Neither the Private Placement Memorandum nor the Company
Information contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
2.11 Each of the Guarantors is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all the requisite power and authority to execute, deliver
and perform its respective obligations under the Guarantees, this Agreement and
the Issuing and Paying Agency Agreement.
2.12 This Agreement, the Issuing and Paying Agency Agreement and the
Guarantees have been duly authorized, executed and delivered by each of the
Guarantors and constitute legal, valid and binding obligations of the Guarantors
enforceable against the Guarantors in accordance with their terms subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally, and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law) and except as enforceability of the indemnification provisions of this
Agreement may be limited by federal securities laws.
2.13 No consent or action of, or filing or registration with, any
governmental or public regulatory body or authority, including the SEC, is
required to authorize, or is otherwise required in connection with the
execution, delivery or performance by the Guarantors of, this Agreement, the
Guarantees or the Issuing and Paying Agency Agreement, except as may be required
by the securities or Blue Sky laws of the various states in connection with the
offer and sale of the Notes.
2.14 Neither the execution and delivery by the Guarantors of this
Agreement, the Issuing and Paying Agency Agreement and the Guarantees, nor the
fulfillment of or compliance with the terms and provisions hereof or thereof by
each of the Guarantors, will (i) result in the creation or imposition of any
mortgage, lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Guarantors, or (ii) violate or result in a breach or
an event of default under any of the terms of the Guarantors' charter documents
or by-laws, any contract or instrument to which each of the Guarantors is a
party or by which it or its property is bound, or any law or regulation, or any
order, writ, injunction or decree of any court or government instrumentality, to
which each of the Guarantors is subject or by which it or its property is bound,
which breach or event of default might have a material adverse effect on the
condition (financial or otherwise), operations or business prospects of each of
the Guarantors or the ability of either Guarantor to perform its obligations
under this Agreement, the Guarantees or the Issuing and Paying Agency Agreement.
2.15 Neither of the Guarantors is an "investment company" or an
entity "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
2.16 The information concerning the Guarantors contained in the
Private Placement Memorandum does not contain any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
2.17 The Guarantees do not require registration under the Securities
Act, pursuant to the exemption from registration contained in Section 4(2)
thereof.
2.18 Each (a) issuance of Notes by the Issuer hereunder and (b)
amendment or supplement of the Private Placement Memorandum shall be deemed a
representation and warranty by each of the Issuer and the Guarantors (as to
itself) to the Dealer, as of the date thereof, that, both before and after
giving effect
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to such issuance and after giving effect to such amendment or supplement, (i)
the representations and warranties given by the Issuer and the Guarantors set
forth above in this Section 2 remain true and correct on and as of such date as
if made on and as of such date, (ii) in the case of an issuance of Notes, the
Notes being issued on such date have been duly and validly issued and constitute
legal, valid and binding obligations of the Issuer, enforceable against the
Issuer in accordance with their terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (iii) in the case
of an issuance of Notes, since the date of the most recent Private Placement
Memorandum, there has been no material adverse change in the condition
(financial or otherwise), operations or business prospects of the Issuer or the
Guarantors which would impact the ability of the Issuer or either of the
Guarantors to perform its obligations under the Notes or the Guarantees, as the
case may be, and which has not been disclosed to the Dealer in writing.
Section 3. Covenants and Agreements of Issuer
The Issuer covenants and agrees that:
3.1 The Issuer will give the Dealer prompt notice (but in any event
prior to any subsequent issuance of Notes hereunder) of any amendment to,
modification of, or waiver with respect to, the Notes or the Issuing and Paying
Agency Agreement, including a complete copy of any such amendment, modification
or waiver.
3.2 The Issuer shall, whenever there shall occur any change in the
Issuer's condition (financial or otherwise), operations or business prospects or
any development or occurrence in relation to the Issuer that would be material
to holders of the Notes or potential holder of the Notes (including any
downgrading or receipt of any notice of intended or potential downgrading or any
review for potential change in the rating accorded any of the Issuer's
securities by any nationally recognized statistical rating organization which
has published a rating of the Notes), promptly, and in any event prior to any
subsequent issuance of Notes hereunder, notify the Dealer (by telephone,
confirmed in writing) of such change, development, or occurrence.
3.3 The Issuer shall from time to time furnish to the Dealer such
information as the Dealer may reasonably request, including, without limitation,
any press releases or material provided by the Issuer to any national securities
exchange or rating agency, regarding (i) the Issuer's operations and financial
condition, (ii) the due authorization and execution of the Notes, and (iii) the
Issuer's ability to pay the Notes as they mature.
3.4 The Issuer will take all such action as the Dealer may
reasonably request to ensure that each offer and each sale of the Notes will
comply with any applicable state Blue Sky laws; provided, that the Issuer shall
not be obligated to file any general consent to service of process or to qualify
as a foreign corporation in any jurisdiction in which it is not so qualified or
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject.
3.5 The Issuer will not be in default of any of its obligations
hereunder, under the Notes or under the Issuing and Paying Agency Agreement, at
any time that any of the Notes are outstanding.
3.6 The Issuer shall not issue Notes hereunder until the Dealer
shall have received (a) an opinion of counsel to the Issuer, addressed to the
Dealer, satisfactory in form and substance to the Dealer, (b) an opinion of
counsel to the Guarantors, addressed to the Dealer, satisfactory in form and
substance to the Dealer, (c) copies of the executed Guarantees, (d) a copy of
the executed Issuing and Paying Agency Agreement as then in effect, (e) a copy
of resolutions adopted by the Board of Directors of the Issuer, satisfactory in
form and substance to the Dealer and certified by the Secretary or similar
officer of the Issuer, authorizing execution and delivery by the Issuer of this
Agreement the Issuing and Paying Agency Agreement and the Notes and consummation
by the Issuer of the transactions contemplated hereby and
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thereby, (f) copies of resolutions adopted by the Board of Directors of the
Guarantors, satisfactory in form and substance to the Dealer and certified by
the Secretary or similar officer of each of the Guarantors authorizing the
execution and delivery by each of the Guarantors of this Agreement and the
Guarantees, and consummation by each of the Guarantors of the transactions
contemplated hereby and thereby, (g) prior to the issuance of any Notes
represented by a book-entry note registered in the name of DTC or its nominee, a
copy of the executed Letter of Representations among the Issuer, the Issuing and
Paying Agent and DTC and (h) such other certificates, opinions, letters and
documents as the Dealer shall have reasonably requested.
Section 4. Disclosure
4.1 The Private Placement Memorandum and its contents (other than
the Dealer Information) shall be the sole responsibility of the Issuer. The
Private Placement Memorandum shall contain a statement expressly offering an
opportunity for each prospective purchaser to ask questions of, and receive
answers from, the Issuer concerning the offering of Notes and to obtain relevant
additional information which the Issuer possesses or can acquire without
unreasonable effort or expense.
4.2 The Issuer agrees promptly to furnish the Dealer the Company
Information as it becomes available.
4.3 (a) The Issuer further agrees to notify the Dealer promptly upon
the occurrence of any event relating to or affecting the Issuer that would cause
the Company Information then in existence to include an untrue statement of
material fact or to omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they are
made, not misleading.
(b) In the event that the Issuer gives the Dealer notice
pursuant to Section 4.3(a) and the Dealer notifies the Issuer that it then has
Notes it is holding in inventory, the Issuer agrees promptly to supplement or
amend the Private Placement Memorandum so that such Private Placement
Memorandum, as amended or supplemented, when taken together with the Company
Information, shall not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, and the
Issuer shall make such supplement or amendment available to the Dealer.
(c) In the event that (i) the Issuer gives the Dealer notice
pursuant to Section 4.3(a) and (ii) the Dealer does not notify the Issuer that
it is then holding Notes in inventory and (iii) the Issuer chooses not to
promptly amend or supplement the Private Placement Memorandum in the manner
described in clause (b) above, then all solicitations and sales of Notes shall
be suspended until such time as the Issuer has so amended or supplemented the
Private Placement Memorandum, and made such amendment or supplement available to
the Dealer.
4.4 The Issuer agrees that it shall not have outstanding at any time
Notes issued in aggregate amount in excess of the authorized amount of the
Guarantees.
Section 5. Indemnification and Contribution
5.1 The Issuer will indemnify and hold harmless the Dealer, each
individual, corporation, partnership, trust, association or other entity
controlling the Dealer, any affiliate of the Dealer or any such controlling
entity and their respective directors, officers, employees, partners,
incorporators, shareholders, servants, trustees and agents (hereinafter the
"Indemnitees") against any and all liabilities, penalties, suits, causes of
action, losses, damages, claims, costs and expenses (including, without
limitation, fees and disbursements of counsel) or judgments of whatever kind or
nature (each a "Claim"), imposed upon, incurred by or asserted against the
Indemnitees arising out of or based upon (i) any allegation that the
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Private Placement Memorandum or the Company Information included (as of any
relevant time) or includes an untrue statement of a material fact or omitted (as
of any relevant time) or omits to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. This indemnification shall not apply to the extent that the
Claim arises out of or is based upon Dealer Information. In addition, this
indemnification shall not inure to the benefit of the Dealer (or to the benefit
of any person controlling the Dealer) on account of any losses, claims, damages
or liabilities from the sale any Notes by the Dealer to any investor if a copy
of the Private Placement Memorandum (as amended or supplemented, if prior to
distribution of the Private Placement Memorandum by the Dealer to such investor,
the Issuer shall have made any supplements or amendments which have been
furnished to the Dealer) shall not have been sent or given by or on behalf of
the Dealer to such investor at or prior to the written confirmation of the sale
of the Notes to such investor and such statement or omission is cured in the
Private Placement Memorandum.
5.2 Provisions relating to claims made for indemnification under
this Section 5 are set forth on Exhibit B to this Agreement.
5.3 In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 5 is
held to be unavailable or insufficient to hold harmless the Indemnitees,
although applicable in accordance with the terms of this Section 5, the Issuer
shall contribute to the aggregate costs incurred by the Dealer in connection
with any Claim in the proportion of the respective economic interests of the
Issuer and the Dealer; provided, however, that such contribution by the Issuer
shall be in an amount such that the aggregate costs incurred by the Dealer do
not exceed the aggregate of the commissions and fees earned by the Dealer
hereunder with respect to the issue or issues of Notes to which such Claim
relates. The respective economic interests shall be calculated by reference to
the aggregate proceeds to the Issuer of the Notes issued hereunder and the
aggregate commissions and fees earned by the Dealer hereunder. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
Section 6. Definitions
6.1 "Claim" shall have the meaning set forth in Section 5.1.
6.2 "Company Information" at any given time shall mean the Private
Placement Memorandum together with, to the extent applicable, (i) the Issuer's
most recent report on Form 10-K filed with the SEC and each report on Form 10-Q
or 8-K filed by the Issuer with the SEC since the most recent Form 10-K, (ii)
the Issuer's most recent annual audited financial statements and each interim
financial statement or report prepared subsequent thereto, if not included in
item (i) above, and (iii) the Issuer's and its affiliates' other publicly
available recent reports, including, but not limited to, any publicly available
filings or reports provided to their respective shareholders. For the purposes
of this Agreement, any statement contained in any Company Information shall be
deemed to be modified or superseded to the extent that a statement contained in
any then available Company Information subsequent to such statement modifies or
supersedes such statement; and such statement shall not be deemed to be Company
Information except as so modified or superseded.
6.3 "Dealer" shall mean Xxxxxxx Xxxxx Xxxxxx Inc.
6.4 "Dealer Information" shall mean material concerning the Dealer
and provided by the Dealer in writing expressly for inclusion in the Private
Placement Memorandum.
6.5 "DTC" shall mean The Depository Trust Company.
6.6 "Exchange Act" shall mean the U.S. Securities Exchange Act of
1934, as amended.
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6.7 "Indemnitee" shall have the meaning set forth in Section 5.1.
6.8 "Institutional Accredited Investor" shall mean an institutional
investor that is an accredited investor within the meaning of Rule 501 under the
Securities Act and that has such knowledge and experience in financial and
business matters that it is capable of evaluating and bearing the economic risk
of an investment in the Notes, including, but not limited to, a bank, as defined
in Section 3(a)(2) of the Securities Act, or a savings and loan association or
other institution, as defined in Section 3(a)(5)(A) of the Securities Act,
whether acting in its individual or fiduciary capacity.
6.9 "Issuing and Paying Agency Agreement" shall mean the issuing and
paying agency agreement described on the cover page of this Agreement, as such
agreement may be amended or supplemented from time to time.
6.10 "Issuing and Paying Agent" shall mean the party designated as
such on the cover page of this Agreement, as issuing and paying agent under the
Issuing and Paying Agency Agreement.
6.11 "Non-bank fiduciary or agent" shall mean a fiduciary or agent
other than (a) a bank, as defined in Section 3(a)(2) of the Securities Act, or
(b) a savings and loan association, as defined in Section 3(a)(5)(A) of the
Securities Act.
6.12 "Private Placement Memorandum" shall mean offering materials
prepared in accordance with Section 4 (including materials referred to therein
or incorporated by reference therein) provided to purchasers and prospective
purchasers of the Notes, and shall include amendments and supplements thereto
which may be prepared from time to time in accordance with this Agreement (other
than any amendment or supplement that has been completely superseded by a later
amendment or supplement).
6.13 "Qualified Institutional Buyer" shall have the meaning assigned
to that term in Rule 144A under the Securities Act.
6.14 "Rule 144A" shall mean Rule 144A under the Securities Act.
6.15 "SEC" shall mean the U.S. Securities and Exchange Commission.
6.16 "Securities Act" shall mean the U.S. Securities Act of 1933, as
amended.
Section 7. General
7.1 Unless otherwise expressly provided herein, all notices under
this Agreement to parties hereto shall be in writing and shall be effective when
received at the address of the respective party set forth in the Addendum to
this Agreement.
7.2 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to its conflict of laws
provisions.
7.3 The Issuer and the Guarantors each agrees that any suit, action
or proceeding brought by the Issuer or the Guarantors against the Dealer in
connection with or arising out of this Agreement or the Notes or the offer and
sale of the Notes shall be brought solely in the United States federal courts
located in the borough of Manhattan or the courts of the State of New York
located in the Borough of Manhattan. EACH OF THE DEALER AND THE ISSUER AND THE
GUARANTORS WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
7.4 This Agreement may be terminated, at any time, by the Issuer or
the Guarantors, upon one
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business day's prior notice to such effect to the Dealer, or by the Dealer upon
one business day's prior notice to such effect to the Issuer or the Guarantors.
Any such termination, however, shall not affect the obligations of the Issuer or
the Guarantors under Sections 5 and 7.3 hereof or the respective
representations, warranties, agreements, covenants, rights or responsibilities
of the parties made or arising prior to the termination of this Agreement.
7.5 This Agreement is not assignable by any party hereto without the
written consent of the other parties; provided, however, that the Dealer may
assign its rights and obligations under this Agreement to any affiliate.
7.6 This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
7.7 This Agreement is for the exclusive benefit of the parties
hereto, and their respective permitted successors and assigns hereunder, and
shall not be deemed to give any equitable or legal right; remedy or claim to any
other person whatsoever.
7.8 Any payments in respect of the Notes, the Guarantees or to the
Dealer hereunder, whether pursuant to Sections 5.1 or otherwise, shall be in US
dollars and shall be free of all withholding, stamp and other similar taxes and
of all other governmental charges of any nature whatsoever. In the event any
withholding is required by law, the Issuer and the Guarantors each agrees to (i)
pay the same and (ii) pay such additional amounts to the holders of the Notes or
to the Dealer which, after deduction of any such withholding, stamp or other
taxes or governmental charges of any nature whatsoever imposed with respect to
the payment of such additional amount, shall equal the amount withheld pursuant
to clause (i).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date and year first above written.
TELECOMUNICACIONES DE PUERTO RICO, INC.,
AS ISSUER
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
PUERTO RICO TELEPHONE COMPANY, INC.,
AS GUARANTOR
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
CELULARES TELEFONICA, INC.,
AS GUARANTOR
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
XXXXXXX XXXXX BARNEY INC., AS DEALER
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Director
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ADDENDUM
1. The other dealers referred to in clause (b) of Section 1.2 of the
Agreement are Bank of America Securities, Xxxxxxx Xxxxx Money Markets Inc.,
Xxxxxxx Xxxxx, Pierce, Fenner, and Xxxxx Incorporated and Popular Securities,
Inc.
2. The following Section 3.8 is hereby added to the Agreement:
3.8 Without limiting any obligation of the Issuer pursuant to this
Agreement to provide the Dealer with credit and financial
information, the Issuer hereby acknowledges and agrees that the
Dealer may share the Company Information and any other information
or matters relating to the Issuer or the transactions contemplated
hereby with affiliates of the Dealer, including, but not limited to
Xxxxxxx Xxxxx Money Markets Inc. and that such affiliates may
likewise share information relating to the Issuer or such
transactions with the Dealer.
3. The addresses of the respective parties for purposes of notices
under Section 7.1 are as follows:
For the Issuer & the Guarantors:
Telecomunicaciones de Puerto Rico, Inc.
X.X. Xxx 000000
Xxx Xxxx, Xxxxxx Xxxx 00000-0000
Attention: Xx. Xxxxxx X. Casablanca
Telephone number: (000) 000-0000
Fax number: (000) 000-0000
For the Dealer:
Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Money Markets Origination
Telephone number: (000) 000-0000
Fax number: (000) 000-0000
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EXHIBIT A
FORM OF LEGEND FOR
PRIVATE PLACEMENT MEMORANDUM AND NOTES
THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY OTHER APPLICABLE
SECURITIES LAW, AND OFFERS AND SALES THEREOF MAY BE MADE ONLY
IN COMPLIANCE WITH AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER
WILL BE DEEMED TO REPRESENT THAT IT HAS BEEN AFFORDED AN
OPPORTUNITY TO INVESTIGATE MATTERS RELATING TO THE ISSUER AND
THE NOTES, THAT IT IS NOT ACQUIRING SUCH NOTE WITH A VIEW TO
ANY DISTRIBUTION THEREOF AND THAT IT IS EITHER (A) AN
INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN
THE MEANING OF RULE 501(a) UNDER THE ACT AND POSSESSES SUCH
KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS
THAT IS CAPABLE OF EVALUATING AND BEARING THE ECONOMIC RISK OF
AN INVESTMENT IN THE NOTES (AN "INSTITUTIONAL ACCREDITED
INVESTOR" AND THAT EITHER IS PURCHASING NOTES FOR ITS OWN
ACCOUNT, IS A U.S. BANK (AS DEFINED IN SECTION 3(a)(2) OF THE
ACT) OR A SAVINGS AND LOAN ASSOCIATION OR OTHER INSTITUTION
(AS DEFINED IN SECTION 3(a)(5)(A) OF THE ACT) ACTING IN ITS
INDIVIDUAL OR FIDUCIARY CAPACITY OR IS A FIDUCIARY OR AGENT
(OTHER THAN A U.S. BANK OR SAVINGS AND LOAN) PURCHASING NOTES
FOR ONE OR MORE ACCOUNTS EACH OF WHICH IS SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR (i) WHICH ITSELF POSSESSES
SUCH KNOWLEDGE AND EXPERIENCE OR (ii) WITH RESPECT TO WHICH
SUCH PURCHASER HAS SOLE INVESTMENT DISCRETION; OR (B) A
QUALIFIED INSTITUTIONAL BUYER ("QIB") WITHIN THE MEANING OF
RULE 144A UNDER THE ACT WHICH IS ACQUIRING NOTES FOR ITS OWN
ACCOUNT OR FOR ONE OR MORE ACCOUNTS, EACH OF WHICH IS A QIB
AND WITH RESPECT TO EACH OF WHICH THE PURCHASER HAS SOLE
INVESTMENT DISCRETION; AND THE PURCHASER ACKNOWLEDGES THAT IT
IS AWARE THAT THE SELLER MAY RELY UPON THE EXEMPTION FROM THE
REGISTRATION PROVISIONS OF SECTION 5 OF THE ACT PROVIDED BY
RULE 144A. BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER THEREOF
SHALL ALSO BE DEEMED TO AGREE THAT ANY RESALE OR OTHER
TRANSFER THEREOF WILL BE MADE ONLY (A) IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE ACT, EITHER (1) TO THE ISSUER OR
TO XXXXXXX XXXXX XXXXXX INC. OR ANOTHER PERSON DESIGNATED BY
THE ISSUER AS A PLACEMENT AGENT FOR THE NOTES (COLLECTIVELY,
THE "PLACEMENT AGENTS"), NONE OF WHICH SHALL HAVE ANY
OBLIGATION TO ACQUIRE SUCH NOTE, (2) THROUGH A PLACEMENT AGENT
TO AN INSTITUTIONAL ACCREDITED INVESTOR OR A QIB BY A
PLACEMENT AGENT, OR (3) TO A QIB IN A TRANSACTION THAT MEETS
THE REQUIREMENTS OF RULE 144A AND (B) IN MINIMUM AMOUNTS OF
$250,000.
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EXHIBIT B
FURTHER PROVISIONS RELATING
TO INDEMNIFICATION
(a) The Issuer agrees to reimburse each Indemnitee for all expenses
(including reasonable fees and disbursements of internal and external counsel)
as they are incurred by it in connection with investigating or defending any
loss, claim, damage, liability or action in respect of which indemnification may
be sought under Section 5 of the Agreement (whether or not it is a party to any
such proceedings).
(b) Promptly after receipt by an Indemnitee of notice of the
existence of a Claim, such Indemnitee will, if a claim in respect thereof is to
be made against the Issuer, notify the Issuer in writing of the existence
thereof; provided that (i) the omission so to notify the Issuer will not relieve
it from any liability which it may have hereunder unless and except to the
extent it did not otherwise learn of such Claim and such failure results in the
forfeiture by the Issuer of substantial rights and defenses, and (ii) the
omission so to notify the Issuer will not relieve it from liability which it may
have to an Indemnitee otherwise than on account of this indemnity agreement. In
case any such Claim is made against any Indemnitee and it notifies the Issuer of
the existence thereof, the Issuer will be entitled to participate therein, and
to the extent that it may elect by written notice delivered to the Indemnitee,
to assume the defense thereof, with counsel reasonably satisfactory to such
Indemnitee; provided that if the defendants in any such Claim include both the
Indemnitee and the Issuer, and the Indemnitee shall have concluded that there
may be legal defenses available to it which are different from or additional to
those available to the Issuer, the Issuer shall not have the right to direct the
defense of such Claim on behalf of such Indemnitee, and the Indemnitee shall
have the right to select separate counsel to assert such legal defenses on
behalf of such Indemnitee. Upon receipt of notice from the Issuer to such
Indemnitee of the Issuer's election so to assume the defense of such Claim and
approval by the Indemnitee of counsel, the Issuer will not be liable to such
Indemnitee for expenses incurred thereafter by the Indemnitee in connection with
the defense thereof (other than reasonable costs of investigation) unless (i)
the Indemnitee shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the Issuer shall not be liable for
the expenses of more than one separate counsel (in addition to any local counsel
in the jurisdiction in which any Claim is brought), approved by the Dealer,
representing the Indemnitee who is party to such Claim), (ii) the Issuer shall
not have employed counsel reasonably satisfactory to the Indemnitee to represent
the Indemnitee within a reasonable time after notice of existence of the Claim
or (iii) the Issuer has authorized in writing the employment of counsel for the
Indemnitee. The indemnity, reimbursement and contribution obligations of the
Issuer hereunder shall be in addition to any other liability the Issuer may
otherwise have to an Indemnitee and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Issuer and any Indemnitee. The Issuer agrees that without the Dealer's prior
written consent, it will not settle, compromise or consent to the entry of any
judgment in any Claim in respect of which indemnification may be sought under
the indemnification provision of the Agreement (whether or not the Dealer or any
other Indemnitee is an actual or potential party to such Claim), unless such
settlement, compromise or consent includes an unconditional release of each
Indemnitee from all liability arising out of such Claim. The Dealer agrees that
without the Issuer's prior written consent, which consent will not be
unreasonably withheld, it will not settle, compromise or consent to the entry of
any judgment in any Claim in respect of which indemnification may be sought
under the indemnification provision of the Agreement (whether or not the Issuer
is an actual or potential party to such Claim).
