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EXHIBIT 10.17
TAG-ALONG AGREEMENT
This Tag-Along Agreement is made as of March 2, 1999, by and among GTE
Holdings (Puerto Rico) LLC, a Delaware limited liability company ("Purchaser"),
GTE International Telecommunications Incorporated, a Delaware corporation and
the sole holder of equity interests of Purchaser ("Strategic Purchaser"), and
the Trust of the Employee Stock Ownership Plan of Telecomunicaciones de Puerto
Rico, Inc. (the "Trust"), with reference to the following facts:
A. Purchaser is the registered and beneficial owner of 40.01% plus one
share of the total issued and outstanding shares, par value $0.01 per share (the
"Shares"), of Telecomunicaciones de Puerto Rico, Inc., a Puerto Rico corporation
(the "Company"), and has an option to acquire an additional 15% of the Shares of
the Company.
B. The Trust was established to fund benefits under the Employee Stock
Ownership Plan of Telecomunicaciones de Puerto Rico, Inc. and has agreed to
purchase 30,000 Shares from the Puerto Rico Telephone Authority, subject to
Purchaser's and Strategic Purchaser's entering into this Agreement.
C. As used in this Agreement, the term "Seller" means Purchaser, Strategic
Purchaser, and the GTE Permitted Transferees (as defined in Section 1, below).
NOW, THEREFORE, it is agreed by and among the parties as follows:
1. In the event that Purchaser, Strategic Purchaser and/or their GTE
Permitted Transferees (as such term is defined in that
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certain Shareholders Agreement (the "Shareholders Agreement") dated as of March
2, 1999, by and among Purchaser, Strategic Purchaser, the Company, Popular Inc.,
a Puerto Rico corporation, and Puerto Rico Telephone Authority), as applicable,
proposes to, directly or indirectly, sell or otherwise dispose of (any such
event, a "Transfer") any Shares or Purchaser Interests (as such term is defined
in the Shareholders Agreement), as applicable, other than to GTE Permitted
Transferees (the "Offered Shares") in one or a series of related transactions,
which (i) in the aggregate comprise (directly or indirectly) over 7.5% of the
total number of outstanding Shares of the Company or (ii) would result in the
transferee and its affiliates owning, directly or indirectly, over 20% of the
Shares, such Sellers shall promptly give written notice to the Trust at least 20
days prior to the closing of such proposed sale. The notice (the "Tag-Along
Notice") shall describe in reasonable detail the proposed Transfer, including,
without limitation, the name of the buyer, the number of Shares to be directly
or indirectly Transferred by the Seller, the per Share sale price, any other
significant terms of such sale and the date such proposed sale will be
consummated.
2. The Trust shall have the right, exercisable upon written notice to the
Sellers, within 15 days after receipt of the Tag-Along Notice, to participate in
such sale, by selling a pro rata portion of the lesser of (i) 30,000 Shares or
(ii) the aggregate number of Shares then owned by it (the "Trust Shares") to the
buyer on the same terms and conditions as set forth in the Tag-Along Notice, as
determined in accordance with the calculation set forth below (a "Tag-Along
Transaction"). If the Trust elects to participate in the sale described in the
Tag-Along Notice, the Trust shall indicate in its notice of election
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to the Sellers the maximum number of Trust Shares it desires to sell in
connection with such sale. To the extent the Trust exercises such right of
participation in accordance with the terms and conditions set forth in this
Agreement, and the buyer agrees to purchase the Trust Shares indicated by the
Trust in its notice of election, the Trust may sell the same percentage of its
Trust Shares as the Sellers are selling (the "pro rata portion"). In the event
the buyer does not agree to purchase the Trust's Shares in addition to the
Sellers' Shares, the number of Shares or Purchaser Interests, as applicable,
that the Sellers may sell in the transaction shall be correspondingly reduced by
the number of Trust Shares entitled to be sold by the Trust. In this event, the
"pro rata portion" of the Trust shall be the Trust Shares multiplied by a
fraction, (i) the numerator of which is the number of Shares proposed to be,
directly or indirectly, sold by Sellers in the Tag-Along Notice and (ii) the
denominator of which is the sum of (A) the total number of Shares, directly or
indirectly, owned by the Sellers immediately prior to the sale proposed in the
Tag-Along Notice and (B) the Trust Shares owned by the Trust immediately prior
to the sale proposed in the Tag-Along Notice. In the event that the Tag-Along
Transaction involves the sale of Purchaser Interests, the Trust shall be
entitled to sell to the buyer that number of Trust Shares constituting its pro
rata share calculated in accordance with the preceding sentence as if
immediately prior thereto Purchaser was liquidated, each equity holder thereof
received a total distribution of Shares and each such equity holder was the
Seller for purposes of this Section. Not later than five days prior to the date
scheduled for such sale, Sellers shall provide notice to
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the Trust of the "pro rata portion" of Trust Shares to be sold by the Trust in
such sale.
3. The Trust shall effect its participation in the sale by delivering, on
the date scheduled for such sale, to Sellers, for their own accounts or for
delivery to the prospective transferee, as applicable, one or more certificates,
in proper form for transfer, which represent the number of Trust Shares which
the Trust is entitled to sell in accordance with this Agreement. Such stock
certificate or certificates shall be delivered on such date to such transferee
in consummation of the sale of the Offered Shares pursuant to the terms and
conditions specified in the Tag-Along Notice and the Sellers shall concurrently
therewith remit to the Trust that portion of the sale proceeds to which the
Trust is entitled by reason of its participation in such sale. Sellers' sale of
Shares or Purchaser Interests, as applicable, in any sale proposed in a
Tag-Along Notice shall be effected on the terms and conditions set forth in such
Tag-Along Notice. In no event shall any Seller receive special consideration or
a control premium in such sale that is not received by all Sellers, including
the Trust.
4. The exercise or non-exercise of the right of the Trust to participate in
one or more sales subject to this Agreement shall not adversely affect the
Trust's right to participate in subsequent sales of Shares or Purchaser
Interests subject to this Agreement.
5. In the event that the buyer of Offered Shares fails or refuses to
purchase the Trust Shares which the Trust is entitled to sell pursuant to this
Agreement, and if the transaction giving rise to such right closes, then the
Sellers shall be obligated to purchase the same, simultaneously with the closing
of the Tag-
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Along Transaction, for the same per Share price as that received by
the Sellers in the Tag-Along Transaction.
6. Notwithstanding any provision in this Agreement to the contrary:
(a) The Trust shall not be required to make any representation, covenant
or warranty in connection with the Tag-Along Transaction, other than as to the
Trust's ownership and the trustee's authority, on behalf of the Trust, to sell,
free of liens, claims and encumbrances, the Shares proposed to be sold by the
Trust. Sellers shall, without limitation as to time, indemnify and hold
harmless, to the full extent permitted by law, the Trust and the trustee of the
Trust against all losses, claims, damages, liabilities, costs (including costs
of preparation) and expenses (including reasonable attorney's fees) arising out
of or relating to any representation or warranty made by, or covenant of,
Sellers or the Company or any agent, employee, officer or director of any of
them in connection with or relating to, or under the terms of each agreement
entered into in connection with, such Tag-Along Transaction, except insofar as
the same are based solely upon written information furnished in writing to
Sellers or the Company by the Trust expressly for use therein.
(b) If Sellers have agreed to sell any Shares for non-cash
consideration, the buyer's offer shall include (or, at the option of Sellers,
Sellers may otherwise provide) an option for the Trust to participate in such
Tag-Along Transaction and to select as consideration for its sale either its pro
rata share of such non-cash consideration or cash in the amount of the fair
market value of such non-cash consideration.
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(c) The Trust's right to effect a sale of Trust Shares hereunder shall
terminate on March 1, 2009.
7. Any notice or other communication under this Agreement shall be in
writing and shall be considered given when delivered in person, sent by telefax
transmission or mailed by certified mail, return receipt requested, to the
parties at the following addresses or telefax numbers (or at such other address
or telefax number as a party may specify by notice to the others):
If to Purchaser or Strategic Purchaser, at:
GTE Holdings (Puerto Rico) LLC
0000 Xxxxx X'Xxxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Fares Xxxxxxx
with a copy to:
GTE International Telecommunications Incorporated
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Fares Xxxxxxx
Xxxxxx, Xxxxxx-Xxxxxxx, Colt & Mosle
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxx
If to the Trust, at:
U.S. Trust Company, National Association
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000)000-0000
Telecopy: (000)000-0000
Attention: Xxxxxx X. Xxxxxxxx
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with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000)000-0000
Telecopy: (000)000-0000
Attention: Xxxxxx X. Xxxxx
8. No waiver of any provision of this Agreement in any instance shall be,
or for any purpose be deemed to be, a waiver of the right of any party hereto to
enforce strict compliance with the provisions hereof in any subsequent instance.
9. Each party hereto and its successors and assigns shall perform any
further acts and execute and deliver any documents which may reasonably be
necessary to carry out the provisions of this Agreement.
10. No provision of this Agreement may be amended, modified or waived
without the written approval of each of the parties hereto.
11. This Agreement may be executed in multiple counterparts, subject to the
execution of at least one of such counterparts by each of the parties hereto.
12. Every provision of this Agreement is intended to be severable and if
any term or all or part of any provision hereof is held by judicial decision to
be invalid, such invalidity shall not affect the validity of the remainder of
this Agreement.
13. This Agreement is intended by the parties hereto as a final expression
of their agreement and understanding with respect to the subject matter hereof
and supersedes any and all prior and contemporary agreements and understandings.
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14. This Agreement shall be construed and interpreted in accordance with
the laws of the State of California, without giving effect to its principles of
conflicts of laws.
15. When necessary, the singular shall include the plural and vice versa.
16. This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto. None of the rights or obligations of the parties
hereunder may be assigned (other than to a GTE Permitted Transferee), and no
other person or party shall be a third party beneficiary of this Agreement.
17. Each of the parties hereto acknowledges that the other parties will be
irreparably damaged and will have no adequate remedy at law in the event of a
breach or threatened breach of obligations hereunder and shall be entitled to
such equitable and injunctive relief as may be available to restrain a violation
of, or threatened violation of, or to specifically enforce, this Agreement.
Nothing herein shall be deemed to preclude any party from pursuing any other
remedies available under this Agreement or otherwise to such party for such
breach or threatened breach, including the recovery of damages.
18. Any legal action or proceeding with respect to this Agreement shall be
brought in the United States District Court for the Southern District of
California (by way of summary judgment in lieu of complaint if procedure so
permits) or, if such court lacks subject matter jurisdiction, in the courts of
California situated in Los Angeles County. By execution and delivery of this
Agreement, each of the parties hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts and irrevocably consents to the service of process out of
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any of the aforementioned courts in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to such
party at its address set forth in Section 7, such service to become effective 30
days after such mailing. Nothing herein shall affect the right of any party
hereto to serve process in any other manner permitted by law. Each of the
parties hereto hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement brought in the
courts referred to in this Section and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
GTE HOLDINGS (PUERTO RICO) LLC
By:
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Name:
Title:
GTE INTERNATIONAL
TELECOMMUNICATIONS INCORPORATED
By:
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Name:
Title:
TRUST OF THE EMPLOYEE
STOCK OWNERSHIP PLAN OF
TELECOMUNICACIONES DE PUERTO
RICO, INC.
By: U.S. TRUST COMPANY, NATIONAL
ASSOCIATION, SOLELY IN ITS
CAPACITY AS TRUSTEE AND NOT IN
ITS INDIVIDUAL CAPACITY
By:
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Name: Xxxxxx X. Xxxxxxxx
Title: Managing Director
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