FORM OF BOND PURCHASE AGREEMENT
Published on February 21, 1995
EXHIBIT 1(a)
________________________________________________________________________________
BOND PURCHASE AGREEMENT
AMONG
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL,
MEDICAL AND ENVIRONMENTAL CONTROL FACILITIES
FINANCING AUTHORITY,
(THE "AUTHORITY")
PALMA REAL ASSOCIATES, S.E.
(THE "BORROWER")
AND
PAINEWEBBER INCORPORATED OF PUERTO RICO
INDIVIDUALLY AND ON BEHALF OF SMITH BARNEY INC.
(COLLECTIVELY, THE "UNDERWRITER")
DATED FEBRUARY 23, 1995
________________________________________________________________________________
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL
AND ENVIRONMENTAL CONTROL FACILITIES
FINANCING AUTHORITY
$43,450,000 INDUSTRIAL REVENUE BONDS,
1995 SERIES A
(PLAZA PALMA REAL PROJECT)
TABLE OF CONTENTS
The parties appearing in the cover page of this Bond Purchase Agreement
which is hereby made an integral part hereof, hereby agree with each other as
follows:
1. INTRODUCTION; DEFINITIONS; RULES OF INTERPRETATION.
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Upon the terms, conditions, representations, warranties, and agreements set
forth herein, the Underwriter agrees to purchase from the Authority and the
Authority agrees to sell and deliver to the Underwriter all, but not less than
all, of $43,450,000 aggregate principal amount of the Authority's captioned
bonds (the "Bonds"), to be dated January 1, 1995, at an aggregate discount of
[$820,453] of the principal amount thereof. The Bonds shall mature, shall bear
interest, shall be payable, shall be secured and shall be otherwise as provided
in the Trust Agreement (the "Trust Agreement") by and between the Authority and
the Trustee (therein identified) to be dated the date of delivery of the Bonds
and purchase therefor (the "Date of Issuance") relative to the Bonds and the
resolution (the "Resolution") adopted by the Authority authorizing the issuance
and sale of the Bonds.
The capitalized words hereinbefore and hereinafter used shall have the
meanings assigned thereto under the Trust Agreement.
The Bonds shall be issued under and pursuant to the Trust Agreement. The
Authority will loan the proceeds of the Bonds to the Borrower under the Loan
Agreement. Concurrently with the issuance of the Bonds, the Authority will cause
to be delivered to the Trustee, the Guaranty, the Mortgage, the Mortgage Note,
the Pledge Agreement, the Title Insurance and the Collateral Assignment. This
Bond Purchase Agreement, the Trust Agreement, the Bonds and the Related
Documents are hereinafter collectively referred to as the "Contracts".
A Preliminary Official Statement (the "Preliminary Official Statement") and
an Official Statement (as amended or supplemented from time to time, the "Final
Official Statement") have been prepared in connection with the offering of the
Bonds. As used herein, the terms "Preliminary Official Statement" and "Final
Official Statement" shall include the appendices attached thereto, the materials
incorporated by reference therein and the exhibits to such materials, and are
herein collectively referred to as the "Official Statement".
This Bond Purchase Agreement shall be interpreted pursuant to the rules
established in the Trust Agreement.
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2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE AUTHORITY.
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The Authority represents, warrants and agrees as follows:
(a) The Authority is a body corporate and politic constituting a
public corporation and governmental instrumentality of the Commonwealth, duly
constituted and existing under the laws of the Commonwealth, particularly the
Act, with full legal right, power and authority to enter into this Bond Purchase
Agreement, to adopt the Resolution, to issue, sell and deliver the Bonds to the
Underwriter as provided herein, and to enter into and carry out and consummate
all other transactions contemplated by the Contracts to which it is a party.
(b) By official action of the Authority prior to or concurrently with
its execution of this Bond Purchase Agreement, the Authority has duly adopted
the Resolution, and has duly authorized and approved the execution and delivery
of, and the performance by the Authority of the obligations contained in, the
Contracts to which it is a party.
(c) The information with respect to the Authority and the Government
Development Bank for Puerto Rico in the Official Statement as of the date hereof
does not contain any untrue or misleading statement of a material fact or omit
to state a material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they are made, not misleading.
(d) The Authority has duly and validly authorized the execution and
delivery of the Contracts to which it is a party, and when executed and
delivered by the other parties thereto, will constitute the legal, valid and
binding agreements of the Authority, except as may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally from time to time in effect and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(e) There are no actions, suits, proceedings or investigations at law
or in equity before or by any court, arbitration board or tribunal, public board
or body, pending or, to the best knowledge of the Authority, threatened against
or affecting the Authority, or, to the best knowledge of the Authority, does
there exist any basis therefor, (i) to restrain or enjoin the issuance or
delivery of the Bonds, (ii) which in any way question or affect the validity of
any of the Contracts to which it is a party, any provisions thereof, or any
proceedings taken with respect thereto, (iii) which question the Authority's
creation, organization or existence or the titles to office of any of its
officers,,or its powers to finance the Project, or (iv) wherein an unfavorable
decision, ruling or finding would adversely affect the transactions contemplated
by, or the validity or
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enforceability of, the Contracts to which it is a party or any other agreement
or instrument to which the Authority is a party and which is used or
contemplated for use in consummation of the transactions contemplated by the
Contracts.
(f) To the best knowledge of the Authority: (i) no event has occurred
and no condition exists which, upon the issuance of the Bonds, or thereupon with
notice and/or passage of time, would constitute an event of default within the
meaning of the Trust Agreement or the Loan Agreement, or a breach of this Bond
Purchase Agreement; and (ii) the Authority is not in default in any material
respect under any term of any indenture, agreement, by-law or other instrument
to which it is a party or by which it may be bound.
(g) All consents, approvals, atuthorizations and orders of, or
filings, registrations or qualifications with, any governmental or regulatory
authorities (collectively, the "Governmental Approvals") which are required to
be obtained by the Authority for consummation of the transactions contemplated
by the Contracts to which the Authority is a party have been duly and validly
obtained or performed on or before this date and are in full force and no
default exists thereunder; provided, however, that no representation, warranty,
promise or agreement is made herein by the Authority with respect to compliance
by the Authority with the Securities Act or the securities or Blue Sky laws of
the Commonwealth or the states of the United States of America (the "States").
(h) Neither the issuance and sale of the Bonds nor the execution and
delivery of the Contracts to which the Authority is a party, the consummation of
the transactions herein and therein contemplated, nor compliance with the terms,
conditions or provisions of such instruments, will conflict with, or violate or
result in a breach of, or constitute a default under the by-laws of the
Authority or the rules of procedure of the Authority or any indenture, agreement
or other instrument by which the Authority or any of its properties may be bound
or any statute, rule, regulation, order, decree or ordinance of any court,
government or governmental body having jurisdiction over the Authority or any of
its property.
(i) As of this date, the Preliminary Official Statement was deemed
"final" by the Authority for purposes of paragraph (b)(1) of Rule 15c2-12 (the
"Rule") of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Authority omitted therefrom only such information permitted to be
omitted therefrom by the Rule.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BORROWER.
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The Borrower represents, warrants and agrees as follows:
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(a) The information provided by the Borrower contained in the
Preliminary Official Statement as of the date thereof did not, and the
information contained in the Final Official Statement does not, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Borrower
makes no representation or warranty as to statements or omissions made in
reliance upon, and in conformity with, information furnished to the Borrower by
the Underwriter, the Authority, the Government Development Bank for Puerto Rico
or the Guarantor expressly for use therein.
(b) There is no fact known to the Borrower which the Borrower has not
disclosed in writing to the Authority and to the Underwriter which materially
adversely affects the properties, business or financial condition of the
Borrower or the ability of the Borrower to perform its obligations under the
Contracts to which it is a party or any other agreement or instrument to which
the Borrower is a party and which is used or contemplated for use in
consummation of the transactions contemplated by any such agreement.
(c) The Borrower is a partnership organized and validly existing
under the laws of the Commonwealth which has made an election under Supplement P
of the Commonwealth Income Tax Act of 1954, as amended, is in good standing
there in, and is not in violation of any provisions of its partnership
agreement.
(d) The Borrower has all requisite power and authority to own and
operate its properties and to carry on its business as now conducted and as
presently proposed to be conducted, and to enter into, execute, deliver and
carry out and consummate the transactions contemplated by the Contracts to which
it is a party.
(e) The Borrower has duly and validly authorized the execution and
delivery of the Contracts to which it is a party and, when duly executed and
delivered by the parties thereto, will be legal, valid, and binding agreements
of the Borrower.
(f) As presently contemplated, the Project conforms in all material
respects to all statements with regard thereto contained in the Official
Statement.
(g) Except as reflected in or contemplated by the Official Statement,
since the respective dates as of which information is given therein there has
not been any material adverse change in the condition, financial or otherwise,
of the Borrower or in its result of operations or in its business or prospects.
(h) The Borrower does not have any contingent obligations not
disclosed in the Official Statement which are material to the businesses or
financial
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condition of the Borrower and which are required to be disclosed in the
Borrower's financial statements.
(i) The Borrower has obtained or will obtain and maintain in full
force and effect once obtained all Governmental Approvals.
(j) There does not exist any material breach or material default, and
no event has occurred which with notice, lapse of time, or both, would
constitute a material default under any indenture, mortgage, deed of trust or
other agreement or instrument to which the Borrower is now a party which would
have a material adverse effect on the condition, financial or otherwise, or the
Borrower.
(k) Neither the execution or delivery by the Borrower of the
Contracts to which it is a party, the consummation of the transactions therein
contemplated, nor compliance with the terms, conditions or provisions of such
instruments, will result in a breach or violation of, or be in contravention of,
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the Borrower
is a party or by which is bound, or any statute or the partnership agreement of
the Borrower, or any rule, regulation, judgment or order of any court or
governmental agency or body having jurisdiction over the Borrower or over its
properties.
(l) Except as described in the Official Statement, there are no
actions, suits or proceedings pending, or, to the knowledge of the Borrower,
threatened, against the Borrower or any of its property, at law or in equity or
before or by any Federal or state court, commission, regulatory body or
administrative agency or other governmental body, in which an adverse decision
would, in the judgment of the Borrower, be reasonably expected to have a
material adverse effect on the business or financial condition of the Borrower.
(m) The Borrower will not take or omit to take any action which
action or omission will in any way cause the proceeds from the sale of the Bonds
to be applied in a manner contrary to that provided in the Trust Agreement and
the Loan Agreement, as in force from time to time.
(n) There is no litigation or proceeding pending, or to the knowledge
of the Borrower threatened, against the Borrower or, to the knowledge of the
Borrower, any other person, affecting in any manner whatsoever the right of the
Borrower to execute the Contracts to which it is a party, or the ability of the
Borrower to make the payments required thereunder, or to otherwise comply with
the Borrower's obligations contained therein.
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(o) The Borrower covenants that throughout the term that the Loan
Agreement is in force, it shall comply with all laws, regulations and
governmental requirements that may apply to the Project or to the operation of
the Borrower.
(p) The Borrower covenants to furnish to the Underwriter or to each
Person designated by the Underwriter within seven (7) days after the date
hereof, at such address or addresses as the Underwriter shall specify, such
number of conformed copies of the Official Statement with all exhibits thereto
in such quantities as the Underwriter requests in order to comply with paragraph
(b)(4) of the Rule and the Rules of the Municipal Securities Rulemaking Board.
(q) The Borrower will not take or permit any action within its power
to be taken, nor will it omit to take any action within its power which would
result in the interest paid on the Bonds being considered from sources outside
of the Commonwealth for purposes of the Code.
(r) As of this date, the Preliminary Official Statement was deemed
"final" by the Borrower for purposes of paragraph (b)(1) of the Rule and the
Borrower omitted therefrom only such information permitted to be omitted
therefrom by the Rule.
4. COVENANTS OF THE AUTHORITY AND THE BORROWER.
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The Authority and the Borrower agree that:
(i) If at any time between the date of this Bond Purchase Agreement
and a date 90 days after the Date of Issuance any event occurs which might or
would cause the Official Statement, as then amended or supplemented, to contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein in the light of the
circumstances under which they were made, not misleading, the Borrower or the
Authority shall forthwith notify the Underwriter thereof and, if in the opinion
of the Underwriter such event required the preparation and publication of a
supplement or amendment to the Official Statement, the Authority and the
Borrower, at the Underwriter's request, shall prepare and furnish to the
Underwriter, in such quantity as the Underwriter may reasonably request, an
amendment or supplement to such statement in a form and in a manner approved by
the Underwriter. The Borrower will not, at any time prior to the expiration of
such period, amend or supplement the Official Statement unless the Underwriter
shall previously have been advised and furnished with a copy of such amendment
or supplement.
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(ii) The Authority and the Borrower will, when and as requested by
the Underwriter, reasonably cooperate with the Underwriter in qualifying the
Bonds for offering and sale and in determining their eligibility for investment
under the laws of the Commonwealth and will maintain such qualification in
effect so long as required for their distribution.
5. PAYMENT AND DELIVERY OF THE BONDS.
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The Authority will deliver the Bonds to the Underwriter at the offices of
the Bond Counsel, at approximately 10:00 a.m., Atlantic Standard Time, on the
Date of Issuance, in definitive form, duly executed and authenticated, against
payment therefor to the Trustee by the Underwriter of the initial principal
amount of the Bonds less the aggregate discount set forth in Section 1 hereof by
wire transfer. Upon such payment, the Trustee shall authorize delivery of the
Bonds to the Underwriter.
The Bonds shall be: (i) in the form and as otherwise described in the Trust
Agreement and (ii) delivered and issued as fully registered bonds without
coupons, in such names and in such denominations (which denominations may not be
other than those authorized in the Trust Agreement) as the Underwriter shall
specify not less than 24 hours prior to the Date of Issuance.
6. CLOSING OF THE UNDERWRITER'S OBLIGATION.
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The obligation of the Underwriter to purchase and pay for the Bonds as
provided herein shall be subject, in its reasonable discretion, to compliance
with the following conditions precedent on or before the Date of Issuance, in a
manner reasonably satisfactory to the Underwriter and its counsel:
(a) All of the representations and warranties of the Authority and
the Borrower contained herein and all the information provided by them and
contained in the Official Statement shall be true and correct in all material
respects as of the Date of Issuance.
(b) Any and all statements of the officers and/or directors of the
Authority and the Borrower made in connection with the issuance and sale of the
Bonds pursuant to the provisions hereof or the execution of the Contracts and
other instruments of the Authority and the Borrower referred to herein shall be
true and correct in all material respects as of the Date of Issuance.
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(c) The Authority and the Borrower shall have performed all of their
obligations hereunder and heretofore to be performed.
(d) On the Date of Issuance the market price of the Bonds, or the
market price of general credit or revenue obligations issued by the Commonwealth
or any of its agencies, instrumentalities or political subdivisions, or the
market price of revenue obligations of the character of the Bonds, shall not
have been materially adversely affected (in the reasonable opinion of the
Underwriter) by reason of the fact that (i) legislation shall have been
introduced in or enacted by the Federal Congress or the Commonwealth
Legislature, or legislation pending in such Congress shall have been amended, or
legislation shall have been recommended to such Congress or otherwise endorsed
for passage (by press release, other form of notice or otherwise) by the Federal
President, or Treasury Department, or the Chairman or ranking minority member of
the Committee on Finance of the Federal Senate or the Committee on Ways and
Means of the Federal House of Representatives, or legislation shall have been
proposed for consideration by either such Committee by any member thereof or
presented as an option for consideration by either such Committee by the staff
of such Committee or by the staff of the Joint Committee on Taxation of such
Congress, or legislation shall have been favorably reported for passage to
either house of such Congress by a committee of such house to which such
legislation has been referred for consideration, or (ii) a decision shall have
been rendered by a court established under Article III of the Federal
Constitution, or the Federal Tax Court, or (iii) an order, ruling, regulation or
official statement shall have been made by the Federal or Commonwealth Treasury
Department in each such case with the purpose or effect, directly or indirectly,
of imposing Federal, State, Commonwealth or local taxation upon interest to be
received by the Holder of any Bond.
(e) On the Date of Issuance none of the following shall have occurred
(i) any outbreak of hostilities or other national or international calamity or
crisis, or (ii) there shall be in force a general suspension of trading, or
minimum or maximum prices for all trading shall have been fixed and in force, or
maximum ranges for prices for all securities shall have been required and in
force, on the New York Stock Exchange, whether by virtue of a determination by
that Exchange or by order of the Securities and Exchange Commission or any other
governmental authority having jurisdiction, or (iii) a general banking
moratorium shall have been declared by Federal, or Commonwealth authorities
having jurisdiction, or (iv) there shall exist any event which in the reasonable
opinion of the Underwriter either makes untrue or incorrect in any material
respect any statement or information contained in the Official Statement
delivered after the acceptance of this Bond Purchase Agreement.
(f) No order, decree or injunction of any court of competent
jurisdiction, or any judicial proceeding, or any order ruling, regulation or
administrative proceeding by any governmental body, instrumentality or board,
shall have been issued or commenced, nor shall any legislation have been
enacted, with the purpose or effect
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of prohibiting the issuance, offering or sale of the Bonds as contemplated
hereby or by the Official Statement or the performance by the Authority or the
Borrower of their respective obligations under the Contracts.
(g) There shall have been duly tendered to the Underwriter Bonds
representing, in the aggregate, the entire principal amount of the Bonds.
(h) That the Underwriter shall have received evidence satisfactory to
the Underwriter and its counsel to the effect that the Guaranty has been
registered for distribution under the Securities Act.
(i) The Bonds shall be rated "A" by the Rating Agency.
(j) The Underwriter shall have received, in form and substance
satisfactory to the Underwriter and its counsel, the following documents:
(i) certified, executed or simple copies of each of the
Contracts;
(ii) copies of the Resolution, certified as of the Date of
Issuance by the Secretary of the Authority as having been duly adopted
by the Authority and as being in full force and effect;
(iii) certified copies of the transcript of all proceedings of
the Authority relating to the authorization and issuance of the Bonds;
(iv) the following legal opinions or letters dated the Date of
Issuance;
(A) a letter of the Bond Counsel, to the effect that the
opinions in substantially the form included in the Official
Statement may be relied upon by the Underwriter to the same
extent as if such opinions were addressed to the Underwriter,
(B) a supplementary opinion of the Bond Counsel to the
effect that the statements contained in the Official Statement
appearing under the captions "THE AUTHORITY AND GOVERNING BOARD",
"THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO", "THE BONDS",
"TAX MATTERS", "THE TRUST AGREEMENT", "THE SECURITY AGREEMENTS"
and "THE LOAN AGREEMENT", are a fair, accurate and complete
summary of the subject matter described therein,
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(C) the opinion of Letvia Arza Goderich, Esq., counsel to
the Borrower, dated the Date of Issuance,
(D) the opinion of Delfina Betancourt, Esq., general
counsel to the Authority, dated the Date of Issuance,
(E) the opinion of Samuel Susi, Esq., special counsel to
the Borrower,
(F) the opinion of Fiddler Gonzalez & Rodriguez, counsel to
the Underwriter, with respect to the Official Statement and other
related matters as the Underwriter may reasonably require,
(G) the opinion of Conner & Winters, special counsel to the
Guarantor, with respect to the registration of the Guaranty,
(H) the opinion of Allison D. Garrett, Assistant General
Counsel to the Guarantor;
(v) a certificate of the Executive Director of the Authority, or
of other duly authorized official of the Authority, dated the Date of
Issuance, to the effect that (A) on and as of the Date of Issuance,
each of the representations and warranties of the Authority set forth
in Section 2 hereof is true, accurate and complete and all agreements
of the Trustee herein provided and contemplated to be performed on or
prior to the Date of Issuance have been so performed, (B) the Bonds
have been duly authorized, executed and delivered to the Trustee, (C)
the Contracts to which the Authority is a party, and any and all other
agreements and documents required to be executed and delivered by the
Authority in order to carry out, give effect to, and consummate the
transactions contemplated thereby have each been duly authorized,
executed and delivered by the Authority and, as of the Date of
Issuance, each is in full force and effect, and substantially all
right, title and interest inuring to the Authority under the Loan
Agreement and the Guaranty and all amounts payable thereunder have
been duly assigned to the Trustee under the Trust Agreement for the
benefit of the Bondholders, and (D) no litigation is pending or
threatened to restrain or enjoin the issuance or sale of the Bonds or
in any way contesting the validity of or affecting the Authority in
connection with the issuance of the Bonds, the authorization,
execution or performance of the Contracts to which it is a party, or
the existence of powers of the Authority or the right of the Authority
to lend money in connection with the Project;
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(vi) a certificate of the managing partner of the Borrower,
dated the Date of Issuance, (A) as to the accuracy, as of the date
thereof, of the representations and warranties set forth in Section 3
hereof, (B) as to no event having occurred which, pursuant to the
terms of this Bond Purchase Agreement, shall have been set forth in an
amendment or supplement to the Official Statement and (C) to the
effect that the Contracts to which the Borrower is a party have each
been duly authorized, executed and delivered by the Borrower and
constitute the legal, valid and binding obligations of the Borrower;
(vii) a certificate of one or more duly authorized officers of
the Trustee, dated as of the Date of Issuance, as to the due
authorization, execution and delivery of the Trust Agreement by the
Trustee and the due authentication and delivery of the Bonds by the
Trustee thereunder;
(viii) a certificate of a duly authorized officer of the
Guarantor, dated the Date of Issuance, (A) to the effect that the
information relating to the Guarantor in the Final Official Statement
is true and correct in all material aspects, and (B) to the effect
that the Guaranty has been duly authorized, executed and delivered by
the Guarantor and constitute the legal, valid and binding obligation
of the Guarantor;
(ix) a copy of the executed Guaranty;
(x) such additional certificates, opinions, instruments or other
documents as the Underwriter may reasonably require to evidence the
accuracy, as of the Date of Issuance, of the representations and
warranties herein contained, and the due performance and satisfaction
by the Authority and the Borrower at or prior to such time of all
agreements then to be performed and all conditions then to be
satisfied by any one or all of them in connection with the Contracts.
If the Authority or the Borrower shall be unable to satisfy the
conditions to the obligations of the Underwriter contained in this Bond Purchase
Agreement, this Bond Purchase Agreement shall terminate and the Underwriter, the
Authority and the Borrower shall have no further obligations or liabilities
hereunder except as otherwise provided in Sections 7 and 11.
7. INDEMNIFICATION AND CONTRIBUTION.
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(a) The Borrower agrees to indemnify and hold harmless the Authority,
the Underwriter and each Person who controls the Underwriter within the meaning
of Section 15 of the Securities Act, or Section 20(a) of the Exchange Act, from
and against any and all losses, claims, damages or liabilities, joint or
several, under the Securities Act, the Exchange Act or any other statute or
common law, including, but not limited to reimburse the Authority, the
Underwriter and each such controlling Person for any legal or other expenses
(including, to the extent hereinafter provided, reasonable counsel fees)
incurred by them in connection with investigating any such losses, claims,
damages or liabilities or in connection with defending any actions ("Losses") to
which the Authority, the Underwriter or such controlling Person may become
subject, insofar as the Losses, arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Official Statement (or the Official Statement as amended or supplemented if such
losses, claims, damages, liabilities, expenses or actions arise out of or are
based upon the use of the Official Statement after the Borrower shall have
amended or supplemented the Official Statement) or the omission or alleged
omission to state therein a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading or (ii) any untrue statement or alleged untrue statement of
a material fact contained in any application or other document or communication
(in this Section 7 called "application") executed by or on behalf of the
Borrower, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that with respect to the Underwriter or any
Person who controls the Underwriter, the indemnity agreement contained in this
paragraph shall not apply to any Losses arising out of or based upon, any such
untrue statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission (i) was made in reliance upon
information in respect of the Underwriter, furnished herein to the Borrower by
the Underwriter expressly for use in the Official Statement or in any
application, (ii) relates to the information set forth in subsection (b)(i)
below, or (iii) relates to the information set forth under the captions "THE
AUTHORITY AND GOVERNING BOARD","THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO
RICO", "LEGAL INVESTMENT" and "TAX MATTERS" (except matters relating to the
Borrower) in the Official Statement, provided further, that with respect to the
Authority, the indemnity agreement contained in this paragraph shall not apply
to any Losses arising out or based upon, any such untrue statement or alleged
untrue statement, or any such omission or alleged omission, if such statement or
omission relates to the information set forth under the captions "THE AUTHORITY
AND GOVERNING BOARD", "THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO", "TAX
MATTERS" (except matters relating to the Borrower) and "LEGAL INVESTMENT", and
provided further that the indemnity agreement contained in this Section with
respect to the Preliminary Official Statement will not inure to the benefit of
the Underwriter (or to the benefit of any such person controlling the
Underwriter) from whom the Person asserting any Losses, purchased the
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Bonds which are the subject, thereof, unless with or prior to the written
confirmation of the sale a copy of the Final Official Statement was delivered to
such Person. The indemnity agreement of the Borrower contained in this Section
7 and the representations and warranties of the Borrower contained in Section 3
hereof shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Authority or Underwriter or any such
controlling Person, and shall survive the delivery of the Bonds. The Borrower
agrees promptly to notify the Authority and the Underwriter of the commencement
of any litigation or proceedings against the Borrower or any of its officers or
directors in connection with the issuance and sale of the Bonds. This indemnity
agreement shall be in addition to any liability which the Borrower may otherwise
have.
(b) The Underwriter agrees to indemnify and hold harmless the
Authority, and its officers and directors against any and all Losses, to which
they or any of them may become subject, insofar as such Losses arise out of the
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained on the cover page of the Official Statement respecting
the offering prices for the Bonds and under the caption "Underwriters" and
"Supplemental Information" in the Summary and "UNDERWRITING", or Losses which
arise out of or are based upon the use of the Official Statement after the
Underwriter shall have amended or supplemented the Official Statement with
respect to the sections of the Official Statement set forth above, or the
omission or alleged omission to state therein a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any application or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, if such
statement or omission was made in reliance upon information in respect of the
Underwriter furnished herein to the Authority by the Underwriter expressly for
use in the Official Statement or in any application. The indemnity of the
Underwriter contained in this paragraph shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Authority, its officers and directors or any such controlling person, and shall
survive the delivery of the Bonds. The Authority agrees promptly to notify the
Underwriter of the commencement of any litigation or proceedings against it in
connection with the issuance and sale of the Bonds. This indemnity agreement
shall be in addition to any liablity which the Underwriter may otherwise have.
(c) The Authority, to the extent permitted by law, and the
Underwriter will indemnify and hold harmless the Borrower, and each Person who
controls the Borrower within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, from and against any and all Losses to which
they or any of them may become subject, in so far as such Losses arise out or of
are based upon any untrue
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statement or alleged untrue statement of a material fact contained in the
Official Statement, from time to time amended or supplemented, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, in light of the circumstances under which they were
made, but only in so far as any such statement or omission was made in reliance
upon and in conformity with such information, if any, as was furnished to the
Borrower by the Authority or the Underwriter specifically for use in the
Official Statement under the captions "THE AUTHORITY AND GOVERNING BOARD", "THE
GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO", "LEGAL INVESTMENT" and "TAX
MATTERS". This indemnity agreement will be in addition to any liability which
the Authority or the Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
Losses, in such proportion as is appropriate to reflect the relative benefits
received by the indemnified party on the one hand and the indemnifying party on
the other in connection with the statements or omissions that resulted in such
Losses, as well as any other relevant equitable considerations. Relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
parties hereto agree that it would not be just and equitable if contributions
pursuant hereto were to be determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this subsection. The
obligation to contribute in this subsection are several in proportion to each
party's respective obligations and not joint. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof may be made against the indemnifying party under this
Section 7, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
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indemnified party, unless such indemnified party reasonably objects to such
assumption on the ground that there may be legal defenses available to it which
are different from or in addition to those available to such indemnifying party.
If any indemnifying party assumes the defense of such action, the indemnifying
party shall not be liable for any fees and expenses of counsel for the
indemnified party incurred thereafter in connection with such action unless the
employment of such counsel has been authorized by the indemnifying party or
unless based in the opinion of counsel to the indemnified party there may be
legal defenses available to it which are different from or in addition to those
available to such indemnifying party. An indemnifying party shall not be liable
to indemnify any indemnified person for any settlement of such action effected
without the indemnifying party's consent.
8. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITER.
-------------------------------------------------
The Underwriter hereby represents and warrants as follows:
(a) it is duly (i) organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, and (ii) authorized to
perform the obligations to be performed by the Underwriter hereunder;
(b) it is not, and at the time of delivery of the Bonds will not be,
in breach of or in default under in any material respect any applicable law
(including without limitation, any administrative rule-making law) or
administrative regulation, and the execution and delivery by the Underwriter of
this Bond Purchase Agreement will not conflict with or constitute a breach of or
default under any law, administrative regulation, judgment, decree or any
agreement or other instrument to which the Underwriter is a party, which
conflict, breach or default might have a material adverse effect on the
performance by the Underwriter of its obligations hereunder;
(c) at the time of delivery of the Bonds, this Bond Purchase
Agreement will constitute the legal, valid and binding obligation of the
Underwriter, enforceable in accordance with its terms;
(d) it understands that the Bonds are not registered under the
Securities Act, and that during the period from the initial offering of the
Bonds until nine months after the last sale of the Bonds by it, it will only
sell or offer for sale or dispose of, any Bonds to individuals who have their
principal residence and to corporations or other entities that have their
principal office and principal place of business within the Commonwealth;
(e) during the period from the initial offering of the Bonds until
nine months after the last sale of the Bonds by it, it will obtain from each
Person to whom it
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has sold any Bonds, the representation letter required by Section 206 of the
Trust Agreement;
(f) it will offer, sell or dispose of, any Bonds only from its branch
office in the Commonwealth; and
(g) it will provide to everyone who buys a Bond a copy of the
Official Statement and the prospectus included as part of the registration
statement covering the registration of the issuance of the Guaranty under the
Securities Act.
9. FEES AND EXPENSES.
-----------------
All expenses in connection with the preparation, issuance, delivery,
recording and (if and where needed) filing of any of the Contracts, and any
notice with respect thereto, shall be paid out of the proceeds of the Bonds or
directly by the Borrower. For the purpose of the foregoing sentence, such
expenses shall include all expenses incurred by the Borrower or the Underwriter,
in connection with the preparation and printing of the Official Statement; the
cost of reproducing the Contracts; the cost of preparing and printing the Bonds;
the fees and expenses of the Trustee, counsel for the Trustee in connection with
the Trust Agreement and the issuance of the Bonds, Bond Counsel, Underwriter's
counsel and counsel for the Borrower; and all other costs and expenses incident
to the performance of the Borrower's or the Underwriter's obligations hereunder.
In the event any transaction hereby contemplated is not consummated, the
Borrower shall pay all of the above fees and expenses and the out-of-pocket
expenses of the Underwriter (including the fees and disbursements of its
counsel). The foregoing undertakings shall survive the delivery of the Bonds.
10. NOTICES.
-------
(a) Any notice, demand, direction, certificate, request, advise,
consent or other instrument or communication authorized or required by this Bond
Purchase Agreement to be given by or to be filed with or given to the parties
hereto shall be in writing and given by (i) first class mail, registered or
certified, return receipt requested, or (ii) private courier service, next day
delivery, or (iii) telefax or other similar form of rapid transmission,
confirmed as provided in clauses (i) or (ii) hereof, at substantially the same
time as such rapid transmission, or (iv) personally delivered to the receiving
party or, if not an individual, to an officer of the receiving party. All such
communications shall be mailed, sent or delivered addressed as follows:
If to the Authority:
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as provided in the Trust Agreement
If to the Borrower:
as provided in the Trust Agreement
If to the Underwriter:
PaineWebber Incorporated of Puerto Rico
American International Plaza
Penthouse Floor
250 Munoz Rivera Avenue
San Juan, Puerto Rico 00918
Attention: Executive Vice-President
---------
Telefax (809) 250-2055
Smith Barney, Inc.
270 Munoz Rivera Avenue
Fourth Floor
San Juan, Puerto Rico 00918
Attention: Managing Director
---------
Telefax (809) 764-0585
(b) A duplicate copy of each notice, demand, direction, certificate,
request, consent or other instrument or communication given hereunder to a party
hereto shall also be concurrently given to each of the others.
(c) The parties hereto may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, demands, directions,
certificates, requests, consents or other instruments or communications shall be
sent.
(d) All written notices hereunder shall be deemed given on the day
when received, except when mailed, in which case they shall be deemed given on
the third day after deposit in the mails in the manner provided above.
11. BENEFICIARIES AND SURVIVAL.
--------------------------
This Bond Purchase Agreement is made solely for the benefit of the
Authority, the Borrower and the Underwriter and their respective personal
representatives,
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successors and assigns, and no other person shall acquire or have any right
hereunder or by virtue hereof. All of the representations, warranties and
agreements of the Authority, the Borrower and the Underwriter and their
respective personal representatives, successors and assigns, shall remain
operative and in full force and effect regardless of (a) any investigations made
by or on behalf of the Underwriter, (b) delivery of and payment for the Bonds
hereunder, and (c) any termination of this Bond Purchase Agreement.
12. COUNTERPART EXECUTION.
---------------------
This Bond Purchase Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
13. CONSTRUCTION.
------------
This Bond Purchase Agreement shall be governed by the laws of the
Commonwealth.
14. BOND PURCHASE AGREEMENT SUPERSEDES PRIOR AGREEMENTS.
---------------------------------------------------
This Bond Purchase Agreement supersedes any other prior agreements or
understandings, written or oral, between the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Bond
Purchase Agreement to be duly executed by its officers thereunto duly authorized
on the date set forth above.
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL,MEDICAL AND ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY
By: ________________________________
Francisco Sierra Mendez
Assistant Executive Director
PALMA REAL ASSOCIATES, S.E.
By: ________________________________
Mark Davis Bragin
Managing Partner
PAINEWEBBER INCORPORATED OF PUERTO RICO
individually and on behalf of Smith Barney Inc.
By: ________________________________
Eugenio Belaval
Executive Vice-President
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