EXHIBIT 4.27
CONFORMED COPY
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AMENDED AND RESTATED TRUST AGREEMENT
entered into between
TELEFONICA DEL PERU S.A.A.,
as Transferor and Servicer
and
THE BANK OF NEW YORK,
as Trustee,
for the benefit of
each of the holders from time to time of the
certificates issued hereunder
Dated as of December 16, 1998
Amended and Restated as of December 17, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions ................................................ 2
ARTICLE II
CREATION OF TRUST;
PURCHASE AND SALE OF CERTIFICATES
SECTION 2.01. Declaration of Trust ....................................... 17
SECTION 2.02. Security Interest .......................................... 17
SECTION 2.03. Authority to Issue Certificates ............................ 18
SECTION 2.04. Form of Certificates ....................................... 19
SECTION 2.05. Registration of Certificates ............................... 21
SECTION 2.06. Replacement of Certificates ................................ 22
SECTION 2.07. Payments on Certificates ................................... 23
SECTION 2.08. Statement of Rights in Certificates ........................ 23
SECTION 2.09. Certain Transfer Restrictions .............................. 23
ARTICLE III
RIGHTS OF CERTIFICATEHOLDERS; ESTABLISHMENT OF ACCOUNTS
AND APPLICATION OF COLLECTIONS AND OTHER PAYMENTS
SECTION 3.01. Rights of Certificateholders and the holder of the
Transferor Certificate .................................. 26
SECTION 3.02. Establishment of Accounts .................................. 26
SECTION 3.03. Application of Collections ................................. 29
SECTION 3.04. Payments to the Trust ...................................... 33
SECTION 3.05. Investment of Funds ........................................ 33
SECTION 3.06. Distribution of Redemption Price ........................... 34
ARTICLE IV
SPECIFIED EVENTS, SHORTFALLS
AND EFFECTS THEREOF
SECTION 4.01. Specified Events ........................................... 34
SECTION 4.02. Notices Upon the Occurrence of a Specified Event ........... 37
SECTION 4.03. Redemption Obligation ...................................... 37
ARTICLE V
THE TRUSTEE'S DUTIES;
APPOINTMENT OF SUCCESSOR TRUSTEE
SECTION 5.01. Acceptance of Trust ........................................ 38
SECTION 5.02. Representations and Warranties of the Trustee .............. 38
SECTION 5.03. Duties and Responsibilities of the Trustee ................. 38
SECTION 5.04. Trustee Not Liable for Purchased Receivables; Performance
of Trustee's Duties ..................................... 40
SECTION 5.05. Resignation and Removal; Appointment of Successor Trustee .. 42
SECTION 5.06. Acceptance of Appointment by Successor Trustee ............. 43
SECTION 5.07. Merger or Consolidation of Trustee ......................... 43
SECTION 5.08. Certain Procedural Matters ................................. 43
SECTION 5.09. Appointment of Co-Trustee or Separate Trustee .............. 45
SECTION 5.10. Appointment of Paying Agent ................................ 46
ARTICLE VI
TRUSTEE COVENANTS
SECTION 6.01. Application of Moneys ...................................... 47
SECTION 6.02. Distribution of Statements and Other Information ........... 47
SECTION 6.03. Requests for Information ................................... 48
SECTION 6.04. Returns .................................................... 49
ARTICLE VII
TELEFONICA DEL PERU'S DUTIES AS SERVICER
SECTION 7.01. Performance of Service Arrangements ........................ 49
SECTION 7.02. Covenants of Telefonica del Peru as Servicer of the
Purchased Receivables ................................... 49
SECTION 7.03. Additional Designated Carriers ............................. 52
SECTION 7.04. Receivables Files .......................................... 53
SECTION 7.05. Administration and Servicing of Receivables ................ 54
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.01. Representations and Warranties of Telefonica del Peru ...... 56
SECTION 8.02. Representations and Warranties of the Trustee .............. 59
SECTION 8.03. Further Assurances ......................................... ▇▇
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SECTION 9.01. Affirmative Covenants ...................................... 61
SECTION 9.02. Negative Covenants ......................................... 62
SECTION 9.03. Financial Statements and Reports ........................... 64
SECTION 9.04. Expenses ................................................... 65
SECTION 9.05. Certain Indemnities ........................................ 66
SECTION 9.06. Securities Laws ............................................ 66
SECTION 9.07. Taxes ...................................................... 67
ARTICLE X
CONCERNING THE CERTIFICATEHOLDERS
SECTION 10.01. Control of Trustee by Certificateholders ................... 67
SECTION 10.02. Evidence of Action Taken by Certificateholders ............. 68
SECTION 10.03. Proof of Execution of any Request, Consent or Other
Instruments and of Holding of Certificates .............. 68
SECTION 10.04. Certificates Owned by Telefonica del Peru and Certain
Other Persons ........................................... 68
SECTION 10.05. Right of Revocation of Action Taken ........................ 68
ARTICLE XI
REDEMPTION
SECTION 11.01. Optional Redemption by Telefonica del Peru ................. 69
SECTION 11.02. Optional Redemption for Tax Reasons ........................ 69
SECTION 11.03. Notice of Redemption ....................................... 69
SECTION 11.04. Investment Grade Option .................................... 70
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Benefits of Agreement ...................................... 71
SECTION 12.02. Amendment or Waiver ........................................ 71
SECTION 12.03. Binding Upon Assigns ....................................... 72
SECTION 12.04. Notices .................................................... 72
SECTION 12.05. Construction ............................................... 73
SECTION 12.06. Termination; Dissolution ................................... 73
SECTION 12.07. Severability ............................................... 74
SECTION 12.08. GOVERNING LAW .............................................. 74
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SECTION 12.09. WAIVER OF IMMUNITY; SUBMISSION TO JURISDICTION; AGENT ...... 74
SECTION 12.10. Use of English Language .................................... 76
SECTION 12.11. Trustee's Fees and Expenses ................................ 76
SECTION 12.12. Counterparts ............................................... 76
SECTION 12.13. Entire Agreement ........................................... 76
SECTION 12.14. Limitation on Rights of Certificateholders ................. 76
SECTION 12.15. Certificates Nonassessable and Fully Paid .................. 77
SECTION 12.16. Remedies Cumulative ........................................ 77
SECTION 12.17. Rule 144A Information ...................................... 77
SECTION 12.18. WAIVER OF JURY TRIAL ....................................... 77
SECTION 12.19. REVERSION OF TRUST ESTATE; TERMINATION OF SECURITY
INTERESTS ............................................... 78
iv
Exhibits and Schedules to the Trust Agreement
Exhibits
Exhibit A-1 Form of Rule 144A Global Certificate (Section 2.03(a))
Exhibit A-2 Form of Regulation S Global Certificate (Section 2.03(a))
Exhibit A-3 Form of Definitive Certificate (Section 2.04(b))
Exhibit B Form of Transferor Certificate (Section 2.03(d))
Exhibit C Form of Account Statement (Section 6.02(a))
Exhibit D Form of Identification of Collections (Section 7.05(a)(v))
Exhibit E Form of Notice of Face Amounts (Section 7.05(a)(vi))
Exhibit F Form of Notice of Delinquent Payments (Section 7.05(a)(vii))
Exhibit G Form of Officer's Certificate (Section 9.01(a))
Exhibit H Form of Instructions of Sale and Payment
Exhibit I Form of Notice of Closing Date and Effectiveness
Exhibit J Form of Notice of Termination Date
Exhibit K Form of Daily Statement
Exhibit L Form of Notice of Termination of Designated Carrier (Section 7.03(b))
Schedules
Schedule 1 Amended Amortization Schedule
Schedule 2 Disputes with Designated Carriers regarding the Service Arrangements
(Section 8.01(k)(l))
Schedule 3 Actions at Law, Suits in Equity and Proceedings pending against Telefonica del
Peru or its Assets (Section 8.01 (n))
Schedule 4 List of Designated Carriers
Schedule 5 Service Arrangements
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This AMENDED AND RESTATED TRUST AGREEMENT, dated as of December 16, 1998,
and amended and restated as of December 17, 2001 (as the same may be amended,
modified or supplemented pursuant to Section 12.02 hereof, this "Agreement"), is
entered into by Telefonica del Peru S.A.A., a sociedad anonima abierta organized
under the laws of Peru (together with its successors and assigns, hereinafter
called "Telefonica del Peru"), and The Bank of New York, a New York banking
corporation, not in its individual capacity, but solely as trustee (together
with its successors and assigns, hereinafter called the "Trustee") for the
benefit of the holders from time to time of trust certificates issued hereunder
(collectively, the "Certificateholders") and the holder of the Transferor
Certificate. Unless otherwise defined herein, capitalized terms used in the
recitals below have the meanings given thereto in Article I hereof.
W I T N E S S E T H:
WHEREAS, on ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and the Trustee entered
into a Trust Agreement (the "Original Trust Agreement");
WHEREAS, pursuant to the Original Trust Agreement, Telefonica del Peru and
the Trustee established a trust known as the Telefonica del Peru Grantor Trust
(the "Trust"), a New York grantor trust, pursuant to which the Trustee acts as
trustee for the benefit of the holders of the Certificates and the Transferor
Certificate and for the purpose of acquiring and holding Purchased Receivables
and other assets comprising the Trust Estate on behalf and for the benefit of
such Certificateholders;
WHEREAS, simultaneously with the effectiveness of the Original Trust
Agreement, pursuant to the Transfer Agreement, Telefonica del Peru sold,
transferred, assigned, delivered and conveyed to the Trust all of Telefonica del
Peru's right, title and interest in and to (i) the Purchased Receivables, (ii)
all funds collected or to be collected in respect of the Purchased Receivables
and (iii) all other payments by any Person in respect of the foregoing, and all
assets related thereto, proceeds therefrom, and payments under or distributions
in respect thereof, in consideration for (A) the issuance by the Trust of the
Certificates; (B) the transfer of the proceeds of the sale and issuance of the
Certificates to Telefonica del Peru (less the initial Reserve Amount Cap and the
Transaction Expenses); and (C) the Transferor Certificate;
WHEREAS, this Agreement amends and restates the Original Trust Agreement;
and
WHEREAS, the amendments to the Original Trust Agreement set forth in this
Agreement have been approved by the Required Percentage of Certificateholders.
NOW THEREFORE, in consideration of the covenants and premises herein
contained and other consideration, the receipt and sufficiency of which is
hereby acknowledged, Telefonica del Peru and the Trustee hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms for all purposes of this
Agreement shall have the respective meanings hereinafter specified.
"Account Statement" shall mean, with respect to the Certificates, the
report referred to in Section 6.02(a) hereof, the form of which is attached
hereto as Exhibit C.
"Act" shall mean the U.S. Securities Act of 1933, as amended, and the rules
and regulations from time to time promulgated thereunder.
"Additional Amounts" shall have the meaning set forth in Section 9.07(a)
hereof.
"Additional Designated Carrier Requirements" shall have the meaning set
forth in Section 7.03(a) hereof.
"Adjusted Face Amount" shall mean, as of any date of determination, for
each Certificate, the Original Face Amount thereof less the aggregate amount of
all distributions made by the Trustee from time to time prior to such date in
reduction of the Original Face Amount pursuant to this Agreement; provided,
however, that the Adjusted Face Amount of any Certificate shall never be less
than zero.
"Affiliate" of any Person shall mean any other Person which, directly or
indirectly, controls or is controlled by, or is under common control with, such
first Person. For the purposes of this definition, "control" (including
"controlled by" and "under common control with"), as used with respect to any
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Agreement" shall have the meaning set forth in the first paragraph hereof.
"Amortization Amount" shall mean, with respect to any Payment Date, the
amount set forth under the column heading "Amortization Amount" next to such
Payment Date on Schedule 1 hereto.
"Authorized Denominations" shall mean, with respect to the Certificates,
denominations of $250,000 and integral multiples of $1,000 in excess thereof.
"Authorized Officer" shall mean (i) as to Telefonica del Peru, one of its
managers or higher officers, (ii) as to any Certificateholder of a Certificate,
an authorized officer of such Certificateholder, (iii) as to the initial
Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to
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whom any corporate trust matter is referred because of such person's knowledge
of and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Agreement, (iv) as to any
successor Trustee, any officer or officers identified in its certificate
accepting its appointment as Trustee hereunder or in any Officer's Certificate
delivered thereafter by such Trustee to the Certificateholders, with a copy
delivered to Telefonica del Peru, and (v) as to any other Person not listed
above, an authorized officer of such Person.
"Base Receivables Amount," with respect to each Collection Period, shall be
equal to the sum of:
(a) the Certificate Interest for such Collection Period,
(b) the Amortization Amount scheduled to be paid on the Certificates
on the related Payment Date, and
(c) all Additional Amounts for such Collection Period which are not
paid by Telefonica del Peru or the Trustee directly to the applicable
taxing authority, if any.
"Benefit Plan" shall have the meaning assigned thereto in Section 2.09(b)
hereof.
"Book-Entry Certificates" shall mean certificates evidencing a beneficial
interest in the applicable Certificates, ownership of which shall be recorded
and transfers of which shall be made through book entries by the Depository,
provided, that after the occurrence of a condition whereupon book-entry
registration and transfer are no longer authorized and Definitive Certificates
have been issued to the Certificate Owners, such certificates shall no longer be
"Book-Entry Certificates".
"Business Day" shall mean any day other than a Saturday, Sunday or any day
on which banking institutions in The City of New York, United States or Lima,
Peru are permitted or required by law, executive order or governmental decree to
remain closed.
"Carrier Notices" shall mean the Instructions, the Notice of Closing, the
Notice of Termination Date, the Designated Carrier Termination Notice and other
notices to the Designated Carriers related thereto.
"Cedel" shall mean Cedel S.A.
"Certificate" shall have the meaning specified in Section 2.03(a) hereof.
"Certificate Account" shall have the meaning specified in Section 3.02(b)
hereof.
"Certificate Balance" shall mean, as of any date of determination, the
initial Certificate Balance (which amount shall be equal to the sum of the
Original Face Amounts of all of the Certificates which, in turn, shall be equal
to the Purchase Price) less the aggregate amount of all distributions made by
the Trustee from time to time prior to such date in reduction of the Certificate
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Balance pursuant to this Agreement (which amount shall be equal to the sum of
the Adjusted Face Amounts of all of the Certificates as of such date).
"Certificateholders" shall mean the Person or Persons who hold Certificates
at any given time as shown on the Register maintained by the Trustee.
"Certificate Interest" shall mean, with respect to each Collection Period
in respect of the Certificates, interest on the Certificates (which shall be
payable in arrears on the Payment Date immediately succeeding such Collection
Period) in an amount equal to the sum of (i) the product of (a) the Certificate
Rate, (b) the average Certificate Balance in respect of the Certificates during
the preceding Collection Period (or in the case of the first Payment Date, the
Purchase Price) after giving effect to all payments in respect of the
Amortization Amount or otherwise in respect of principal made in respect of the
Certificates on such preceding Payment Date, and (c) the number of days in the
related Collection Period divided by 360 (assuming months of 30 days), (ii) the
amount of Certificate Interest accrued during any prior Collection Period but
not distributed on any prior Payment Date, and (iii) to the extent permitted by
law, the product of (A) the Certificate Rate plus 1% per annum, (B) the amount,
if any, of interest accrued on the Certificates during any prior Collection
Period which was not distributed on any prior Payment Date, and (C) the number
of days in the related Collection Period divided by 360 (assuming months of 30
days).
"Certificate Owner" shall mean, with respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Book-Entry Certificate, as may be
reflected on the books of the Depository, or on the books of a Person
maintaining an account with such Depository (directly or as an indirect
participant, in accordance with the rules of such Depository).
"Certificate Owner Certification" shall mean, with respect to any
Certificate Owner, a written certification of such Certificate Owner, addressed
to the Trustee and Telefonica del Peru (with a copy delivered to Telefonica del
Peru by such Certificate Owner), stating (i) that the Person signing such
Certification is a Certificate Owner on the date set forth in such
certification, (ii) that such Person shall promptly notify the Trustee and
Telefonica del Peru in writing when it ceases to be a Certificate Owner (and in
any event shall so notify the Trustee and Telefonica del Peru promptly after
receipt of the first monthly Account Statement after it ceases to be a
Certificate Owner), (iii) that, with respect to notices, reports, certificates,
instruments, opinions, documents and other information (collectively,
"Information") to be furnished to it pursuant to Section 6.02(b) or its designee
pursuant to Section 6.03, as the case may be, such Person agrees to be bound by
all of the provisions of this Agreement that apply to a Certificateholder of
Certificates regarding receipt, use and possession of Information (including
without limitation the provisions thereof regarding Confidential Information)
and (iv) the address for delivery of Information to such Certificate Owner.
"Certificate Purchase Agreement" shall mean the certificate purchase
agreement dated as of December 9, 1998 between Telefonica del Peru, the Trustee
and the Initial Purchaser.
"Certificate Rate" shall mean 7.48% per annum.
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"Closing Date" shall mean the date on which the Certificates are originally
issued in accordance with Section 2.03 hereof.
"Code" shall mean the U.S. Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect on the date hereof
and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"Collection Account" shall have the meaning specified in Section 3.02(a)
hereof.
"Collection Period" shall mean the period commencing with the day after any
Semiannual Cut-Off Date and ending on the next succeeding Semiannual Cut-Off
Date; provided that, with respect to the first Collection Period, such period
shall commence with the Closing Date and end on the next succeeding Semiannual
Cut-Off Date.
"Collection Shortfall Amount" shall mean, with respect to any Payment Date,
an amount equal to the excess, if any, of the Semiannual Payment Amount for such
Payment Date over the aggregate amount of cash distributed to the
Certificateholders pursuant to clauses "First", "Second" and "Third" of Section
3.03(b) hereof on such Payment Date.
"Collections" shall mean, with respect to any Purchased Receivables, all
cash collections and proceeds of such Purchased Receivables deposited or
credited to the Collection Account.
"Confidential Information" shall mean, (a) in relation to any
Certificateholder and the Trustee, any written information delivered or made
available by or on behalf of Telefonica del Peru to such Certificateholder or
the Trustee in connection with or pursuant to this Agreement (including without
limitation financial information, information relating to the conduct and
business operations of Telefonica del Peru and the Designated Carriers and the
information referred to in Section 6.02 hereof) which is proprietary in nature
and clearly marked or labeled as being confidential information, other than
information (i) which was publicly known, or otherwise known to such
Certificateholder, at the time of disclosure (except pursuant to disclosure in
connection with this Agreement), (ii) which subsequently becomes publicly known
through no act or omission by such Certificateholder or the Trustee, (iii) which
otherwise becomes known to such Certificateholder or the Trustee other than
through disclosure by Telefonica del Peru, and (b) in relation to any purchaser
or prospective purchaser referred to in Section 6.03, the information referred
to in clauses (a) through (c) of such Section, other than information (i) which
was publicly known, or otherwise known to such Person, at the time of disclosure
(except pursuant to disclosure in connection with this Agreement), (ii) which
subsequently becomes publicly known through no act or omission by such Person,
or (iii) which otherwise becomes known to such Person other than through
disclosure by a Certificateholder or the Trustee.
"Corporate Trust Office" shall mean the principal corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office is, at the date of execution of this Agreement,
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, except that, with
respect to presentation of Certificates for payment or registration of
5
transfer or exchange and the location of the Register for the registration and
registration of transfer of the Certificates, such term shall mean the office or
agency of the Trustee at which at any particular time its corporate agency
business shall be principally conducted, which office is, at the date of
execution of this Agreement, located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ and which at all times shall be located in The City of New York.
"Coverage Shortfall Account" shall have the meaning specified in Section
3.02(d) hereof.
"Coverage Shortfall Amount" shall have the meaning specified in Section
3.02(d) hereof.
"Debt Service Reserve Account" shall have the meaning specified in Section
3.02(g) hereof.
"Definitive Certificates" shall have the meaning specified in Section
2.04(b) hereof and shall be substantially in the form of Exhibit B hereto.
"Depository" shall mean The Depository Trust Corporation.
"Designated Carriers" shall mean those telecommunications carriers with
Service Arrangements with Telefonica del Peru and, except for Deutsche Telekom
AG, that have executed enforceable and effective Instructions and that are
listed on Schedule 4 attached hereto, as amended from time to time in accordance
herewith, together with their successors and assigns, including any Designated
Carriers added pursuant to Section 7.03 hereof.
"Designated Carrier Termination Notice" shall mean the Notice of
Termination of Designated Carrier, substantially in the form of Exhibit L
hereto, executed and delivered by the Trustee, (i) informing a Designated
Carrier that Telefonica del Peru has terminated such Designated Carrier as a
Designated Carrier pursuant to Section 7.03(b) hereof and that the Purchased
Receivables from such Designated Carrier have been transferred back to
Telefonica del Peru and (ii) instructing such Designated Carrier to resume
making payments in respect of such Purchased Receivables to Telefonica del Peru
under the terms of the applicable Service Arrangements.
"Designated Carrier Traffic Statement" shall have the meaning set forth in
Section 7.02(e)(ii) hereof.
"Determination Date" shall have the meaning specified in Section 3.02(d)
hereof.
"Dollar" and "$" shall mean freely transferable lawful money of the United
States.
"Due Settlement Date" shall have the meaning specified in Section
7.02(e)(iv) hereof.
"Eligible Account" shall mean (a) a segregated account or accounts
maintained with a depository institution or trust company (which may be the
Trustee if it meets the following rating criteria) whose long-term unsecured
unsubordinated debt obligations are rated at least A by Fitch (or, if such
obligations are not rated by Fitch, at least A by Standard & Poor's or at least
A2 by
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Moody's) if Fitch is a Rating Agency with respect to any outstanding
Certificates and at least A1 by Moody's (or if such obligations are not rated by
Moody's, at least A by Standard & Poor's or at least A by Fitch) if ▇▇▇▇▇'▇ is a
Rating Agency with respect to any outstanding Certificates or (b) a segregated
trust account or accounts maintained with a federal or state chartered
depository institution subject to regulations regarding fiduciary funds on
deposit substantially similar to 12 C.F.R. Section 9.10(b).
"Eligible Investments" shall mean, unless otherwise specified herein, with
a remaining maturity not exceeding 183 days, any one or more of the following
obligations or securities denominated in Dollars and acquired at a purchase
price of not greater than par, regardless of whether issued by the Trustee or
any of its Affiliates but excluding any obligations or securities issued by
Telefonica del Peru or any Affiliate thereof:
(a) direct obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States of America, or
any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America;
(b) demand and time deposits in, certificates of deposit of, or bankers'
acceptances issued by, any depository institution or trust company
incorporated under the laws of the United States or any state thereof
or the District of Columbia, having at any date of determination
combined capital and surplus of not less than $100,000,000 and a long
term unsecured unsubordinated debt rating of not less than "A", "A1"
and "A" (i) by Standard & Poor's, Moody's and Fitch, respectively, or
(ii) if not rated by all three of the foregoing rating agencies, by
those of such rating agencies which rate such securities (which shall
include such rating by Moody's at all times when Moody's maintains a
rating on the Certificates);
(c) repurchase obligations with respect to any security described in
clause (a) above entered into with a depository institution or trust
company acting as principal meeting the requirements set forth in
clause (b) above;
(d) securities bearing interest or sold at a discount that are issued by
any corporation incorporated under the laws of the United States of
America or any state thereof and rated (i) by Standard & Poor's,
Moody's and Fitch or (ii) if not rated by all three of the foregoing
rating agencies, by those of such rating agencies which rate such
securities, in one of their two highest long term unsecured debt
rating categories at the time of such acquisition or contractual
commitment providing for such acquisition (which shall include such
rating by Moody's at all times when Moody's maintains a rating on the
Certificates); or
(e) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations) that is issued by any
corporation incorporated under the laws of the United States of
America or any state thereof and rated (i) by Standard & Poor's,
Moody's and Fitch or (ii) if not rated by all three of the foregoing
rating
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agencies, by those of such rating agencies which rate such securities,
at least "A-l", "P-1" or "D-1", respectively, at the time of such
investment (which shall include such rating by Moody's at all times
when Moody's maintains a rating on the Certificates).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder. Section references to ERISA are to ERISA as in effect at the
Closing Date, and to any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.
"Euroclear" shall mean The Euroclear System.
"Excess Tax Amount" shall have the meaning set forth in Section 11.02
hereof.
"Fitch" shall mean Fitch (Duff & ▇▇▇▇▇▇).
"Generally Accepted Accounting Principles" when used with regard to
financial statements prepared by Telefonica del Peru shall mean generally
accepted accounting principles in effect from time to time in Peru, and when
used with regard to financial statements prepared by the Trustee shall mean
generally accepted accounting principles in effect from time to time in the
United States for banking institutions.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Incipient Specified Event" shall mean an event that with the giving of
notice or the passage of time or both would be a Specified Event.
"Initial Purchaser" shall mean ▇.▇. ▇▇▇▇▇▇ Securities Inc.
"Insolvency Event" shall mean, with respect any Person, (a) such Person (i)
ceases or fails to be solvent, or generally fails to pay, or admits in writing
its general inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
commences any Insolvency Proceeding with respect to itself; or (iii) takes any
action to effectuate or authorize any of the foregoing; or
(b) (i) any involuntary Insolvency Proceeding is commenced or filed against
such Person, and any such proceeding or petition shall not be dismissed, within
60 days after commencement or filing; (ii) such Person admits the material
allegations of a petition against it in any Insolvency Proceeding, or an order
for relief is ordered in any Insolvency Proceeding; or (iii) such Person
acquiesces in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other similar Person
for itself or a substantial portion of its property or business.
8
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors.
"Instructions" shall mean the instructions of sale and payment executed and
delivered by Telefonica del Peru and acknowledged and agreed to by each
Designated Carrier (except for Deutsche Telekom AG) and the Trustee relating to
the transfer and assignment pursuant to the Transfer Agreement and this Trust
Agreement of all Purchased Receivables owed to Telefonica del Peru by such
Designated Carrier and instructing such Designated Carrier to make all payments
relating to such Purchased Receivables to the Collection Account, the form which
is attached hereto as Exhibit H.
"Investment Company Act" shall mean the U.S. Investment Company Act of
1940, as amended, and the rules and regulations promulgated from time to time
thereunder.
"ITU" shall mean the International Telecommunications Union.
"ITU - T" shall mean the ITU Telecommunication Standardization Sector
(formerly the International Telegraph and Telephone Consultative Committee
("CCITT")), a permanent organ of the ITU.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien (including any statutory lien) or charge of any kind (including any
agreement to give any of the foregoing); any conditional sale or other title
retention agreement; any lease or other conveyance in the nature thereof; any
notification to an account debtor for purposes of perfecting any sale or
assignment of the accounts owed by it; or any filing of or agreement to file any
financing statement under the UCC.
"Make Whole Premium" means, with respect to any redemption of the
Certificates, the amount (but not less than zero) calculated as of any optional
or mandatory redemption date obtained by subtracting (a) the sum of the Current
Values of each payment of principal that would otherwise have become due on each
Payment Date occurring on or after such redemption date if the principal and
interest component of the redemption price actually paid on such redemption date
were not being paid in satisfaction thereof (each such payment an "Amount
Payable"), where "d" in the formula below is the financing rate equal to 7.48%
per annum from (b) the sum of the Current Values of each Amount Payable where
"d" in the formula below is the sum of the Treasury Yield plus 50 basis points.
The "Current Value" of any Amount Payable means such Amount Payable discounted
(on a semi annual basis) to its present value on such redemption date at yield
of "d" in accordance with the following formula:
Current Value = Amount Payable
--------------
(1 + d/2)/n/
9
where "n" is an exponent (which need not be an integer) equal to the number of
semi-annual periods and portion thereof (any such portion of a period to be
determined by dividing the number of days in such portion of such period by the
total number of days in such period, both computed on the basis of twelve 30-day
months in a 360-day year) between such redemption date and the due date of the
Amount Payable. The "Treasury Yield" shall be equal to the yield to maturity
implied by (i) the yield reported, as of 10:00 a.m. (New York City time) on the
second Business Day preceding the date of determination of the Make Whole
Premium, on the display designated as "Page 500" on the Telerate Service for
actively traded on-the-run U.S. Treasury securities having a maturity equal to
the then remaining weighted average life to maturity of all Amounts Payable (the
"Remaining Life"), computed by dividing (x) the sum of all Amounts Payable into
(y) the total of the products obtained by multiplying (A) the amount of each
Amount Payable by (B) the number of years (calculated to the nearest
one-twelfth) which will elapse between the date as of which such computation is
made and the due date of the Amount Payable, or (ii) if such yields shall not be
reported as of such time or the yield reports as of such time shall not be
ascertainable, the Treasury Constant Maturity Series yields reported as of the
Business Day preceding the date of determination of the Make Whole Premium, in
Federal Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury Securities having a constant
maturity equal to the Remaining Life as of such date of determination. If the
"Page 500" on the Telerate Service or the Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) are no longer in
publication, such implied yield shall be determined by (1) converting U.S.
Treasury ▇▇▇▇ quotations to bond-equivalent yields in accordance with accepted
financial practice and (2) interpolating linearly between reported yields. The
Treasury Yield shall be computed to the fifth decimal place (one-thousandth of a
percentage point) and then rounded to the fourth decimal place (one-hundredth of
a percentage point).
"Material Adverse Effect" shall be deemed to result from any action which
(i) impairs the right, title or interest of any Certificate Owners in the
portion of the Trust Estate held by the Trustee on behalf of such Certificate
Owners, (ii) results or could reasonably be expected to result in a reduction or
delay in the payment of any amounts to the Certificateholders, (iii)(A) for
Peruvian tax purposes alters or could reasonably be expected to alter the
characterization of any outstanding Certificates in a manner adverse to
Certificateholders thereof; (B) for U.S. federal income tax purposes alters or
could reasonably be expected to alter the characterization of any outstanding
Certificates as indebtedness; (C) for Peruvian tax purposes or U.S. federal
income tax purposes causes or could reasonably be expected to cause a taxable
event to the Certificateholder of any outstanding Certificate; (D) for Peruvian
tax purposes causes or could reasonably be expected to cause the Trust to be
treated as a separate entity that will be subject to an entity level tax; and
(E) for U.S. federal income tax purposes causes or could reasonably be expected
to cause the Trust to be taxable as a corporation or (iv) adversely alters the
characterization or treatment of the Trust or any outstanding Certificates under
the Act, the Investment Company Act or the Trust Indenture Act. "Materially
Adversely Affect" shall have a correlative meaning.
"Monthly Settlement Designated Carrier" shall have the meaning set forth in
Section 7.02(e)(i) hereof.
"Monthly Settlement Invoice" shall have the meaning set forth in Section
7.02(e)(iii) hereof.
10
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Notice of Closing" shall mean the notice of closing date and effectiveness
executed and delivered by Telefonica del Peru and the Trustee on or about the
Closing Date, informing the Designated Carriers of the Closing Date and the
effectiveness of the Instructions relating thereto, and attached as Exhibit I
hereto.
"Notice of Termination Date" shall mean the Notice of Termination Date
executed and delivered by Telefonica del Peru and the Trustee, (i) informing the
Designated Carriers that Trust Termination Date has occurred and that the
Purchased Receivables have been transferred back to Telefonica del Peru and (ii)
instructing the Designated Carriers to resume making payments in respect of the
Purchased Receivables to Telefonica del Peru under the terms of the applicable
Service Arrangements, substantially in the form of Exhibit J hereto.
"Offering Circular" shall mean the preliminary offering circular, dated
November 20, 1998, and the final offering circular, dated December 9, 1998, in
each case relating to the Certificates hereunder, together with all exhibits,
amendments and supplements thereto.
"Officer's Certificate" shall mean a certificate signed by an Authorized
Officer of the Person required to deliver a certificate hereunder.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be
counsel for, or an employee of, the Person providing the opinion, except in the
case of an opinion as to taxes, in which case such counsel shall be independent
tax counsel, and who shall be reasonably acceptable to the Trustee (it being
agreed, however, that any Person previously delivering any legal opinion in
connection with the issuance of the Certificates shall be deemed reasonably
acceptable by the Trustee and the parties to this Agreement).
"Original Face Amount," with respect to any Certificate, shall have the
meaning given thereto in Section 2.03(b) hereof.
"Paying Agent" shall mean any paying agent appointed pursuant to Section
5.09.
"Payment Date" shall mean each June 15 and December 15 (or, if any such
date is not a Business Day, then the first date following that is a Business
Day), beginning on June 15, 1999.
"Person" shall mean any legal person, including any individual,
corporation, partnership, joint venture, association, joint stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Peru" shall mean the Republic of Peru.
"Peruvian Taxes" shall have the meaning given thereto in Section 9.07
hereof.
"Process Agent" shall have the meaning given thereto in Section 12.09(c)
hereof.
11
"Proportionate Share" shall mean, as of any date of determination, with
respect to each Certificateholder of Certificates, the percentage obtained by
dividing the aggregate Adjusted Face Amount of Certificates then held by such
Certificateholder by the aggregate Adjusted Face Amount of all Certificates then
outstanding determined, in each case, as of such date.
"PTE 95-60" shall have the meaning assigned thereto in Section 2.09(b)
hereof.
"Purchase Price" shall mean $150,000,000.
"Purchased Receivables" shall mean all U.S. dollar denominated net
international settlement receivables generated and outstanding as of the Closing
Date and all future U.S. dollar denominated net international settlement
receivables generated thereafter but prior to the Trust Termination Date that
are owed by the Designated Carriers (including carriers that become Designated
Carriers after the Closing Date in accordance with this Agreement) to Telefonica
del Peru and transferred by Telefonica del Peru to the Trust pursuant to the
Transfer Agreement.
"Put Price" shall mean, for any redemption of Certificates pursuant to
Section 11.04, the amount equal to the sum (without duplication) of (i) the
Adjusted Face Amount subject to such redemption of Certificates, (ii) unpaid
accrued Certificate Interest on such amount as of such date of redemption and
(iii) all unpaid Additional Amounts in respect of such amount (if any).
"QIB" shall mean a "qualified institutional buyer" as defined in Rule 144A
under the Act.
"Qualified LC Reserve Bank" shall mean any financial institution located in
the United States of America that has a short term unsecured debt or deposit
rating of "P-1" by Moody's and "D-1" by Fitch.
"Quarterly Settlement Designated Carrier" shall have the meaning set forth
in Section 7.02(e)(i) hereof.
"Quarterly Settlement Invoice" shall have the meaning set forth in Section
7.02(e)(iii) hereof.
"Rating Agency" shall mean each of Fitch, Moody's and Standard & Poor's,
but only to the extent that it is maintaining a rating on the Certificates.
"Ratings Redemption Date" shall have the meaning set forth in Section
11.04(a) hereof.
"Receivables Files" shall mean the documents, data and records referred to
in Section 7.04(a) hereof.
"Receivables Statement" shall mean with respect to the Certificates, the
Receivables Statement referred to in Section 6.02(a) hereof.
"Record Date" shall have the meaning set forth in Section 2.05(e) hereof.
12
"Redemption Price" shall mean, as of any date of determination and for any
redemption of Certificates, the amount equal to the sum (without duplication) of
(i) the Adjusted Face Amount subject to such redemption of Certificates, (ii)
unpaid accrued Certificate Interest on such amount as of such date of
determination, (iii) all unpaid Additional Amounts in respect of such amount (if
any), and (iv) a Make Whole Premium in respect of such amount, all as determined
by the Trustee as of the date of payment of the Redemption Price, which amount
shall be notified to Telefonica del Peru.
"Register" shall have the meaning set forth in Section 2.05(c) hereof.
"Registered Certificateholder ? (i) With respect to a Book-Entry
Certificate, the Depository or its nominee, and (ii) with respect to a
Definitive Certificate, the Person in whose name such Certificate is registered
on the Register on the applicable Record Date.
"Regulation S" shall mean Regulation S under the Act.
"Regulation S Global Certificate" shall mean a Certificate representing a
Certificate sold outside the United States in reliance on Regulation S
substantially the form set forth in Exhibit A-2 attached hereto.
"Required Percentage of Certificateholders" shall mean, as of any date of
determination, Certificateholders of Certificates representing at least 51% of
the Certificate Balance of the Certificates as of such date; provided, however,
that the consent of 100% of the Certificateholders of the Certificates shall be
required to approve any amendment or waiver of this Agreement which shall (i)
reduce the Original Face Amount or Adjusted Face Amount of any Certificate; (ii)
change any definition relating to the calculation or allocation of payments to
such Certificateholders; (iii) modify, amend or waive the provisions of Section
3.03(a) or Section 3.03(b) hereof; (iv) modify this definition; (v) modify any
provision hereof which relates to the date, time, manner or amount of any
payment due to such Certificateholders; or (vi) authorize the Trustee to reduce
the amount of or extend the time of payment of any monies payable to or for the
benefit of the Certificateholders of Certificates under the Transaction
Documents or to release or provide for the release of any of the Trust Estate or
any other property or cash held by the Trust, other than as expressly permitted
by the terms of the Transaction Documents.
"Reserve Account" has the meaning set forth in Section 3.02(c)(i) hereof.
"Reserve Amount Cap," as of any date of determination, shall mean the
Certificate Interest due on the next succeeding Payment Date.
"Reserve LC" shall have the meaning set forth in Section 3.02(c)(ii)
hereof.
"Rule 144A Global Certificate" shall mean a Certificate sold to QIBs in
reliance on Rule 144A, substantially in the form set forth in Exhibit A-1
attached hereto.
"Rule 144A" shall mean Rule 144A promulgated under the Act.
13
"Semiannual Cut-Off Date" shall mean, with respect to any Payment Date, the
Business Day immediately preceding such Payment Date.
"Semiannual Payment Amount" shall mean, with respect to any Payment Date,
the sum of (i) the Base Receivables Amount for the Collection Period that ends
on such Payment Date and (ii) the aggregate amount of any and all unpaid
Collection Shortfall Amounts from all preceding Payment Dates.
"Service Arrangements" shall mean arrangements, whether in the nature of
informal agreements or written agreements, that are based on or refer to the
applicable ITU regulations and recommendations, which generate accounts
receivable for Telefonica del Peru from the Designated Carriers in respect of
cross-border telecommunications services originating or passing through the
territory of operation of each respective Designated Carrier and terminating in
or passing through Peru. The Service Arrangements in effect at the Closing Date
are described in Schedule 5 hereto.
"Servicer" shall mean Telefonica del Peru in its capacity as servicer of
the Purchased Receivables in accordance with the provisions set forth in Article
VII hereunder.
"Servicing Report" shall have the meaning set forth in Section 6.02(a)
hereof.
"Specified Event" shall mean each such event set forth in Section 4.01
hereof.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Taxes" shall mean all fees, taxes (including, without limitation, income,
gross receipts, sales, rental, use, turnover, value added, property (tangible
and intangible), excise and stamp taxes), licenses, levies, imposts, duties,
royalties, charges, assessments and withholdings of any nature whatsoever,
imposed by or on behalf of any government or taxing authority, together with any
and all penalties, fines, additions to tax and interest thereon.
"TdP Traffic Statement" shall have the meaning set forth in Section
7.02(e)(i) hereof.
"Telefonica del Peru" shall have the meaning set forth in the first
paragraph hereto.
"Transaction Documents" shall mean this Agreement, the Transfer Agreement,
the Certificate Purchase Agreement and the Carrier Notices.
"Transaction Expenses" shall mean all costs and expenses incident to the
performance of Telefonica del Peru's obligations under the Transactions
Documents, including without limiting the generality of the foregoing, all fees,
costs and expenses (i) incident to the preparation, issuance, execution,
authentication and delivery of the Certificates, including any expenses of the
Trustee, (ii) incident to the preparation, printing and distribution of the
Offering Circular (including all exhibits, amendments and supplements thereto),
(iii) incurred in connection with the registration or qualification and
determination of eligibility for investment of the Certificates under the laws
of
14
such jurisdictions as the Initial Purchaser may designate (including fees of
counsel for the Initial Purchaser and its disbursements), (iv) in connection
with the approval for trading of the Certificates on any securities exchange or
inter-dealer quotation system, (v) in connection with the printing (including
word processing and duplication costs) and delivery of this Agreement, the
Certificate Purchase Agreement and the other Transaction Documents and the
furnishing to the Initial Purchaser and dealers of copies of the Offering
Circular, including mailing and shipping, as provided in the Certificate
Purchase Agreement, (vi) payable to the Trustee in connection with the
establishment of the Trust and issuance of the Certificates (whether acting in
its capacity as Trustee or as Paying Agent), (vii) payable to Moody's in
connection with the rating of the Certificates as of the Closing Date, (viii)
amounts to cover the Initial Purchasers' out-of-pocket expenses, (ix) any
expenses incurred by or on behalf of Telefonica del Peru in connection with a
"road show" presentation to potential investors, (x) fees and expenses of U.S.,
Peruvian and (if required) Cayman Islands counsel to Telefonica del Peru, the
Initial Purchaser and the Trustee, and (xi) payable to the New York process
agent in connection with its services related to the Transaction Documents;
provided that the sum of amounts payable by Telefonica del Peru under clauses
(i) through (xi) inclusive through the Closing Date shall not exceed $535,000
(it being understood that such sum does not include the fees and expenses
payable to Fitch as of the Closing Date); and provided further that all payments
to the Initial Purchaser hereunder shall be free and clear of any stamp,
documentary, withholding or similar taxes.
"Transfer Agreement" shall mean the Transfer and Assignment Agreement, of
even date herewith, between Telefonica del Peru and the Trustee pursuant to
which Telefonica del Peru has transferred to the Trust the Transferred Property.
"Transferred Property" shall have the meaning assigned thereto in Section
2.02 hereof.
"Transferor" shall mean Telefonica del Peru in its capacity as transferor
of the Transferred Property pursuant to the Transfer Agreement.
"Transferor Certificate" shall have the meaning assigned thereto in Section
2.03(d) hereof.
"Trust" shall have the meaning set forth in the first recital hereof.
"Trust Accounts" shall mean, collectively, the Collection Account, the
Certificate Account, the Reserve Account, the Debt Service Reserve Account and
the Coverage Shortfall Account.
"Trust Estate" shall have the meaning set forth in Section 2.01 hereof.
"Trust Indenture Act" shall mean the U.S. Trust Indenture Act of 1939, as
amended, and the rules and regulations from time to time promulgated thereunder.
"Trust Termination Date" shall have the meaning set forth in Section 12.06.
"Trustee" shall have the meaning set forth in the first paragraph hereto.
15
"UCC" shall mean the Uniform Commercial Code as from time to time in effect
in the State of New York.
"United States" or "U.S. shall mean the United States of America.
"U.S. Carrier" shall mean any telecommunications carrier incorporated and
with its principal place of business in the United States.
"U.S. Taxes" shall have the meaning given thereto in Section 3.03(d)
hereof.
"Written Direction" shall mean, in respect of any action by the
Certificateholders, a written direction which is executed by, or otherwise
evidences the approval of, the Required Percentage of Certificateholders and is
addressed to the Trustee.
"60-day Period" shall have the meaning set forth in Section 7.02(e)(iv)
hereof.
ARTICLE II
CREATION OF TRUST;
PURCHASE AND SALE OF CERTIFICATES
SECTION 2.01. Declaration of Trust. (a) This Agreement amends and restates
the Original Trust Agreement.
(b) In order to establish the Trust created hereby, Telefonica del Peru
appoints the Trustee to act as trustee hereunder and the Trustee hereby accepts
the Trust created hereby and declares that it will hold all estate, right, title
and interest of the Trust in and to any property (including, without limitation,
the Transferred Property, and all funds on deposit in the Collection Account,
the Certificate Account, the Reserve Account, the Debt Service Reserve Account
and the Coverage Shortfall Account and all other payments by any Person in
respect thereof, and any and all assets related thereto, proceeds therefrom,
payments under or distributions in respect thereof), now existing or at any time
hereafter created, which is at any time conveyed to the Trustee pursuant to the
Transfer Agreement and the terms and conditions hereof or to which the Trust
otherwise holds estate, right, title and interest (such property, the "Trust
Estate") in trust for the use and benefit of the Certificateholders from time to
time of the Certificates and the holder of the Transferor Certificate, all in
accordance with the terms and provisions of this Agreement. The Trustee shall
have no power to create, assume or incur indebtedness or other liabilities other
than in the performance of its duties and obligations as contemplated in this
Agreement.
SECTION 2.02. Security Interest. (a) Telefonica del Peru intends that the
transfer, assignment, delivery and conveyance of (i) the Purchased Receivables,
(ii) all funds collected or to be collected in respect of the Purchased
Receivables, and (iii) all other payments by any Person in respect of the
foregoing, and all assets related thereto, proceeds therefrom, and payments
under or distributions in respect thereof (collectively, the "Transferred
Property") pursuant to the Transfer Agreement constitutes a transfer,
assignment, delivery and conveyance of the Transferred Property
▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ to the Trust. In the event that, for any reason, the
transfer, assignment, delivery and conveyance of the Transferred Property does
not constitute a transfer, assignment, delivery and conveyance, Telefonica del
Peru intends such transfer, assignment, delivery and conveyance to be the grant
of a security interest in the Transferred Property to the Trust. Therefore, in
order to secure (i) the full and punctual payment of the Semiannual Payment
Amount on each Payment Date and all other amounts payable hereunder to the
Certificateholders from the Trust Estate and (ii) the performance of all of
Telefonica del Peru's obligations hereunder (including its obligations to the
Trustee), Telefonica del Peru grants to the Trustee, on behalf of the Trust and
for the ratable benefit of the Certificateholders from time to time, a
continuing security interest in and to all of Telefonica del Peru's right, title
and interest in the Trust Estate, whether now owned or existing or hereafter
acquired or arising; including:
(A) the Transferred Property;
(B) the Trust Accounts;
(C) all securities entitlements with respect to all securities and other
property held in the Trust Accounts;
(D) all cash, securities, investments and other monies and properties of
any kind held in or credited to the Trust Accounts or otherwise in the
possession or control of the Trustee from time to time as part of the
Trust Estate; and
(E) all revenues, issues, products, accessions, substitutions,
replacements and proceeds of and from all of the foregoing.
For such purpose, this Agreement shall constitute a security agreement (as
defined in the UCC).
(b) Telefonica del Peru hereby represents (i) that no Purchased Receivable
constitutes proceeds of property in which any third party has a perfected
security interest, (ii) that neither Telefonica del Peru nor any of its
creditors has given notice to the Designated Carriers constituting "notification
to the account debtor" within the meaning of the UCC (other than the
Instructions and Notice of Closing) and (iii) that immediately prior to the
purchase by the Trust of any receivable of a Designated Carrier, Telefonica del
Peru was the sole owner of such Purchased Receivable, free and clear of the
interest of any creditor or purchaser (each as defined in the UCC).
SECTION 2.03. Authority to Issue Certificates. (a) The Trustee is hereby
authorized, subject to the terms and conditions hereof, at the request of
Telefonica del Peru, to execute, authenticate, issue and deliver the Rule 144A
Global Certificate and the Regulation S Global Certificate (collectively,
together with any trust certificates issued in exchange therefor or in
replacement thereof, the "Certificates") on the Business Day specified therefor
by Telefonica del Peru (the "Closing Date"). The Rule 144A Global Certificate
and Regulation S Global Certificate shall be in substantially the form of
Exhibits A-1 and A-2 hereto, respectively. The Certificates will not represent
an obligation of Telefonica del Peru, the Trustee or any of their respective
Affiliates, except as provided herein and therein. The Certificates shall, with
the exception of the
17
Transferor Certificate, be equally and ratably entitled as provided herein to
the benefits of this Agreement, without preference, priority or distinction.
Each Certificateholder, by acceptance of its Certificate(s), agrees and
acknowledges that its interest in the Trust and the Trust Estate represented by
its Certificate shall not include any estate, right, title or interest in any
part of the Trust or the Trust Estate which is transferred and conveyed to or
held by the Trustee on behalf of or for the benefit of any other
Certificateholder of Certificates issued under this Agreement.
(b) Each Certificate shall represent an interest, in the amount therein
specified (the "Original Face Amount"), in the Trust Estate. The Original Face
Amount of each Certificate shall equal such Certificate's pro rata share of the
initial Certificate Balance of the Certificates.
(c) Pursuant to the terms of this Agreement, the Paying Agent will pay such
amount as is necessary to reduce the Certificate Balance of the Certificates to
zero, together with interest thereon at the Certificate Rate in effect from time
to time is payable pursuant to, and to the extent set forth in, Article III
hereof in respect of each Certificate, in semiannual payments payable on each
Payment Date (to the extent funds shall have been received therefor by the
Trustee) equal to the Semiannual Payment Amount for such Payment Date. The
scheduled final Payment Date for the Certificates is the Payment Date occurring
on December 15, 2008.
(d) The Certificates shall be executed by the Trustee under and pursuant to
this Agreement in the aggregate Original Face Amount of $150,000,000 on the
Closing Date. On the Closing Date, the Trustee will deliver to Telefonica del
Peru or its designee a certificate (the "Transferor Certificate"), substantially
in the form of Exhibit B hereto, representing an undivided beneficial interest
in the Trust Estate not represented by Certificates.
(e) It is the intent of Telefonica del Peru and the Certificateholders that
for U.S. federal, state and local income tax purposes the Certificates will be
indebtedness of Telefonica del Peru, secured by the Purchased Receivables, and
the Trust will not be a separate entity but merely a security device.
(f) Concurrently with the execution of this Agreement, Telefonica del Peru
shall deliver to the Trustee an opinion with respect to this Agreement (in form
and substance reasonably satisfactory to the Trustee and to be negotiated in
good faith prior to the execution of this Agreement), dated the date of this
Agreement, of (A) the general counsel for Telefonica del Peru; and (B) ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇, special U.S. counsel for Telefonica del Peru.
SECTION 2.04. Form of Certificates. (a) The Certificates shall be issued in
fully registered form in Authorized Denominations. The Certificates shall be
signed in the name and on behalf of the Trust by the manual or facsimile
signature of an authorized signatory of the Trustee and shall not be valid or
obligatory for any purpose until so signed. In case any authorized signatory of
the Trustee whose signature, whether facsimile or not, shall appear on any of
the Certificates shall cease to be such an authorized signatory of the Trustee
before such Certificates shall have been issued and delivered by the Trustee or
shall not have been acting in such capacity on the date of such Certificates,
such Certificates shall nonetheless be issued and delivered as though such
individual had not ceased to be or had then been such an authorized signatory of
the Trustee.
18
(b) The Certificates, upon original issuance, shall be issued in the form
of typewritten certificates representing Book-Entry Certificates, to be
delivered to the Depository or to a custodian of the Depository specified
herein. The Certificates shall initially be registered on the Register in the
name of Cede & Co. as the initial nominee of the Depository. No Certificate
Owner will receive a definitive certificate representing such Certificate
Owner's interest in the Certificates, except as provided in Section 2.04(c)
below. Unless and until definitive, fully registered Certificates ("Definitive
Certificates") have been issued to Certificate Owners pursuant to Section
2.04(c):
(i) the provisions of this Section 2.04(b) shall be in full force and
effect with respect to such Certificates;
(ii) except as otherwise provided in Section 6.02(b), the Trustee may
deal with the Depository for all purposes (including the making of
distributions on, and the giving of notices with respect to, the
Certificates) as the authorized representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section 2.04(b)
conflict with any other provisions of this Agreement, the provisions of
this Section shall control with respect to the Certificates;
(iv) the rights of Certificate Owners of the Certificates shall be
exercised only through the Depository and shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository;
(v) except as provided in clause (ii) above, all references in this
Agreement to distributions, notices, reports and statements to
Certificateholders shall refer to distributions, notices, reports and
statements to the Depository for distribution to the Certificate Owners in
accordance with the Depository's applicable procedures;
(vi) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Certificateholders evidencing a
specified percentage of the Certificate Balance, the Depository shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from Certificateholders owning or representing,
respectively, such required percentage of the Book-Entry Certificates and
has delivered such instructions to the Trustee; and
(vii) any transfer of an interest in a Book-Entry Certificate by a
Certificateholder will be subject to the restrictions set forth in Section
2.09 below and subject to registration with the Register in accordance with
Section 2.05.
(c) If (i) (A) Telefonica del Peru advises the Trustee in writing that the
Depository is no longer willing or able to continue as depository for any Rule
144A Global Certificate or Regulation S Global Certificate or discharge properly
its responsibilities under the applicable
19
depository agreement, and (B) neither the Trustee nor Telefonica del Peru is
able to locate a qualified successor or (ii) Telefonica del Peru, at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository with respect to the Certificates, the Trustee shall
notify all Certificate Owners of the Certificates, through the applicable
Depository participants, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners of the
Certificates requesting the same. Upon surrender to the Trustee of the
Certificates by the Depository, accompanied by re-registration instructions, the
Trustee shall, without charge to the Certificate Owners, issue Definitive
Certificates of the Certificates. Neither Telefonica del Peru nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates of the Certificates, all references
herein to obligations imposed upon or to be performed by the Depository shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates, and the Trustee shall recognize
the holders of the Definitive Certificates of the Certificates as
Certificateholders of the Certificates hereunder.
SECTION 2.05. Registration of Certificates. (a) The Certificates: (i) if
issued in registered form shall be promptly registered by the Trustee and shall
show the Original Face Amount thereof and the name of the Certificateholder
thereof; (ii) except as provided herein shall be transferable, in whole or in
part, and exchangeable for other Certificates of other Authorized Denominations
of equal aggregate Original Face Amount upon presentation and surrender thereof
for registration of transfer or exchange at the Corporate Trust Office,
accompanied, in the case of transfer, by appropriate instruments of assignment
and transfer, duly executed by the Certificateholder thereof or by its duly
authorized attorney (together with evidence of the power of attorney and any
other documents or instruments required hereunder pursuant to which such
Certificates were issued) in form satisfactory to the Trustee; (iii) shall, in
connection with the initial issuance thereof, be dated as of the Closing Date
and shall, in connection with Certificates in registered form issued in exchange
for another Certificate, or upon registration of transfer, be dated as of the
date of registration thereof (which registration of transfer shall be made
within five Business Days after delivery of the documentation set forth in
clause (ii) above); and (iv) shall, except as provided in Section 2.05(e)
hereof, entitle the Certificateholder thereof to payments in respect thereof.
Except as provided herein pursuant to which such Certificates were issued, the
several denominations of Certificates shall be interchangeable in Authorized
Denominations at the Corporate Trust Office. In the event that any outstanding
Certificate presented for exchange is divided into more than one Certificate,
the Original Face Amount of such outstanding Certificate shall be divided among
such subsequently issued Certificates as directed by the Certificateholder
presenting such outstanding Certificate and the Original Face Amount set forth
on such subsequently issued Certificates shall be deemed to be the Original Face
Amount of such subsequently issued Certificates.
(b) Prior to registration of transfer of a Certificate in registered form,
the Trustee shall deem and treat the Person in whose name such Certificate is
registered as the absolute owner of such Certificate for all purposes and shall
not be affected by any notice to the contrary.
20
(c) Unless otherwise provided herein, the Trustee shall cause to be kept at
the Corporate Trust Office a separate register for each Certificate (a
"Register") in which it shall (i) register the issuance and transfer each
Certificateholder's interest in each Certificate, (ii) record the Original Face
Amount of each Certificate and all reductions thereto and all payments made in
respect thereof and (iii) record any other matters required pursuant to the
terms hereof. Upon presentation of any Certificates in registered form for
registration of transfer, the Trustee shall, subject to any restrictions
contained herein, register any transfer or exchange as hereinabove provided and
under such reasonable regulations as it may prescribe. The Register and the
entries thereon shall be conclusive in the absence of manifest error.
(d) No fee shall be charged to the Certificateholder of any Certificate for
any registration of transfer or exchange, but the Trustee may require payment by
the Person requesting such registration of a sum sufficient to reimburse it for
any governmental tax, charge or other similar expense connected therewith.
(e) The "Record Date" with respect to each Payment Date for the
Certificates shall be the first day of the calendar month on which such Payment
Date occurs, or if such Record Date is not a Business Day, on the immediately
preceding Business Day, and all payments to be made by the Trustee on or after a
Record Date up to the next succeeding Record Date shall be made to the
Certificateholders of record on such preceding Record Date.
SECTION 2.06. Replacement of Certificates. In case any Certificate shall
become mutilated or defaced or be lost, destroyed or stolen, then on the terms
herein set forth, and not otherwise, the Trustee shall execute and deliver a new
Certificate, with the same Original Face Amount and date, and bearing such
identifying number or designation as the Trustee may determine, in exchange and
substitution for, and upon cancellation of, such mutilated or defaced
Certificate, or in lieu of and in substitution for the same if lost, destroyed
or stolen. The applicant for a new Certificate pursuant to this Section 2.06
shall furnish to the Trustee evidence to the Trustee's satisfaction of the loss,
destruction or theft of such Certificate alleged to have been lost, destroyed or
stolen and of the ownership and authenticity of such mutilated, defaced, lost,
destroyed or stolen Certificate, and also shall furnish such security or
indemnity as may be required by the Trustee, and shall pay all expenses and
charges of such substitution or exchange (including legal fees of the Trust, the
Paying Agent and the Trustee). All mutilated or defaced Certificates shall be
disposed of by the Trustee in accordance with its policy of disposal upon its
delivery of a new Certificate to the Certificateholder of such mutilated or
defaced Certificate.
SECTION 2.07. Payments on Certificates. Unless otherwise provided herein,
payments on Certificates shall be payable by wire transfer or other means
pursuant to the payment instructions of any Certificateholder (which may be
standing instructions applicable to all payments until subsequent notices are
given) provided to the Trustee at least five Business Days prior to the date of
such payment. If on the date of any such payment, the Trustee has not received
payment instructions satisfactory to the Trustee, the Trustee shall promptly
notify the Certificateholder or Certificateholders failing to deliver
satisfactory payment instructions that the Trustee is holding such amounts on
its behalf. Absent receipt of such payment instructions, the Trustee shall make
payments to Certificateholders by check in U.S. dollars. All payments to
Certificateholders shall
21
be in Dollars, but only from and out of monies received by the Trustee as a
portion of the Trust Estate in which such Certificateholder has an interest and
applicable to such payment under the provisions hereof. By acceptance of its
Certificate, each Certificateholder agrees that, unless otherwise provided
herein, upon final payment of all amounts due hereunder in respect of such
Certificate it shall promptly surrender its Certificate to the Trustee for
cancellation. All Certificates surrendered to the Trustee for cancellation or
for registration of transfer or exchange shall be canceled and disposed of by
the Trustee in accordance with its policy of disposal.
SECTION 2.08. Statement of Rights in Certificates. Subject to the terms
hereof, in the event that any Certificateholder of a Certificate desires to
transfer its Certificate, the Trustee, upon written request, shall issue a
statement setting forth the then outstanding Adjusted Face Amount as shown on
the appropriate Register.
SECTION 2.09. Certain Transfer Restrictions. (a) No Certificate, or
interest therein, may be sold or transferred (including by pledge or
hypothecation) except in accordance with this Section 2.09 and unless (i) the
registration requirements of the Act and any applicable state securities are
complied with, or (ii) such transfer is made to a Person (A) that the transferor
reasonably believes after due inquiry is a QIB that is acting for its own
account (and not for the account of others) or as a fiduciary or an agent for
others (which others are QIBs) to whom notice is given that the transfer is
being made in reliance on Rule 144A or (B) to a non-U.S. person in an offshore
transaction in accordance with Regulation S, and in each case in compliance with
the Securities Act and any other applicable securities laws. Through and
including the "40-day restricted period" (within the meaning of Rule 903(c)(3)
of Regulation S), which date is January 25, 1999, beneficial interests in the
Regulation S Global Certificates may be held only through the Depository (in the
United States) or Euroclear or Cedel (in Europe), as participating organizations
in the Depository, unless transferred to a QIB that takes delivery of such
beneficial interest through a Rule 144A Global Certificate or, in certain
circumstances, through one or more Definitive Certificates in accordance with
the terms hereof. Beneficial interests in the Rule 144A Global Certificates may
not be exchanged for beneficial interests in the Regulation S Global
Certificates at any time except in accordance with the terms hereof. Any
Certificate, or interest therein, transferred or sold that is not in compliance
with this Section 2.09 shall be null and void. The Trustee shall have no
liability with respect to any Certificate which has become null and void.
(b) In addition, no transfer of a Certificate, or interest therein, will be
made unless the prospective transferee has certified to the Trustee that at
least one of the following statements is an accurate representation as to the
source of funds to be used by it to pay the purchase price of the Certificate,
or interest therein, or as to its acquisition of the Certificate, or interest
therein, as applicable. Either (i) the source is an ?insurance company general
account" within the meaning of Department of Labor Prohibited Transaction Class
Exemption 95-60 ("PTE 95-60") and all of the applicable requirements of PTE
95-60 are satisfied and the acquisition of the Certificates is exempt from the
prohibited transaction restrictions of ERISA and Section 4975 of the Code to the
fullest extent provided under such exemption; or (ii) the source does not
include assets of any "employee benefit plan" as defined in Section 3(3) of
ERISA that is subject to Title I of ERISA or any "plan" as defined in Section
4975 of the Code or any entity which may be deemed to hold the assets of any
22
such plan pursuant to regulations promulgated by the United States Department of
Labor at 29 C.F.R. (S) 2510.3-101 or otherwise (a "Benefit Plan").
(c) Rule 144A Global Certificate to Regulation S Global Certificate. After
the expiration of the ?40-day restricted period" (within the meaning of Rule
903(c)(3) of Regulation S), which date is January 25, 1999, if a
Certificateholder of a Rule 144A Global Certificate deposited with the
Depository wishes at any time to exchange its interest in such Rule 144A Global
Certificate for an interest in a Regulation S Global Certificate, or to transfer
its interest in such Rule 144A Global Certificate to a Person who wishes to take
delivery thereof in the form of an interest in such Regulation S Global
Certificate, such Certificateholder may, subject to the rules and procedures of
Euroclear or Cedel and the Depository and to the requirements set forth in the
following sentence, exchange or cause the exchange or transfer or cause the
transfer of such interest for an equivalent interest in such Regulation S Global
Certificate. Upon receipt by the Trustee, as transfer agent, at the Corporate
Trust Office of (1) instructions given in accordance with Euroclear or Cedel and
the Depository's procedures from an agent member directing the Trustee to credit
or cause to be credited such Regulation S Global Certificate in an amount equal
to the interest in the Rule 144A Global Certificate to be exchanged or
transferred, (2) a written order given in accordance with the Depository's
procedures containing information regarding the participant account of the
Depository and such order to contain information regarding the agent member's
account with the Depository or Euroclear or Cedel to be credited with such
increase and (3) a certificate given by the transferor (upon which the Trustee
may conclusively rely), the Trustee, as transfer agent, shall instruct the
Depository, its nominee, or the custodian for the Depository, as the case may
be, to reduce or reflect on its records a reduction of such Rule 144A Global
Certificate by the aggregate principal amount of the interest in such Rule 144A
Global Certificate to be so exchanged or transferred and the Trustee, as
transfer agent, shall instruct the Depository, its nominee, or the custodian for
the Depository, as the case may be, concurrently with such reduction, to
increase or reflect on its records an increase of the principal amount of such
Regulation S Global Certificate by the aggregate principal amount of the
interest in such Rule 144A Global Certificate to be so exchanged or transferred,
and to credit or cause to be credited to the account of the Person specified in
such instructions an interest in such Regulation S Global Certificate equal to
the reduction in the principal amount of such Rule 144A Global Certificate.
(d) Regulation S Global Certificate to Rule 144A Global Certificate. If a
Certificateholder of a Regulation S Global Certificate that is deposited with
the Depository wishes at any time to exchange its interest for an interest in a
Rule 144A Global Certificate, or to transfer its interest in such Regulation S
Global Certificate to a Person who wishes to take delivery thereof in the form
of an interest in such Rule 144A Global Certificate, such Certificateholder may,
subject to the rules and procedures of Euroclear or Cedel and the Depository, as
the case may be, and to the requirements set forth in the following sentence,
exchange or cause the exchange or transfer or cause the transfer of such
interest for an equivalent interest in such Rule 144A Global Certificate. Upon
receipt by the Trustee, as transfer agent, at the Corporate Trust Office of (1)
instructions from Euroclear or Cedel or the Depository, as the case may be,
directing the Trustee, as transfer agent, to credit or cause to be credited such
Rule 144A Global Certificate equal to the interest in the Regulation S Global
Certificate to be exchanged or transferred, such instructions to contain
information regarding the agent member's account with the Depository to be
credited with such
23
increase, and (2) a certificate given by the transferor (upon which the Trustee
may conclusively rely), the Trustee, as transfer agent, shall instruct the
Depository, its nominee, or the custodian for the Depository, as the case may
be, to reduce or reflect on its records a reduction of such Regulation S Global
Certificate by the aggregate principal amount of the interest in such Regulation
S Global Certificate to be exchanged or transferred, and the Trustee, as
transfer agent, shall instruct the Depository, its nominee, or the custodian for
the Depository, as the case may be, concurrently with such reduction, to
increase or reflect on its records an increase of the principal amount of such
Rule 144A Global Certificate by the aggregate principal amount of the interest
in such Regulation S Global Certificate to be so exchanged or transferred, and
to credit or cause to be credited to the account of the Person specified in such
instructions an interest in such Rule 144A Global Certificate equal to the
reduction in the principal amount of such Regulation S Global Certificate.
(e) Rule 144A Global Certificate to Rule 144A Global Certificate;
Regulation S Global Certificate to Regulation S Global Certificate. If a
Certificateholder of a Rule 144A Global Certificate that is deposited with the
Depository wishes at any time to exchange its interest for an interest in a Rule
144A Global Certificate, or to transfer its interest in such Rule 144A Global
Certificate to a Person who wishes to take delivery thereof in the form of an
interest in such Rule 144A Global Certificate, such Certificateholder may,
subject to the rules and procedures of Euroclear or Cedel and the Depository, as
the case may be, and to the other applicable provisions in this Agreement,
exchange or cause the exchange or transfer or cause the transfer of such
interest for an equivalent interest in such Rule 144A Global Certificate.
Similarly, if a Certificateholder of a Regulation S Global Certificate that is
deposited with the Depository wishes at any time to exchange its interest for an
interest in a Regulation S Global Certificate, or to transfer its interest in
such Regulation S Global Certificate to a Person who wishes to take delivery
thereof in the form of an interest in such Regulation S Global Certificate, such
Certificateholder may, subject to the rules and procedures of Euroclear or Cedel
and the Depository, as the case may be, and to the other applicable provisions
in this Agreement, exchange or cause the exchange or transfer or cause the
transfer of such interest for an equivalent interest in such Regulation S Global
Certificate.
(f) Other Exchanges. In the event that a Book-Entry Certificate is
exchanged for a Definitive Certificate pursuant to Section 2.02(c), such
exchange and any subsequent exchange or transfer of such Definitive Certificates
shall only be made in accordance with clauses (a) and (b) above and with such
procedures as are substantially consistent with the provisions of clauses (c)
and (d) above (including the certification requirements intended to ensure that
such exchanges or transfers comply with Rule 144A or Regulation S, as the case
may be) and as may be from time to time adopted by the Trustee.
(g) No Obligation To Monitor. The Trustee shall have no obligation or duty
to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Agreement or under applicable law with respect to
any transfer of any interest in any Certificate other than to require delivery
of such certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by the terms of, this
Agreement, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.
24
ARTICLE III
RIGHTS OF CERTIFICATEHOLDERS; ESTABLISHMENT OF ACCOUNTS
AND APPLICATION OF COLLECTIONS AND OTHER PAYMENTS
SECTION 3.01. Rights of Certificateholders and the holder of the Transferor
Certificate. Certificates shall represent and confer ratable entitlements to
payments and distributions to the Certificateholders and the holder of the
Transferor Certificate hereof at the time such entitlements vest in accordance
with the terms hereto and shall consist of the right to receive (a) the portion
of Collections and all other amounts allocable or payable to Certificateholders
and the holder of the Transferor Certificate pursuant to this Agreement, (b)
funds on deposit in the Collection Account, the Certificate Account, the Reserve
Account, the Debt Service Reserve Account and the Coverage Shortfall Account to
the extent provided herein; and (c) investment earnings on funds on deposit in
the Collection Account, the Certificate Account, the Reserve Account, the Debt
Service Reserve Account and the Coverage Shortfall Account to the extent
provided herein.
SECTION 3.02. Establishment of Accounts. (a) The Trustee shall establish
and maintain with the Trustee's Cayman Islands branch a non-interest bearing
segregated Eligible Account in the name of the Trustee designated as the
Telefonica del Peru Collection Account, ABA #▇▇▇▇▇▇▇▇▇, GLA #111-565, for
further credit to: A/C 356365 ("Collection Account"), which account shall be for
the express benefit of Telefonica del Peru, the Trust and the Certificateholders
in accordance with their respective interests therein. All Collections received
by the Trustee from any Designated Carrier or from any other Person in respect
of the Purchased Receivables on any Business Day shall be promptly deposited
into the Collection Account.
(b) The Trustee, for the express benefit of the Certificateholders, is
hereby authorized and directed to establish as part of the Trust Estate with the
Trustee's Cayman Island branch a non-interest bearing segregated Eligible
Account designated as the Telefonica del Peru Certificate Account, ABA
#▇▇▇▇▇▇▇▇▇, GLA #111-565, for further credit to: A/C 356366 (the "Certificate
Account"). The Trustee shall transfer funds in the Collection Account to the
Certificate Account as set forth in Section 3.03 hereof.
(c) (i) The Trustee, for the express benefit of the Certificateholders, is
hereby authorized and directed to establish as part of the Trust Estate with the
Trustee's Cayman Islands branch a non-interest bearing segregated Eligible
Account designated as the Telefonica del Peru Reserve Account, ABA #▇▇▇▇▇▇▇▇▇,
GLA #111-565, for further credit to: A/C 356367 (the "Reserve Account"). The
Reserve Account will initially be funded by the Trustee, on the Closing Date,
from the proceeds of the sale of Certificates to the Initial Purchaser by the
Trust, at the direction of Telefonica del Peru, with cash equal to the Reserve
Amount Cap. The Reserve Account will thereafter be maintained by the Trustee, to
the extent funds are available therefor from the assets of the Trust Estate, at
the Reserve Amount Cap and will be held as collateral by the Trustee in favor of
the Certificateholders until the Certificates are fully repaid. Provided that no
Specified Event has occurred and is continuing, if on any Payment Date the
balance on deposit in the Reserve Account exceeds the Reserve Amount Cap, the
Trustee will, on such Payment Date, be
25
required to pay promptly such excess to Telefonica del Peru as the holder of the
Transferor Certificate.
(ii) At the election of Telefonica del Peru, as an alternative to
maintaining the funding of the Reserve Account, Telefonica del Peru may cause a
letter of credit in a face amount equal to the Reserve Amount Cap (the "Reserve
LC"), denominated in Dollars, to be issued for the benefit of the Trustee on
behalf of the Certificateholders, by a Qualified LC Bank. The expiration date of
any such Reserve LC shall initially be the first anniversary of its issuance
date. If, with respect to any scheduled expiration on any such Reserve LC, the
expiration date of any such Reserve LC is not extended for an additional year
and confirmed by a Qualified LC Bank prior to 20 days before the expiration date
thereof, the Trustee promptly shall draw the full amount thereof and deposit
such amount in the Reserve Account.
(iii) In the event that on any Payment Date the collections of Purchased
Receivables are insufficient to pay amounts then due and payable with respect to
the Certificates, the Trustee shall draw amounts as necessary from the Reserve
Account or from the Reserve LC, as the case may be, to make up any shortfalls.
The face amount of the Reserve LC will be reinstated to the Reserve Amount Cap,
and all amounts due on the Reserve LC will be paid, in each case from funds
deposited in the Collection Account to the extent funds are available therefor
in accordance with Section 3.03(a).
(d) The Trustee, for the express benefit of the Certificateholders and
Telefonica del Peru, is hereby authorized and directed to establish as part of
the Trust Estate with the Trustee's Cayman Islands branch a non-interest bearing
segregated Eligible Account designated as the Telefonica del Peru Coverage
Shortfall, ABA #▇▇▇▇▇▇▇▇▇, GLA #111-565, for further credit to: A/C 356368 (the
"Coverage Shortfall Account"). If the sum of (i) the amount of Collections in
respect of Purchased Receivables deposited in the Collection Account during any
Collection Period plus (ii) the balance on deposit in the Debt Service Reserve
Account at the close of business on the Determination Date (as defined below)
(provided, however, that for purposes of this calculation, the portion of any
such balance in the Debt Service Reserve Account in excess of 110% of the Base
Receivables Amount for such Collection Period shall not be taken into account)
shall be less than 2.1 times the Base Receivables Amount for such Collection
Period (the extent to which such Collections fall below such multiple of the
Base Receivables Amount being the "Coverage Shortfall Amount"), as determined by
the Trustee on the fifth (5th) Business Day before the end of such Collection
Period (such date of determination with respect to a Collection Period, the
"Determination Date"; provided that the Determination Date for the Collection
Period ending December 14, 2001 shall be December ▇▇, ▇▇▇▇), ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
may, before the end of such Collection Period, deposit the Coverage Shortfall
Amount in the Coverage Shortfall Account to prevent the occurrence of Specified
Event; provided that Telefonica del Peru shall not be permitted to deposit the
Coverage Shortfall Amount to prevent such a Specified Event if it has so
deposited Coverage Shortfall Amounts in the Coverage Shortfall Account for each
of the two Collection Periods immediately preceding such Collection Period.
If the coverage test set forth above shall have been satisfied solely as a
result of Collections received from Designated Carriers plus the balance on
deposit in the Debt Service Reserve
26
Account at the close of business on the Determination Date for two consecutive
Collection Periods following the deposit of a Coverage Shortfall Amount, the
amounts in the Coverage Shortfall Account shall be released to Telefonica del
Peru.
Upon the occurrence and during the continuance of a Specified Event, the
Trustee will be required to deposit all amounts on deposit in the Coverage
Shortfall Account and the Debt Service Reserve Account (and, in addition, in the
case of a Specified Event under Section 4.01(i)(a), all amounts on deposit in
the Reserve Account) into the Collection Account and transfer all funds in the
Collection Account into the Certificate Account for distribution to the
Certificateholders.
(e) The Collection Account, the Certificate Account, the Reserve Account,
the Debt Service Reserve Account and the Coverage Shortfall Account shall each
be under the sole dominion and control of the Trustee.
(f) Except upon the occurrence and during the continuation of a Specified
Event, (i) the Trust, for the benefit of the holder of the Transferor
Certificate, shall have the right to receive all investment earnings on Eligible
Investments held in the Collection Account, the Certificate Account, the Reserve
Account, the Debt Service Reserve Account and the Coverage Shortfall Account
during any Collection Period and (ii) the amount of any loss incurred in respect
of such investments shall be reimbursed to the Trust Estate by deposit by
Telefonica del Peru in the applicable account immediately following notification
of such loss. In accordance with Section 3.05(b), the Trustee shall remit such
earnings to or at the direction of Telefonica del Peru on the first Business Day
following each Payment Date.
(g) (i) The Trustee, for the express benefit of the Certificateholders, is
hereby authorized and directed to establish as part of the Trust Estate with the
Trustee's Cayman Islands branch a non-interest bearing segregated Eligible
Account designated as the Telefonica del Peru Debt Service Reserve Account, ABA
#▇▇▇▇▇▇▇▇▇, GLA #111-565, for further credit to: A/C 356405 (the "Debt Service
Reserve Account"). Immediately following the execution of this Agreement, the
Debt Service Reserve Account shall be funded by Telefonica del Peru with cash
equal to 110% of the Base Receivables Amount due on the next succeeding Payment
Date of December 15, 2001. The Debt Service Reserve Account will thereafter be
maintained by the Trustee at a balance equal to 110% of the Base Receivables
Amount due on the next succeeding Payment Date and will be held as collateral by
the Trustee in favor of the Certificateholders until the Certificates are fully
repaid. Provided that no Specified Event has occurred and is continuing, and
unless the Trustee is notified pursuant to subsection (ii) below, if on any
Payment Date the balance then on deposit in the Debt Service Reserve Account
exceeds 110% of the Base Receivables Amount due on the next succeeding Payment
Date, the Trustee shall, on such Payment Date, be required to pay promptly such
excess to Telefonica del Peru as the holder of the Transferor Certificate. If at
any time the balance then on deposit in the Debt Service Reserve Account is less
than 110% of the Base Receivables Amount due on the next succeeding Payment
Date, the Company shall promptly, and in any event within five (5) Business Days
after notice from the Trustee of the occurrence of such deficiency, deposit into
the Debt Service Reserve Account the amount of such deficiency, in accordance
with Section 3.03 hereof.
27
(ii) If Telefonica del Peru notifies the Trustee in writing during a
Collection Period to maintain the balance in the Debt Service Reserve Account,
the Trustee will not pay any excess on deposit in the Debt Service Reserve
Account to Telefonica del Peru on the next succeeding Payment Date.
SECTION 3.03. Application of Collections. (a) Immediately following any
deposit of funds into the Collection Account on any day during a Collection
Period, the Trustee shall apply such funds in the following order of priority:
First, unless clause Second below shall apply in respect of a Specified
Event that has occurred and is continuing:
(1) for deposit into the Certificate Account, until the sum of
the funds then on deposit in the Certificate Account shall be
equal to the Semiannual Payment Amount for the next succeeding
Payment Date;
(2) after giving effect to subclause (1) of this clause First,
(A) for deposit into the Reserve Account, an amount equal to the
excess, if any, of (i) the Reserve Amount Cap as calculated for
the next succeeding Payment Date over (ii) the amount then on
deposit on the Reserve Account or (B) if a Reserve LC is then
outstanding due to an election of Telefonica del Peru to utilize
a Reserve LC pursuant to Section 3.02(c), for payment to the
Qualified LC Reserve Bank, an amount, if any, necessary to
reinstate the face amount of the Reserve LC to the Reserve
Amount Cap, as calculated for the next succeeding Payment Date;
(3) for deposit into the Debt Service Reserve Account, an amount
equal to the excess, if any, of (i) 110% of the Base Receivables
Amount due on the next succeeding Payment Date over (ii) the
balance then on deposit in the Debt Service Reserve Account; and
(4) after giving effect to subclause (3) of this clause First,
for payment to, or at the direction of, the holder of the
Transferor Certificate; and
Second, if (x) an Authorized Officer of the Trustee shall have actual
knowledge or (y) the Trustee shall have received written
notification in accordance with Section 4.02 and shall have
determined that a Specified Event shall have occurred and be
continuing, for deposit into the Certificate Account until the
first to occur of (i) the effectiveness of the cure or
termination of such Specified Event as set forth in Section
4.02(c) hereof (and, in the case of a Specified Event described
in Section 4.01(a) herein, such Specified Event shall not be
deemed to have been cured or terminated until the Trustee has
received an Officer's Certificate from Telefonica del Peru
setting forth information concerning Collections in respect of
the Purchased Receivables in reasonable detail and confirming
that such Specified Event was no longer
28
continuing at the close of the immediately preceding Collection
Period) and (ii) the reduction of the Certificate Balance of the
Certificates to zero.
(b) Until such time as the Certificate Balance shall be reduced to zero, on
each Payment Date, the Trustee shall, in the following order of priority, to the
extent funds are available therefor:
First, withdraw from the Certificate Account an amount equal to the
Certificate Interest for such Payment Date, and distribute such
funds to the Certificateholders;
Second, unless clause Third below shall apply in respect of a Specified
Event that has occurred and is continuing:
(1) after giving effect to clause First above, withdraw from the
Certificate Account an amount equal to the Amortization Amount
for such Payment Date, and distribute such funds to the
Certificateholders;
(2) after giving effect to subclause (1) of this clause Second,
withdraw from the Certificate Account unpaid Additional Amounts
(if any) due to Certificateholders and distribute such funds to
the Certificateholders (provided that such Additional Amounts
have not been paid directly to Peruvian taxing authorities); and
(3) after giving effect to subclause (2) of this clause Second,
withdraw from the Certificate Account the aggregate amount of
any and all unpaid Collection Shortfall Amounts from all
preceding Payment Dates and distribute such funds to the
Certificateholders; and
Third, if (x) an Authorized Officer of the Trustee shall have actual
knowledge or (y) the Trustee shall have received written
notification in accordance with Section 4.02 and shall have
determined that a Specified Event shall have occurred and be
continuing, after giving effect to clause First above, and until
the effectiveness of the cure or termination of such Specified
Event as set forth in Section 4.02(c) hereof, withdraw from the
Certificate Account an amount equal to the lesser of (i) such
amount as is necessary to reduce the Certificate Balance of the
Certificates to zero and (ii) the funds remaining in the
Certificate Account for such Payment Date, and distribute such
funds to the Certificateholders.
All payments shall be distributed by the Paying Agent on behalf of the Trustee
to the Certificateholders without priority of one over the other, on the basis
of each such Certificateholder's Proportionate Share, except that Additional
Amounts shall only be paid to Certificateholders entitled thereto.
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(c) Upon the occurrence of a Specified Event and continuing until the
effectiveness of the cure or termination thereof as set forth in Section 4.02(c)
hereof, the Trustee shall deposit all amounts on deposit in the Coverage
Shortfall Account and the Debt Service Reserve Account into the Collection
Account; provided that for the period beginning at the time the Trustee deposits
such amounts then on deposit in the Debt Service Reserve Account into the
Collection Account as set forth above and continuing until the earlier of (i)
the end of the Collection Period during which such Specified Event occurred and
(ii) the cure or termination of such Specified Event, the Trustee shall not
deposit or transfer into the Collection Account any additional amounts deposited
by Telefonica del Peru in the Debt Service Reserve Account during such period.
Upon the occurrence of a Specified Event under subparagraph (i)(a) of Section
4.01 and continuing until the effectiveness of the cure or termination thereof
as set forth in Section 4.02(c) hereof, the Trustee shall deposit all amounts on
deposit in the Reserve Account into the Collection Account.
(d) The Trustee shall, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed under U.S. tax law (including
applicable treaty provisions) ("U.S. Taxes") on a Certificateholder or on any
payments hereunder to any Certificateholder; provided, however, that prior to
deducting or withholding any amounts from any Certificateholder the Trustee
agrees to provide notice to any such Certificateholder stating that it is
subject to such deductions or withholding, and provided, further, that any such
amount so withheld shall be deemed to have been paid to the Certificateholder in
lieu and to the extent of amounts required to be distributed to such
Certificateholder under the terms of this Agreement. If within the time period
set forth in such notice (which shall not be less than ten Business Days) any
Certificateholder shall not have provided the Trustee with a certificate
required under U.S. tax law (including applicable treaty provisions) to
establish an exemption from or reduction in any applicable U.S. withholding tax,
the Trustee is hereby authorized and directed to withhold the full amount of
U.S. Taxes required to be withheld from any payment to such Certificateholder in
respect of any Certificate held by such Certificateholder. The Trustee may, and
at the request of Telefonica del Peru will, request properly completed IRS forms
W-8 or W-9, as appropriate, or any successor forms from each Certificateholder
as a condition to making payments to such Certificateholder in respect of such
Certificate without deduction for U.S. backup withholding tax. In the event that
any U.S. Taxes imposed on, or creditable against Taxes imposed on, a
Certificateholder, or Persons holding an interest in the Certificates through a
Certificateholder (including without limitation Taxes imposed under sections
1441, 1442 and 1446 of the Code and any comparable Taxes imposed by a state or
local taxing authority but excluding any Taxes imposed on a Certificateholder
that Telefonica del Peru is obligated to pay or indemnify against pursuant to
Sections 9.05 and 9.07 hereof) are paid by, or collected from, the Trust Estate,
the Trust, the Trustee or Telefonica del Peru (other than by means of
withholding from distributions as described above in this Section 3.03 (such
payment a "Tax Advance"), such Tax Advance shall (i) be repaid by reducing the
amount which would otherwise have been distributed to such Certificateholder
pursuant to this Section 3.03 or (ii) be promptly repaid to the Trustee by such
Certificateholder. If such Tax Advance is repaid in the manner described in
clause (i) of the preceding sentence, for all other purposes of this Agreement,
such Certificateholder shall be treated as if it had received all payments
payable pursuant to Section 3.03 unreduced by the amount of such Tax Advance. To
the extent that any Tax Advance (or portion thereof) shall have been collected
from Telefonica del Peru, any amounts paid by the Certificateholder to the
Trustee or retained by the Trustee pursuant to this paragraph in respect of
30
such Tax Advance shall be paid by the Trustee to Telefonica del Peru, less any
outstanding amounts payable by Telefonica del Peru under this Agreement,
provided that all amounts paid to or retained by the Trustee with respect to
such outstanding amounts are paid over promptly to the Person to whom they are
owed, and provided further, that the Trustee shall not be obligated to repay any
such Tax Advance unless and until an Authorized Officer of the Trustee has
actual knowledge that such a Tax Advance has been made or the Trustee has
received written notice of any such Tax Advance.
(e) Upon the making of any distribution to Certificateholders in respect of
the Certificates, the Trustee shall reflect in the Register maintained for the
Certificates the effect of such distribution on (i) the Adjusted Face Amount of
each Certificate shown on such Register and (ii) the Certificate Balance and any
Collection Shortfall Amount in respect of all Certificates shown on such
Register.
SECTION 3.04. Payments to the Trust. Until further notice by the Trustee,
all payments to the Trust shall be made by wire transfer in immediately
available funds to The Bank of New York, for the account of Telefonica del Peru
Collection Account, ABA #▇▇▇▇▇▇▇▇▇, GLA #111-565, for further credit to: A/C
356365 or to such other account as the Trustee shall designate in writing.
SECTION 3.05. Investment of Funds. (a) Subject to clause Second of Section
3.03(a) and to Section 3.03(c), available monies which remain in the Collection
Account on any day after the allocation set forth in subclause (1), (2) and (3)
of Clause First of Section 3.03(a) above shall be invested by the Trustee, at
the direction of Telefonica del Peru, in investments of the type set forth in
the definition of "Eligible Investments" that mature on the next Business Day.
All such investments shall be made in the name of the Trustee and, provided that
no Specified Event has occurred and is continuing, the resulting earnings, gains
and losses shall be credited to, or charged against, amounts on deposit in the
Collection Account for the benefit of the holder of the Transferor Certificate.
(b) Subject to clause Third of Section 3.03(b) and to Section 3.03(c),
available monies which are on deposit in the Certificate Account, Reserve
Account, Debt Service Reserve Account or Coverage Shortfall Account at the close
of any Business Day shall be invested by the Trustee based on written
instructions from an Authorized Officer of Telefonica del Peru in Eligible
Investments (or in the absence of any such instructions, in investments of the
type set forth in clause (a) of the definition of "Eligible Investments")
maturing on or before the date on which such amounts will be required to be
distributed pursuant to the terms hereof. All such investments shall be made in
the name of the Trustee and, provided that no Specified Event has occurred and
is continuing, the resulting earnings, gains and losses shall be applied and/or
allocated to Telefonica del Peru and shall be paid to Telefonica del Peru on the
first Business Day following each Payment Date.
(c) It is understood that available monies may remain temporarily
uninvested to the extent that the Trustee is instructed by Telefonica del Peru
to purchase Eligible Investments which are unavailable because: (i) the deadline
for purchasing such Eligible Investments on any Business Day is prior to the
time the monies to be invested are available or (ii) such Eligible Investments
are
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available only in specific denominations and the available monies to be invested
are not evenly divisible into such denominations.
(d) The Eligible Investments will be acquired or disposed of only if this
will not result in a downgrading in the rating of the Certificates and such
acquisition or disposition is not for the primary purpose of recognizing gains
or decreasing losses resulting from market value changes.
SECTION 3.06. Distribution of Redemption Price. Upon payment of the
Redemption Price (or any amount in respect thereof) by Telefonica del Peru to
the Trustee pursuant to this Agreement, the Trustee shall not deposit such
Redemption Price in the Collection Account or the Certificate Account or in any
other account referred to in Section 3.02 but shall promptly instruct the Paying
Agent to distribute to the Certificateholders, without priority of one over the
other, their respective Proportionate Shares of the Redemption Price.
ARTICLE IV
SPECIFIED EVENTS, SHORTFALLS
AND EFFECTS THEREOF
SECTION 4.01. Specified Events. Each of the following events shall
constitute a Specified Event hereunder:
(a) (i) The sum of (A) the amount of Collections in respect of Purchased
Receivables deposited in the Collection Account during any Collection
Period plus (B) the balance on deposit in the Debt Service Reserve Account
at the close of business on the Determination Date (provided, however, that
for purposes of this calculation, the portion of any such balance in the
Debt Service Reserve Account in excess of 110% of the Base Receivables
Amount for such Collection Period shall not be taken into account) shall be
less than 2.1 times the Base Receivables Amount for such Collection Period;
provided (1) it shall not be a Specified Event if Telefonica del Peru has
deposited the Coverage Shortfall Amount in Dollars in the Coverage
Shortfall Account before the end of such Collection Period, and (2)
Telefonica del Peru shall not be permitted to deposit the Coverage
Shortfall Amount as set forth in the foregoing clause (1) if it has
deposited Coverage Shortfall Amounts in the Coverage Shortfall Account for
each of the two Collection Periods immediately preceding such Collection
Period; or
(ii) at any time, the balance then on deposit in the Debt Service Reserve
Account shall be less than 110% of the Base Receivables Amount due on the
next succeeding Payment Date and Telefonica del Peru shall fail to deposit
the amount of such deficiency into the Debt Service Reserve Account within
five (5) Business Days following notice by the Trustee of the occurrence of
such deficiency.
If the coverage test set forth in Section 4.01(a)(i) above shall have
been satisfied solely as a result of Collections received from Designated
Carriers plus the balance on deposit in the Debt Service Reserve Account at
the close of business on the Determination
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Date for two consecutive Collection Periods following the deposit of a
Coverage Shortfall Amount, the amounts in the Coverage Shortfall Account
shall be released to Telefonica del Peru;
(b) both (a) (i) any Designated Carrier shall have delayed settlement payments
arising out of a tariff dispute or otherwise for a period of 150 days or
greater beyond the Due Settlement Date for such payments and (ii) the
Purchased Receivables subject to such delay represent in excess of 10% of
the aggregate Purchased Receivables (measured by reference to the volume of
Purchased Receivables generated by the Designated Carriers in the 12
calendar months prior to such Due Settlement Date) and (b) as a result (in
whole or in part) of the delay referred to in clause (a), one or more
Rating Agencies shall have lowered or withdrawn its then-current rating on
the Certificates; provided that if such Designated Carrier has been
replaced with another Designated Carrier which complies with the Additional
Designated Carrier Requirements, such event shall not be a Specified Event;
(c) there shall be any failure, except if such failure is the result of an
error or omission on the part of the Trustee, to pay when due any amount
payable to the Certificateholders on any Payment Date or Ratings Redemption
Date and such failure shall continue for two (2) Business Days after the
Payment Date or Ratings Redemption Date therefor;
(d) Telefonica del Peru shall have violated any of the covenants specified in
Section 9.01 hereof and such violation shall not have been remedied by the
forty-fifth (45th) day after the earlier of (i) an Authorized Officer of
Telefonica del Peru having actual knowledge of such violation and (ii)
written notice of such violation being given to an Authorized Officer of
Telefonica del Peru;
(e) the representations and warranties of Telefonica del Peru in this Agreement
and the Transfer Agreement shall have been untrue or incorrect in any
material respect when made, and such failure to be true or correct would be
reasonably likely to materially and adversely affect the timeliness,
amount, collectibility or payment frequency of Purchased Receivables;
(f) Telefonica del Peru shall have violated any of the covenants specified in
Section 9.02 hereof and such violation shall not have been remedied by the
fifteenth (15th) day after the earlier of (i) an Authorized Officer of
Telefonica del Peru having actual knowledge of such violation and (ii)
written notice of such violation being given to an Authorized Officer of
Telefonica del Peru;
(g) Telefonica del Peru shall have violated any of the covenants in Section
7.05 hereof, such violation would be reasonably likely to materially and
adversely affect the timeliness, amount, collectibility or payment
frequency of Purchased Receivables and such violation shall not have been
remedied by the fifteenth (15th) day after the earlier of (i) an Authorized
Officer of Telefonica del Peru having actual knowledge of such violation;
and (ii) written notice of such violation being given to an Authorized
Officer of Telefonica del Peru;
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(h) any judicial order or decree in any action or proceeding shall be entered
against Telefonica del Peru and such order or decree shall not have been
not dismissed or stayed within sixty (60) days of its entry such that the
timeliness, amount, collectibility or payment frequency of the Purchased
Receivables, taken as a whole, may be affected in any material respect;
(i) (a) an Insolvency Event of Telefonica del Peru or (b) both (i) an
Insolvency Event of any Designated Carrier representing 10% or more of the
aggregate Purchased Receivables (measured by reference to the volume of
Purchased Receivables generated by the Designated Carriers in the 12
calendar months prior to the initial date of legal filing for any such
Insolvency Event) shall have occurred and (ii) as a result of (in whole or
in part) such Insolvency Event referred to in clause (i), one or more
Rating Agencies shall have lowered or withdrawn its then-current rating on
the Certificates; provided that if such Designated Carrier has been
replaced with another Designated Carrier which complies with the Additional
Designated Carrier Requirements, such event shall not be a Specified Event;
(j) any Transaction Document (other than the Carrier Notices to any Designated
Carrier that has been replaced or withdrawn in accordance with the
procedure set forth in Section 7.03 herein) shall cease to be in full force
and effect;
(k) both (a) there shall occur a termination of exchange of services by either
Telefonica del Peru or any Designated Carrier representing 10% or more of
the aggregate Purchased Receivables (measured by reference to the volume of
Purchased Receivables generated by the Designated Carriers in the 12
calendar months prior to such notice of termination) at the time of such
termination and (b) as a result of (in whole or in part) any termination
referred to in clause (a), one or more Rating Agencies shall have lowered
or withdrawn its then-current rating on the Certificates; provided that if
any such Designated Carrier has been replaced with another Designated
Carrier which complies with the Additional Designated Carrier Requirements,
such event shall not be a Specified Event;
(l) Telefonica del Peru shall sell, transfer, assign or encumber Purchased
Receivables, other than pursuant to the Transfer Agreement;
(m) both (a) Telefonica S.A. shall fail to own, directly or indirectly, at
least 20% of the voting stock of Telefonica del Peru and (b) as a result of
(in whole or in part) such failure, one or more Rating Agencies shall have
lowered or withdrawn its then-current rating on the Certificates;
(n) the Government of Peru shall contest the sale of the Purchased Receivables
or the enforceability of the Transaction Documents, and such contest is not
withdrawn or effectively terminated by the thirtieth (30th) day after the
earlier to occur of (i) an Authorized Officer of Telefonica del Peru having
actual knowledge of such contest and (ii) written notice of such contest
being given to an Authorized Officer of Telefonica del Peru; or Telefonica
del Peru or any Affiliate of Telefonica del Peru shall contest the sale of
the Purchased Receivables or the enforceability of the Transaction
Documents.
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SECTION 4.02. Notices Upon the Occurrence of a Specified Event. (a) If (x)
an Authorized Officer of the Trustee shall have actual knowledge or (y) the
Trustee shall receive written notice from Telefonica del Peru or any
Certificateholder and the Trustee shall have determined that a Specified Event
has occurred and is continuing, the Trustee, in addition to providing all
notices required by Section 5.03 hereof, shall promptly issue written notice of
such Specified Event to Telefonica del Peru and the Certificateholders, which
notice shall state that the application of Collections pursuant to Section 3.03
shall be effected as set forth therein and whether the Certificateholders are
entitled to the payment of the Redemption Price under Section 4.03 hereof.
(b) After the occurrence and during the continuance of a Specified Event,
the Trustee shall take or refrain from taking such actions, and shall exercise
such rights, with respect to the Certificates as are set forth herein and in
Article V of this Agreement or as the Required Percentage of Certificateholders
by Written Direction shall direct.
(c) Upon the curing or termination of a Specified Event, an Officer's
Certificate of Telefonica del Peru shall be delivered to the Trustee identifying
the events causing the Specified Event and describing the actions which were
taken to cure or terminate such events (including, in the case of a Specified
Event described in Section 4.01(a) hereof, setting forth information concerning
Collections in respect of the Purchased Receivables in reasonable detail and
confirming the respective balances on deposit in the Collection Account, the
Debt Service Reserve Account and the Coverage Shortfall Account) and certifying,
as applicable, that such Specified Event has been cured or terminated as
permitted under this Agreement; such cure or termination shall only become
effective upon receipt by the Trustee of such Officer's Certificate.
SECTION 4.03. Redemption Obligation. (a) If at any time after the Closing
Date, any Specified Event described in subparagraphs (c) through (j), inclusive,
or (l) through (n), inclusive, of Section 4.01 hereof shall have occurred and be
continuing, at the written direction to the Trustee of the Required Percentage
of Certificateholders, the Trust shall redeem all but not less than all, of the
then outstanding Certificates for the Redemption Price. Upon notice by the
Trustee, Telefonica del Peru will be required to pay to the Trustee the
Redemption Price, and upon receipt of such payment, the Trustee shall (i)
distribute such Redemption Price to the Certificates pro rata and (ii) execute
such documents and take such other steps as Telefonica del Peru may reasonably
request to convey back to Telefonica del Peru the unpaid balance of the
Purchased Receivables. Telefonica del Peru acknowledges that until Telefonica
del Peru shall have paid the Redemption Price to the Trustee in full as required
pursuant to this Section 4.03(a) or the Trustee shall have otherwise received
such amount, the Trustee shall apply all funds in the Collection Account
pursuant to clause "Second" of Section 3.03(a) hereof and shall apply all funds
in the Certificate Account pursuant to clause "Third" of Section 3.03(b) hereof.
(b) If Telefonica del Peru shall not pay the Redemption Price to the
Trustee as required under Section 4.03(a), the Trustee, at the written direction
of the Required Percentage of Certificateholders, may proceed to enforce and
protect the rights of the Certificateholders by an action at law, suit in equity
or other appropriate proceeding. Telefonica del Peru shall pay to the Trustee
such amount in addition to the Redemption Price as shall be sufficient to cover
the cost and
35
expenses of instituting such action, suit or proceeding, including without
limitation, attorneys' fees, expenses and disbursements. No course of dealing
and no delay on the part of the Trustee or the Certificateholders in enforcing
the rights of the Certificateholders under this Section 4.03(b) shall operate as
a waiver thereof or otherwise prejudice their rights, powers or remedies under
this Section 4.03. The Certificateholders' right to the Redemption Price shall
not be exclusive of any other right, power or remedy referred to herein or now
or hereinafter available at law, in equity, by statute or otherwise.
ARTICLE V
THE TRUSTEE'S DUTIES;
APPOINTMENT OF SUCCESSOR TRUSTEE
SECTION 5.01. Acceptance of Trust. The Trustee hereby accepts its
appointment as trustee hereunder and accepts the trust and duties imposed upon
it by this Agreement, and covenants and agrees to perform the same as herein
provided.
SECTION 5.02. Representations and Warranties of the Trustee. The Trustee
represents and warrants that, at all times, such of the following is true and
will be true:
(a) it is a "security intermediary" within the meaning of the UCC;
(b) each of the Trust Accounts is a "securities account" as such term is
defined in Section 8-501(a) of the UCC and will be maintained as such until
termination of this Agreement;
(c) the "securities intermediary's jurisdiction" with respect to securities
entitlements to securities or other financial assets held in the Trust Accounts
is the State of New York;
(d) this Agreement is a valid and binding obligation of the Trustee
enforceable against the Trustee in accordance with its terms.
The Trustee, as "securities intermediary", hereby agrees to accept
"entitlement orders" without the consent of Telefonica del Peru.
SECTION 5.03. Duties and Responsibilities of the Trustee. (a) During a
Specified Event. If at any time (i) an Authorized Officer of the Trustee obtains
actual knowledge of the occurrence of or cure or termination of a Specified
Event or (ii) the Trustee receives written notice of the occurrence of a
Specified Event from Telefonica del Peru or any Certificateholder and determines
that a Specified Event has occurred, the Trustee shall promptly declare that
such a Specified Event has occurred or been cured or terminated by issuing
written notice thereof in accordance with Sections 4.02 and 6.02(c)(i)(A)), in
each case, to the Rating Agencies, the Certificateholders and Telefonica del
Peru. In addition, after the occurrence of a Specified Event and during the
continuation thereof, the Trustee shall take or refrain from taking such
actions, and shall exercise such rights, with respect to the Certificates, as
are set forth in this Agreement or as the Required Percentage of
Certificateholders by Written Direction shall direct; provided, however, that in
the absence of any such direction, the Trustee shall act on behalf of the
36
Certificateholders using the same degree of care, skill and diligence as a
prudent business person would exercise or use under the circumstances in the
conduct of his or her own affairs and provided, further, that in any event the
Trustee shall take only such action or remedy in respect of such Specified Event
as is provided for in this Agreement.
(b) Duties of Trustee Generally. The Trustee, prior to the declaration and
after the effective cure of a Specified Event, shall perform such duties and
only such duties as are specifically set forth in this Agreement (it being
agreed that no implied covenants or obligations of the Trustee shall be read
into this Agreement) or as shall be specifically directed by the Required
Percentage of Certificateholders. In performing its duties hereunder (whether or
not a Specified Event has occurred or been declared):
(i) the Trustee in good faith may conclusively rely as to the truth of the
statements and the correctness of the opinions expressed in any Opinion of
Counsel furnished to the Trustee pursuant to this Agreement on the Closing Date
or on any subsequent date, and upon any certificates, reports, instructions,
directions, notices, documents or orders furnished to the Trustee appearing on
their face to conform to the requirements of this Agreement; but in the case of
any certificates, reports, instructions, directions, notices, documents, orders
or Opinions of Counsel which by any provision hereof, are specifically required
to be furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they appear on their face to conform to the
requirements of this Agreement and the Trustee shall give prompt notice to the
Person delivering any such document of any lack of conformity determined by the
Trustee of any such document to the applicable requirements of this Agreement;
(ii) the Trustee shall not be liable for any error of judgment made by it
in good faith; provided, however, that, subject to the terms of this Agreement,
the foregoing provisions of this clause (ii) shall not excuse the Trustee from
liability for its action or inaction which was contrary to the express
provisions of this Agreement or any Written Direction or for its own negligence,
bad faith or willful misconduct;
(iii) the Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with a Written
Direction relating to any power conferred upon the Trustee under this Agreement
or the time, method and place of conducting any proceeding for any remedy
available to the Trustee;
(iv) the Trustee may in good faith rely upon, and shall be protected in
acting or refraining from acting upon, and shall not be bound to make any
investigation into the facts or matters stated in, any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
Certificate, guaranty or other paper or document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(v) the Trustee may consult with and rely upon counsel of its selection and
the written advice of such counsel and any Opinion of Counsel delivered to it
hereunder shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice of counsel or Opinion of Counsel;
37
(vi) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement and pursuant to a Written Direction
unless the Certificateholders giving such Written Direction shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities (including, without limitation, attorneys' fees and expenses) which
might be incurred therein or thereby;
(vii) none of the provisions contained in this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers;
(viii) the Trustee shall have the right to decline to take any action
requested or directed by the Required Percentage of Certificateholders if the
Trustee shall have been advised by counsel that such action may not be lawfully
taken by it; and
(ix) the Trustee shall not be liable for any action taken, suffered or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement.
Whether or not expressly so provided herein, every provision of this Agreement
relating to the conduct or affecting the liability of, or affording protection
to, the Trustee shall be subject to the provisions of this Section 5.03;
provided, however, that no provision of this Agreement shall be construed to
relieve the Trustee from liability for breach of obligation or for its
negligence, bad faith or willful misconduct.
SECTION 5.04. Trustee Not Liable for Purchased Receivables; Performance of
Trustee's Duties. The Trustee shall not be liable to any Person for any delay or
failure in the generation of any Purchased Receivables or for any default on the
part of Telefonica del Peru or the Designated Carriers under the applicable
Service Agreements between such Designated Carriers and Telefonica del Peru, the
Instructions or this Agreement . THE TRUSTEE MAKES NO REPRESENTATION OR WARRANTY
EXPRESS OR IMPLIED AS TO THE TITLE, VALUE, CONDITION, OR COLLECTIBILITY OF THE
PURCHASED RECEIVABLES OR THE CREATION OR PERFECTION OF ANY SECURITY INTEREST IN
THE PURCHASED RECEIVABLES OR ANY OTHER PART OF THE TRUST ESTATE IN FAVOR OF ANY
PERSON OR ANY OTHER REPRESENTATION OR WARRANTY EXPRESS OR IMPLIED WITH RESPECT
TO THE PURCHASED RECEIVABLES WHATSOEVER.
(a) The Trustee may execute any of the trusts or perform its powers and
duties hereunder by or through such attorneys and agents as it shall appoint.
The Trustee shall not be liable for the default or misconduct of any
accountants, appraisers or other experts or advisers appointed and supervised by
it with reasonable care and diligence.
(b) The Trustee in its individual capacity may own, hold and dispose of
Certificates and, subject only to any restrictions contained herein, shall enjoy
and exercise the same rights and powers in connection therewith as enjoyed and
exercised by any other Certificateholder.
38
(c) Each Certificateholder, by its acceptance of its Certificates,
acknowledges and agrees that the Trustee in its individual capacity is not the
issuer of the Certificates for any Federal or state securities law purposes.
(d) The Trustee in its individual capacity may lend money to, and otherwise
engage in any kind of business with Telefonica del Peru, the Designated Carriers
or any Affiliates of any of the foregoing.
(e) Each Certificateholder, by its acceptance of its Certificates,
acknowledges and agrees that the Trustee makes no representations or warranties
to the Certificateholders with respect to the characterization of the Trust or
the Certificates for Federal, state or local income tax purposes.
(f) The Trustee shall not be deemed to have notice of any Specified Event
or Incipient Specified Event unless an Authorized Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a Specified Event or Incipient Specified Event is received by the Trustee
at the Corporate Trust Office of the Trustee, and such notice references the
Certificates and this Agreement.
(g) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
(h) The Trustee shall not be responsible for the existence, genuineness or
value of any of the Purchased Receivables, whether impaired by operation of law
or by reason of any action or omission to act on its part hereunder, except to
the extent such action or omission constitutes negligence, bad faith or willful
misconduct on the part of the Trustee, for the validity or sufficiency of the
Purchased Receivables or any agreement or assignment contained therein, for the
validity of the title to the Purchased Receivables, for insuring the Purchased
Receivables or for the payment of taxes, charges, assessments or Liens upon the
Purchased Receivables or otherwise as to the maintenance of the Purchased
Receivables.
SECTION 5.05. Resignation and Removal; Appointment of Successor Trustee.
(a) The Trustee may resign and be discharged of the Trust by giving at
least sixty (60) days' written notice to each Rating Agency, each Designated
Carrier, Telefonica del Peru and the Required Percentage of Certificateholders,
and such resignation shall take effect upon (i) receipt by the Trustee of an
instrument of acceptance executed by a successor trustee as herein provided in
Section 5.06, and (ii) receipt by each Designated Carrier of a notice to make
all payments in respect of the Purchased Receivables to a designated account of
such successor trustee.
(b) The Trustee may be removed at any time for cause (including, without
limitation, in connection with the failure of the Trustee to maintain in full
force and effect any license required to
39
conduct business in the State of New York) by the Required Percentage of
Certificateholders or Telefonica del Peru pursuant to a written notice delivered
to the Trustee, each Designated Carrier, each Rating Agency, Telefonica del Peru
and all of the Certificateholders not less than thirty (30) days prior to the
date of removal. The Trustee may be removed at any time without cause by a
written notice of the Required Percentage of Certificateholders delivered to the
Trustee, each Designated Carrier, each Rating Agency, Telefonica del Peru and
all of the Certificateholders. Any such removal shall take effect upon (i)
receipt by the Trustee of an instrument of acceptance executed by a successor
trustee as herein provided in Section 5.06 and (ii) the receipt by each
Designated Carrier of a notice to make all payments in respect of the Purchased
Receivables to a designated account of such successor Trustee.
(c) If at any time the Trustee shall issue a notice of resignation or
receive a notice of removal, Telefonica del Peru or, if it does not do so, then
any Certificateholder, may by written notice propose a successor trustee (and if
necessary propose alternative candidates seriatim) to the Certificateholders,
or, if applicable, to the other Certificateholders, for approval by the Required
Percentage of Certificateholders. In the event that no such successor trustee is
appointed by Written Direction within 30 days after the giving of notice of
resignation, the Trustee may request a court to make such appointment. Any
court-appointed successor trustee shall automatically be replaced by a successor
trustee subsequently appointed by Written Direction. Every successor trustee
appointed pursuant to this Section 5.05 shall be a national bank or a bank or
trust company incorporated under the laws of the State of New York, having its
principal office in The City of New York, having a capital and surplus of not
less than $100,000,000 and a rating on its long-term unsecured debt obligations
of not less than "▇-", "▇-" ▇▇ "▇▇" by Standard & Poor's, Fitch and ▇▇▇▇▇'▇,
respectively (provided that, if such successor trustee is not rated by Standard
& Poor's, Fitch or ▇▇▇▇▇'▇ and is 100% owned by a parent corporation which is so
rated, such parent corporation shall have a rating of not less than "A-", "A-"
or "A3", respectively) and subject to regulations regarding fiduciary funds on
deposit substantially similar to 12 C.F.R. 9.10(b), if there be such an
institution willing, qualified and able to accept the trust upon reasonable and
customary terms. Until a successor trustee has been appointed to act as Trustee
hereunder, no such resignation or removal shall be effective, and the Trustee
shall continue to perform its duties hereunder.
SECTION 5.06. Acceptance of Appointment by Successor Trustee. Any successor
Trustee appointed as provided in Section 5.05 hereof, prior to or upon such
appointment, shall execute, acknowledge and deliver to its predecessor Trustee,
each Designated Carrier, the Certificateholders and Telefonica del Peru an
instrument accepting such appointment hereunder, and, with respect to each
Designated Carrier, a notice to make all payments in respect of the Purchased
Receivables to a designated account of the successor Trustee, and upon receipt
by the Trustee of such instrument and receipt by each Designated Carrier of such
notice, the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein; but, nevertheless, on the written request of the
Required Percentage of Certificateholders or the written request of the
successor Trustee, the predecessor Trustee ceasing to act shall execute and
deliver, without representation or warranty (express or implied) or recourse, an
instrument transferring to such successor Trustee all the rights and powers of
the predecessor Trustee so
40
ceasing to act. Upon the written request of any such successor Trustee, the
Certificateholders shall execute any and all instruments necessary for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights and powers.
SECTION 5.07. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party shall be the successor of
the Trustee hereunder without the execution or filing of any paper or any
further act on the part of any Person, anything herein to the contrary
notwithstanding; provided, however, that in the event such successor shall fail
to be qualified under the provisions of the fourth sentence of Section 5.05(c)
hereof such successor may be removed for cause in accordance with the first
sentence of Section 5.05(b) hereof.
SECTION 5.08. Certain Procedural Matters. (a) The Trustee, in its own name
and as trustee of an express trust, shall, upon receipt of a Written Direction,
be entitled to institute any action or proceeding at law or in equity for the
collection of any amounts due and unpaid by Telefonica del Peru, any Designated
Carrier or any other Person against whom the Trustee or the Trust shall have a
claim. Such Written Direction shall describe in reasonable detail the claims
relating to the Certificates and shall specify the amount and the Person against
whom the Trustee on behalf of the Certificates has a claim. The Trustee, upon
receipt of indemnification reasonably satisfactory to the Trustee, shall, unless
otherwise instructed pursuant to a Written Direction, prosecute any such action
or proceeding to judgment or final decree (or with the consent of the Required
Percentage of Certificateholders settle such action or proceeding), enforce any
such judgment or final decree against any such defendant and collect in the
manner provided by law the moneys adjudged or decreed to be payable.
(b) In case a Specified Event shall occur and be continuing with respect to
the Certificates, the Trustee, in its discretion, may and upon the receipt of a
Written Direction will, subject to the provisions of Section 5.03(a) and Article
VI hereof, proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement and by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in any Transaction Document, or in aid of the
execution of any power granted in any Transaction Document, or for the
enforcement of any other legal, equitable or other remedy, as the Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of the Trustee or the Certificateholders.
(c) All rights of actions and claims under this Agreement or any
Certificates may be prosecuted and enforced by the Trustee without the
possession of any such Certificates or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee may be
brought in its own name or in its capacity as Trustee.
(d) In case there shall be pending proceedings for the bankruptcy or the
insolvency-related reorganization (or for any similar proceeding) of Telefonica
del Peru or any Designated Carrier, under any Peruvian, United States or other
bankruptcy or insolvency act or any other applicable law, or in case a receiver
or trustee shall have been appointed for the property of
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ or any Designated Carrier or in the case of any other
judicial proceedings relative to Telefonica del Peru or any Designated Carrier,
or relative to the creditors or property of Telefonica del Peru or any
Designated Carrier, the Trustee, irrespective of whether payments hereunder, or
the aggregate outstanding Adjusted Face Amount of the Certificates shall then be
due and payable as herein or therein expressed, whether by declaration or
otherwise, and irrespective of whether the Trustee shall have made any demand or
declaration pursuant to the provisions of this Section 5.08, shall be entitled
and empowered by intervention in such proceedings or otherwise, to file and
prove a claim or claims for the amount of any payment due by such Person to the
Trust Estate, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and its agents, attorneys
and counsel, the Trust Estate and the Certificateholders, and for reimbursement
of all expenses incurred by the Trustee, the Trust Estate and each of the
Certificateholders, allowed in such proceedings and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute all amounts received with respect to the claims of the
Certificateholders and the Trustee on their behalf; and any receiver, assignee,
trustee or custodian in bankruptcy or reorganization is hereby authorized by
each of the Certificateholders to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of payments directly to the
Certificateholders, to pay to the Trustee such amount as shall be sufficient to
cover reasonable compensation to the Trustee, its agents and attorneys and for
all advances made by the Trustee, except those incurred as a result of the
Trustee's negligence, bad faith or willful misconduct. The Trustee agrees that,
to the extent it is entitled to do so, it will as part of the same proceeding,
seek reimbursement for any such fees and expenses from the other parties in
interest in such proceeding or any other Person who is contractually obligated
to reimburse the Trustee for such amounts; provided, however, that any failure
to do so shall not affect the availability of any indemnity previously offered
by the Certificateholders in respect of such action. All amounts received by the
Trustee on account of any action or proceeding hereunder shall be paid (i) first
to the Trustee to reimburse the Trustee for any and all reasonable and
documented fees and expenses (including, but not limited to reasonable
attorneys' fees) incurred by the Trustee in prosecuting or enforcing any such
action or proceeding or in collecting on any judgment in connection therewith
and (ii) second, to the Certificateholders, each according to its proportionate
share of such amounts as are determined in such action or proceeding.
(e) All payments received or collected by the Trustee pursuant to this
Section 5.08 in respect of any Certificates, and the proceeds of any judgment
received or collected by the Trustee pursuant to this Section in respect of the
Certificates, together with any other sums which may at any time be held by the
Trustee as part of the portion of the Trust Estate under any of the provisions
hereof, shall be distributed by the Trustee as provided in this Agreement.
SECTION 5.09. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate may at the time be located, the Trustee shall have the power
and may execute and deliver all instruments to appoint one or more persons to
act as a co-trustee or co-trustees, or separate trustee or separate trustees, of
all or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the Trust,
or any part thereof, and, subject to the other provisions of
42
this Section, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 5.05 hereof unless, for any reason, such co-trustee or separate trustee
will be holding or maintaining any of the Trust Accounts. The addition of
co-trustee or separate trustee shall not result in additional expenses or fees
to Telefonica del Peru or the Trust, unless a Specified Event shall have
occurred and is continuing and until the termination or cure of such Specified
Event.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed upon
the Trustee shall be conferred or imposed upon and exercised or performed by the
Trustee or, if necessary, by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular act or
acts are to be performed, the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any act
or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove any
separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Section. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 5.10. Appointment of Paying Agent. (a) Unless otherwise specified
herein, the Paying Agent shall have the revocable power to withdraw funds from
the applicable Certificate
43
Account for the purpose of making distributions to the Certificateholders. The
Trustee (or Telefonica del Peru if the Trustee is the Paying Agent) may revoke
such power and remove the Paying Agent, if the Trustee (or Telefonica del Peru
if the Trustee is the Paying Agent) determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under this Agreement
in any material respect or for other good cause. The Trustee, or Telefonica del
Peru if the Trustee is the Paying Agent, shall notify each Rating Agency of the
removal of any Paying Agent. The Paying Agent shall initially be the Trustee's
New York office. The Trustee shall be permitted to resign as Paying Agent with
respect to any or all Certificates in the same manner in which it is permitted
to resign as Trustee under Section 5.05(a). In the event that the Trustee shall
no longer be the Paying Agent with respect to the Certificates, the Trustee
shall appoint a successor to act as Paying Agent, which shall be a bank or trust
company having (x) a capital and surplus of not less than $50,000,000 and (y) an
investment grade rating from each of the Rating Agencies.
(b) The Trustee shall cause each Paying Agent (other than itself) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums, if any,
held by it for payment to Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders and shall agree, and if the Trustee is the Paying Agent it
hereby agrees, that it shall comply with all requirements of the Code regarding
the withholding of payments in respect of federal income taxes due from
Certificateholders.
ARTICLE VI
TRUSTEE COVENANTS
SECTION 6.01. Application of Moneys. The Trustee covenants and agrees to
apply the monies received by it under this Agreement, the Transfer Agreement or
the Instructions, when and as the same shall be received and in the manner
specified herein.
SECTION 6.02. Distribution of Statements and Other Information. (a) The
Trustee will be obligated to provide Telefonica del Peru on a daily basis by
facsimile to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer at ▇▇▇-▇▇▇-▇▇▇▇ a
statement with the amounts received in each account and any other activity, the
balances for each Trust Account and the status of the Eligible Investments
substantially in the form of Exhibit K hereto (the "Daily Statement").
Telefonica del Peru will be obligated to deliver to the Trustee, (i) not later
than the 45th day of each Collection Period, a statement (the "Receivables
Statement"), substantially in the form of Schedule X to Exhibit C attached
hereto, detailing (w) the amount of Purchased Receivables generated during the
immediately preceding Collection Period by each person that was a Designated
Carrier during such Collection Period, (x) the total of any and all unpaid
amounts with respect to Purchased Receivables generated during any other prior
Collection Period by each person that was a Designated Carrier during any such
prior Collection Period, (y) the amounts paid during the immediately preceding
Collection Period by Designated Carriers to the Trustee, and (z) the amount of
net international settlement payments generated during the immediately preceding
Collection Period and the aggregate amount of net international settlement
payments generated during the immediately preceding two Collection Periods, in
each case by all carriers other than Designated
44
Carriers with which Telefonica del Peru has Service Arrangements, and (ii) not
later than the 60th day of each Collection Period a statement (the "Servicing
Report"), substantially in the form of Schedule Y to Exhibit C attached hereto,
detailing information on the incoming and outgoing minutes billed for the
immediately preceding Collection Period by Telefonica del Peru and each person
that was a Designated Carrier during such Collection Period and the settlement
payments relating thereto. The Trustee shall send by mail, not later than five
(5) Business Days after receipt of such statements and/or reports from
Telefonica del Peru, a copy of the Receivables Statement, Servicing Report and
an account statement (the "Account Statement"), substantially in the form of
Exhibit C attached hereto, containing the applicable information for the
immediately preceding Collection Period to the Certificateholders, the Rating
Agencies and (in the case of each Account Statement only) to Telefonica del
Peru. The Trustee shall send by mail to each Rating Agency the information
provided to it by Telefonica del Peru pursuant to Section 9.01(b) hereof
promptly after the Trustee's receipt of such information.
(b) The Trustee shall retain at the Corporate Trust Office copies of all
notices, reports, certificates, instruments, opinions, documents and other
information provided or received by it in respect of or in connection with the
rights of the Certificateholders, copies of which shall be available for
inspection by any Certificateholder at the Corporate Trust Office during regular
business hours upon the request of any Certificateholder. In the case of
Book-Entry Certificates, the items referred to in the preceding sentence shall
be forwarded directly to each Certificate Owner upon its request; provided that
(i) at least 15 days prior to the Trustee's provision or receipt, as the case
may be, of such item such Certificate Owner shall have furnished to the Trustee
a Certificate Owner Certification and (ii) the Trustee shall not have received
notice or otherwise determined that such Person is no longer a Certificate
Owner.
(c) The Trustee covenants and agrees that it shall (i) send by facsimile
transmission promptly after receipt copies of any written notice it receives (A)
which states that any Specified Event has occurred and is continuing or has been
cured or terminated, to Telefonica del Peru, each Certificateholder and each
Rating Agency, (B) which states that any Person has failed to perform its duties
and obligations hereunder, to Telefonica del Peru and the Certificateholders and
each Rating Agency, (C) which constitutes a request for direction from any
Certificateholders, to the Certificateholders to which such request relates, or
(D) which specifically states that it is to be distributed by facsimile to
certain Certificateholders, to the Certificateholders to which such request
relates and (ii) send by mail (promptly after receipt thereof or receipt of a
request therefor) to each Certificateholder copies of any documentation relating
to such Certificates in its possession which has been specifically requested in
writing by such Certificateholder; provided, however, that any documentation
sent by facsimile transmission shall be followed with prompt transmission by
mail.
(d) The Trustee covenants and agrees that, promptly upon receipt from
Telefonica del Peru of a statement indicating that the amount to be distributed
to the Certificateholders of any Certificates on the next Payment Date will
constitute final payment of all amounts due hereunder, it will give the
Certificateholders notice to such effect, stating that upon receipt of such
amount the Certificateholders will be obligated to surrender promptly their
Certificates to the Trustee for cancellation.
45
SECTION 6.03. Requests for Information. Upon the request of any
Certificateholder (other than a Certificateholder which is a Depository or a
nominee of a Depository) or any Certificate Owner as provided in the final
sentence of this Section, the Trustee will deliver the following information to
any purchaser or prospective purchaser of Certificates named by such
Certificateholder or Certificate Owner: (a) the four (or such fewer number as
exist at such time) most recent Receivables Statements, Servicing Reports and
Account Statements with respect to the related Certificates, (b) a copy of this
Agreement, the Transfer Agreement and the Instructions, (c) the financial
statements delivered to the Trustee during the previous twelve months (or such
shorter period as shall have transpired since the Closing Date) pursuant to this
Agreement, (d) all notices delivered to or by the Trustee which state that any
Specified Event has occurred or has been cured or terminated with respect to the
Certificates and (e) notice of any Coverage Shortfall Amount existing as of the
immediately preceding Payment Date with respect to the Certificates. Such
Certificateholder, by acquiring its Certificate, agrees to advise any such
purchaser or prospective purchaser that, unless excepted from the definition of
"Confidential Information," such information is Confidential Information. In the
case of Book-Entry Certificates, the Trustee will deliver the information
referred to in the second preceding sentence to any purchaser or prospective
purchaser of Certificates owned by a Certificate Owner, provided that (i) such
Certificate Owner shall have furnished to the Trustee a Certificate Owner
Certification and (ii) the Trustee shall not have received notice or otherwise
determined that such Person is no longer a Certificate Owner.
SECTION 6.04. Returns. Each of the Certificateholders, by acceptance of its
Certificates, hereby directs the Trustee to cause to be prepared on behalf of
the Trust all required U.S. federal, state, local or other tax returns and
information reports, if any, (i) on the basis that, for purposes of U.S. tax
law, the Trust and Certificates will be treated as if the Certificates will be
indebtedness of Telefonica del Peru secured by the Purchased Receivables and the
Trust will be a security device and not a separate entity, or (ii) if, after
challenge by the appropriate taxing authority of which the Trustee has actual
knowledge, it is determined that the treatment of the Trust and Certificates
referred to in clause (i) is not correct, then as required by law. The Trustee
shall not be bound to cause to be prepared returns or reports in accordance with
the immediately preceding sentence to the extent some other action is required
based on a change in law after the date hereof. Subject to the two immediately
preceding sentences, the Trustee shall have the right to retain, and rely upon,
and shall have no liability in connection with its good faith reliance upon the
written advice or opinion of, independent U.S. tax counsel or advisors of its
choice and reasonably acceptable to Telefonica del Peru as to what returns are
required to be filed with any U.S. federal, state or local tax authorities by
the Trust. Subject to the foregoing, the Trustee shall execute and cause to be
filed such returns with the appropriate tax authorities. The Trustee shall
furnish, to each Person who at any time during a calendar year shall have been a
Certificateholder, a statement containing such information as such Person shall
reasonably request to prepare its tax returns to the extent that information is
requested.
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ARTICLE VII
TELEFONICA DEL PERU'S DUTIES AS SERVICER
SECTION 7.01. Performance of Service Arrangements. It is expressly agreed
that, notwithstanding the execution and delivery of the Carrier Notices,
Telefonica del Peru shall remain liable under the Service Arrangements to
perform all of its obligations thereunder in accordance with the terms and
conditions thereof, and neither the Trustee nor the Certificateholders shall be
required in any manner to perform any obligations of Telefonica del Peru
pursuant to the Service Arrangements or any other agreement, or to make any
payments in respect thereof, except as may be expressly provided herein in the
Transaction Documents.
SECTION 7.02. Covenants of Telefonica del Peru as Servicer of the Purchased
Receivables. As Servicer of the Purchased Receivables, Telefonica del Peru
covenants and agrees that it will:
(a) continue to, at its own expense and in a timely manner, (a) manage,
service and administer the Purchased Receivables using its customary and usual
procedures, including accounting, responding to inquiries of Designated
Carriers, investigating non-payments and reporting to taxation and regulatory
authorities as required by applicable law, and (b) pursue and prosecute its
rights under the Service Arrangements, in both cases and at all times acting
with reasonable care and, in particular, maintaining accurate and complete
accounting records in relation to the Purchased Receivables;
(b) allow reasonable inspections of records relating to the Purchased
Receivables by the Trustee on behalf of the Certificateholders;
(c) make all reasonable efforts to manage, service, administer and make
collections on the Purchased Receivables on behalf of the Trustee and to follow
such collection procedures as it follows with respect to all comparable
receivables; conduct its business in relation to the Service Arrangements in a
manner consistent with prudent practices of international telecommunications
companies applicable to long distance telecommunications services, including the
applicable ITU recommendations and regulations; and, in the event that
Telefonica del Peru receives any payments in respect of Purchased Receivables,
Telefonica del Peru shall promptly notify the Trustee of such receipt (including
the amount of such payment) and shall promptly forward any and all such payments
to the Collection Account;
(d) promptly upon the execution of any amendment, waiver, supplement or
modification of any kind whatsoever of the Service Arrangements (whether or not
such amendment, waiver, supplement or modification is embodied in a formally
executed written agreement), to deliver to the Trustee (A) a copy of such
amendment, supplement, modification or waiver (or if not embodied in a written
agreement, a complete description thereof certified as true and correct by an
Authorized Officer of Telefonica del Peru) and (B) an officer's certificate
certifying that an Authorized Officer of Telefonica del Peru has reviewed the
contents of such amendment, supplement, modification, waiver or description of
such Service Arrangement, and that such amendment, supplement,
47
modification or waiver will not violate the provisions of any Transaction
Document. Telefonica del Peru shall also deliver copies of the foregoing
instruments to each Rating Agency. No such Officer's Certificate shall be
binding upon the Trustee, nor shall any such amendment, supplement, modification
or waiver limit, modify or discharge Telefonica del Peru's obligations under
Section 7.02(c). Notwithstanding the foregoing, Telefonica del Peru shall not be
required to deliver the documents described in this Section 7.02(d) in respect
of any such modification or waiver which is of a ministerial or administrative
nature.
(e) observe the following procedures for the generation of Purchased
Receivables:
(i) In the case of any Designated Carrier whose accounts are settled
on a monthly basis with Telefonica del Peru (a "Monthly Settlement Designated
Carrier") and any Designated Carrier whose accounts are settled on a quarterly
basis with Telefonica del Peru (a "Quarterly Settlement Designated Carrier"),
Telefonica del Peru will, on or prior to the 45th day after the end of each
calendar month, send a statement (a "TdP Traffic Statement") to such Designated
Carrier listing the telephone calls (i) originating from Telefonica del Peru or
(ii) carried via Telefonica del Peru's system to such Designated Carrier's
system, either terminating with such Designated Carrier or passing through such
Designated Carrier's system and terminating with another carrier's system.
Telephone calls originating from Telefonica del Peru's system, passing through
another carrier and terminating with a Designated Carrier may be included on the
TdP Traffic Statement to such Designated Carrier, depending on the method of
accounting used by the carriers originating and terminating the call. Similarly,
telephone calls originating with another carrier, passing through Telefonica del
Peru's system and terminating with a Designated Carrier may be included on the
TdP Traffic Statement to such Designated Carrier, depending on the method of
accounting used by the carrier originating the call and such Designated Carrier.
(ii) In the case of each Monthly Settlement Designated Carrier and
Quarterly Settlement Designated Carrier, Telefonica del Peru will use reasonable
commercial efforts to cause such Designated Carrier, on or prior to the 45th day
after the end of each calendar month, to send a statement (a "Designated Carrier
Traffic Statement") to Telefonica del Peru listing the telephone calls (i)
originating from such Designated Carrier or (ii) carried via such Designated
Carrier's system to Telefonica del Peru's system, either terminating with
Telefonica del Peru or passing through Telefonica del Peru's system and
terminating with another carrier's system. Telephone calls originating with such
Designated Carrier, passing through another carrier and terminating with
Telefonica del Peru may be included on the Designated Carrier Traffic Statement
of such Designated Carrier, depending on the method of accounting used by such
Designated Carrier and Telefonica del Peru. Similarly, telephone calls
originating with another carrier, passing through a Designated Carrier's system
and terminating with Telefonica del Peru may be included on the Designated
Carrier Traffic Statement of such Designated Carrier, depending on the method of
accounting used by the carrier originating the call and Telefonica del Peru.
(iii) (i) In the case of each Monthly Settlement Designated Carrier,
Telefonica del Peru will use reasonable commercial efforts to reach agreement
with and send a reconciliation invoice ("Monthly Settlement Invoice") to such
Monthly Settlement Designated Carrier not later than 20 days after receiving the
Designated Carrier Traffic Statement from such Designated Carrier
48
(as described in clause (e)(ii) above), as to the amount of Purchased
Receivables due from such Designated Carrier in respect of the period covered by
such Monthly Settlement Invoice; and (ii) in the case of each Quarterly
Settlement Designated Carrier, Telefonica del Peru will use its best efforts to
reach agreement with and send a reconciliation invoice ("Quarterly Settlement
Invoice") to such Quarterly Settlement Designated Carrier not later than 20 days
after receiving the Designated Carrier Traffic Statement from such Designated
Carrier (as described in clause (e)(ii) above), for the third month in each
quarter of each calendar year, as to the amount of Purchased Receivables due
from such Designated Carrier for the three month period covered by such
Quarterly Settlement Invoice. Each Monthly Settlement Invoice and Quarterly
Settlement Invoice will state that all payments in respect of such invoice are
due 60 days from the date of such invoice.
(iv) Telefonica del Peru will use reasonable commercial efforts to
collect all amounts due under each Monthly Settlement Invoice and Quarterly
Settlement Invoice by the date falling 60 days (the "60-day Period") after
sending such invoices under clause (e)(iii) above (such date hereinafter
referred to as the "Due Settlement Date"), provided that if discrepancies arise
between the total minutes billed by Telefonica del Peru and/or the total minutes
billed by a Designated Carrier, an additional 20 day period will be granted
before the 60-day Period begins to run with respect to such Designated Carrier.
SECTION 7.03. Additional Designated Carriers. (a) Telefonica del Peru
hereby agrees that a long distance telecommunications company which is not a
Designated Carrier may become a Designated Carrier, at the option of Telefonica
del Peru, provided that the following conditions (the "Additional Designated
Carrier Requirements") are satisfied:
(i) there is a valid and binding Service Arrangement in effect between
Telefonica del Peru and such long distance telecommunications company;
(ii) Telefonica del Peru delivers (A) to such long distance
telecommunications company Instructions (with such modifications thereto as are
reasonably required by such company) and (B) to the Trustee and each Rating
Agency, an original of such Instructions acknowledged and agreed to by the such
long distance telecommunications company;
(iii) not later than ten (10) Business Days prior to the effective
date of such long distance telecommunications company becoming a Designated
Carrier, Telefonica del Peru provides to the Trustee and each Rating Agency an
Officer's Certificate and legal opinions from reputable counsel in form and
substance satisfactory to the Trustee from such jurisdictions as the Trustee
reasonably considers appropriate evidencing that the undertakings set forth
above have been obtained from Telefonica del Peru and such long distance
telecommunications company as provided above, and that in all other respects the
event of such long distance telecommunications company becoming a Designated
Carrier otherwise complies with the terms of this Agreement and the other
Transaction Documents; and
(iv) (only in the case of a long distance telecommunications company
replacing existing Designated Carrier(s) or a long distance telecommunications
company added as a Designated Carrier during any Specified Event or Incipient
Specified Event) ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇
delivers to the Trustee written confirmation from the Rating Agencies that the
rating on the Certificates that existed immediately prior to the replacement of
such existing Designated Carriers or the occurrence of such Specified Event or
Incipient Specified Event, as the case may be, will not be lowered or withdrawn.
(b) The transfer to the Trust of Purchased Receivables from any Designated
Carrier may be terminated, at the election of Telefonica del Peru, provided that
immediately after giving effect to such termination no Specified Event shall
have occurred or be continuing, upon receipt of written confirmation from each
Rating Agency that the then-current rating on the Certificates will not be
lowered or withdrawn. To effect such termination, the Trustee shall promptly
send such Designated Carrier a Designated Carrier Termination Notice, and
Schedule 4 hereto shall be revised accordingly.
SECTION 7.04. Receivables Files. Telefonica del Peru's obligations with
respect to the Receivables Files shall be as follows:
(a) In connection with the transfer and assignment of the Purchased
Receivables to the Trustee hereunder, Telefonica del Peru shall maintain and
preserve, in accordance with the provisions of this Section 7.04, the following
documents or instruments relating to the Purchased Receivables:
(i) the documents and data (written and electronic) representing or
evidencing the Purchased Receivables, including all billing data and records
generated pursuant to the terms of the Service Arrangements;
(ii) any written materials documenting or concerning the Service
Arrangements; and
(iii) any and all other documents that Telefonica del Peru shall keep on
file, in accordance with its customary procedures, relating to the Purchased
Receivables.
(b) Telefonica del Peru shall maintain accurate and complete accounts and
records pertaining to the Receivables Files sufficient to enable the Trustee and
the Certificateholders to obtain the benefits of this Agreement and the other
Transaction Documents and to preserve the interest of the Trust and the
Certificateholders in the Purchased Receivables. Telefonica del Peru shall
conduct, or cause to be conducted, periodic physical inspections of the
Receivables Files maintained by it under this Agreement, and of the related
accounts, records and computer systems, in such a manner as shall enable the
Trustee to verify the accuracy of Telefonica del Peru's record-keeping.
Telefonica del Peru shall promptly report to the Trustee any failure on its part
to maintain the Receivables Files or to maintain its accounts, records, and
computer systems as herein provided, and shall promptly take appropriate action
to remedy any such failure. The Trustee shall be under no obligation to make any
inspection or otherwise verify the condition of the Receivables Files.
(c) Telefonica del Peru shall maintain the Receivables Files at its offices
located in Lima, Peru, or at such other office as shall be specified to the
Trustee by thirty (30) days' prior
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ shall permit the Trustee or its duly
authorized representatives, attorneys or auditors to inspect the Receivables
Files and the related accounts and records maintained by Telefonica del Peru at
such times as the Trustee may reasonably request, and at the cost and expense of
Telefonica del Peru, shall provide such copies thereof as the Trustee and the
Rating Agencies may reasonably request. Telefonica del Peru shall provide the
Trustee or its duly authorized representatives, attorneys or auditors, upon the
written request of the Trustee, with such information as from time to time may
reasonably be requested to monitor Telefonica del Peru's compliance with the
covenants contained herein with respect to the Service Arrangements.
SECTION 7.05. Administration and Servicing of Receivables. Telefonica del
Peru shall administer the Service Arrangements as agent for the benefit of the
Trust, and the Trust hereby appoints Telefonica del Peru as its agent for such
purpose. Telefonica del Peru, in its capacity as agent, shall provide the
services and facilities called for hereunder, including but not limited to
▇▇▇▇▇▇▇▇, follow-up on collection of Purchased Receivables payable to the
Trustee, processing of claims for services rendered under the Service
Arrangements and negotiation of claims and disputes with the Designated
Carriers, all as more fully set forth thereunder, subject, however, at all times
to the following provisions and all other applicable provisions of this
Agreement:
(a) Telefonica del Peru shall make all reasonable efforts to manage,
service, administer and make collections on the Purchased Receivables on behalf
of the Trustee as and when the same shall become due, using a degree of skill
and attention of a prudent servicer, but in any event no less than that which
Telefonica del Peru exercises with respect to all comparable accounts receivable
that it services for its own account; provided that at all times Telefonica del
Peru shall cause all payments in respect of Purchased Receivables to be made to
the Collection Account in accordance with Section 3.04 hereof and, in the event
that Telefonica del Peru receives any payments in respect of Purchased
Receivables, Telefonica del Peru shall promptly notify the Trustee of such
receipt (including the amount of such payment) and shall promptly forward any
and all such payments to the Collection Account. In carrying out the foregoing
duties, Telefonica del Peru shall perform the following functions:
(i) providing the Trustee, within five (5) days of the issuance
thereof to any Designated Carrier, with a copy of each Monthly Settlement
Invoice or Quarterly Settlement Invoice issued by Telefonica del Peru
pursuant to Section 7.02(f)(iii) hereof;
(ii) delivering to the Trustee, the Receivables Statement and the
Servicing Report in accordance with Section 6.02(a) hereof;
(iii) collecting, accounting for and posting of all payments in
respect of Purchased Receivables;
(iv) providing to the Trustee the written and telephonic information
called for pursuant to Section 7.05(b);
(v) identifying to the Trustee the Designated Carrier to which
Collections in the Collection Account relate, by providing to the Trustee
Telefonica del Peru's statement
51
substantially in the form of Exhibit D hereto not later than five (5) days
after receipt of written notification by the Trustee of any such wire
receipts;
(vi) providing, not later than forty (40) days after the beginning of
each Collection Period, information to the Trustee (to the extent such
information is then available), by written notice substantially in the form
of Exhibit E hereto, listing, for each Designated Carrier, the face amount
of Purchased Receivables generated by such Designated Carrier that have
fallen due or are reasonably expected to fall due for payment during such
Collection Period;
(vii) providing, not later than five (5) days after becoming aware
thereof, information to the Trustee, by written notice substantially in the
form of Exhibit F hereto, listing any payment by any Designated Carrier in
respect of any Purchased Receivable that is delinquent by thirty (30) days
or more beyond the Due Settlement Date therefor;
(viii) responding to inquiries of Designated Carriers with respect to
the Purchased Receivables;
(ix) investigating delinquencies in the payment of Purchased
Receivables and identifying to the Trustee all Collections of any
delinquent Purchased Receivable which gave rise to a Coverage Shortfall
Amount;
(x) reporting to taxation and regulatory authorities as required by
applicable law;
(xi) furnishing to the Trustee pursuant to Section 12.17 of this
Agreement promptly upon the Trustee's request therefor, the information
pursuant to Rule 144A(d)(4) under the Act referred to in Section 12.17
hereof;
(xii) pursuing and prosecuting the rights of Telefonica del Peru under
the Service Arrangements;
(xiii) otherwise complying with all terms and conditions of the
Service Arrangements; and
(xiv) such other duties as the Trustee may reasonably require in order
to monitor and give effect to the transactions contemplated by the
Transaction Documents.
Subject to the first sentence of Section 7.05(a), Telefonica del Peru shall
follow its customary standards, policies and procedures, including the
procedures set forth in Section 7.02(e), in performing its duties as servicer
and agent for the Trust hereunder, and shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administration, and collection, subject to the provisions of this
Agreement and the Service Arrangements, that it may deem necessary or desirable.
Upon written request, the Trustee shall furnish Telefonica del Peru with any
documents reasonably necessary or appropriate to enable
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ to carry out its servicing and administrative duties
hereunder. Failure on the part of the Trustee to provide Telefonica del Peru
with a Daily Statement substantially in the form of Exhibit K as referred to in
Section 6.02(a) hereof will excuse any delay on the part of Telefonica del Peru
in delivering any reports set forth in this Section 7.05 that require the
information set forth in such Daily Statement.
(b) Telefonica del Peru shall use all commercially reasonable efforts to
collect on behalf of the Trustee all payments called for under the terms and
provisions of the Service Arrangements in respect of the Purchased Receivables
as and when the same shall become due, and shall follow such collection
procedures as it follows with respect to all comparable accounts receivable that
it services for its own account. Telefonica del Peru will give an Authorized
Officer of the Trustee telephonic notice, promptly confirmed in writing, for
each Collection Period, as to when each Designated Carrier's next settlement
payment pursuant to its Service Arrangement is expected to be paid in accordance
with the applicable ITU recommendations and regulations as soon as Telefonica
del Peru has been notified thereof by such Designated Carrier.
(c) Telefonica del Peru hereby agrees that it has received full
compensation for its services as servicer and agent for the Trust to be
performed hereunder, and it shall not be entitled to any additional compensation
for such services. Neither the Trustee nor any Person other than Telefonica del
Peru shall be required to pay any expenses incurred by Telefonica del Peru in
connection with Telefonica del Peru's activities hereunder (including, without
limitation, fees and disbursements of independent accountants, taxes imposed on
Telefonica del Peru, and expenses incurred in connection with the preparation of
reports to the Trustee and the Certificateholders).
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.01. Representations and Warranties of Telefonica del Peru.
Telefonica del Peru represents and warrants as of the date hereof for the
benefit of the Trustee and the Certificateholders as follows:
(a) Telefonica del Peru is a sociedad anonima abierta duly organized and
validly existing under the laws of Peru, and has all corporate power necessary
to own and convey its properties and conduct its business as now being
conducted.
(b) No consent, authorization or approval of any governmental agency or
commission of Peru or the United States is necessary for the due execution and
delivery by Telefonica del Peru of this Agreement, for the performance by
Telefonica del Peru of its obligations hereunder or under any of the other
Transaction Documents to which it is a party or for the validity or
enforceability thereof against Telefonica del Peru; and Telefonica del Peru has
taken all actions that are required under laws of Peru to perfect the interest
of the Trust in the Purchased Receivables, and such interests are prior and
superior to the rights of all other Persons (including creditors of Telefonica
del Peru).
53
(c) This Agreement and each of the other Transaction Documents to which
Telefonica del Peru is a party and each of the other documents and instruments
delivered hereunder and thereunder has been duly authorized, executed and
delivered by Telefonica del Peru and constitutes a legal, valid and binding
obligation of Telefonica del Peru, enforceable against Telefonica del Peru in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization and other similar laws affecting the enforcement of
creditors' rights generally and general equitable principles which may limit the
right to obtain the remedy of specific performance of executory contracts and
other equitable remedies.
(d) Under the laws of Peru, neither Telefonica del Peru nor any of its
property has any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise).
(e) intentionally omitted.
(f) All steps necessary or advisable to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement and the other
Transaction Documents in Peru have been taken.
(g) Neither Telefonica del Peru nor any agent acting on its behalf has sold
or offered to sell the Purchased Receivables, or the Certificates or any part
thereof, or any similar obligation or security, or solicited any offers to buy
the same from any Person, so as to bring the issuance, offer or transfer of the
Certificates within the provisions of Section 5 of the Act.
(h) The consummation of the transfer and assignment of the Purchased
Receivables pursuant to the Transfer Agreement in accordance with the terms in
this Agreement and the delivery of the Carrier Notices by Telefonica del Peru to
the Designated Carriers are effective to convey to the Trust at the time the
Purchased Receivables are generated all right, title and interest of Telefonica
del Peru in and to the Purchased Receivables and, as a result of such transfer
and assignment, the Trust will have an unencumbered ownership interest in, and
legal, valid and equitable title to, the Purchased Receivables under the laws of
Peru. Telefonica del Peru has taken all actions that are required under the laws
of the State of New York to perfect the interest of the Trustee in the Purchased
Receivables, and such interests are prior and superior to the rights of all
other Persons whose interests, or the priority thereof, are determined pursuant
to the laws of Peru or the UCC as in effect in the State of New York. Telefonica
del Peru does not maintain an office or place of business in the United States
within the meaning of Section 9-307 of the New York UCC.
(i) The Purchased Receivables are free and clear of any Liens (other than
Liens in connection with this Agreement).
(j) Telefonica del Peru is in compliance (except in a manner that would not
materially and adversely affect the amount, timeliness, collectibility or
payment frequency of the Purchased Receivables) with the applicable ITU
recommendations and regulations for all its actions for the settlement of
receivables by the Designated Carriers which arise by virtue of cross-border
54
telecommunications services into Peru originating from or passing through the
territory of each respective Designated Carrier.
(k) As of the effective date of this Agreement, no Carrier is delinquent
with respect to any Purchased Receivables which arise by virtue of cross-border
telecommunications services into Peru originating from the territory of each
respective Designated Carrier by more than ninety (90) days beyond the
settlement date, except in a manner that would not materially and adversely
affect the Purchased Receivables and, except as set forth on Schedule 2 attached
hereto.
(l) As of the effective date of this Agreement, no disputes exist with any
of the Designated Carriers with regard to the settlement rates or any other
terms of the Service Arrangements, except such disputes as would not materially
and adversely affect the amount, timeliness, collectibility or payment frequency
of the Purchased Receivables or the operations of Telefonica del Peru and except
as set forth on Schedule 2 attached hereto.
(m) The Purchased Receivables have been created in accordance with the
applicable ITU recommendations and regulations and all other applicable laws,
rules and regulations of Peru.
(n) There are no (A) actions at law or suits in equity pending against
Telefonica del Peru or any of its assets, or to the knowledge of Telefonica del
Peru threatened against or affecting Telefonica del Peru or any of its assets or
(B) proceedings by or before any governmental commission, bureau or other
administrative agency (whether inside or outside of Peru) pending against
Telefonica del Peru, or to the knowledge of Telefonica del Peru threatened
against Telefonica del Peru, which in either case could reasonably be expected
to have a material adverse effect on the ability of Telefonica del Peru to
perform its obligations under this Agreement and the other Transaction Documents
to which it is a party, except as set forth on Schedule 3 attached hereto.
(o) The Designated Carriers (except for Deutsche Telekom AG) have agreed,
by executing the acknowledgment to that effect on the Instructions, that they
have no right of counterclaim, defense, recoupment or setoff against Telefonica
del Peru with respect to the Purchased Receivables other than any rights
provided under the Service Arrangements.
(p) The execution, delivery and performance by Telefonica del Peru of this
Agreement and the performance by Telefonica del Peru of the other Transaction
Documents to which it is a party will not (A) contravene, result in any breach
of, or constitute a default under, or with notice or lapse of time, or both,
constitute a default under, or result in the creation of any Lien in respect of
any property of Telefonica del Peru or any subsidiary thereof under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to which
Telefonica del Peru or such subsidiary is bound or by which Telefonica del Peru,
such subsidiary or any of their respective properties may be bound or affected,
other than any such purported contravention, breach, default or Lien vacated or
waived by the written consents, certificates confirmations and waivers delivered
by Telefonica del Peru pursuant to this Agreement, (B) conflict with or result
in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or governmental
55
authority applicable to Telefonica del Peru or any subsidiary thereof or (C)
violate any provision of any statute or other rule or regulation of any
governmental authority applicable to Telefonica del Peru or any subsidiary
thereof.
(q) The Purchased Receivables are the legal, valid and binding obligations
of each of the respective Designated Carriers, and as of its sale to the Trust,
no Purchased Receivable will have been previously paid, subordinated or
rescinded in whole or in part.
(r) Telefonica del Peru and its subsidiaries have good and sufficient title
to their respective material properties, including all such properties reflected
in its most recent financial statements or purported to have been acquired by
Telefonica del Peru or any subsidiary thereof after the date of such financial
statements (except as sold or otherwise disposed of in the ordinary course of
business), in each case free and clear of Liens prohibited by this Agreement,
except for those defects in title and Liens that, individually or in the
aggregate, would not have a material adverse effect on the amount, timeliness,
collectibility or payment frequency of the Purchased Receivables. All material
leases are valid and subsisting and are in full force and effect in all material
respects.
(s) Except for the 4.99% withholding tax on interest payments to
Certificateholders not domiciled in Peru, there are no Peruvian taxes on (A) the
Trust or on the income, assets or operations of the Trust or (B) payments made
to any Certificateholder, the Trustee or with respect to any Certificate unless
such Certificateholder or the Trustee is (I) an enterprise which is carried on
through a permanent establishment in Peru and to which enterprise such
Certificate is attributable or (II) domiciled in Peru or is an entity organized
pursuant to the laws of Peru. All amounts required to be paid, deducted or
withheld in accordance with such 4.99% withholding tax have been timely paid,
deducted or withheld, as the case may be.
(t) As of the effective date of this Agreement, (A) Telefonica del Peru is
in compliance with the Service Arrangements in all material respects; (B) the
Service Arrangements have not been terminated and are in full force and effect;
(C) Telefonica del Peru has not received nor issued any notice of termination
with respect to the Service Arrangements; and (D) Telefonica del Peru has no
knowledge of any existing circumstances or events which would, with the passage
of time or the giving of notice or both, result in a termination of the Service
Arrangements.
SECTION 8.02. Representations and Warranties of the Trustee. The Trustee
represents and warrants as of the Closing Date to Telefonica del Peru as
follows:
(a) The Trustee is a banking corporation, duly organized and validly
existing under the laws of the State of New York, its principal office and place
of business is not located in Peru and, in its capacity as Trustee, has the
necessary power and authority to carry on its business as now conducted and to
enter into and perform its obligations under this Agreement, the Transfer
Agreement and any other Transaction Document to which it is party, including the
power and authority to accept the Trust created thereunder and hereunder.
56
(b) The execution, delivery and performance by the Trustee of this
Agreement, the Transfer Agreement and each of the other Transaction Documents to
which it is party (including without limitation the execution and delivery of
the Certificates pursuant hereto and the acceptance of the Trust created
hereunder) have been duly authorized by all necessary corporate action on the
part of the Trustee, and the Trustee has duly executed and delivered such
documents, and such documents constitute the legal, valid and binding
obligations of the Trustee (or, in the case of the Certificates, of the Trust in
accordance with the terms of this Agreement), enforceable against the Trustee in
accordance with their respective terms (or, in the case of the Certificates,
against the Trust in accordance with the terms of this Agreement), except in
each case as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar laws affecting the enforcement of creditors'
rights generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance by the Trustee of this
Agreement, the Transfer Agreement and each of the other Transaction Documents to
which it is party (including without limitation the execution and delivery of
the Certificates pursuant hereto and the acceptance of the Trust created
thereunder and hereunder), the consummation of the transactions herein and
therein contemplated and the fulfillment of the terms hereof and thereof (i)
will not violate any provision of any law, rule or any regulation, order, writ,
judgment, or decree of any court, arbitrator, or governmental authority
governing the banking or trust powers of the Trustee, (ii) will not violate any
provision of the corporate charter or by-laws of the Trustee, and (iii) will not
violate any provision of, or constitute, with or without notice or lapse of
time, a default under, or result in the creation or imposition of any Lien on
any properties of the Trustee, the Trust or the Trust Estate pursuant to the
provisions of any court order, ruling or decree or any mortgage, indenture,
contract, agreement, or other undertaking to which it is a party or by which it
is bound, other than any violation, default or Lien which could not reasonably
be expected to materially and adversely affect (x) the Trustee's performance or
ability to perform its duties under this Agreement, the Transfer Agreement or
any of the other Transaction Documents to which it is party or (y) the
transactions contemplated hereby or thereby.
(d) The execution, delivery and performance by the Trustee of this
Agreement, the Transfer Agreement and each of the other Transaction Documents to
which it is party (including without limitation the execution and delivery of
the Certificates pursuant hereto and the acceptance of the Trust created and
hereunder) will not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency regulating the
banking and trust powers of the Trustee.
(e) There are no (i) actions at law or suits in equity pending against the
Trustee, or to the knowledge of the Trustee, threatened against the Trustee or
any of its assets or (ii) proceedings by or before any governmental commission,
bureau or other administrative agency (domestic or foreign) pending against the
Trustee, or to the knowledge of the Trustee, threatened against the Trustee,
which, in the case of either of clauses (i) or (ii) of this Section 8.02(e), if
adversely determined, might materially adversely affect the ability of the
Trustee to perform its obligations under this Agreement, the Transfer Agreement
or any of the other Transaction Documents to which
57
it is party (including without limitation the execution and delivery of the
Certificates pursuant hereto).
SECTION 8.03. Further Assurances. Telefonica del Peru agrees that at any
time and from time to time, upon the written request of the Trustee, it will
promptly and duly execute and deliver, at its own expense, any and all such
further instruments and documents as is necessary or as reasonably requested by
the Trustee to effect more fully the purposes of this Agreement.
ARTICLE IX
COVENANTS OF TELEFONICA DEL PERU
SECTION 9.01. Affirmative Covenants. Telefonica del Peru covenants and
agrees that it will:
(a) provide to the Trustee, in English, or accompanied by a certified
English translation thereof, not later than the tenth (10th) Business Day after
each anniversary of the Closing Date, an annual Officer's Certificate stating
whether or not Telefonica del Peru has performed all of its obligations and
covenants set forth in the Transfer Agreement and this Agreement and whether any
Specified Event has occurred;
(b) deliver promptly to the Trustee:
(i) copies of all notices received from any Designated Carrier with
respect to the Purchased Receivables that relate to matters that materially
and adversely affect Purchased Receivables in respect of such Designated
Carrier;
(ii) in its capacity as Servicer hereunder, and at the request of the
Trustee, a copy of Telefonica del Peru's periodic public reports of its
operations (including audited annual financial results);
(c) comply at all times in all material respects with all Peruvian laws,
rules, regulations and orders applicable to or in any way affecting the creation
and servicing of the Purchased Receivables or the transaction contemplated
hereby (except in a manner that would not materially and adversely affect the
Purchased Receivables);
(d) pay (a) reasonable and documented expenses of the Trustee and the
Rating Agencies as agreed from time to time between any such Person and
Telefonica del Peru, and (b) reasonable and documented costs and expenses of the
Trustee in connection with any enforcement action taken by the Trustee as a
result of a breach by Telefonica del Peru of its obligations under this
Agreement;
(e) keep proper audited books of record and account, in which full and
correct entries in all material respects shall be made of all financial
transactions and the assets and business of Telefonica del Peru;
58
(f) comply in all material respects with the requirements of the Rating
Agencies relating to the maintenance by each of them of rating surveillance with
respect to the Certificates, to the extent the Rating Agencies are maintaining a
rating on the Certificates,
(g) use its best efforts to add as a new Designated Carrier (and to satisfy
the Additional Designated Carrier requirements related thereto) any U.S. Carrier
that enters into a Service Arrangement with Telefonica del Peru and that
generates, as of any date, 10% or more of the aggregate net international
settlement receivables owed by all carrier (including, but not limited to, the
Purchased Receivables generated by the Designated Carriers) to Telefonica del
Peru during the 12 calendar months prior to such date of determination,
(h) maintain its businesses and assets in such a manner as not to
materially impair its ability to perform its obligations under the Transaction
Documents,
(i) except as provided in Section 9.02(l) hereof, (i) preserve and maintain
its corporate existence and (ii) preserve and maintain all of its rights,
franchises and privileges in the jurisdiction of its incorporation necessary for
the performance of each of its obligations under the Transaction Documents; and
(j) use its best efforts to have the amount of Purchased Receivables
represent, as of any and each Determination Date, at least 80% of all net
international settlement payments due to it by all carriers with which it has
Service Arrangements (measured by reference to the volume of Purchased
Receivables generated in the 12 calendar months prior to the end of the
Collection Period).
SECTION 9.02. Negative Covenants. Telefonica del Peru covenants and agrees
that it will not:
(a) unilaterally, or together with any other party, take any action
(including without limitation changing or causing to have changed any of the
normal business settlement practices for the Purchased Receivables which arise
by virtue of cross-border long distance telephone calls into Peru originating
from or passing through the territory of operation of the respective Designated
Carriers or accelerating payment by any Designated Carrier in respect of
Purchased Receivables prior to sending the Monthly Settlement Invoice or
Quarterly Settlement Invoice, as the case may be, referred in Section 7.02(e)
above) that (a) would have a material adverse effect on the timeliness, amount,
collectibility and/or payment frequency of Purchased Receivables or (b) be
reasonably likely to result in Telefonica del Peru being unable to comply with
its obligations under the Transaction Documents, without in either case having
obtained the prior written consent of the Required Percentage of the
Certificateholders; provided, however, that no provision herein restricts
Telefonica del Peru's ability to modify tariffs with the Designated Carriers in
the ordinary course of business;
59
(b) terminate its relationships with any of the Designated Carriers, unless
Telefonica del Peru has complied with the conditions set forth in Section 7.03
hereof for terminating the transfer to the Trust of Purchased Receivables from
such Designated Carrier;
(c) agree to allow any Designated Carrier (except for Deutsche Telekom AG)
to set-off any amount against the Purchased Receivables (exclusive of customary
set-offs for the determination of net receivables due to Telefonica del Peru
under the Service Arrangements); agree to accept or knowingly accept any direct
payment from any Designated Carrier in respect of the Purchased Receivables; or
agree to permit any Designated Carrier to make any payment in respect of
Purchased Receivables to any account other than the Collection Account;
(d) make any change in the character of its telecommunications business,
accounting records or policies and practices which would materially and
adversely affect the timeliness, amount, collectibility and/or payment frequency
of the Purchased Receivables;
(e) cease to conduct its servicing duties with respect to the Purchased
Receivables;
(f) impede payments by any Designated Carrier for any amount due under the
Service Arrangements in a manner that would materially and adversely affect the
timeliness, amount, collectibility and/or payment frequency of the Purchased
Receivables;
(g) agree to any payment for the settlement of Purchased Receivables by a
Designated Carrier to be made in a settlement currency other than Dollars;
(h) cut off or materially hinder cross-border telephone calls into Peru
originating from the territory of operation of each respective Designated
Carrier, or otherwise prevent or materially hinder the creation of Purchased
Receivables;
(i) sell, assign, transfer or otherwise encumber any Purchased Receivables,
other than pursuant to the Transaction Documents; provided that Telefonica del
Peru shall have the right to sell, assign, transfer or otherwise encumber any
receivables owing from international telephone carriers that are not Designated
Carriers under the Transaction Documents;
(j) extend or modify the terms of any Purchased Receivable, except as
provided under this Agreement;
(k) change its collection policies in a manner that would materially and
adversely affect the Purchased Receivables; and
(l) consolidate with or merge into any other Person or convey, transfer or
lease all or substantially all of its assets as an entirety to any Person or
convey, transfer or lease any or all of its international long distance business
to any Person (other than a subsidiary of Telefonica del Peru that satisfies
clause (i)(A) below) unless: (i) the Person formed by such consolidation or into
which it is merged or the Person which acquires by conveyance, transfer or lease
such assets or such international long distance business shall be a corporation
validly organized and existing in
60
the jurisdiction of its incorporation which (A) assumes in writing all of the
obligations of Telefonica del Peru under the Transaction Documents and such
Person is capable of performing such obligations, and (B) delivers to the
Trustee an opinion of counsel in form and substance satisfactory to the Trustee
to the effect that such assumption is sufficient for each such agreement to
constitute a legal, valid and binding obligation of such Person, enforceable
against such Person in accordance with its respective terms, except in each case
as enforcement may be limited by bankruptcy, insolvency, reorganization and
other similar laws affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or law), (ii) upon the effectiveness of
such assumption, such Person would not be in violation or breach of any of
Telefonica del Peru's covenants, agreements or continuing representations or
warranties under the Transaction Documents, and (iii) each of the Rating
Agencies shall have confirmed that its then-current rating on the Certificates
would not be lowered or withdrawn as a result of such consolidation, merger,
conveyance, transfer or lease.
SECTION 9.03. Financial Statements and Reports. Telefonica del Peru shall
deliver to the Trustee, with sufficient copies for each Rating Agency and, in
the case of Section 9.03(a), for distribution to each Certificateholder that
makes a written request therefor, and hereby directs the Trustee to furnish to
the Rating Agency and such Certificateholders:
(a) as soon as practicable and in any event within 60 days after the end of
each fiscal quarter (other than the fourth quarter) or 150 days after the end of
each fiscal year of Telefonica del Peru (which fiscal year currently ends on
each December 31), as the case may be, an unaudited (with respect to a fiscal
quarter) or audited (with respect to a fiscal year) consolidated balance sheet
of Telefonica del Peru as of the quarter or year then ended and its related
unaudited and audited nonconsolidated statements of income for the quarter or
year then ended and audited (with respect to a fiscal year only) nonconsolidated
statements of, changes in equity or retained earnings and changes in financial
position based on cash flow for the year then ended, prepared in accordance with
Generally Accepted Accounting Principles and setting forth in each case in
comparative form corresponding figures from the preceding quarterly or annual
statements, as the case may be, and in the case of the annual audit, certified
to Telefonica del Peru by independent public accountants of recognized standing
selected by Telefonica del Peru, which in each case shall be in English or
accompanied by an English translation thereof; provided that for so long as
Telefonica del Peru is a reporting company under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the requirements of this Section
9.03(a) shall be satisfied by Telefonica del Peru furnishing to the Trustee
copies of its Annual Reports on Form 20-F and periodic reports on Form 6-K
during the time periods required for annual and quarterly reports, respectively;
(b) together with each of the annual financial statements (or reports
containing the same) delivered pursuant to clause (a) above, an Officer's
Certificate stating that a review of the activities of Telefonica del Peru
during such period covered thereby has been made under his supervision with a
view to determining whether Telefonica del Peru and the Designated Carriers have
kept, observed, performed and fulfilled all of their respective obligations and
covenants under the Transaction Documents to which Telefonica del Peru or any
Designated Carrier is a party and the Service Arrangements, and that no
Specified Event or Incipient Specified Event has occurred
61
during such period or, if one or more Specified Events or Incipient Specified
Event has occurred during such period, specifying all such Specified Events or
Incipient Specified Event and the nature and status thereof and what actions
Telefonica del Peru has taken and will take with respect to each such Specified
Event or Incipient Specified Event;
(c) promptly upon becoming aware of a Specified Event or Incipient
Specified Event, an Officer's Certificate specifying the nature thereof, the
period of existence thereof, and what action Telefonica del Peru proposes to
take with respect thereto; and
(d) promptly upon receipt by Telefonica del Peru, a copy of any
communication from any Designated Carrier that threatens a refusal to perform
its obligations under a Service Arrangement in a manner that could have a
material adverse effect on the amount, timeliness, collectibility or payment
frequency of the Purchased Receivables.
SECTION 9.04. Expenses. Whether or not the transactions hereby contemplated
are consummated, Telefonica del Peru shall, for the benefit of the Trustee and
the Certificateholders, pay all Transaction Expenses hereunder upon written
demand, it being understood that such demand shall be deemed to have been made
as of the Closing Date. If such transactions are consummated, Telefonica del
Peru shall pay such Transaction Expenses (i) on the Closing Date and (ii) in the
case of any reasonable and documented expenses arising after the Closing Date as
agreed to from time to time by Telefonica del Peru and the Trustee, promptly
upon written demand therefor.
(a) Telefonica del Peru shall pay all reasonable and documented costs and
expenses (including reasonable and documented financial advisors' fees and
attorneys' fees of a special counsel and, if reasonably required, local or other
counsel) incurred by the Trustee or the Certificateholders in connection with
(i) any amendments, waivers or consents under or in respect of the Transaction
Documents or the Certificates proposed by Telefonica del Peru (whether or not
such amendment, waiver or consent becomes effective), (ii) in enforcing or
defending (or determining whether or how to enforce or defend) any rights under
the Transaction Documents or the Certificates, and (iii) in connection with any
Insolvency Event relating to Telefonica del Peru or any Affiliate thereof.
(b) Telefonica del Peru shall pay, and will save the Trustee and the
Certificateholders harmless from, all claims in respect of any fees, costs or
expenses, if any, of brokers and finders (other than those retained by the
Trustee and the Certificateholders).
(c) The obligations of Telefonica del Peru under this Section 9.04 will
survive the payment or transfer of any Certificate, the enforcement, amendment
or waiver of any provision of the Transaction Documents or the Certificates, and
the termination of the Transaction Documents.
SECTION 9.05. Certain Indemnities. Telefonica del Peru (1) shall indemnify
and hold the Trustee (and its directors, officers, employees and agents), the
Trust and the Initial Purchaser harmless from and against (a) any and all
claims, disputes, liabilities, obligations, losses (other than credit losses),
damages, payments, penalties, costs, or expenses of any kind whatsoever that may
be imposed on, incurred, or asserted against the Trustee (and its directors,
officers, employees
62
and agents), the Trust or the Initial Purchaser (i) relating to the Purchased
Receivables (including product-related claims), or (ii) as the result of any act
or omission in any way relating to either the maintenance by Telefonica del Peru
of the Receivables Files or the performance by Telefonica del Peru of its
obligations under the Service Arrangements; (b) any tax liability, including but
not limited to Peruvian withholding tax as set forth in Section 9.07 hereof; (c)
any breach of warranty, representation or covenant of Telefonica del Peru in any
Transaction Document, and (d) as otherwise required by any Transaction Document;
provided, however, that Telefonica del Peru shall not be liable to the Trustee
for any portion of any such amount resulting from the negligence, bad faith or
willful misconduct of the Trustee; and (2) shall indemnify the Trustee for, and
to hold the Trustee harmless on an after-tax basis against, any losses, claims,
damages and liabilities (including reasonable and documented attorneys' fees and
disbursements) incurred without negligence, bad faith or willful misconduct on
its part arising out of or in connection with, the Trustee's acceptance and
administration of the Trust Estate for the benefit of Certificateholders or the
performance of its duties or obligations under the Transaction Documents with
respect to the Certificates. The provisions of this Section shall survive
termination of this Agreement and the resignation or removal of the Trustee.
SECTION 9.06. Securities Laws. Telefonica del Peru acknowledges and agrees
that the Trustee in its individual capacity is not the issuer of the
Certificates for the purposes of Federal or state securities laws. Telefonica
del Peru covenants and agrees to indemnify the Trustee in such capacity for any
and all damages, losses, claims, liabilities, costs and expenses (including
reasonable attorneys' fees and disbursements) awarded against or incurred by it
arising out of or as a result of the treatment of the Trustee as issuer for the
purposes of Federal or state securities laws in connection with the issuance,
offer or sale of the Certificates. The provisions of this Section shall survive
termination of this Agreement and the resignation or removal of the Trustee.
SECTION 9.07. Taxes. (a) Telefonica del Peru hereby agrees
(i) to assume, pay and discharge, when and as due and payable, any and
all Taxes under Peruvian law ("Peruvian Taxes") that may be imposed on,
incurred by, or asserted against any of the Trustee, the Trust or the
Certificateholders in connection with, relating to or measured by any
amounts paid or to be paid by any Designated Carrier, the Trustee or
Telefonica del Peru in respect of the Purchased Receivables or Certificate
Interest on the Certificates pursuant to the terms of the Transaction
Documents (including income of the Trust Estate on such amounts), or
otherwise in respect of any of the transactions contemplated by the
Transaction Documents; and if any such Peruvian Taxes are paid by any of
the Trustee, the Trust for the benefit of Certificateholders or the
Certificateholders, upon request promptly to reimburse such Person paying
such Peruvian Taxes in an amount that, after deducting any Peruvian Taxes
imposed thereon, shall be equal to the amount of such Taxes paid by such
Person; neither the Trustee nor Telefonica del Peru shall be required to
pay any Peruvian Taxes imposed solely by reason of (A) a present or past
connection between such Certificateholder and the jurisdiction imposing
such Taxes (except a connection arising solely from the ownership of the
Certificates, the receipt of payments under the Trust Agreement or the
Certificates, or the exercise or enforcement of rights under the
Certificates or the Trust Agreement) or (B) a failure of the
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Certificateholder to provide, within 60 days of written request of the
Trust, any certification, identification, documentation or other
requirements of the jurisdiction imposing such Taxes where such compliance
is required to establish entitlement to a reduced rate of or exemption from
such Taxes. Such Peruvian Taxes, with the exclusions set forth in
sub-clauses (A) and (B) of clause (i) of this Section 9.07(a), are referred
to as "Additional Amounts".
(b) In the event that Telefonica del Peru is required to pay any Peruvian
Taxes pursuant to this Section 9.07, Telefonica del Peru shall promptly deliver
to the Trustee receipts for payment of such Peruvian Taxes. All such receipts
shall be originals, duplicate originals or duly certified or authenticated
copies.
(c) In no event shall any Certificateholder be required to submit any of
its Tax returns or any part thereof to Telefonica del Peru or any other Person
or, subject to this Section 9.07 hereof, to prepare its tax return other than as
such Certificateholder in its sole discretion shall determine.
ARTICLE X
CONCERNING THE CERTIFICATEHOLDERS
SECTION 10.01. Control of Trustee by Certificateholders. In respect of any
remedy or action with respect to the Certificates issued hereunder, the Required
Percentage of Certificateholders, by a Written Direction, shall have the right
to direct the time, method and place of conducting any proceeding for any remedy
or action or exercising any power conferred on the Trustee hereby.
SECTION 10.02. Evidence of Action Taken by Certificateholders. Whenever in
this Agreement it is provided that Certificateholders may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action), the fact that at the time
of taking any such action any Certificateholders have joined therein may be
evidenced by any instrument or any number of instruments of similar tenor
executed by Certificateholders in person or by agent or proxy appointed in
writing.
SECTION 10.03. Proof of Execution of any Request, Consent or Other
Instruments and of Holding of Certificates. Proof of the execution of any
request, consent or other instrument by a Certificateholder or its agent or
proxy and proof of the holding by any Person of any of the Certificates shall be
sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of any request,
consent or other instrument may be proved by an Officer's Certificate of such
Person; and
(b) The ownership of Certificates may be proved by the appropriate Register
or by a certificate of the Trustee.
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SECTION 10.04. Certificates Owned by Telefonica del Peru and Certain Other
Persons. In determining whether the Required Percentage of Certificateholders
have concurred in any direction, request or consent under this Agreement,
Certificates which are known by an Authorized Officer of the Trustee to be owned
or controlled by Telefonica del Peru or by any Affiliate thereof, shall be
disregarded in both the numerator and denominator of such percentage and the
other Certificateholders shall have the exclusive right to give any such
direction, request or consent except where this Agreement specifically provides
that Telefonica del Peru shall have any right to vote on any direction, request
or consent; provided, however, that in the event that Telefonica del Peru is
deemed to be the Certificateholder of all Certificates pursuant to the terms of
this Agreement, Telefonica del Peru shall have the right to vote the interest
represented by such Certificates with respect to any amendment, waiver or
consent under this Agreement.
SECTION 10.05. Right of Revocation of Action Taken. At any time prior to
(but not later than) the taking by the Trustee of any action requested by or
consented to by the Required Percentage of Certificateholders, any
Certificateholder which was included in the Required Percentage of
Certificateholders which requested or consented to such action may, by filing
written notice with the Trustee at the Corporate Trust Office, revoke its
request or consent to such action and if such revocation results in the request
or consent of less than the Required Percentage of Certificateholders , such
request or consent shall be deemed revoked; provided that any such revocation
shall not affect the indemnity, if any, offered by such Certificateholders to
the Trustee for any actions taken by the Trustee prior to such revocation.
Except as aforesaid, any such action taken by the Required Percentage of
Certificateholders shall be conclusive and binding upon such Certificateholders
and upon all future Certificateholders, irrespective of whether or not any
notation in regard thereto is made upon the Certificate. Except as otherwise
provided herein, any action taken by the Required Percentage of
Certificateholders in connection with such action shall be conclusive and
binding upon the Trustee and all Certificateholders.
ARTICLE XI
REDEMPTION
SECTION 11.01. Optional Redemption by Telefonica del Peru. (a) Provided
that no Specified Event shall have occurred and be continuing, Telefonica del
Peru will have the right to direct the Trust to redeem the Certificates in whole
or in part in a minimum principal amount equal to $25,000,000 and greater
increments of $1,000,000 by payment to the Trustee of an amount equal to the
Redemption Price in respect of the principal amount of Certificates so redeemed.
Any partial redemption shall be made pro rata among all Certificates and will be
applied pro rata to reduce, with respect to any Payment Date, the amount set
forth under Amortization Amount corresponding to such Payment Date on Schedule
1.
(b) Upon receipt of the Redemption Price, the Trustee shall, at Telefonica
del Peru's expense, execute such documents and take such other steps as
Telefonica del Peru may reasonably request to convey back promptly to or at the
direction of Telefonica del Peru the Certificates subject to any redemption of
the Certificates in whole made pursuant to Section 11.01(a) hereof.
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SECTION 11.02. Optional Redemption for Tax Reasons. (a) If, at any time
after the Closing Date, due to any change in the laws, rules or regulations (or
in the official interpretation or application thereof) affecting Peruvian
taxation, Telefonica del Peru is or will become obligated to pay any Additional
Amounts in excess of those attributed to the Peruvian withholding tax of 1%
imposed on interest payments to Certificateholders not domiciled in Peru (the
amount of any such excess the "Excess Tax Amount"), and such obligation cannot
be avoided by Telefonica del Peru taking reasonable measures available to it,
then Telefonica del Peru will have the right, to direct the Trustee to redeem
the Certificates in whole (or in part, if Telefonica del Peru would be obligated
to pay Excess Tax Amounts aggregating at least $1,000,000 per annum) at the
Redemption Price in respect of the principal amount of Certificates so redeemed.
Any partial redemption shall be made pro rata among all Certificates.
(b) Upon receipt of the Redemption Price, the Trustee shall, at Telefonica
del Peru's expense, execute such documents and take such other steps as
Telefonica del Peru may reasonably request to convey back promptly to or at the
direction of Telefonica del Peru the Certificates subject to any redemption of
the Certificates in whole made pursuant to Section 11.02(a) hereof.
SECTION 11.03. Notice of Redemption. Telefonica del Peru shall give the
Trustee (who shall promptly notify the Certificateholders) prior written notice
of any redemption to be made under Section 11.01 or 11.02 specifying the
redemption date (the "Redemption Date") for the Certificates, which date shall
be not less than 30 days and not more than 60 days after delivery of such
notice. The Trustee shall promptly notify the Certificateholders of such
redemption in the manner provided in Section 12.04. Notice of the redemption
having been given as aforesaid, the Redemption Price shall become due and
payable on the Redemption Date.
SECTION 11.04. Investment Grade Option. (a) If (i) the rating by one or
more Rating Agencies of the Certificates is below "investment grade" (i.e.,
below BBB- in the case of Standard & Poor's and Fitch or below Baa3 in the case
of Moody's) for 180 consecutive days and (ii) the corresponding downgrading was
principally because of a material decrease in the amount of Collections or the
performance of the Purchased Receivables, then, upon written notice to the
Trustee by Certificateholders representing at least 15% of the Certificate
Balance as of the date of such notice (the "Put Percentage"), the Trust shall
offer to purchase any and all outstanding Certificates for the Put Price. Such
written notice to the Trustee shall specify the proposed redemption date of
Certificates (the "Ratings Redemption Date"), which date shall not be less than
five (5) Business Days after delivery of such notice to the Trustee.
(b) The Trustee shall promptly notify Telefonica del Peru and the
Certificateholders of such offer in the manner provided in Section 12.04. Notice
of such offer having been given as aforesaid, the Put Price shall become due and
payable on the Ratings Redemption Date. Upon notice by the Trustee, Telefonica
del Peru shall pay to the Trustee an amount equal to the aggregate Put Price
with respect to all Certificates that Certificateholders have requested be
redeemed. Upon receipt of the aggregate Put Price, the Trustee shall, at
Telefonica del Peru's expense, (i) execute such documents and take such other
steps as Telefonica del Peru may reasonably request to convey back promptly to
or at the direction of Telefonica del Peru the Certificates, (ii) distribute to
the Certificateholders the aggregate Put Price in accordance with and
66
only to the extent of such Certificateholder's interest therein, and (iii)
deliver to the Certificateholders any and all instruments necessary to evidence
and effect such distribution.
(c) If Telefonica del Peru shall not pay the Put Price to the Trustee
as required under the Section 11.04(a), the Trustee, at the written direction of
the Put Percentage of Certificateholders, may proceed to enforce and protect the
rights of the Certificateholders by an action at law, suit in equity or other
appropriate proceeding. Telefonica del Peru shall pay to the Trustee such amount
in addition to the Put Price as shall be sufficient to cover the reasonable and
documented cost and expenses of instituting such action, suit or proceeding,
including without limitation, attorneys' fees, expenses and disbursements. No
course of dealing and no delay on the part of the Trustee or the
Certificateholders in enforcing the rights of the Certificateholders under this
Section 11.04 shall operate as a waiver thereof or otherwise prejudice their
rights, powers or remedies under this Section 11.04. The Certificateholders'
right to the Put Price shall not be exclusive of any other right, power or
remedy referred to herein or now or hereinafter available at law, in equity, by
statute or otherwise.
(d) Notwithstanding the foregoing provisions, Telefonica del Peru may
exercise its rights to redeem the Certificates pursuant to Section 11.01 if it
is otherwise permitted to do so pursuant thereto. Furthermore, the exercise of
the put option by the Certificateholders in accordance with this Section shall
under no circumstances be deemed to constitute a breach or default by Telefonica
del Peru or the acceleration of the Certificates under this Agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Benefits of Agreement. Nothing expressed or implied herein
is intended or shall be construed to confer upon or to give to any Person, other
than the Trustee, Telefonica del Peru and the Certificateholders, any right,
remedy or claim under or by reason of this Agreement, and any terms, covenants,
conditions, promises and agreements contained herein shall be for the sole and
exclusive benefit of such Persons and their respective successors and assigns.
SECTION 12.02. Amendment or Waiver. (a) This Agreement may be amended from
time to time by the Trustee and Telefonica del Peru without the consent of any
of the Certificateholders solely to cure any ambiguity or to correct any
provision hereof (provided that such action shall not, Materially Adversely
Affect the rights of any Certificateholder) and as set forth in this Agreement.
(b) This Agreement may be amended from time to time by the Trustee,
Telefonica del Peru and the Required Percentage of Certificateholders then
outstanding, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Certificateholders, and any rights granted to
the Certificateholders of the Certificates hereunder may be waived in writing by
the Required Percentage of Certificateholders entitled to direct the exercise of
such rights.
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(c) Promptly after the execution by all required parties of any such
amendment to, or waiver of, this Agreement hereto, the Trustee shall furnish a
copy of any such amendment to, or waiver of this Agreement to Telefonica del
Peru, each Certificateholder and each Rating Agency.
(d) It shall not be necessary for the consent of Certificateholders under
this Section 12.02 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by the Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
(e) The Trustee may, but shall not be obligated to, enter into any
amendment or waiver with respect to this Agreement which affects the Trustee's
own rights, duties or immunities under this Agreement or otherwise.
SECTION 12.03. Binding Upon Assigns. Except as otherwise provided herein,
the provisions of this Agreement (including any amendments, modifications and
waivers hereof properly adopted) shall be binding upon and shall inure to the
benefit of the parties hereto, each party which becomes a party hereto by the
execution of this Agreement or the purchase of any Certificates and their
respective successors and assigns.
SECTION 12.04. Notices. Except as otherwise expressly provided herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be in writing and shall become effective when received. Any
such written notice shall either be mailed, certified or registered mail, return
receipt requested with proper postage for airmail prepaid, or by overnight
delivery service (providing for delivery receipts) or delivered by hand or sent
in the form of a tested telex (except as to the Trustee and any Rating Agency)
or confirmed facsimile.
(a) All notices, requests, demands, instructions or other communications
under this Agreement (except as provided in Section 6.02) shall be addressed as
follows (or to any other address as may be designated in writing by any party
hereto to the other parties hereto) (provided that any Certificateholder which
desires to change its address for notices need only notify the Trustee in
writing):
(i) If to the Trustee:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporation Trust Administration
International Structural Finance Unit
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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(ii) If to any Certificateholder:
At its address specified in the appropriate Register.
(iii) If to Telefonica del Peru:
Telefonica del Peru
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Attention: Deputy General Manager
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(iv) (A) If to Moody's:
▇▇▇▇▇'▇ Investors Service
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or
▇▇▇-▇▇▇-▇▇▇▇
(B) If to any other Rating Agency, as provided in writing to the
Trustee.
(v) If to any Designated Carrier, as provided in writing to the Trustee.
SECTION 12.05. Construction.
(a) The words "hereof", "herein", "hereto" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule, Annex and Exhibit references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms used herein shall be equally applicable to
both the singular and plural forms of such terms.
(c) The Table of Contents and the Article and Section headings herein are
for convenience only and shall not affect the construction hereof.
(d) Any report, document, Opinion of Counsel, Officer's Certificate or any
other instrument delivered hereunder delivered pursuant hereto which does not
conform to the requirements hereof or thereof shall be deemed non-conforming and
shall not relieve the Person delivering such non-conforming instrument from its
obligations to deliver a conforming instrument.
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(e) As used in this Agreement, the phrases "date hereof," "date of this
Agreement" and similar phrases mean December 17, 2001.
SECTION 12.06. Termination; Dissolution. (a) This Agreement and the Trust
created hereby shall terminate upon the earliest of (i) repayment in full of all
outstanding Certificates (by way of repayment in full on the final Payment Date,
mandatory or optional redemption or otherwise), (ii) twenty-one years less one
day after the death of the last survivor of any of the descendants living on the
Closing Date of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, father of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or (iii)
on the written consent of Telefonica del Peru and the Certificateholders of 100%
of the Certificates (such earliest date being the "Trust Termination Date"). In
connection with any termination of this Agreement and the Trust created hereby
pursuant to clause (i), (ii) or (iii) above, (w) all monies and other property
or proceeds constituting the Trust Estate shall be distributed to the
Certificateholders in accordance with and only to the extent of such
Certificateholder's interest therein; (x) the Trustee shall deliver to the
Certificateholders any and all instruments necessary to evidence and effect such
distribution; (y) any excess monies, property and proceeds following such
distribution, including all amounts then on deposit in the Trust Accounts, shall
be distributed to or at the direction of the holder of the Transferor
Certificate; and (z) the Trustee shall deliver to Telefonica del Peru, upon the
request of Telefonica del Peru, all agreements, instruments and other documents
relating to the Service Arrangements or that may be confidential.
SECTION 12.07. Severability. Any provision of this Agreement hereto which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 12.08. GOVERNING LAW. THE PROVISIONS OF THIS AGREEMENT AND EACH
TRANSACTION DOCUMENT, AND ALL THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER OR THEREUNDER, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, INCLUDING WITHOUT LIMITATION, SECTIONS 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAWS AND RULE 327(b) OF THE NEW
YORK CIVIL PRACTICE LAWS AND RULES, BUT EXCLUDING, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES,
EXCEPT THAT THE TRANSFER AGREEMENT AND THE VALIDITY AND EFFECTIVENESS OF THE
TRANSFER, ASSIGNMENT, DELIVERY AND CONVEYANCE OF THE TRANSFERRED PROPERTY
PURSUANT THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF PERU, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 12.09. WAIVER OF IMMUNITY; SUBMISSION TO JURISDICTION; AGENT. (a)
This Agreement and any other documents delivered pursuant hereto, and any
actions taken hereunder, constitute commercial acts by Telefonica del Peru. If
Peru or a political subdivision of Peru becomes the owner of the majority of the
shares or other ownership interests of Telefonica del Peru, Telefonica del Peru
hereby irrevocably and unconditionally and to the fullest
70
extent permitted by law agrees to waive, and agrees not to plead or claim, any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) for itself or any of its property, assets or
revenues wherever located with respect to its obligations, liabilities or any
other matter under or arising out of or in connection with this Agreement, each
other Transaction Document or any document delivered pursuant hereto or thereto,
in each case for the benefit of each Certificateholder, the Trustee and their
respective successors and assigns, it being intended that the foregoing waiver
and agreement shall be effective, irrevocable and not subject to withdrawal in
any and all jurisdictions.
(b) Telefonica del Peru and the Trustee hereby irrevocably agree that any
legal action, suit or proceeding brought by or against either or both of them
with respect to any matter under or arising out of or in any way connected with
this Agreement or the other Transaction Documents, or any document delivered
pursuant hereto or thereto or for recognition or enforcement of any judgment
rendered in any such action, suit or proceeding may be brought in the courts of
the State of New York in the Borough of Manhattan or of the United States of
America in the State of New York in the Borough of Manhattan, and by execution
and delivery of this Agreement, the parties hereto hereby irrevocably accept and
submit to the jurisdiction of the aforesaid courts in person, generally and
unconditionally, with respect to any such action, suit or proceeding for
themselves and in respect of any of their property, assets and revenues. In
addition, the parties hereto hereby irrevocably and unconditionally waive, to
the fullest extent permitted by law, any objection which any of them may now or
hereafter have to the laying of venue of any of the aforesaid actions, suits or
proceedings brought in any such court arising out of or in connection with this
Agreement or the other Transaction Documents, or any other document delivered
pursuant hereto or thereto, brought in any of the aforesaid courts, and hereby
further irrevocably and unconditionally waive and agree, to the fullest extent
permitted by law, not to plead or claim that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
(c) Telefonica del Peru hereby irrevocably designates, appoints and
empowers CT Corporation System with offices on the date hereof at ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, and its successors, as its process agent (the "Process
Agent") to receive, accept and acknowledge for and on its behalf and on behalf
of its property service of any and all legal process, summons, notices and
documents which may be served in any such action, suit or proceeding in the
courts of the State of New York in the Borough of Manhattan or of the United
States of America in the State of New York in the Borough of Manhattan, which
service may be made on such designee, appointee and agent in accordance with
legal procedures prescribed for such courts. Telefonica del Peru agrees to take
any and all action necessary to continue such designation in full force and
effect and to advise the Trustee of any change of address of the Process Agent;
and should the Process Agent become unavailable for this purpose for any reason,
Telefonica del Peru shall forthwith irrevocably designate a new process agent
within New York, New York, which shall agree to act as such, with the powers and
for the purposes specified in this subsection. Telefonica del Peru further
irrevocably consents and agrees to the service of any and all legal process,
summons, notices and documents out of any of the aforesaid courts in any such
action, suit or proceeding by hand delivery, to it at its address set forth in
Section 12.04 hereof or to any other addresses of which it shall have given
notice pursuant to Section 12.04 hereof or to its Process Agent.
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ agrees that service upon it or any Process Agent as provided
for herein shall, to the fullest extent permitted by law, constitute valid and
effective personal service and that the failure of any Process Agent to give any
notice of such service to Telefonica del Peru shall not impair or affect in any
way the validity of such service or any judgment rendered in any action or
proceeding based thereon.
SECTION 12.10. Use of English Language. All certificates, reports, notices
and other documents and communications given or delivered pursuant to this
Agreement shall be in the English language, except to the extent such documents
set forth any law, regulation, rule or pronouncement of Peru or any political
subdivision, governmental authority or regulatory body thereof or therein. The
parties hereby irrevocably agree that if it were necessary to translate this
Agreement into Spanish for purposes of enforcement hereof, such translation
shall be prepared by sworn translators selected by the Trustee and approved by
Telefonica del Peru. The translation (unless manifest error, willful misconduct,
bad faith or gross negligence by such translators is or has been detected) so
prepared shall be binding and the parties hereto waive any right to appeal or
contest such translation.
SECTION 12.11. Trustee's Fees and Expenses. (a) The fees and expenses of
the Trustee (including all out-of-pocket expenses incurred or to be incurred by
the Trustee in the administration of the Trust) hereunder for the duration of
this Agreement, unless otherwise stated herein, shall be payable by Telefonica
del Peru on the Closing Date as agreed upon by Telefonica del Peru and the
Trustee.
(b) The Trustee hereby irrevocably waives any right, claim or interest
(including, without limitation, any set-off, banker's lien or other similar
right it may have at contract or at law) against the Collection Account, the
Certificate Account, the Reserve Account, the Debt Service Reserve Account and
the Coverage Shortfall Account for payment of amounts owing to the Trustee.
SECTION 12.12. Counterparts. This Agreement may be separately executed in
counterparts and by the different parties hereto or thereto in separate
counterparts, each of which shall be deemed to constitute one and the same
agreement.
SECTION 12.13. Entire Agreement. This Agreement and the other Transaction
Documents contain the entire understanding of the parties hereto with respect to
the subject matter contained herein and therein, and there are no promises,
undertakings, representations or warranties by the parties hereto relative to
the subject matter hereof and thereof not expressly set forth or referred to
herein or therein.
SECTION 12.14. Limitation on Rights of Certificateholders. (a) The
dissolution of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor shall such dissolution entitle such
Certificateholder's legal representatives to claim an accounting or to take any
action or commence any proceeding in any court for a partition or winding up of
the Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) No Certificateholder shall have any right by virtue of any provision of
this
72
Agreement to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Agreement or any portion of the Trust Estate,
unless such Certificateholder previously shall have made a request to the
Trustee and shall have provided such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby,
and the Trustee, for fifteen days after such request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee, that
no one or more Certificateholders shall have any rights in any manner whatever
by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of other
Certificateholders, or to obtain or seek to obtain priority over or preference
to any other such Certificateholder, or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section, each and every Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 12.15. Certificates Nonassessable and Fully Paid. It is the
intention of the parties to this Agreement that, except as expressly provided
herein, no Certificateholder shall be personally liable for obligations of the
Trust or the Trustee, that the interests in the Trust represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
the Trustee for any reason whatsoever and that Certificates upon execution and
delivery by the Trustee pursuant to Section 2.02 hereof are and shall be deemed
fully paid.
SECTION 12.16. Remedies Cumulative. No failure or delay on the part of any
party hereto in exercising any right, power or privilege hereunder or under any
other document delivered in connection herewith or therewith and no course of
dealing between the Trustee, the Certificateholders or Telefonica del Peru shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other document delivered in
connection herewith or therewith preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder or thereunder.
The rights, powers and remedies herein and in any other document delivered in
connection herewith or therewith are cumulative and not exclusive of any rights,
powers or remedies which any party hereto would otherwise have. No notice to or
demand on any party hereto in any case shall entitle such party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of such party to any other or further action in any
circumstances without notice or demand.
SECTION 12.17. Rule 144A Information. For so long as any of the
Certificates are "restricted securities" within the meaning of Rule 144(a)(3)
under the Act, Telefonica del Peru as Servicer shall provide to any
Certificateholders and to any prospective purchaser of Certificates designated
by such a Certificateholder, upon the request of such Certificateholder or
prospective purchaser, any information required to be provided to such
Certificateholder or prospective purchaser to satisfy the conditions set forth
in Rule 144A(d)(4) under the Act.
SECTION 12.18. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY EXPRESSLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
73
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY SUPPLEMENT,
OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM
ANY RELATIONSHIP EXISTING IN CONNECTION WITH ANY RELATED TRANSACTION, AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
SECTION 12.19. REVERSION OF TRUST ESTATE; TERMINATION OF SECURITY
INTERESTS. (a) Upon repayment in full of all outstanding Certificates (by way of
payment on the final Payment Date, mandatory or optional redemption, upon the
termination of this Agreement and the Trust, or otherwise), all right, title and
interest in the Trust Estate shall revert to Telefonica del Peru, as holder of
the Transferor Certificate, and all security interests created hereby shall
terminate.
(b) Upon the termination of the transfer to the Trust of Purchased
Receivables from any Designated Carrier pursuant to Section 7.03(b), all right,
title and interest in the Purchased Receivables of such Designated Carrier
outstanding at the time of such termination or thereafter arising, and all
Collections thereafter received, in respect thereof and all proceeds thereof,
shall revert to Telefonica del Peru and all security interests therein created
hereby shall terminate.
(c) The Trustee shall, at the expense of Telefonica del Peru, execute and
deliver to Telefonica del Peru such documents, including Notices of Termination
in the form of Exhibit L hereto, as Telefonica del Peru shall reasonably request
to evidence the reversion to it of any part of the Trust Estate and any
termination of the security interests created hereby.
[signature page follows]
74
IN WITNESS WHEREOF, the parties have caused their name to be signed hereto
by their officers thereunto duly authorized as of the day and year first above
written.
TELEFONICA DEL PERU S.A.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
Title: Chief Executive Officer
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer
TELEFONICA DEL PERU GRANTOR TRUST
By: THE BANK OF NEW YORK, not in its
individual capacity, but solely as Trustee on
behalf of the Telefonica del Peru Grantor Trust
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Assistant Vice President
75
Exhibits and Schedules to the Trust Agreement
Exhibits
Exhibit A-1 Form of Rule 144A Global Certificate (Section 2.03(a))
Exhibit A-2 Form of Regulation S Global Certificate (Section 2.03(a))
Exhibit A-3 Form of Definitive Certificate (Section 2.04(b))
Exhibit B Form of Transferor Certificate (Section 2.03(d))
Exhibit C Form of Account Statement (Section 6.02(a))
Exhibit D Form of Identification of Collections (Section 7.05(a)(v))
Exhibit E Form of Notice of Face Amounts (Section 7.05(a)(vi))
Exhibit F Form of Notice of Delinquent Payments (Section 7.05(a)(vii))
Exhibit G Form of Officer's Certificate (Section 9.01(a))
Exhibit H Form of Instructions of Sale and Payment
Exhibit I Form of Notice of Closing Date and Effectiveness
Exhibit J Form of Termination Notice
Exhibit K Form of Daily Statement (Section 6.02(a))
Exhibit L Form of Designated Carrier Termination Notice (Section 7.03(b))
Schedules
Schedule 1 Amended Amortization Schedule
Schedule 2 Disputes with Designated Carriers regarding the Long Distance
Service Arrangements (Section 8.01(k),(l))
Schedule 3 Actions at Law, Suits in Equity and Proceedings pending against
Telefonica del Peru or its Assets (Section 8.01 (n))
Schedule 4 List of Designated Carriers
EXHIBIT A-1
[FORM OF RULE 144A GLOBAL CERTIFICATE]
THIS RULE 144A GLOBAL CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE WITH
CERTAIN PROVISIONS OF A TRUST AGREEMENT (THE "TRUST AGREEMENT") BETWEEN
TELEFONICA DEL PERU S.A.A. ("TELEFONICA DEL PERU") AND THE BANK OF NEW YORK, AS
TRUSTEE (THE "TRUSTEE"), INCLUDING (WITHOUT LIMITATION) SECTION 2.09 THEREOF.
THIS RULE 144A GLOBAL CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND NEITHER THIS RULE 144A GLOBAL CERTIFICATE NOR ANY INTEREST
HEREIN, MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES
AND (A) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE SECURITIES ACT, OR (B) IN ACCORDANCE WITH
THE PROVISIONS OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A. EACH HOLDER OF A BENEFICIAL INTEREST IN THIS RULE 144A
GLOBAL CERTIFICATE SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS A QUALIFIED
INSTITUTIONAL BUYER. EACH HOLDER OF A BENEFICIAL INTEREST IN THE REGULATION S
GLOBAL CERTIFICATE (AS DEFINED IN THE TRUST AGREEMENT) SHALL BE DEEMED TO HAVE
REPRESENTED THAT IT HAS ACQUIRED SUCH INTEREST IN A TRANSACTION THAT COMPLIES
WITH THE PROVISIONS OF REGULATION S. THE ISSUER HEREOF HAS NOT BEEN REGISTERED
UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
NO EMPLOYEE BENEFIT OR OTHER PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974 ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986 (THE "CODE"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN
ASSETS" BY REASON OF ANY SUCH PLAN'S INVESTMENT IN THE ENTITY AND NO
GOVERNMENTAL PLAN WHICH IS SUBJECT TO ANY FEDERAL STATE OR LOCAL LAW THAT IS
SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE, MAY PURCHASE OR HOLD THIS RULE 144A GLOBAL CERTIFICATE, EXCEPT THAT
CERTIFICATES MAY BE ACQUIRED AND HELD WITH THE ASSETS OF AN INSURANCE COMPANY
GENERAL ACCOUNT (BUT NOT A SEPARATE ACCOUNT) IF ALL OF THE APPLICABLE CONDITIONS
OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60, 60 F.R. 35925 ARE SATISFIED AND
THE ACQUISITION OF THE CERTIFICATES IS EXEMPT FROM THE PROHIBITED TRANSACTION
RESTRICTIONS OF ERISA AND SECTION 4975 OF THE CODE TO THE FULLEST EXTENT
PROVIDED UNDER SUCH EXEMPTION.
A-1-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
▇-▇-▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ GRANTOR TRUST RULE ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇
Original Face Amount:
$ ▇▇. ▇▇▇
---------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ GRANTOR TRUST, acting at the direction of
Telefonica del Peru S.A.A. ("Telefonica del Peru"), and through The Bank of New
York, not in its individual capacity but solely as Trustee (the "Trustee"),
under the Trust Agreement, dated as of December 16, 1998 (as it may be amended
from time to time, the "Trust Agreement"), by and between Telefonica del Peru
and the Trustee, certifies that Cede & Co. or registered assigns is the
registered owner of a nonassessable, fully-paid interest as set forth above in
the Trust Estate. A summary of certain of the pertinent provisions of the Trust
Agreement is set forth below.
Capitalized terms used herein and not defined herein shall have the
meanings assigned to them in the Trust Agreement.
This Rule 144A Global Certificate is one of an authorized issue of
7.48% International Settlements Backed Trust Certificates due 2008 (the
"Certificates") having an aggregate Original Face Amount of $150,000,000.
Reference is made to the Trust Agreement (copies of which are on file with the
Trustee at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ 10286) for a more
complete statement of the terms and provisions thereof, to all of which the
Certificateholder hereof, by accepting this Rule 144A Global Certificate,
assents and by which such Certificateholder is bound.
Payments on this Rule 144A Global Certificate shall be made by the
Trustee on behalf of the Trust in Dollars on each Payment Date to the Person in
whose name interests in this Rule 144A Global Certificate are registered at the
close of business on the first day of the calendar month on which such Payment
Date occurs, or if such day is not a Business Day, on the immediately preceding
Business Day (the "Record Date"). Each of such payments shall be made only from
and out of monies received by the Trustee in respect of the portion of the Trust
Estate in which such Certificateholder has an interest and applicable to such
payment under the provisions of the Trust Agreement. Payments on the Rule 144A
Global Certificate shall be made by wire transfer or other means in accordance
with the payment instructions of any Certificateholder provided to the Trustee
pursuant to Section 2.07 of the Trust Agreement. In the event that any
Certificateholder desires to transfer its interest in this Rule 144A Global
Certificate, the Trustee, upon written request, shall issue a statement setting
forth the then-outstanding Adjusted Face Amount as shown on the Register. Any
such transfer is subject to the limitations described more fully below and in
the Trust Agreement. The Register and the entries thereon shall be conclusive in
the absence of manifest error.
By accepting this Rule 144A Global Certificate, the holder hereof
agrees to treat this Rule 144A Global Certificate for United States federal,
state and local income tax purposes as indebtedness of Telefonica del Peru,
secured by the Purchased Receivables, and to treat the Trust as merely a
security device and not as a separate entity.
A-1-3
This Rule 144A Global Certificate shall be transferable, in whole or
in part, and exchangeable for other Certificates of other Authorized
Denominations of equal aggregate Original Face Amount upon presentation and
surrender thereof for registration of transfer or exchange at the Corporate
Trust Office, accompanied, in the case of transfer, by appropriate instruments
of assignment and transfer, duly executed by the Certificateholder hereof or by
a duly authorized attorney (together with evidence of the power of attorney and
any other documents or instruments required under the Trust Agreement) in form
satisfactory to the Trustee. In addition, exchanges of interests in this Rule
144A Global Certificate may be made for interests in the Regulation S Global
Certificate in accordance with the provisions of the Trust Agreement, and shall
be recorded on Schedule 1 hereto. Notwithstanding the preceding sentence, in
connection with any transfer, the Certificateholder will be subject to the
restrictions on transfer contained in the Trust Agreement.
This Rule 144A Global Certificate may not be divided into
denominations of less than $250,000. Prior to registration of transfer, the
Trustee shall deem and treat the Person in whose name this Rule 144A Global
Certificate is registered on the Register as the absolute owner hereof for all
purposes and shall not be affected by any notice to the contrary. No fee shall
be charged to the Certificateholder for any registration of transfer or
exchange, but the Trustee may require payment by the Person requesting the same
of a sum sufficient to reimburse it for any governmental tax, charge or other
similar expense connected therewith.
This Rule 144A Global Certificate shall not be deemed in any way a
promise to pay of the Trustee, except out of monies received by the Trustee and
applicable to such payment under the provisions of the Trust Agreement. The
Certificateholder, by its acceptance hereof, agrees that it will look to the
income and proceeds of the Trust Estate for payment hereof, and that the Trustee
in its individual capacity shall not be personally liable to the
Certificateholder for such payment.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof with the consent of the Required Percentage of
Certificateholders then outstanding. Any such consent by the Certificateholders
shall, subject to the terms of the Trust Agreement, be conclusive and binding on
such Certificateholders and upon all future Certificateholders of this Rule 144A
Global Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Rule 144A Global Certificate.
The Trust Agreement also provides for mandatory and voluntary
redemptions, by Telefonica del Peru, of this Rule 144A Global Certificate, and
interests herein (including partial voluntary redemptions to the extent set
forth in the Trust Agreement), at the times and subject to the terms and
conditions set forth in the Trust Agreement.
The right of Certificateholders to receive payment from the Trust
Estate shall terminate when the Adjusted Face Amount hereof shall be zero.
Upon the termination of the Trust pursuant to Section 12.06 of the
Trust Agreement, the Trustee is required to distribute all monies, other
property or proceeds constituting the Trust Estate to the Certificateholders in
accordance with and only to the extent of their respective interests therein and
any excess monies, property and proceeds, including, but not limited to, all
amounts then on
A-1-4
deposit in the Reserve Account or the Coverage Shortfall Account, shall be
distributed to or at the direction of the holder of the Transferor Certificate.
IN WITNESS WHEREOF, the Trustee, not in its individual capacity but
solely as Trustee, has caused this Rule 144A Global Certificate to be executed
on behalf of the Trust.
TELEFONICA DEL PERU GRANTOR TRUST
By: THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
Dated: December 16, 1998
Certificate of Authentication:
This is one of the Rule 144A Global Certificates referred to in the
within-mentioned Trust Agreement.
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee
By:
---------------------------------
Authorized Officer
A-1-5
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
Please insert social security or other identifying number of assignee
---------------------------------------------------------------------
---------------------------------------------------------------------
(Please print or typewrite name and address
including postal zip code of assignee)
---------------------------------------------------------------------
the attached Rule 144A Global Certificate evidencing an interest in certain
distributions with respect to the Trust Estate and hereby authorizes the
transfer of registration of such interest to assignee on the Register.
I (we) further direct the Trustee to issue a new Rule 144A Global
Certificate of like interest to the above named assignee and deliver such Rule
144A Global Certificate to the following address:
---------------------------------------------------------------------
---------------------------------------------------------------------
In connection with any offer, sale, resale, transfer, assignment,
participation, sub-participation, pledge, or other disposition (each a
"Transfer") of this Rule 144A Global Certificate, the undersigned registered
holder hereof confirms that such Transfer is made:
(i) in compliance with Section 2.09 of the Telefonica del Peru Trust
Agreement, dated as of December 16, 1998 (as it may be amended from
time to time, the "Trust Agreement"); and
(ii) (check applicable box):
to a Person (as defined in the Trust Agreement) reasonably
believed to be a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in the United States and
reasonable steps have been taken to ensure that the Person to
whom such Transfer is made is aware that such Transfer is being
made in reliance on Rule 144A;
to a Person outside the United States in reliance on Regulation S
under the Securities Act;
in each case in accordance with any applicable securities laws of any state of
the United States or any other jurisdiction.
Dated:
-------------------------
-------------------------------
Signature by or on behalf of assignor
A-1-6
Schedule 1 to Rule 144A Certificate
SCHEDULE OF EXCHANGES
The following exchanges of interests in the Regulation S Global Certificate for
interests in the Rule 144A Global Certificate represented by this Rule 144A
Global Certificate have been made:
Change in principal Principal amount of Notation made by
Principal amount of amount of this Rule this Rule 144A or on behalf of
this Rule 144A Global 144A Global Global Certificate Telefonica del
Certificate as of Date exchange Certificate due to following such Peru Grantor
December 16, 1998 made exchange exchange Trust
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I-1
EXHIBIT A-2
[FORM OF REGULATION S GLOBAL CERTIFICATE]
THIS REGULATION S GLOBAL CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE WITH
CERTAIN PROVISIONS OF A TRUST AGREEMENT (THE "TRUST AGREEMENT") BETWEEN
TELEFONICA DEL PERU S.A.A. ("TELEFONICA DEL PERU") AND THE BANK OF NEW YORK, AS
TRUSTEE (THE "TRUSTEE"), INCLUDING (WITHOUT LIMITATION) SECTION 2.09 THEREOF.
THIS REGULATION S GLOBAL CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND NEITHER THIS REGULATION S GLOBAL CERTIFICATE NOR ANY
INTEREST HEREIN, MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES
AND (A) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE SECURITIES ACT, OR (B) IN ACCORDANCE WITH
THE PROVISIONS OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A. EACH HOLDER OF A BENEFICIAL INTEREST IN THE RULE 144A
GLOBAL CERTIFICATE (AS DEFINED IN THE TRUST AGREEMENT) SHALL BE DEEMED TO HAVE
REPRESENTED THAT IT IS A QUALIFIED INSTITUTIONAL BUYER. EACH HOLDER OF A
BENEFICIAL INTEREST IN THIS REGULATION S GLOBAL CERTIFICATE SHALL BE DEEMED TO
HAVE REPRESENTED THAT IT HAS ACQUIRED SUCH INTEREST IN A TRANSACTION THAT
COMPLIES WITH THE PROVISIONS OF REGULATION S. THE ISSUER HEREOF HAS NOT BEEN
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
NO EMPLOYEE BENEFIT OR OTHER PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974 ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986 (THE "CODE"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN
ASSETS" BY REASON OF ANY SUCH PLAN'S INVESTMENT IN THE ENTITY AND NO
GOVERNMENTAL PLAN WHICH IS SUBJECT TO ANY FEDERAL STATE OR LOCAL LAW THAT IS
SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE, MAY PURCHASE OR HOLD THIS REGULATION S GLOBAL CERTIFICATE, EXCEPT
THAT CERTIFICATES MAY BE ACQUIRED AND HELD WITH THE ASSETS OF AN INSURANCE
COMPANY GENERAL ACCOUNT (BUT NOT A SEPARATE ACCOUNT) IF ALL OF THE APPLICABLE
CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60, 60 F.R. 35925 ARE
SATISFIED AND THE ACQUISITION OF THE CERTIFICATES IS EXEMPT FROM THE PROHIBITED
TRANSACTION RESTRICTIONS OF ERISA AND SECTION 4975 OF THE CODE TO THE FULLEST
EXTENT PROVIDED UNDER SUCH EXEMPTION.
A-2-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
A-2-2
TELEFONICA DEL PERU GRANTOR TRUST REGULATION S GLOBAL CERTIFICATE
CUSIP (CINS) No. ▇▇▇▇▇▇▇▇▇
Original Face Amount:
$ ▇▇. ▇▇▇
-----------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ GRANTOR TRUST, acting at the direction of
Telefonica del Peru S.A.A. ("Telefonica del Peru"), and through The Bank of New
York, not in its individual capacity but solely as Trustee (the "Trustee"),
under the Trust Agreement, dated as of December 16, 1998 (as it may be amended
from time to time, the "Trust Agreement"), by and between Telefonica del Peru
and the Trustee, certifies that Cede & Co. or registered assigns is the
registered owner of a nonassessable, fully-paid interest as set forth above in
the Trust Estate. A summary of certain of the pertinent provisions of the Trust
Agreement is set forth below.
Capitalized terms used herein and not defined herein shall have the
meanings assigned to them in the Trust Agreement.
This Regulation S Global Certificate is one of an authorized issue of
7.48% International Settlements Backed Trust Certificates due 2008 (the
"Certificates") having an aggregate Original Face Amount of $150,000,000.
Reference is made to the Trust Agreement (copies of which are on file with the
Trustee at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ 10286) for a more
complete statement of the terms and provisions thereof, to all of which the
Certificateholder hereof, by accepting this Regulation S Global Certificate,
assents and by which such Certificateholder is bound.
Payments on this Regulation S Global Certificate shall be made by the
Trustee on behalf of the Trust in Dollars on each Payment Date to the Person in
whose name interests in this Regulation S Global Certificate are registered at
the close of business on the first day of the calendar month on which such
Payment Date occurs, or if such day is not a Business Day, on the immediately
preceding Business Day (the "Record Date"). Each of such payments shall be made
only from and out of monies received by the Trustee in respect of the portion of
the Trust Estate in which such Certificateholder has an interest and applicable
to such payment under the provisions of the Trust Agreement. Payments on the
Certificates shall be made by wire transfer or other means in accordance with
the payment instructions of any Certificateholder provided to the Trustee
pursuant to Section 2.07 of the Trust Agreement. In the event that any
Certificateholder desires to transfer its interest in this Regulation S
Certificate, the Trustee, upon written request, shall issue a statement setting
forth the then-outstanding Adjusted Face Amount as shown on the Register. Any
such transfer is subject to the limitations described more fully below and in
the Trust Agreement. The Register and the entries thereon shall be conclusive in
the absence of manifest error.
A-2-3
By accepting this Regulation S Global Certificate, the holder hereof
agrees to treat this Regulation S Global Certificate for United States federal,
state and local income tax purposes as indebtedness of Telefonica del Peru,
secured by the Purchased Receivables, and to treat the Trust as merely a
security device and not as a separate entity.
This Regulation S Global Certificate shall be transferable, in whole
or in part, and exchangeable for other Certificates of other Authorized
Denominations of equal aggregate Original Face Amount upon presentation and
surrender thereof for registration of transfer or exchange at the Corporate
Trust Office, accompanied, in the case of transfer, by appropriate instruments
of assignment and transfer, duly executed by the Certificateholder hereof or by
a duly authorized attorney (together with evidence of the power of attorney and
any other documents or instruments required under the Trust Agreement) in form
satisfactory to the Trustee. In addition, exchanges of interests in this
Regulation S Global Certificate may be made for interests in the Rule 144A
Global Certificate (as defined in the Trust Agreement) in accordance with the
provisions of the Trust Agreement, and shall be recorded on Schedule 1 hereto.
Notwithstanding the preceding sentence, in connection with any transfer, the
Certificateholder will be subject to the restrictions on transfer contained in
the Trust Agreement.
This Regulation S Global Certificate may not be divided into
denominations of less than $250,000. Prior to registration of transfer, the
Trustee shall deem and treat the Person in whose name this Regulation S Global
Certificate is registered on the Register as the absolute owner hereof for all
purposes and shall not be affected by any notice to the contrary. No fee shall
be charged to the Certificateholder for any registration of transfer or
exchange, but the Trustee may require payment by the Person requesting the same
of a sum sufficient to reimburse it for any governmental tax, charge or other
similar expense connected therewith.
This Regulation S Global Certificate shall not be deemed in any way a
promise to pay of the Trustee, except out of monies received by the Trustee and
applicable to such payment under the provisions of the Trust Agreement. The
Certificateholder, by its acceptance hereof, agrees that it will look to the
income and proceeds of the Trust Estate for payment hereof, and that the Trustee
in its individual capacity shall not be personally liable to the
Certificateholder for such payment.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof with the consent of the Required Percentage of
Certificateholders then outstanding. Any such consent by the Certificateholders
shall, subject to the terms of the Trust Agreement, be conclusive and binding on
such Certificateholders and upon all future Certificateholders of this
Regulation S Global Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Regulation S Global Certificate.
The Trust Agreement also provides for mandatory and voluntary
redemptions, by Telefonica del Peru, of this Regulation S Global Certificate,
and interests herein (including partial voluntary redemptions to the extent set
forth in the Trust Agreement), at the times and subject to the terms and
conditions set forth in the Trust Agreement.
A-2-4
The right of Certificateholders to receive payment from the Trust
Estate shall terminate when the Adjusted Face Amount hereof shall be zero.
Upon the termination of the Trust pursuant to Section 12.06 of the
Trust Agreement, the Trustee is required to distribute all monies, other
property or proceeds constituting the Trust Estate to the Certificateholders in
accordance with and only to the extent of their respective interests therein and
any excess monies, property and proceeds, including, but not limited to, all
amounts then on deposit in the Reserve Account or the Coverage Shortfall
Account, shall be distributed to or at the direction of the holder of the
Transferor Certificate.
IN WITNESS WHEREOF, the Trustee, not in its individual capacity but
solely as Trustee, has caused this Regulation S Global Certificate to be
executed on behalf of the Trust.
TELEFONICA DEL PERU GRANTOR TRUST
By: THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Dated: December 16, 1998
Certificate of Authentication:
This is one of the Regulation S Global Certificates referred to in the
within-mentioned Trust Agreement.
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee
By:
------------------------------------
Authorized Officer
A-2-5
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
Please insert social security or other identifying number of assignee
-------------------------------------------------------------------
-------------------------------------------------------------------
(Please print or typewrite name and address
including postal zip code of assignee)
-------------------------------------------------------------------
the attached Regulation S Global Certificate evidencing an interest in certain
distributions with respect to the Trust Estate and hereby authorizes the
transfer of registration of such interest to assignee on the Register.
I (we) further direct the Trustee to issue a new Certificate of like
interest to the above named assignee and deliver such Certificate to the
following address:
----------------------------------------------------------
----------------------------------------------------------
In connection with any offer, sale, resale, transfer, assignment,
participation, sub-participation, pledge, or other disposition (each a
"Transfer") of this Regulation S Global Certificate, the undersigned registered
holder hereof confirms that such Transfer is made:
(i) in compliance with Section 2.09 of the Telefonica del Peru Trust
Agreement, dated as of December 16, 1998 (as it may be amended from
time to time, the "Trust Agreement"); and
(ii) (check applicable box):
to a Person (as defined in the Trust Agreement) reasonably
believed to be a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in the United States and
reasonable steps have been taken to ensure that the Person to
whom such Transfer is made is aware that such Transfer is being
made in reliance on Rule 144A;
to a Person outside the United States in reliance on Regulation S
under the Securities Act;
in each case in accordance with any applicable securities laws of any state of
the United States or any other jurisdiction.
Dated:
---------------------------
----------------------------------
Signature by or on behalf of assignor
A-2-6
Schedule 1 to Reg S Certificate
SCHEDULE OF EXCHANGES
The following exchanges of interests in the Rule 144A Global Certificate for
interests in the Regulation S Global Certificate represented by this Regulation
S Global Certificate have been made:
Principal amount of Change in principal Principal amount of Notation made
this Regulation S amount of this this Regulation S by or on behalf
Global Certificate as Regulation S Global Global Certificate of Telefonica
of December 16, Date exchange Certificate due to following such del Peru Grantor
1998 made exchange exchange Trust
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$
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I-1
EXHIBIT A-3
[FORM OF DEFINITIVE CERTIFICATE]
THIS DEFINITIVE CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE WITH CERTAIN
PROVISIONS OF A TRUST AGREEMENT (THE "TRUST AGREEMENT") BETWEEN TELEFONICA DEL
PERU S.A.A. ("TELEFONICA DEL PERU") AND THE BANK OF NEW YORK, AS TRUSTEE (THE
"TRUSTEE"), INCLUDING (WITHOUT LIMITATION) SECTION 2.09 THEREOF. THIS DEFINITIVE
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND
NEITHER THIS DEFINITIVE CERTIFICATE NOR ANY INTEREST HEREIN, MAY BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND (A) TO A NON-U.S. PERSON
IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S
UNDER THE SECURITIES ACT, OR (B) IN ACCORDANCE WITH THE PROVISIONS OF RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A") TO A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
ANOTHER QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE REOFFER,
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A. EACH
HOLDER OF A BENEFICIAL INTEREST IN THE RULE 144A GLOBAL CERTIFICATE (AS DEFINED
IN THE TRUST AGREEMENT) SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS A
QUALIFIED INSTITUTIONAL BUYER. EACH HOLDER OF A BENEFICIAL INTEREST IN THE
REGULATION S GLOBAL CERTIFICATE (AS DEFINED IN THE TRUST AGREEMENT) SHALL BE
DEEMED TO HAVE REPRESENTED THAT IT HAS ACQUIRED SUCH INTEREST IN A TRANSACTION
THAT COMPLIES WITH THE PROVISIONS OF REGULATION S. THE ISSUER HEREOF HAS NOT
BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
NO EMPLOYEE BENEFIT OR OTHER PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974 ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986 (THE "CODE"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN
ASSETS" BY REASON OF ANY SUCH PLAN'S INVESTMENT IN THE ENTITY AND NO
GOVERNMENTAL PLAN WHICH IS SUBJECT TO ANY FEDERAL STATE OR LOCAL LAW THAT IS
SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE, MAY PURCHASE OR HOLD THIS DEFINITIVE CERTIFICATE, EXCEPT THAT
CERTIFICATES MAY BE ACQUIRED AND HELD WITH THE ASSETS OF AN INSURANCE COMPANY
GENERAL ACCOUNT (BUT NOT A SEPARATE ACCOUNT) IF ALL OF THE APPLICABLE CONDITIONS
OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60, 60 F.R. 35925 ARE SATISFIED AND
THE ACQUISITION OF THE CERTIFICATES IS EXEMPT FROM THE PROHIBITED TRANSACTION
RESTRICTIONS OF ERISA AND SECTION 4975 OF THE CODE TO THE FULLEST EXTENT
PROVIDED UNDER SUCH EXEMPTION.
▇-▇-▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ GRANTOR TRUST DEFINITIVE CERTIFICATE
Original Face Amount:
$ No.
------------------ ------------------
The TELEFONICA DEL PERU GRANTOR TRUST, acting at the direction of
Telefonica del Peru S.A.A. ("Telefonica del Peru"), and through The Bank of New
York, not in its individual capacity but solely as Trustee (hereinafter called
the "Trustee"), under the Trust Agreement, dated as of December 16, 1998 (as it
may be amended from time to time, the "Trust Agreement"), by and between
Telefonica del Peru and the Trustee, certifies that or registered
------------
assigns is the registered owner of a nonassessable, fully-paid interest as set
forth above in the Trust Estate. A summary of certain of the pertinent
provisions of the Trust Agreement is set forth below.
Capitalized terms used herein and not defined herein shall have the
meanings assigned to them in the Trust Agreement.
This Definitive Certificate is one of an authorized issue of 7.48%
International Settlements Backed Trust Certificates due 2008 (the
"Certificates") having an aggregate Original Face Amount of $150,000,000.
Reference is made to the Trust Agreement (copies of which are on file with the
Trustee at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ 10286) for a more
complete statement of the terms and provisions thereof, to all of which the
Certificateholder hereof, by accepting this Definitive Certificate, assents and
by which such Certificateholder is bound.
Payments on this Definitive Certificate shall be made by the Trustee
on behalf of the Trust in Dollars on each Payment Date to the Person in whose
name this Definitive Certificate is registered at the close of business on the
first day of the calendar month on which such Payment Date occurs, or if such
day is not a Business Day, on the immediately preceding Business Day (the
"Record Date"). Each of such payments shall be made only from and out of monies
received by the Trustee in respect of the portion of the Trust Estate in which
such Certificateholder has an interest and applicable to such payment under the
provisions of the Trust Agreement. Payments on this Definitive Certificate shall
be made by wire transfer or other means in accordance with the payment
instructions of the Certificateholder provided to the Trustee pursuant to
Section 2.07 of the Trust Agreement. In the event that any Certificateholder
desires to transfer its Definitive Certificate, the Trustee, upon written
request, shall issue a statement setting forth the then-outstanding Adjusted
Face Amount as shown on the Register. Any such transfer is subject to the
limitations described more fully below and in the Trust Agreement. The Register
and the entries thereon shall be conclusive in the absence of manifest error.
By accepting this Definitive Certificate, the holder hereof agrees to
treat this Definitive Certificate for United States federal, state and local
income tax purposes as indebtedness of Telefonica del Peru, secured by the
Purchased Receivables, and to treat the Trust as merely a security device and
not as a separate entity.
A-3-2
This Definitive Certificate shall be transferable, in whole or in
part, and exchangeable for other Certificates of other Authorized Denominations
of equal aggregate Original Face Amount upon presentation and surrender thereof
for registration of transfer or exchange at the Corporate Trust Office,
accompanied, in the case of transfer, by appropriate instruments of assignment
and transfer, duly executed by the Certificateholder hereof or by a duly
authorized attorney (together with evidence of the power of attorney and any
other documents or instruments required under the Trust Agreement) in form
satisfactory to the Trustee. Notwithstanding the preceding sentence, in
connection with any transfer, the Certificateholder will be subject to the
restrictions on transfer contained in the Trust Agreement.
This Definitive Certificate may not be divided into denominations of
less than $250,000 in original face amount. Prior to registration of transfer,
the Trustee shall deem and treat the Person in whose name this Definitive
Certificate is registered on the Register as the absolute owner hereof for all
purposes and shall not be affected by any notice to the contrary. No fee shall
be charged to the Certificateholders for any registration of transfer or
exchange, but the Trustee may require payment by the Person requesting the same
of a sum sufficient to reimburse it for any governmental tax, charge or other
similar expense connected therewith.
This Definitive Certificate shall not be deemed in any way a promise
to pay of the Trustee, except out of monies received by the Trustee and
applicable to such payment under the provisions of the Trust Agreement. The
Certificateholder, by its acceptance hereof, agrees that it will look to the
income and proceeds of the Trust Estate for payment hereof, and that the Trustee
in its individual capacity shall not be personally liable to the
Certificateholder for such payment.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof with the consent of the Required Percentage of
Certificateholders then outstanding. Any such consent by the Certificateholder
shall, subject to the terms of the Trust Agreement, be conclusive and binding on
such Certificateholder and upon all future Certificateholders of this Definitive
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Definitive Certificate.
The Trust Agreement also provides for mandatory and voluntary
redemptions, by Telefonica del Peru, of this Definitive Certificate (including
partial voluntary redemptions to the extent set forth in the Trust Agreement),
at the times and subject to the terms and conditions set forth in the Trust
Agreement.
The right of Certificateholders to receive payment from the Trust
Estate shall terminate when the Adjusted Face Amount hereof shall be zero.
A-3-3
Upon the termination of the Trust pursuant to Section 12.06 of the
Trust Agreement, the Trustee is required to distribute all monies, other
property or proceeds constituting the Trust Estate to the Certificateholders in
accordance with and only to the extent of their respective interests therein and
any excess monies, property and proceeds, including, but not limited to, all
amounts then on deposit in the Reserve Account or the Coverage Shortfall
Account, shall be distributed to or at the direction of the holder of the
Transferor Certificate.
[REST OF PAGE LEFT INTENTIONALLY BLANK]
A-3-4
IN WITNESS WHEREOF, the Trustee, not in its individual capacity but
solely as Trustee, has caused this Definitive Certificate to be executed on
behalf of the Trust.
TELEFONICA DEL PERU GRANTOR TRUST
By: THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee
By:
------------------------------------
Name:
-------------------------------
Title:
-------------------------------
Dated: December 16, 1998
Certificate of Authentication:
This is one of the Definitive Certificates referred to in the within-mentioned
Trust Agreement.
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee
By:
------------------------
Authorized Officer
A-3-5
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
Please insert social security or other identifying number of assignee
---------------------------------------------------------------------
---------------------------------------------------------------------
(Please print or typewrite name and address
including postal zip code of assignee)
---------------------------------------------------------------------
the attached Definitive Certificate evidencing an interest in certain
distributions with respect to the Trust Estate and hereby authorizes the
transfer of registration of such interest to assignee on the Register.
I (we) further direct the Trustee to issue a new Definitive Certificate of
like interest to the above named assignee and deliver such Definitive
Certificate to the following address:
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
In connection with any offer, sale, resale, transfer, assignment,
participation, sub-participation, pledge, or other disposition (each a
"Transfer") of this Definitive Certificate, the undersigned registered holder
hereof confirms that such Transfer is made:
(i) in compliance with Section 2.09 of the Telefonica del Peru Trust
Agreement, dated of December 16, 1998 (as it may be amended from time
to time, the "Trust Agreement"); and
(ii) (check applicable box):
to a Person (as defined in the Trust Agreement) reasonably
believed to be a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in the United States and
reasonable steps have been taken to ensure that the Person to
whom such Transfer is made is aware that such Transfer is being
made in reliance on Rule 144A;
to a Person outside the United States in reliance on Regulation S
under the Securities Act;
in each case in accordance with any applicable securities laws of any state of
the United States or any other jurisdiction.
Dated:
------------------------------
------------------------------------
Signature by or on behalf of assignor
A-3-6
EXHIBIT B
[FORM OF TRANSFEROR CERTIFICATE]
Telefonica del Peru Grantor Trust
Transferor Certificate
THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO RESTRICTIONS SET FORTH IN THE
TRUST AGREEMENT REFERRED TO HEREIN. A COPY OF THE TRUST AGREEMENT WILL BE
FURNISHED TO THE HOLDER OF THIS CERTIFICATE BY THE TRUSTEE UPON WRITTEN REQUEST.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES OR "BLUE SKY" LAWS.
This Transferor Certificate represents the
Transferor's Interest in the Telefonica del Peru Grantor Trust
Evidencing an undivided interest in certain assets of the Trust (as defined
below), the property of which includes, among other things, the right of
Telefonica del Peru S.A.A. ("Telefonica del Peru") or its designees (the
"Certificateholder") to receive Dollar payments to the extent set forth in the
Trust Agreement referred to herein.
This certifies that the Certificateholder is the registered owner of an
undivided beneficial interest in the Telefonica del Peru Grantor Trust (the
"Trust") which is not represented by any Certificates issued pursuant to the
Trust Agreement dated as of December 16, 1998 (as it may be amended from time to
time, the "Trust Agreement") by and between Telefonica del Peru and The Bank of
New York, as Trustee.
All capitalized terms used and not otherwise defined herein shall have the
meanings given thereto in the Transaction Documents.
Reference is made to the Trust Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby. This Transferor Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which agreement, as amended
from time to time, the Certificateholder by virtue of the acceptance hereof
assents and by which the Certificateholder is bound.
THE TRUST AGREEMENT AND THE CERTIFICATES CREATED THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
B-1
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, EXCEPT THAT THE TRANSFER AND ASSIGNMENT AGREEMENT AND
THE VALIDITY AND EFFECTIVENESS OF THE ASSIGNMENT OF THE PURCHASED RECEIVABLES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF PERU, WITHOUT
REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
This Transferor Certificate has a limited right of payment to certain
Collections in respect of the Purchased Receivables, all as more specifically
set forth in the Trust Agreement.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Transferor Certificate shall
not be entitled to any benefit under the Trust Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Trustee has caused this Transferor Certificate to
be duly executed.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
Dated: December 16, 1998
Certificate of Authentication
This is a Transferor Certificate referred to in the Trust Agreement.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee
By:
----------------------------------
Authorized Signatory
B-2
EXHIBIT C
[FORM OF ACCOUNT STATEMENT]
The Bank of New York Telefonica del Peru Grantor Trust Statement Date:
7.48% International Settlements Backed -----------
Trust Certificates due 2008 Payment Date:
-----------
Prior Payment:
-----------
Record Date:
-----------
Trustee:
The Bank of New York [BANK ACCOUNT #]
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
C-1
================================================================================
I. Purchased Receivables Information
A. The Receivables Statement delivered by Telefonica del Peru for the
immediately preceding Collection Period is attached hereto as Schedule
X.
B. The aggregate amount of Purchased Receivables paid to the undersigned
by the Designated Carriers during the immediately preceding Collection
Period was $ .
-------------
C. The Servicing Report delivered by Telefonica del Peru for the
immediately preceding Collection Period is attached hereto as Schedule
Y.
II. Distribution Information
A. On the immediately preceding Payment Date, the amounts payable to the
Certificateholders were as follows:
1. The Semiannual Payment Amount for such Payment Date was
$ .
-------------
2. Such Semiannual Payment Amount was comprised of:
(a) Certificate Interest of $ ;
-------------
(b) Amortization Amount of $ ;
-------------
(c) Additional Amounts not paid by Telefonica del Peru directly
to the applicable taxing authority of $ ; and
-------------
(d) Collection Shortfall Amount (if any) of $ .
-------------
B. The amounts payable in II.A.1. were paid to the Certificateholders as
follows:
1. $ was paid to the Certificateholders from the
-------------
Certificate Account.
2. $ was paid to the Certificateholders from the
-------------
Reserve Account.
III. Reserve Account/Coverage Shortfall Account
A. As of the end of the immediately preceding Payment Date, the amount in
the Reserve Account was $ .
-------------
B. As of the end of the immediately preceding Payment Date, the amount in
the Coverage Shortfall Account was $ .
-------------
C. As of the end of the immediately preceding Payment Date, the amount in
the Debt Service Reserve Account was $ .
-------------
================================================================================
C-2
Schedule X to Exhibit C
[FORM OF TELEFONICA DEL PERU RECEIVABLES STATEMENT]
[TELEFONICA DEL PERU LETTERHEAD]
[Date]
The Bank of New York,
as Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Assistant Vice President
Reference is made to Section 6.02 (a) of the Amended and Restated Trust
Agreement, dated as of December 17, 2001, entered into by the undersigned and
the Bank of New York, not in its individual capacity but solely as Trustee (as
defined therein). Capitalized terms used herein shall have the meanings given
thereto in the Trust Agreement.
----------------------------------------------------------------------------------
(Figures in US$)
----------------------------------------------------------------------------------
Generated Unpaid
Purchased Collected Purchased Purchased
Receivables(*) Receivables (*) Receivables (*)
----------------------------------------------------------------------------------
[DESIGNATED [Amount of Purchased [Amount of Purchased [Amount of Purchased
CARRIER A] Receivables Receivables paid by Receivables unpaid
generated by CARRIER A during by CARRIER A
CARRIER A during immediately preceding during any other
immediately Collection Period] Collection Period,
preceding Collection including the
Period] immediately
preceding one]
----------------------------------------------------------------------------------
[DESIGNATED [Amount of Purchased [Amount of Purchased [Amount of Purchased
CARRIER B] Receivables Receivables paid by Receivables unpaid
generated by CARRIER B during by CARRIER B
CARRIER B during immediately preceding during any other
immediately Collection Period] Collection Period,
preceding Collection including the
Period] immediately
preceding one]
----------------------------------------------------------------------------------
[Include information as to all Designated Carriers]
----------------------------------------------------------------------------------
Total [Sum of Above] [Sum of Above] [Sum of Above]
Designated
Carrier Flow
----------------------------------------------------------------------------------
Generated Purchased Receivables and International Settlement Receivables (*)
C-3
--------------------------------------------------------------------------------------
Immediately Preceding Total of Immediately Preceding
(Figures in US$) Collection Period Two Collection Periods
--------------------------------------------------------------------------------------
Total Designated Carrier
Flow
--------------------------------------------------------------------------------------
Total Net International
Settlement Receivables Net of
Designated Carrier Flow
--------------------------------------------------------------------------------------
Total Net International
Settlement Receivables
--------------------------------------------------------------------------------------
(*) For purposes of this information, the Collection Period with the next
succeeding Payment Date occurring on June 15th shall be from January 1st to June
30th and the Collection Period with the next succeeding Payment Date occurring
December 15th shall be from July 1st to December 31st.
Very truly yours,
TELEFONICA DEL PERU S.A.A.
By:
--------------------
Title:
--------------------
C-4
Schedule Y to Exhibit C
[FORM OF SERVICING REPORT]
[TELEFONICA DEL PERU LETTERHEAD]
January February March April May June
------- -------- ----- ----- --- ----
Incoming Call #### #### ####
Volume (Designated
Carriers to TdP)
Outgoing Call Volume #### #### ####
(TDP to Designated
Carriers)
Net Settlement #### #### ####
Minutes (by
Designated Carrier)
Net Settlement Tariff $$$$ $$$$ $$$$
(by Designated Carrier)
Net Settlement Cash $$$$ $$$$ $$$$
Flow ($)
(*) For purposes of this information, the Collection Period with the next
succeeding Payment Date occurring on June 15th shall be from January 1st to June
30th and the Collection Period with the next succeeding Payment Date occurring
December 15th shall be from July 1st to December 31st.
C-5
EXHIBIT D
[FORM OF IDENTIFICATION OF COLLECTIONS]
[TELEFONICA DEL PERU LETTERHEAD]
Identification of Collections
[Date]/1/
The Bank of New York,
as Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Assistant Vice President
Ladies and Gentlemen:
We are notifying you as follows pursuant to Section 7.05 of the Telefonica
del Peru Amended and Restated Trust Agreement, dated as of December 16, 1998 and
amended and restated as of December 17, 2001 (as it may be amended from time to
time, the "Trust Agreement"), by and between Telefonica del Peru S.A.A.
("Telefonica del Peru") and The Bank of New York, not in its individual capacity
but solely as Trustee. Capitalized terms used herein and not otherwise defined
herein shall have the meanings specified in the Trust Agreement.
In response to your notice dated , , regarding the receipt in
-------- --
the Collection Account of Collections of Purchased Receivables in the amount of
$ , we hereby notify you that such Collections are from [insert name of
-------
Carrier].
Very truly yours,
TELEFONICA DEL PERU S.A.A.
By:
-------------------------------
Title:
----------------------------
----------
/1/ Pursuant to subsection (a)(v) of Section 7.05 of the Trust Agreement,
Telefonica del Peru is to send this notice not later than five (5) days
after receipt of written notification by the Trustee of any wire receipt of
Collections.
D-1
EXHIBIT E
[FORM OF NOTICE OF FACE AMOUNTS]
[TELEFONICA DEL PERU LETTERHEAD]
Notice of Face Amounts
[Date]/2/
The Bank of New York,
as Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Assistant Vice President
Ladies and Gentlemen:
We are notifying you as follows pursuant to subsection (a)(vi) of Section
7.05 of the Amended and Restated Trust Agreement, dated as of December 16, 1998
and amdended and restated as of December 17, 2001 (as it may be amended from
time to time, the "Trust Agreement"), by and between Telefonica del Peru S.A.A.
("Telefonica del Peru") and The Bank of New York, not in its individual capacity
but solely as Trustee. Capitalized terms used herein and not otherwise defined
herein shall have the meanings specified in the Trust Agreement.
With respect to the Collection Period ending on [insert date]:
1. [CARRIER]
a. The face amount of Purchased Receivables generated by [CARRIER]
that have fallen due for payment on and after the beginning of
such Collection Period to but excluding the date hereof is
$ .
----------
2. [CARRIER]
a. The face amount of Purchased Receivables generated by [CARRIER]
that have fallen due for payment on and after the beginning of
such Collection Period to but excluding the date hereof is
$ .
--------------
[INCLUDE INFORMATION AS TO ALL DESIGNATED CARRIERS]
----------
/2/ Pursuant to subsection (a)(vi) of Section 7.05 of the Trust Agreement,
Telefonica del Peru is to send this notice within 40 days of the beginning
of each Collection Period.
E-1
Very truly yours,
TELEFONICA DEL PERU S.A.A.
By:
-----------------------
Title:
--------------------
E-2
EXHIBIT F
[FORM OF NOTICE OF DELINQUENT PAYMENTS]
[TELEFONICA DEL PERU LETTERHEAD]
Notice of Delinquent Payments
[Date]/3/
The Bank of New York,
as Trustee
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Assistant Vice President
Ladies and Gentlemen:
We are notifying you as follows pursuant to subsection (a)(vii) of Section
7.05 of the Amended and Restated Trust Agreement, dated as of December 16, 1998
and amended and restated as of December 17, 2001 (as it may be amended from time
to time, the "Trust Agreement"), by and between Telefonica del Peru S.A.A.
("Telefonica del Peru") and The Bank of New York, not in its individual capacity
but solely as Trustee. Capitalized terms used herein and not otherwise defined
herein shall have the meanings specified in the Trust Agreement.
A payment in the amount of $ in respect of a Purchased Receivables of
------
[CARRIER] is delinquent by thirty (30) days or more beyond the Due Settlement
Date therefor.
Very truly yours,
TELEFONICA DEL PERU S.A.A.
By:
------------------------------------
Title:
---------------------------------
----------
/3/ Pursuant to subsection (a)(vii) of Section 7.05 of the Trust Agreement
Telefonica del Peru is to send this notice within five (5) days of becoming
aware of any such delinquent payment.
F-1
EXHIBIT G
[FORM OF OFFICER'S CERTIFICATE]
[TELEFONICA DEL PERU LETTERHEAD]
Officer's Certificate
[Date]
The Bank of New York,
as Trustee
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Assistant Vice President
Ladies and Gentlemen:
We are notifying you as follows pursuant to subsection (a) of Section 9.01
of the Trust Agreement, dated as of December 16, 1998 and amended and restated
as of December 17, 2001 (as it may be amended from time to time, the "Trust
Agreement"), by and between Telefonica del Peru S.A.A. ("Telefonica del Peru")
and The Bank of New York, not in its individual capacity but solely as Trustee.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings specified in the Trust Agreement.
During the period [____] to [____]:
1. Telefonica del Peru [has] [has not {insert details}] performed all of
its obligations and covenants set forth in the Trust Agreement and the Transfer
Agreement.
2. As of the date hereof, a Specified Event [has occurred and is continuing
{insert details}] [has occurred but is no longer continuing] [has not occurred].
Very truly yours,
TELEFONICA DEL PERU S.A.A.
By:
------------------------------
Title:
---------------------------
G-1
EXHIBIT H
[FORM OF INSTRUCTIONS OF SALE AND PAYMENT]
[TELEFONICA DEL PERU LETTERHEAD]
Instructions of Sale and Payment
December 1, 1998
[CARRIER]
[Address]
Attention: [Name]
[Title]
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Vice President
Ladies and Gentlemen:
We hereby notify [CARRIER] that it is the intention of Telefonica del Peru
S.A.A. ("Telefonica del Peru") to effect an irrevocable sale and transfer of all
of its right, title and interest in and to certain account receivables (the
"Purchased Receivables") to The Bank of New York, a New York banking
corporation, acting not in its individual capacity but solely as trustee (the
"Trustee"), pursuant to (a) the Amended and Restated Trust Agreement entered
into by Telefonica del Peru and the Trustee (as it may be amended from time to
time, the "Trust Agreement") and (b) the Transfer and Assignment Agreement
entered into by Telefonica del Peru and the Trustee (the "Transfer Agreement").
The Purchased Receivables shall include all international settlement payments
due, if any, to Telefonica del Peru by [CARRIER] (after ordinary and appropriate
netting out provisions in accordance with past practices and recommendations of
the International Telecommunications Union) (the "[CARRIER Receivables]") under
the informal or formal arrangements in effect from time to time between
[CARRIER] and Telefonica del Peru and in accordance with past practice, as
amended and supplemented from time to time (the "Service Arrangement").
These Instructions of Sale and Payment (these "Instructions") contain the
terms and conditions under which [CARRIER] agrees to comply with Telefonica del
Peru's request to make said payments to the Trustee. [CARRIER] shall make
payments of the [CARRIER Receivables] to the Trustee in accordance with the
terms specified herein and only upon receipt of a duplicate original of these
Instructions signed by an authorized representative of Telefonica del Peru and
by an authorized representative of the Trustee. [CARRIER] shall not be required
to make any investigation as to the effectiveness or legitimacy of the
authorization of any purported representative whose signature
H-1
appears on these Instructions. Telefonica del Peru acknowledges and irrevocably
agrees that receipt by [CARRIER] of such duplicate original of these
Instructions shall be sufficient to authorize [CARRIER] to make payments of the
[CARRIER Receivables] to the Trustee as provided for herein.
[CARRIER] hereby agrees that receipt of these Instructions is sufficient
evidence of the notice of the transfer of the [CARRIER Receivables] to the
Trust. [CARRIER] further agrees that, in accordance with the instructions
herein, it will make direct payments to the Trustee of the entire amount of the
[CARRIER Receivables] (if any) payable to Telefonica del Peru as and when due to
Telefonica del Peru under the Service Arrangement until such date as [CARRIER]
receives either (i) further notice solely from the Trustee (the "Termination
Notice"), the form of which notice is an exhibit to the Trust Agreement, stating
that the Trust Termination Date (as defined in the Trust Agreement) has
occurred, and, as a consequence, Telefonica del Peru has acquired all right,
title and interest on the [CARRIER Receivables] or (ii) further notice solely
from the Trustee (the "Designated Carrier Termination Notice"), the form of
which notice is an exhibit to the Trust Agreement, stating that Telefonica del
Peru has terminated [CARRIER] as a Designated Carrier pursuant to Section
7.03(b) of the Trust Agreement, and, as a consequence, Telefonica del Peru has
acquired all right, title and interest on the [CARRIER Receivables]. [CARRIER]
hereby agrees that these Instructions shall constitute an irrevocable and
unconditional demand and payment instruction and shall remain in full force and
effect until receipt of the Termination Notice or Designated Carrier Termination
Notice, following which date [CARRIER] shall remit all revenues under the
Service Arrangement to Telefonica del Peru or in accordance with such other
payment instructions as [CARRIER] may thereafter receive from Telefonica del
Peru. [CARRIER] shall not be required to make any investigation as to the
accuracy or legitimacy of such Termination Notice or Designated Carrier
Termination Notice and may rely on such Termination Notice or Designated Carrier
Termination Notice to make payments directly to Telefonica del Peru as new
holder of the [CARRIER Receivables]. The [CARRIER] agrees that receipt of the
Termination Notice or Designated Carrier Termination Notice is sufficient
evidence of the notice of the transfer of the [CARRIER Receivables] to
Telefonica del Peru.
Telefonica del Peru hereby irrevocably authorizes and directs [CARRIER] to
make all payments hereunder in respect of the [CARRIER Receivables] as follows
until such time as [CARRIER] receives the Termination Notice or Designated
Carrier Termination Notice from the Trustee:
Bank: The Bank of New York
----- --------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA# ▇▇▇▇▇▇▇▇▇
GLA# 111-565
For further credit to: A/C #356385
Reference: Telefonica del Peru Collection Account
Att.: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telefonica del Peru irrevocably agrees to indemnify and hold [CARRIER]
harmless from and against any and all claims, losses or additional expenses,
including costs of litigation and attorneys'
H-2
fees, which may in any way arise out of or result from [CARRIER]'s agreement to
these Instructions, the performance by [CARRIER] of its provisions or from
disputes among Telefonica del Peru, the Trustee and any third party (or any
combination of the above) arising out of these Instructions. By these
Instructions, [CARRIER] does not in any way guarantee the transfer of monies to
the Trustee. [CARRIER] agrees only to make payment to the Trustee in respect of
the [CARRIER Receivables] in accordance with the terms of these Instructions to
the extent that such monies are available as a result of the international
settlement process after deducting any claims or amounts owed to [CARRIER]
pursuant to the Service Arrangement.
[CARRIER] assumes no liability for any payments made in accordance with the
terms of these Instructions. Telefonica del Peru acknowledges and agrees that
each transfer of monies made by [CARRIER] to the Trustee in accordance with
these Instructions shall discharge [CARRIER] s obligation to Telefonica del Peru
under the Service Arrangement to make such payment.
Nothing in these Instructions shall be construed to affect or alter in any
way whatsoever any provisions of the Service Arrangement between [CARRIER] and
Telefonica del Peru, including the right to amend, terminate or suspend the
Service Arrangement, or payments thereunder, in accordance with its terms.
[CARRIER] agrees that it has no right of counterclaim, defense, recoupment or
setoff against Telefonica del Peru with respect to the Purchased Receivables,
other than any rights provided under the Service Arrangement. Telefonica del
Peru shall continue to be the party responsible to determine settlement balances
with [CARRIER] under the Service Arrangement, notwithstanding the terms and
conditions of these Instructions. Except for the aforementioned sale and
transfer of the [CARRIER Receivables] to the Trustee, Telefonica del Peru
represents that it has not pledged or assigned any right, title or interest
arising out of or related to the Service Arrangement.
Telefonica del Peru, through the undersigned, its authorized
representative, further represents and warrants that these Instructions are
binding on Telefonica del Peru and does not contravene any laws or regulations
of the Republic of Peru to which Telefonica del Peru is subject. Telefonica del
Peru further represents and warrants that these Instructions constitute the only
authorization required from Telefonica del Peru and that all required
governmental authorizations of the Republic of Peru have been obtained in order
for [CARRIER] to make transfers of monies in accordance with these Instructions.
Telefonica del Peru further acknowledges and agrees that it releases [CARRIER]
from any further liability of [CARRIER]'s obligations to Telefonica del Peru on
the settlement balances for the period that these Instructions are in effect to
the extent [CARRIER] transfers the appropriate sums hereunder to the Trustee in
accordance with the terms of these Instructions.
These Instructions shall supersede all prior instructions with respect to
the method of payment by [CARRIER] to Telefonica del Peru under the Service
Arrangement.
[The rest of this page left intentionally blank]
Very truly yours,
TELEFONICA DEL PERU S.A.A.
H-3
By:
---------------------------------
Title:
------------------------------
Accepted and agreed:
[CARRIER]
By:
-----------------------------------
Title:
--------------------------------
Date:
---------------------------------
Acknowledged:
THE BANK OF NEW YORK
not in its individual capacity but solely
as Trustee
By:
-----------------------------------
Title:
--------------------------------
H-4
EXHIBIT I
[FORM OF NOTICE OF CLOSING DATE AND EFFECTIVENESS]
[TELEFONICA DEL PERU LETTERHEAD]
Notice of Closing Date and Effectiveness
[Date]
[CARRIER]
[Address]
Attention: [___]
[Title]
Ladies and Gentlemen:
We hereby notify [CARRIER] that the Closing Date under the Transfer and
Assignment Agreement (the "Transfer Agreement") between Telefonica del Peru
S.A.A. ("Telefonica del Peru") and The Bank of New York, acting solely as
trustee (the "Trustee"), is December 16, 1998 (the "Closing Date"). Pursuant to
the Transfer Agreement, Telefonica del Peru has irrevocably sold and transferred
to the Trust, effective as of the Closing Date, all of its right, title and
interest in and to the [CARRIER] Receivables (referred to in those certain
Instructions of Sale and Payment among [CARRIER], Telefonica del Peru and the
Trustee, dated as of December 16, 1998, the "Instructions")), and that the
related instructions for payment contained in said Instructions have become
effective as of the Closing Date.
Very truly yours,
TELEFONICA DEL PERU S.A.A.
By:
--------------------------------------
Title:
-----------------------------------
THE BANK OF NEW YORK
not in its individual capacity but solely
as Trustee
By:
--------------------------------------
Title:
-----------------------------------
I-1
EXHIBIT J
[FORM OF TERMINATION NOTICE]
[THE BANK OF NEW YORK LETTERHEAD]
Termination Notice
[Date]
[CARRIER]
[Address]
Attention: [___]
[Title]
Ladies and Gentlemen:
We refer to the Instructions of Sale and Payment of Telefonica del Peru
S.A.A. ("Telefonica del Peru") dated as of , (the "Instructions") [and
------ ---
to the Notice of Closing Date and Effectiveness of Telefonica del Peru dated as
of December 16, 1998 (the "Notice of Closing", and together with the
Instructions, the "Notices").] Capitalized terms used herein and not otherwise
defined herein shall have the meanings specified in the Instructions.
We hereby notify [CARRIER] that the Trust Termination Date under the Trust
Agreement (as defined in the Instructions) has occurred and, as a consequence,
Telefonica del Peru has acquired all right, title and interest in the [CARRIER
Receivables]. Accordingly, as of the date hereof, [CARRIER] shall make payments
directly to Telefonica del Peru under the Service Arrangement in effect between
Telefonica del Peru and [CARRIER], and the Instructions is hereby terminated.
Very truly yours,
THE BANK OF NEW YORK
not in its individual capacity but solely
as Trustee
By:
--------------------------------------
Title:
-----------------------------------
J-1
EXHIBIT K
[FORM OF DAILY STATEMENT]
DATE WIRE RECEIVED FROM AMOUNT
[NAME OF DESIGNATED CARRIER]
[ACCOUNT INFORMATION]
DATE COLLECTION ACCOUNT BALANCE
[DEBIT/CREDIT]
DATE RESERVE ACCOUNT BALANCE
[DEBIT/CREDIT]
DATE DEBT SERVICE RESERVE ACCOUNT BALANCE
[DEBIT/CREDIT]
DATE CERTIFICATE ACCOUNT BALANCE
[DEBIT/CREDIT]
DATE COVERAGE SHORTFALL ACCOUNT BALANCE
[DEBIT/CREDIT]
DATE ELIGIBLE INVESTMENTS BALANCE
[INVESTMENT INFORMATION FOR EACH
ACCOUNT BELOW, INCLUDING YIELD
AND MATURITY]
COLLECTION ACCOUNT
RESERVE ACCOUNT
DEBT SERVICE RESERVE ACCOUNT
CERTIFICATE ACCOUNT
COVERAGE SHORTFALL ACCOUNT
K-1
EXHIBIT L
[FORM OF DESIGNATED CARRIER TERMINATION NOTICE]
[THE BANK OF NEW YORK LETTERHEAD]
Designated Carrier Termination Notice
[Date]
[CARRIER]
[Address]
Attention: [_____]
[Title]
Ladies and Gentlemen:
We refer to the Instructions of Sale and Payment of Telefonica del Peru
S.A.A. ("Telefonica del Peru") dated as of , (the "Instructions").
---------- ---
Capitalized terms used herein and not otherwise defined herein shall have the
meanings specified in the Instructions.
We hereby notify [CARRIER] that Telefonica del Peru has terminated
[CARRIER] as a Designated Carrier under Section 7.03(b) of the Trust Agreement
(as defined in the Instructions) and, as a consequence, Telefonica del Peru has
acquired all right, title and interest in the [CARRIER Receivables].
Accordingly, as of the date hereof, [CARRIER] shall make payments directly to
Telefonica del Peru under the Service Arrangement in effect between Telefonica
del Peru and [CARRIER], and the Instructions is hereby terminated.
Very truly yours,
THE BANK OF NEW YORK
not in its individual capacity but solely
as Trustee
By:
--------------------------------------
Title:
-----------------------------------
L-1
Schedule 1
Amended Amortization Schedule
Principal
Amortization Amount Balance
Payment Date (in U.S. Dollars) (in U.S. Dollars)
------------ ------------------- -----------------
$ 150,000,000
June 15, 1999 $ 7,500,000 $ 142,500,000
December 15, 1999 7,500,000 135,000,000
June 15, 2000 7,500,000 127,500,000
December 15, 2000 7,500,000 120,000,000
June 15, 2001 7,500,000 112,500,000
December 15, 2001 7,500,000 55,000,000**
June 15, 2002 3,928,571.43 51,071,428.57
December 15, 2002 3,928,571.43 47,142,857.14
June 15, 2003 3,928,571.43 43,214,285.71
December 15, 2003 3,928,571.43 39,285,714.29
June 15, 2004 3,928,571.43 35,357,142.86
December 15, 2004 3,928,571.43 31,428,571.43
June 15, 2005 3,928,571.43 27,500,000.00
December 15, 2005 3,928,571.43 23,571,428.57
June 15, 2006 3,928,571.43 19,642,857.14
December 15, 2006 3,928,571.43 15,714,285.71
June 15, 2007 3,928,571.43 11,785,714.29
December 15, 2007 3,928,571.43 7,857,142.86
June 15, 2008 3,928,571.43 3,928,571.43
December 15, 2008 3,928,571.43
$ 100,000,000
** Partial Redemption of U.S.$50 million on December 17, 2001
S-1
Schedule 2
Dispute with Designated Carriers Regarding the Service Arrangements
1. AT&T An accounting rate for the IV.Quarter-2001 is being
negotiated.
2. CONCERT BT Traffic discrepancies of approximately SDR. 67,500.00
3. TELEGLOBE, CANADA Discrepancies in the application of termination rate. It
is required to establish this together with foreign
operator.
INTERNATIONAL TELEPHONE SERVICES
PAYMENT 90 DAYS OVERDUE
------------------------------------------------------------------------------
DESIGNATED REMITTANCE
COUNTRY CARRIER DATE PERIOD CURRENCY AMOUNT
------------------------------------------------------------------------------
Germany Deutsche 07/03 I-QTR-2001 SDR (10,348.33)
==============================================================================
Canada Teleglobe 06/12 Apr.2001 SDR 8,325.14
US$ 928.57
------------------------------------------------------------------------------
07/10 May.2001 SDR 2,937.55
US$ (12,002.04)
------------------------------------------------------------------------------
08/07 Jun.2001 SDR 4,565.68
US$ 17,033.30
==============================================================================
Italy Telecom Italia 09/04 II-QTR-2001 SDR 114,644.68
US$ (4.44)
==============================================================================
Korea Korea Telec. 08/08 II-QTR-2001 SDR 2,142.50
==============================================================================
U.K. Cable & Wireless 04/02 Jan.2001 SDR 32,230.71
05/29 Feb.2001 SDR 53,823.94
06/18 Mar.2001 US$ (12,172.31)
SDR. 4,997.47
==============================================================================
U.K. Concert BT 04/02 Jan.2001 SDR (13,930.06)
05/03 Feb.2001 SDR 43,779.84
US$ (6.30)
06/28 Mar.2001 SDR 1,562.82
06/28 Apr.2001 (13,339.72)
07/18 May.2001 (13,618.99)
------------------------------------------------------------------------------
06/12/2001
S-2
Schedule 3
Actions at Law, Suits in Equity and Proceedings
Pending Against Telefonica del Peru or its Assets
None.
S-3
Schedule 4
List of Designated Carriers
Carrier Country
-----------------------------------------------------
AT&T U.S.
MCIWorldCom Inc. U.S.
Sprint U.S.
KDDI Japan
Cable and Wireless United Kingdom
Japan International Digital Japan
Communications Inc.
Japan Telecom Co., Ltd. Japan
Telefonica S.A. Spain
Deutsche Telekom A.G. Germany
Teleglobe Canada Inc. Canada
France Telecom France
Swisscom Ltd. Switzerland
Korea Telecom Korea
CTC Mundo Chile
Entel Chile Chile
Telefonica de Argentina Argentina
Telecom Argentina (Norte) Argentina
Telecom Italia S.p.A Italy
Concert Global Network Services Ltd. United Kingdom
(UK)
-----------------------------------------------------
S-4
