Purchase Agreement, 6.30% Senior Unsecured Notes Due September 2019

EXHIBIT 10.15


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TRIPLE-S, INC.


US$50,000,000


6.30% Senior Unsecured Notes due September 2019


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NOTE PURCHASE AGREEMENT


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Dated September 30, 2004


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TRIPLE-S, INC.


6.30% Senior Unsecured Notes due September 2019


September 30, 2004


THE PURCHASERS NAMED IN THE ATTACHED SCHEDULE A:


Ladies and Gentlemen:


Triple-S Management Corporation ("TSMC") and its wholly-owned subsidiary Triple-S, Inc. (the "COMPANY"), each a corporation organized under the laws of the Commonwealth of Puerto Rico (the "COMMONWEALTH"), agree with you as follows:


1. AUTHORIZATION OF NOTES.


The Company has authorized the issuance and sale of an aggregate principal amount of Fifty Million United States Dollars (US$50,000,000) of its 6.30% Senior Unsecured Notes due September 2019 (the "NOTES," such term to include each Note delivered pursuant to this Agreement and each Note delivered in substitution or exchange for any such Note pursuant to Section 14 of this Agreement). The Notes shall be substantially in the form of Exhibit 1-A hereto and shall have the terms as herein and therein provided. The Notes will be unconditionally guaranteed as to payment of principal, premium, if any, and interest by TSMC as guarantor (in such capacity, the "GUARANTOR") pursuant to a guarantee substantially in the form of Exhibit 1-B hereto (the "GUARANTEE"). Certain capitalized terms used in this Agreement are defined in Schedule B hereto; references to a "SCHEDULE" or an "EXHIBIT" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement and all Schedules and Exhibits are deemed to be a part of this Agreement. References herein to this "AGREEMENT" mean this Agreement as from time to time amended or supplemented or as the terms hereof may be waived, in accordance with Section 17 hereof.


2. SALE AND PURCHASE OF NOTES.


Subject to the terms and conditions of this Agreement, the Company agrees to issue and sell to you and you agree to purchase from the Company, at the Closing provided for in Section 3, Notes in the aggregate principal amount specified opposite your name in Schedule A at the purchase price of one hundred percent (100%) of the principal amount thereof.


3. CLOSING.


The closing (the "CLOSING") of the sale and purchase of the Notes to be purchased by you shall occur at the offices of Fiddler Gonzalez & Rodriguez, P.S.C., 254 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918, at 10:00 a.m., local time, on September 30, 2004 or on such other Business Day thereafter as may be agreed upon by the Company and you. At the Closing, the


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Company will deliver to you the Notes to be purchased by you in denominations of at least Five Hundred Thousand United States Dollars (US$500,000) as you may request dated the date of the Closing (the "CLOSING DATE") and registered in your name (or in the name of your nominee), against delivery by you to the Company of immediately available funds in the amount of the purchase price therefor by wire transfer to the Account 35858201 of the Company maintained at Citibank New York, Account Name Triple-S, Inc, ABA 021000089.


4. CONDITIONS TO CLOSING.


Your obligation to purchase and pay for the Notes to be delivered to you at the Closing is subject to the fulfillment, prior to or at the Closing, of the following conditions:


4.1. REPRESENTATIONS AND WARRANTIES.


The representations and warranties of the Company and the Guarantor contained in Section 5 of this Agreement shall have been true and correct as of the date of this Agreement and be true and correct at the time of the Closing as if made on and as of such time.


4.2. PERFORMANCE; NO DEFAULT.


Each of the Company and the Guarantor shall have performed and complied in all material respects with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing and, after giving effect to the issuance and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.12), no Default or Event of Default shall have occurred and be continuing. Neither the Company nor the Guarantor shall have entered into any transaction since June 30, 2004, that would have been prohibited by Sections 10 or 11 hereof had such Sections applied since such date.


4.3. COMPLIANCE CERTIFICATES.


(a) Officer's Certificate. Each of the Company and the Guarantor
shall have delivered to you an Officer's Certificate, dated as
of the Closing Date, certifying on behalf of the Company or
the Guarantor, as applicable, that the conditions specified in
Sections 4.1, 4.2, 4.7 and 4.8 have been fulfilled.


(b) Secretary's Certificates. Each of the Company and the
Guarantor shall have delivered to you a certificate in form
and substance reasonably satisfactory to you executed on
behalf of the Company or the Guarantor, as applicable, by its
Secretary or Assistant Secretary certifying as to the
resolutions attached thereto and other corporate proceedings
relating to the authorization, execution, delivery and
performance of this Agreement, the Notes and the Guarantee, as
applicable. Such certificates shall state that the resolutions
thereby certified have not been amended, modified, revoked or
rescinded. The Secretary's certificate also shall confirm the
incumbency and signature of the officers of the Company or the
Guarantor, as applicable, executing this Agreement, the Notes
and the


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Guarantee, as applicable, and any certificate or document to
be delivered to you pursuant hereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary.


4.4. OPINIONS OF COUNSEL.


You shall have received opinions from (a) Fiddler Gonzalez & Rodriguez, P.S.C. and (b) Hector R. Ramos, Senior Vice President, Corporate Affairs, of TSMC, as counsel for the Company and TSMC, each dated as of the Closing Date, and substantially in the respective forms set forth as Exhibits 2-A and 2-B. You also shall have received an opinion from Pietrantoni Mendez & Alvarez LLP your special counsel, dated the Closing Date in form and substance satisfactory to you. This Section 4.4 shall constitute direction by the Company and TSMC to such counsel named in the foregoing clauses (a) and (b) to deliver the opinions specified to you at the Closing.


4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.


On the Closing Date, the consummation of the transactions contemplated hereby shall (i) be permitted by the laws and regulations of each jurisdiction to which you are subject as an investment company organized and operating in Puerto Rico, (ii) not violate any applicable law or regulation, including without limitation, laws or regulations relating to the healthcare and insurance industries, (iii) not subject you to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof, and (iv) all necessary consents, approvals and authorizations of any Governmental Authority or any Person to or of such consummation shall have been obtained and shall be in full force and effect.


4.6. PRIVATE PLACEMENT NUMBER.


A Private Placement number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for the Notes.


4.7. CHANGES IN CORPORATE STRUCTURE.


Neither the Company nor the Guarantor (or any other of the Subsidiaries of the Guarantor) shall have changed its jurisdiction of incorporation or been a party to any merger or consolidation. Neither the Company nor the Guarantor (or any such Subsidiary) shall have succeeded to all or any substantial part of the liabilities of any other entity, following the date of the most recent financial statements referred to in Schedule 5.3. There shall not have occurred any change or event, and you shall not have become aware of any previously undisclosed information regarding the Guarantor or its Subsidiaries, which in each case in your reasonable judgment, could reasonably be expected to have a Material Adverse Effect.


4.8. NO MATERIAL LITIGATION.


Except as disclosed to you pursuant to Section 5.6 hereof, no actions, suits or proceedings, investigations or orders shall be pending, entered or, to the knowledge of the Company or the Guarantor, threatened against or affecting the Company or the Guarantor,


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which, in your reasonable judgment, if determined adversely to the Guarantor or the Company, could reasonably be expected to have a Material Adverse Effect.


4.9. PROCEEDINGS AND DOCUMENTS; GOOD STANDING CERTIFICATES.


All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions, including, but not limited to, the certificate of incorporation and by-laws of the Company and the Guarantor, shall be reasonably satisfactory to you and your special counsel, and you and your special counsel shall have received all such counterpart originals or certified or other copies of such documents as you or they may reasonably request. You shall have received also, copies of certificates dated as of a recent date from the Secretary of State of Puerto Rico and the Commissioner of Insurance, as applicable, evidencing the good standing of the Guarantor, the Company and its Significant Subsidiaries in Puerto Rico.


5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTOR.


The Company and the Guarantor jointly and severally represent and warrant to you as follows:


5.1. ORGANIZATION; POWER AND AUTHORITY.


Each of the Company, the Guarantor, and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Puerto Rico, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and the Notes. The Guarantor has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and the Guarantee. Each of the Company and the Guarantor, and each of the other Subsidiaries of the Guarantor, has the corporate power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged.


5.2. AUTHORIZATION, ETC.


(a) This Agreement and the Notes will be duly authorized on the Closing Date by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof by the Company, each Note, when issued, will constitute, a legal, valid and binding obligation of the Company (assuming with respect to this Agreement and any Notes issued to you, the due authorization, execution and delivery of this Agreement to you), enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally from time to time in effect and (ii) the application of equitable principles and the availability of equitable remedies (collectively, the "ENFORCEABILITY EXCEPTIONS").


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(b) This Agreement and the Guarantee will be duly authorized on the Closing Date by all necessary corporate action on the part of the Guarantor, and this Agreement constitutes, and upon execution and delivery thereof by the Guarantor, the Guarantee will constitute, a legal, valid and binding obligation of the Guarantor (assuming with respect to this Agreement and any Notes issued to you, the due authorization, execution and delivery of this Agreement to you),enforceable against the Guarantor in accordance with its terms, except to the extent that enforceability may be limited by the Enforceability Exceptions.


5.3. FINANCIAL STATEMENTS.


(a) The Company has delivered to you copies of the financial
statements of the Company listed on Schedule 5.3(a) and of the
Guarantor listed on Schedule 5.3(b) (such financial
statements, including in each case the related schedules and
notes, collectively the "FINANCIAL STATEMENTS").


(b) The Financial Statements of the Company listed on Schedule
5.3(a) fairly present in all material respects the financial
position of the Company as of the respective dates specified
in such Schedule and the consolidated results of its
operations and cash flows for the respective periods so
specified in accordance with U.S. GAAP consistently applied
throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).


(c) The Financial Statements of the Guarantor listed on Schedule
5.3(b) fairly present in all material respects the
consolidated financial position of the Guarantor and its
Subsidiaries as of the respective dates specified in such
Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified in
accordance with U.S. GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to
normal year-end adjustments).


5.4. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.


(a) The execution, delivery and performance by the Company of this
Agreement and the Notes and by the Guarantor of this Agreement
and the Guarantee, do not and will not (i) in all material
respects, contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in
respect of any property of the Company or the Guarantor, as
applicable, under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter
or by-laws, or any other Material agreement or instrument to
which the Company or the Guarantor, as applicable, is bound or
by which the Company or the Guarantor, as applicable, or their
respective properties may be bound or affected, (ii)
contravene, result in any breach of, or constitute a default
under an agreement with any Governmental Authority, (iii)
conflict with or result in a breach or violation of any of the
terms, conditions or


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provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the
Guarantor or the Company, or (iv) violate any provision of any
statute or other rule or regulation of any Governmental
Authority applicable to the Guarantor or the Company.


5.5. GOVERNMENTAL AUTHORIZATIONS, ETC.


No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required for the due execution, delivery or performance by the Company of this Agreement and the Notes or by the Guarantor of this Agreement and the Guarantee.


5.6. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.


(a) Except as disclosed in Schedule 5.6, there are no actions,
suits or proceedings pending or, to the knowledge of the
Company or the Guarantor, threatened against or affecting the
Company or the Guarantor or any property of the Company or the
Guarantor in any court or before any arbitrator or
administrative agency of any kind or before or by any
Governmental Authority that, if determined adversely to the
Guarantor or the Company, individually or in the aggregate,
would reasonably be expected to have a Material Adverse
Effect, and no order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the
Company or the Guarantor, has been issued against the Company
or the Guarantor which has a Material Adverse Effect.


(b) Neither the Company nor the Guarantor is in default under any
order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or in violation of any applicable law,
ordinance, rule, order or regulation of any Governmental
Authority, which default or violation, individually or in the
aggregate, has had, or would reasonably be expected to have a
Material Adverse Effect.


5.7. TAXES.


Each of the Company and the Guarantor has filed or caused to be filed all tax returns that are required to have been filed, and has paid all taxes shown to be due and payable on such returns and all other taxes payable by it, to the extent such taxes have become due and payable, except for any taxes (i) the amount of which would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or the Guarantor, as applicable, has established adequate reserves in accordance with U.S. GAAP. The Company and the Guarantor know of no material assessments for which adequate reserves have not been established. Except as provided in Schedule 5.7, neither the Company nor the Guarantor have knowledge of any tax deficiency which, if determined adversely to the Company or the Guarantor, might have a Material Adverse Effect.


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5.8. TITLE TO PROPERTY; LEASES.


Except as disclosed in Schedule 5.8, each of the Company and the Guarantor has good and marketable title to its Material properties owned by them and reflected in the Financial Statements, as to each such property free and clear of Liens, except for those defects in title and Liens that, individually or in the aggregate, do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Guarantor and the Company. All leases of the Company and the Guarantor for real property or buildings Material in the operation of their corresponding business activities are valid and subsisting and are in full force and effect in all material respects.


5.9. LICENSES, PERMITS, ETC.


Except as disclosed in Schedule 5.9, the Company and the Guarantor own or posses adequate rights to use all material trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, material patents, patent applications and licenses which are necessary for the conduct of their respective businesses and have no reason to believe that the conduct or their respective businesses will conflict with, and have not received any notice of any claim of conflict with, any such rights of others, except for such claims that, individually or in the aggregate, would not have a Material Adverse Effect.


5.10. COMPLIANCE WITH ERISA.


(a) Each of the Company and the Guarantor and their respective
ERISA Affiliates has operated and administered each Plan in
all material respects in compliance with its terms and with
all applicable laws except for such instances of noncompliance
as have not resulted in and would not reasonably be expected
to result in a Material Adverse Effect. None of the Company,
the Guarantor or any of their respective ERISA Affiliates has
incurred any liability pursuant to Title I or IV of ERISA or
applicable penalty or excise tax provisions of the Code and
the PRIRC relating to employee benefit plans (as defined in
section 3 of ERISA), and no event, transaction or condition
has occurred or exists that would reasonably be expected to
result in the incurrence of any such liability by the Company,
the Guarantor or any of their respective ERISA Affiliates, or
in the imposition of any Lien on any of the rights, properties
or assets of the Company, the Guarantor or any of their
respective ERISA Affiliates, in either case pursuant to Title
I or IV of ERISA or to such penalty or excise tax provisions
or to section 401(a)(29) or 412 of the Code or to any
comparable provisions of the PRIRC, other than in any of such
cases, such liabilities or Liens as would not reasonably be
expected to result, individually or in the aggregate, in a
Material Adverse Effect.


(b) None of the Company, the Guarantor or any of their respective
ERISA Affiliates has incurred withdrawal liabilities (and are
not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in


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respect of Multiemployer Plans that individually or in the
aggregate would reasonably be expected to result in a Material
Adverse Effect.


(c) The execution and delivery of this Agreement; the issuance and
sale of the Notes hereunder and the execution and delivery of
the Guarantee will not involve any transaction that is subject
to the prohibitions of section 406 of ERISA or in connection
with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code or comparable provisions of the
PRIRC. The representation by the Company and the Guarantor in
the first sentence of this Section 5.10(c) is made in reliance
upon and subject to (i) the accuracy of your representation in
Section 6.2 as to the sources of the funds to be used to pay
the purchase price of the Notes to be purchased by you and
(ii) the assumption, made solely for the purpose of making
such representation, that Department of Labor Interpretive
Bulletin 75-2 with respect to prohibited transactions remains
valid in the circumstances of the transactions contemplated
herein.


5.11. PRIVATE OFFERING BY THE COMPANY.


None of the Company, the Guarantor or the Agent (the only Person authorized or employed by the Company as agent, broker, dealer or finder in connection with the offering or sale of the Notes) has offered any of the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than you. As used in the preceding sentence, "SIMILAR SECURITY" means a security which would be integrated with the offering of the Notes under applicable securities laws. None of the Company, the Guarantor or the Agent has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act.


5.12. USE OF PROCEEDS; MARGIN REGULATIONS.


The Company will apply the proceeds from the sale of the Notes to repay certain outstanding short term indebtedness of the Company incurred in the Company's trade or business in Puerto Rico and for working capital and general corporate purposes of the Company's trade or business in Puerto Rico. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 207), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). As used in this Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned to them in said Regulation U.


5.13. EXISTING INDEBTEDNESS FOR BORROWED MONEY.


Except as described therein, Schedule 5.13 sets forth a complete and correct list of all outstanding Indebtedness for Borrowed Money in the principal amount of at least Five


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Million United States Dollars (US$5,000,000) of the Guarantor and the Company as of June 30, 2004, since which date there has been no material change in the amounts, interest rates, sinking funds, installment payments or maturities of such Indebtedness for Borrowed Money. Neither the Company nor the Guarantor is in default (and no waiver of any such default is currently in effect) in the payment of any principal or interest on, and no event of default exists with respect to, any such Indebtedness for Borrowed Money or any indebtedness (other than Indebtedness for Borrowed Money) by the Guarantor, the Company or any Significant Subsidiary in excess of One Million United States Dollars (US$1,000,000).


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