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Exhibit 10.14
Execution Copy
STOCK PURCHASE AGREEMENT
Dated as of
March 2, 1999
between
PUERTO RICO TELEPHONE AUTHORITY
and
THE TRUST
OF
THE EMPLOYEE STOCK OWNERSHIP PLAN
OF
TELECOMUNICACIONES DE PUERTO RICO, INC.
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") dated as of March
2, 1999, by and between Puerto Rico Telephone Authority (the "Authority" or
"Seller"), a public corporation and government instrumentality of the
Commonwealth of Puerto Rico ("Puerto Rico"), and the Trust of the Employee Stock
Ownership Plan of Telecomunicaciones de Puerto Rico, Inc. (the "Trust" or
"Buyer").
WHEREAS, the Authority, Puerto Rico Telephone Company, GTE
Holdings (Puerto Rico) LLC and GTE International Telecommunications Incorporated
("GITI") entered into an Amended and Restated Stock Purchase Agreement dated as
of July 21, 1998 (as amended from time to time, the "Stock Purchase Agreement"),
pursuant to which the Authority agreed to sell certain shares of common stock,
par value $0.01 per share ("Company Shares"), of Telecomunicaciones de Puerto
Rico, Inc. (the "Company");
WHEREAS, pursuant to authority granted under Act No. 54 of
August 4, 1997 and Joint Resolution No. 209 of June 24, 1998 (collectively, the
"Authorizing Legislation"), the Authority agreed to offer to sell, in
conjunction with the closing of the Stock Purchase Agreement, Company Shares,
constituting 3.0% of the outstanding Company Shares, to a stock bonus plan or
employee stock ownership plan, as described in Section 8.02(1)(ii) of the Stock
Purchase Agreement;
WHEREAS, immediately prior to the closing of the Stock
Purchase Agreement, the Authority was the owner of 1,000,000 Company Shares,
representing 100% of the issued and outstanding capital stock of the Company;
and
WHEREAS, the Trust desires to purchase, and the Authority
desires to sell, on the terms and conditions set forth herein, 30,000 Company
Shares, representing 3.0% of the issued and outstanding Company Shares (the
"Shares").
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Purchase of Shares. The Authority hereby agrees to sell, assign,
transfer, convey and deliver to Buyer, and Buyer agrees to purchase, from the
Authority, the Shares. In full consideration therefor, Buyer agrees to pay to
the Authority $26,100,000 in cash or in immediately available funds by wire
transfer to an account designated in writing by the Authority (the "Purchase
Price").
1.2 Legend. Each certificate representing the Shares shall be
stamped or otherwise imprinted with a legend substantially in the following
form:
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"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS
OF ANY STATE OR THE COMMONWEALTH OF PUERTO RICO, AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE
ACCOUNT OR BENEFIT OF U.S. PERSONS EXCEPT PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT."
ARTICLE II
REPRESENTATION AND WARRANTIES OF THE AUTHORITY
The Authority hereby represents and warrants to Buyer that:
2.1 Existence and Power. The Authority is validly existing as a
public corporation under the laws of Puerto Rico and has all requisite power,
authority and legal right to conduct its affairs as currently conducted, and to
execute, deliver and perform its obligations under this Agreement.
2.2 Corporate Authorization.
(a) The execution, delivery and performance by the Authority of this
Agreement and the documents to be delivered in connection
herewith are within the Authority's powers and have been duly
authorized by the Governing Board of the Authority and, upon
execution thereof, will be duly executed and delivered by the
Authority.
(b) This Agreement constitutes the valid and legally binding
agreement of the Authority, that is enforceable against it in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
and similar laws relating to or affecting creditors generally,
or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
2.3 Governing Authorization. The execution, delivery and performance
by the Authority of this Agreement and the documents to be delivered in
connection herewith require no approval or other action by or in respect of, or
filing with, any Puerto Rico and United States governmental authority other
than: (i) compliance with any applicable requirements of the Communications Act
of 1934, as amended, and any rules, regulations practices and policies
promulgated by the Federal Communications Commission; (ii) compliance with any
applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended; and (iii) compliance with any applicable requirements of the
Telecommunications Regulatory Board of Puerto Rico.
2.4 Absence of Conflicts. Provided that the Trust and the Employee
Stock Ownership Plan of Telecomunicaciones de Puerto Rico, Inc. (the "ESOP") are
an employee stock ownership plan and trust that meets the requirements of
clauses (i) and (ii) of Section
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8.02(1)(i) of the Stock Purchase Agreement, neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated hereby
by the Authority, (i) conflicts with, or will result in any violation of, any
judgment, decree, order, statute, rule or regulation applicable to or binding on
the Authority, (ii) conflicts with, violates or will result in a breach of any
agreement or instrument to which the Authority is a party or by which it is
bound, or (iii) conflicts with or violates any provision of the governing
instruments of the Authority. The Authority has obtained all consents and
approvals that are necessary for the execution, delivery and performance of this
Agreement.
2.5 Capitalization. The Authority was, immediately prior to the
closing of the Stock Purchase Agreement, the record and beneficial owner of all
the issued and outstanding Company Shares.
2.6 No Broker. The Authority has not authorized any broker, dealer,
agent or finder to act on its behalf nor does the Authority have any knowledge
of any broker, dealer, agent or finder purporting to act on its behalf with
respect to this transaction.
2.7 Title to Shares. The Shares are duly authorized, validly issued,
fully paid, and non-assessable and free of preemptive rights, and upon delivery
of the Shares to Buyer, Buyer will acquire good and indefeasible title to the
Shares, free and clear of any and all liens, claims or encumbrances of any kind.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Authority that:
3.1 Existence and Power. Buyer is a trust duly organized and validly
existing under the laws of the State of California and has all requisite power,
authority and legal right to conduct its affairs as currently conducted, and to
execute, deliver and perform its obligations under this Agreement.
3.2 Corporate Authorization.
(a) The execution, delivery and performance by Buyer of this
Agreement and the documents to be delivered in connection herewith are within
Buyer's powers and have been duly authorized by the trustee of Buyer and, upon
execution thereof, will be duly executed and delivered by Buyer.
(b) This Agreement constitutes the valid and legally binding
agreement of Buyer, that is enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors
generally, or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
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3.3 Absence of Conflicts. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby by
Buyer, (i) conflicts with, or will result in any violation of, any judgment,
decree, order, statute, rule or regulation applicable to or binding on Buyer,
(ii) conflicts with, violates or will result in a breach of any agreement or
instrument to which Buyer is a party or by which it is bound, or (iii) conflicts
with or violates any provision of the governing instruments of Buyer. Buyer has
obtained all consents and approvals that are necessary for the execution,
delivery and performance of this Agreement.
3.4 Investment Intent. Buyer understands that the Shares have not
been registered under the Securities Act of 1933, as amended, or any other
applicable state securities law, and that the Company has no present intention
of so registering the Shares. Buyer is purchasing the Shares for its own
account, for investment purposes only, and with no present intention of
reselling, directly or indirectly participating in any distribution of or
otherwise disposing of the Shares, except in compliance with applicable
securities laws. Buyer understands that transferability of the Shares is
restricted by virtue of the Shares not being registered for resale and that the
Company is not required to register the Shares on Buyer's behalf.
3.5 Sophisticated Investor. Buyer acknowledges that it has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of purchasing the Shares.
3.6 No Brokers. Buyer has not authorized any broker, dealer, agent
or finder to act on its behalf nor does Buyer have any knowledge of any broker,
dealer, agent or finder purporting to act on its behalf with respect to this
transaction.
ARTICLE IV
CONDITIONS TO CLOSING
4.1 Conditions to Obligations of Authority. The obligation of the
Authority to consummate the closing of this Agreement is subject to the
Authority having received satisfactory assurances to the effect that the Trust
and the ESOP:
(a) satisfied the applicable requirements of Title I of the Employee
Retirement Income Security Act of 1974, as amended; and
(b) qualified for favorable tax treatment under the Puerto Rico
Internal Revenue Code of 1994, as amended (the "PR Code").
4.2 Conditions to Obligations of Buyer. The obligation of Buyer to
consummate the closing of this Agreement is subject to Buyer having received:
(a) one or more opinions of counsel to GITI, reasonably satisfactory
to Buyer, to the effect that (i) the Shares are employer securities under
Section 409(1) of the United States Internal Revenue Code of 1986, as amended
(the "Code"), and Section 1165(h)(2) of the PR
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Code, and (ii) the Trust and the ESOP constitute a qualified plan and a
tax-exempt trust under Section 401(a) of the Code and Section 1165(a) of the PR
Code; and
(b) one or more opinions of counsel to the Authority, reasonably
satisfactory to Buyer, to the effect that this Agreement is enforceable by the
Trust against the Authority in accordance with its terms under the laws of
Puerto Rico.
ARTICLE V
CROSS-RECEIPT
5.1 Receipt of Shares. By execution and delivery of this Agreement,
Buyer hereby acknowledges the receipt of the Shares.
5.2 Receipt of Purchase Price. By execution and delivery of this
Agreement, the Authority hereby acknowledges receipt of the Purchase Price.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
6.1 Survival. The representations and warranties of the parties
contained in this Agreement shall survive the purchase and sale of the Shares
under this Agreement.
6.2 Indemnification by Buyer. Buyer shall indemnify and hold
harmless the Authority from and against any and all claims, losses, liabilities
and damages, including, without limitation, amounts paid in settlement,
reasonable costs of investigation and reasonable fees and disbursements of
counsel, arising out of or resulting from the inaccuracy of any Buyer
representation or warranty, or the breach by Buyer of any covenant or agreement,
contained herein or in any instrument or certificate delivered pursuant hereto.
6.3 Indemnification by the Authority. The Authority shall indemnify
and hold harmless Buyer from and against any and all claims, losses, liabilities
and damages, including, without limitation, amounts paid in settlement,
reasonable costs of investigation and reasonable fees and disbursements of
counsel, arising out of or resulting from the inaccuracy of any representation
or warranty by the Authority, or the breach by the Authority of any covenant or
agreement, contained herein or in any instrument or certificate delivered
pursuant hereto.
ARTICLE VII
MISCELLANEOUS
7.1 Notices. All notices, requests and other communications to each
party hereunder shall be in writing (including telecopy or similar writing, with
confirmation of receipt) and shall be given:
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If to the Authority, to:
Puerto Rico Telephone Authority
c/o Government Development Bank for Puerto Rico
Minillas ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
With a copy to
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Banco Popular Center
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
If to Buyer, to:
U.S. Trust Company, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Executive Vice President
With a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
GTE International Telecommunications Incorporated
▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Fares ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇
7.2 Amendment and Modification. This Agreement may be amended,
modified, or supplemented only by written agreement of both of the parties
hereto.
7.3 Waiver of Compliance; Consents. Any failure of a party to comply
with any obligation, covenant, agreement, or condition herein may be waived by
the other party; provided, however, that any such waiver may be made only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 6.3, with appropriate notice in
accordance with Section 6.1 of this Agreement.
7.4 Expenses. All fees and expenses (including all fees of counsel
and accountants) incurred by any party in connection with the negotiation and
execution and consummation of this Agreement shall be borne by the party who
incurred them.
7.5 Governing Law. This Agreement shall be construed in accordance
with and governed by the law of Puerto Rico without giving effect to principles
of conflicts of laws.
7.6 Counterparts; Effectiveness. 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. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
7.7 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter of this
Agreement. No representation, inducement, promise,
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understanding, condition or warranty not set forth herein has been made or
relied upon by either party hereto.
7.8 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
7.9 Severability. If any one or more provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or, unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
IN WITNESS WHEREOF, the parties hereto here caused this
Agreement to be duly executed by their respective authorized representatives as
of the day and year first above written.
PUERTO RICO TELEPHONE AUTHORITY
By:__________________________________
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:__________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
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