Registration Statement of a Foreign Private Issuer for Securities Issued in a Business-Combination Transaction — Form F-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: F-4 Registration Statement of a Foreign Private Issuer 193 843K
for Securities Issued in a
Business-Combination Transaction
2: EX-3.1 Bylaws 140 479K
3: EX-4.1 Indenture Dated 12/16/03 130 434K
4: EX-4.2 Specimen Global Note 18 55K
5: EX-4.3 Form of Specimen Global Note 12 40K
6: EX-4.4 Registration Rights Agreement 22 91K
7: EX-9.1 Unanimous Shareholders Agreement 293 771K
8: EX-9.2 Joinder Agreement 2 14K
14: EX-10 Ex-10.6 Letter 7 34K
9: EX-10.1 Concession - Dated June 17, 1996 25 80K
10: EX-10.2 Amend. Datd December 19, 2002 29 131K
11: EX-10.3 Concession Dated October 7, 1998 19 69K
12: EX-10.4 Concession Dated April 1, 1998 18 62K
13: EX-10.5 Concession Dated June 4, 1998 17 63K
15: EX-10.7 Restructuring Agreement 179 568K
16: EX-10.8 Assignment & Assumption Agreement 9 34K
17: EX-10.9 Master Agreement 137 455K
18: EX-12.1 Ratio of Earnings to Fixed Charges 2± 16K
19: EX-12.2 Ratio of Earnings to Fixed Charges 2± 17K
20: EX-21.1 List of Subsidiaries of Axtel 1 9K
21: EX-23 Ex-23.3, Independent Auditors Consent 1 11K
22: EX-25.1 Form T-1 6 24K
23: EX-99.1 Form of Letter of Transmittal 14 58K
24: EX-99.2 Form of Notice of Guaranteed Delivery 5 22K
25: EX-99.3 Form of Instructions to Reg. Holder 2 14K
26: EX-99.4 Form of Exchange Agent Agreement 9 33K
Exhibit 9.1
UNANIMOUS SHAREHOLDERS AGREEMENT
This Unanimous Shareholders Agreement is made as of October 6, 1997,
AMONG: BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED, a corporation duly
incorporated under the laws of British Virgin Islands, with its registered
office at Arawak Chambers, Road Town, Tortola, British Virgin Islands
("BCI"),
AND: TELINOR TELEFONIA, S.A. DE C.V., a corporation duly incorporated under the
laws of Mexico with its registered office at Vasconcelos 210 Ote., Piso 9,
Residencial San Agustin, San Pedro, Garza Garcia, N.L., Mexico ("HOLDCO"),
AND: WORLDTEL MEXICO TELECOM LTD., a corporation duly incorporated under the
laws of Bermuda with its registered office at 41 Cedar Avenue, Hamilton
HM12, Bermuda ("WORLDTEL"),
AND: TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V., a corporation duly
incorporated under the laws of the United Mexican States with its
registered office at Vasconcelos 210 Ote., Piso 12, Residencial San
Agustin, San Pedro, Garza Garcia, N.L., Mexico, (the "CORPORATION")
WITNESSETH
A. WHEREAS Bell Canada International Inc., of which BCI is a subsidiary, the
Corporation and the shareholders of Holdco (the then sole shareholders of
the Corporation) have entered into a Memorandum of Understanding as of July
4, 1997, and WorldTel Limited and the Corporation have entered into a
Memorandum of Understanding as of May 22, 1997, regarding the development
of business opportunities for the provision by the Corporation of local and
long-distance telephone services in Mexico using mainly fixed wireless
access technology, and regarding the respective rights and obligations of
the Parties in relation thereto;
B. WHEREAS the Corporation intends to participate in auctions to be
Page 1
conducted under the auspices of the Government of Mexico (the "Auction")
pursuant to auction bases for the granting of concession titles for the use
and exploitation of frequency bands of the radioelectric spectrum for the
rendering of fixed and mobile wireless access services issued by the
Ministry dated June 27, 1997 and ancillary documentation as same may be
amended, restated or supplemented from time to time (the "Tender
Documents") for the right to use radio frequency spectrum within the 1850
to 1970 MHz bandwidths and within the 3425 to 3600 MHz bandwidths (the
"Spectrum") as required to operate wireless telecommunications networks in
one or more regions of Mexico;
C. WHEREAS the Parties desire to enter into this Agreement to confirm their
mutual understandings regarding the regulation of the affairs of the
Corporation and their interests therein;
D. AND WHEREAS the matters contained in this Agreement will materially affect
the rights and obligations of the Corporation and the conduct of its
business, it is necessary that the Corporation becomes bound by all of the
provisions of this Agreement.
NOW, THEREFORE, the Parties hereto hereby agree as follows:
1. DEFINITIONS
In this Agreement, unless the context otherwise requires, the following words
and phrases shall have the respective meanings set forth below:
1.1 "Additional Shares" means any additional unissued Shares of an existing or
newly created Class of Shares;
1.2 "Affiliate" with respect to any Person, means any Person, now existing or
hereafter created, which, directly or indirectly Controls, is Controlled by
or is under direct or indirect common Control with such Person it being
understood that Cemex, S.A. de C.V. shall not be deemed to be an Affiliate
of Holdco for the purposes of Clauses 3.6.15, 4.4.15, 4.5 and 5.2.8;
1.3 "Agreement" means this agreement and all schedules attached to this
agreement, in each case as they may be supplemented or amended from time to
time, and the expressions "hereof", "herein", "hereto", "hereunder",
"hereby" and similar expressions refer to this agreement, and unless
otherwise indicated, references to Clauses are to the specified Clauses in
this agreement;
1.4 "Auditors" shall mean the auditors of the Corporation appointed in
accordance with the terms hereof, which auditors shall be a reputable firm
with international standing;
Page 2
1.5 "BCI" means Bell Canada International (Mexico Telecom) Limited and includes
any successor to Bell Canada International (Mexico Telecom) Limited
resulting from any amalgamation, merger, arrangement or other
reorganization (other than pursuant to a transaction that constitutes a
change of Control as defined under Clause 5.1.2) of or including Bell
Canada International (Mexico Telecom) Limited or any continuance under the
laws of another jurisdiction;
1.6 "BCI Option" means BCI's right to receive the Optioned Interest set forth
in Clause 3.7;
1.7 "Bid" means the bid or bids to be submitted to the Government under the
Tender Documents in connection with the Auction with a view to obtaining
the Spectrum Concession;
1.8 "Bid Regulations" means the laws, regulations, ordinances, bases and
decrees in effect from time to time, as issued by the Government, including
the Ministry, with respect to the requirements and conditions for the award
of the Spectrum Concession and the conduct of the Auction, including the
Tender Documents;
1.9 "Board" or "Board of Directors" means the board of directors of the
Corporation;
1.10 "Business" shall mean the provision by the Corporation of local telephone
services in Mexico and associated value-added services, as well as domestic
and international long-distance services, using mainly fixed wireless
access technology, it being understood that if, and only to the extent,
agreed to by the Shareholders in an Extraordinary Meeting, the Business may
expand into other activities such as cellular services, mobile personal
communications services and other mobile telecommunications services,
cable-TV, satellite TV, multimedia services and other entertainment
services or related products;
1.11 "Business Day" means any day other than a Saturday, a Sunday or a day in
which commercial banks are required or permitted to be closed in Montreal
(Canada), New York City (USA), London (England), Monterrey, Nuevo Leon
(Mexico), Bermuda, or in the British Virgin Islands;
1.12 "Business Plan" means a business plan, including the Preliminary Business
Plan and the Initial Business Plan, adopted in accordance with the terms
hereof and any revisions thereto, which Business Plans may include the
items included in the Preliminary Business Plan as well as marketing plans,
business strategies and such other matters as are customarily included in
business plans;
Page 3
1.13 "By-laws" means the amended and restated by-laws (Estatutos) of the
Corporation which shall cover the Clauses of this Agreement set out in
Schedule "A", which By-laws shall be approved in accordance with Clause 2.2
and any reference to the "Original By-laws" shall be a reference to the
by-laws of the Corporation existing at the time of execution of this
Agreement;
1.14 "Call Option" means the right to acquire Shares set forth in Clause 5.2;
1.15 "Class" or "Class of Shares" means, as the context requires, the
Participating Shares (irrespective of Series), and the Voting Shares
(irrespective of Series) or any other class of securities issued by the
Corporation that are convertible into, or exchangeable for, Participating
Shares, or Voting Shares as the case may be and such other classes of
Shares as may be created by the Corporation and approved by the
Shareholders pursuant to Clause 9.2 (it being understood that the Series A
Shares, the Series B Shares and the Series C Shares constitute one Class of
Voting Shares) and, until the First Subscription Date, shall include the
series A Shares and series B Shares currently authorized under the Original
By-laws as one Class;
1.16 "Closing" or "Closing Date" shall be the later of (i) ten (10) Business
Days after the date when the conditions stipulated in Clause 3.2.3 (a)
shall have been satisfied or (ii) five (5) Business Days after the date
when all of the conditions stipulated in Clause 3.2.3 shall have been
satisfied, or such other date as may be agreed to by the Shareholders as
the date when the Shareholders shall make their Initial Cash Contributions;
1.17 "COFETEL" means the Federal Telecommunications Commission of Mexico or any
successor body;
1.18 "Company Act" means the Commercial Companies Law ("Ley General de
Sociedades Mercantiles") as amended from time to time and any successor or
replacement legislation thereof;
1.19 "Consulting Services Agreements" means the Secondment Agreement and the
Technical Services Agreement;
1.20 "Control" is possessed by a Person over another Person (such other Person
the "subject person") if such Person (alone or in combination with one or
more Relatives and/or Affiliates) (i) holds the right by ownership of
voting equity, contract or otherwise, to elect a majority of the board of
directors or other governing body of the subject person, or (ii) holds the
record or beneficial ownership, or has control or direction, directly or
indirectly, other than by way of security interest only, of fifty
Page 4
per cent (50%) or more of the voting rights of the subject person, or (iii)
is, or Controls (within the meaning of (i) or (ii) hereof), the general
partner of the subject person which is a limited partnership, or (iv) is,
or Controls (within the meaning of (i) or (ii) hereof), the managing
partner of the subject person which is a partnership; and "Controlling" or
"Controlled" has a corresponding meaning;
1.21 "Controlling Interest" means the rights referred to in Clause 1.20 which
confer Control to a Person or group of Persons;
1.22 "Corporate Secretary" means the Secretary or Corporate Secretary of the
Corporation or the Officer having a similar title or failing which, the
Vice President-Law;
1.23 "Corporation" means Telefonia Inalambrica Del Norte, S.A. de C.V. and
includes any successor to the Corporation resulting from any amalgamation,
merger, arrangement or other reorganization of or including the Corporation
or any continuance under the laws of another jurisdiction;
1.24 "Day", in computing any period fixed by this Agreement, means, unless
otherwise specified or unless a Business Day is specified, a calendar day,
but if the last day of such period falls on a non-Business Day, such period
shall be extended to the next Business Day;
1.25 "Directors" means members of the Board of Directors;
1.26 "EBITDA" means, subject to Clause 10.4.4, such amount for a fiscal year
certified by the Auditors of the Corporation which represents according to
GAAP, operating profit ("utilidad operativa") plus depreciation and
amortization, provided that EBITDA shall not include any amortization
amount or annual expense payment associated with the Spectrum Cost;
1.27 "Equity Shares" means the Voting Shares and the Participating Shares of the
share capital of the Corporation held by the Shareholders, including the
Series A, Series B, Series C and Series N Shares authorized pursuant to the
By-laws;
1.28 "Existing Concession" means the concession title granted by the Ministry to
the Corporation on June 17, 1996 to install, operate and exploit a public
telecommunications network in Mexico;
1.29 "First Subscription Date" shall be the later of i) the fifth Day after the
adoption and notarization of the By-laws in accordance with Clause 2.2
hereof, and ii) the Closing Date;
Page 5
1.30 "Foreign Shareholders" means each of BCI and WorldTel and any non-Mexican
Shareholders which shall become bound by this Agreement;
1.31 "GAAP" means generally accepted accounting principles and auditing
standards adopted from time to time in Mexico by the Instituto Mexicano de
Contadores Publicos A.C. or successor body;
1.32 "Government" means the government of Mexico, or of any state, region or
municipality and/or any ministry, department or agency thereof;
1.33 "Government Approvals" means any and all consents, validations,
authorizations, licences, registrations, waivers and other approvals of the
Government;
1.34 "held" when used herein means any Shares issued to and registered in the
name of the subject Shareholder, adjusted, if applicable, to give effect to
the offset set forth in Clause 3.4.1 and, in the case of BCI shall be
deemed to include any part of the Optioned Interest that has been issued in
accordance with the terms hereof;
1.35 "Holdco" means Telinor Telefonia, S.A. de C.V. and includes any successor
to Holdco resulting from any amalgamation, merger, arrangement or other
reorganization (other than pursuant to a transaction that constitutes a
change of Control as defined under Clause 5.1.2) of or including Holdco or
any continuance under the laws of another jurisdiction;
1.36 "Indebtedness" means any (i) indebtedness for borrowed money or for the
deferred purchase price of property or services, (ii) obligations under
leases which, in accordance with GAAP, are to be recorded as capital or
operating leases, (iii) obligations which are evidenced by notes,
acceptances, loan agreements or similar instruments, (iv) obligations in
connection with any transaction which is a rate swap transaction, basis
swap, forward rate transaction, commodity swap, interest rate option,
forward foreign exchange transaction, cap transaction, floor transaction,
collar transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions, and any combination
of these transactions), (v) any Guarantee Obligations, where "Guarantee
Obligations" means any obligation of (a) the guaranteeing Person or (b)
another Person (including, without limitation, any bank under any letter of
credit) which the guaranteeing Person has induced such Person to create by
issuing a reimbursement, counter indemnity or similar obligation, in either
case guaranteeing or
Page 6
in effect guaranteeing any Indebtedness, lease, dividends or other
obligations (the "Primary Obligations") of any other third Person (the
"Primary Obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing Person,
whether or not contingent, (1) to purchase any such Primary Obligation or
any property constituting direct or indirect security therefor, (2) to
advance or supply funds (A) for the purchase or payment of any such Primary
Obligation or (B) to maintain working capital or equity capital of the
Primary Obligor or otherwise to maintain the net worth or solvency of the
Primary Obligor or (3) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such Primary
Obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business; (vi) obligations
in respect of letters of credit or acceptances, and in each case of any
Indebtedness referred to in clauses (i) through (vi) of this definition,
whether or not assumed, and whether or not secured by a Pledge of any
assets of the borrower or otherwise secured, and provided, however in any
case, that "Indebtedness" shall not include obligations, including those
under letters of credit, payable to trade creditors and normal accruals
incurred in the ordinary course of business;
1.37 "Indirect Interest" means an interest in the Corporation held by ownership
of (directly or indirectly through one or more intermediary entities)
common equity interests in the subject` Shareholder or by contractual
agreements which may give rise to such right of ownership;
1.38 "Initial Business Plan" means the initial Business Plan for the first five
(5) years after launch of services offered in connection with the Spectrum,
or such other period as may be agreed to by the Board of Directors, as it
may, from time to time, be revised in accordance with the terms hereof;
1.39 "Initial Equity Contributions" means the contributions for the subscription
of Shares in the aggregate amount of $5,000,000 as contemplated by Clause
3.2.2;
1.40 "LIBOR" means for each interest period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) for the nearest applicable
interest period equal to the arithmetic mean of the London interbank
offered rates quoted for US Dollar deposits, as shown on the "LIBO" page
display on the Reuters Monitor Money Rates Service (or if such quoted rates
are not available, the rate at which US Dollar deposits, approximately
equal in principal amount to the subject amount and for a maturity equal to
the applicable interest period, are
Page 7
offered in immediately available funds to prime banks by leading banks in
the London interbank market in accordance with their normal practice);
1.41 "Licenses" means the Existing Concession, the Spectrum Concession, the
concession title for the use of frequencies of the radioelectric spectrum
for experimental purposes in the 3.4-3.7 GhZ frequencies band and any
license or concession title to be awarded to the Corporation pursuant to
the Point-to-Point Spectrum Auction;
1.42 "Liquidation" means a distribution by the Corporation to its shareholders
of all or substantially all of its assets and liabilities, or any other
liquidation or dissolution of the Corporation;
1.43 "Liquidation Event" means a Qualified Sale, a Qualified Offering or a
Liquidation;
1.44 "Mexico" means the United Mexican States;
1.45 "Ministry" means the Secretaria de Communicaciones y Transportes of the
Government of Mexico;
1.46 "Minutes" means the minutes of meetings of the Shareholders approving,
inter alia, the issuance of Shares on the First Subscription Date pursuant
to the Initial Equity Contributions including the part of the Optioned
Interest referred to therein;
1.47 "Officer" means an officer of the Corporation appointed by the Board of
Directors;
1.48 "Participating Shares" means the participating non-voting shares of the
share capital of the Corporation, with no expressed par value, authorized
under the By-laws, including the Series N Shares;
1.49 "Parties" means each of BCI, Holdco, WorldTel, the Corporation, and any
other Person who becomes a party to this Agreement;
1.50 "Permitted Assignee" of a Shareholder means any Affiliate or Relative of a
Transferor, whether or not such Affiliate or Relative is also a Shareholder
prior to any Transfer of Shares, it being understood that such Affiliates
or Relatives shall be Permitted Assignees only if they are not a Restricted
Third Party, unless otherwise agreed to by BCI or the Corporation;
1.51 "Person" includes, without limitation, any individual, sole proprietorship,
firm, company or corporation with or without share capital, association,
partnership, limited partnership,
Page 8
joint venture, syndicate, trust, trustee, administrator or other legal
representative, investment company, pension fund or investment fund, or
other entity, or any government or any ministry, department or agency
thereof;
1.52 "Pledge" means to pledge, mortgage, hypothecate, create a security interest
in, lien or charge upon or otherwise voluntarily encumber the subject item
or asset;
1.53 "Point-to-Point Spectrum" means the spectrum in the 10, 15 and 23 GHz
bandwidths to be used for point-to-point and point-to-multipoint
communications;
1.54 "Point-to-Point Spectrum Auction" means the auction conducted under the
auspices of the Government to award Point-to-Point Spectrum;
1.55 "Pre-emptive Rights" means the rights described in Clause 3.6;
1.56 "Preliminary Business Plan" means the financial forecast model to be
delivered at Closing ;
1.57 "Proportionate Entitlement" means with respect to a subject Shareholder,
the percentage obtained by dividing: (i) the number of Shares of the
relevant Class of Shares held of record by such subject Shareholder at the
time of such calculation adjusted to give pro-forma effect to the
subscription of Shares pursuant to the BCI Option; by (ii) the Total Shares
from which Total Shares are deducted the Shares held by the Selling
Shareholder at the time of the calculation adjusted to give pro-forma
effect to the subscription of Shares pursuant to the BCI Option; provided
that, solely for the purposes of this definition, until such time as the
Allocable Shares are allocated between WorldTel and Holdco pursuant to the
Trust Agreement, the Allocable Shares shall be deemed to be held (i) by
Holdco, if (x) Holdco is not a Selling Shareholder and (y) Holdco elects to
exercise its Right of First Offer in full with respect to the percentage
interest represented by such Allocable Shares, (ii) by WorldTel, if (xx)
either one of the conditions set forth in (x) or (y) above is not met, and
(yy) WorldTel is not a Selling Shareholder, or (iii) if neither (i) nor
(ii) applies, by the Corporation (in effect, as if the Allocable Shares
were not outstanding); and provided, further, that upon each exercise of a
Right of First Offer which requires the calculation of a Shareholder's
Proportionate Entitlement (a) unless it is a Selling Shareholder, each of
Holdco and WorldTel shall indicate, in its Purchase Notice, its preferred
position (i) if it were deemed to hold the Allocable Shares, (ii) if the
other Shareholder (excluding BCI) were deemed to hold the Allocable Shares,
and (iii) if the Allocable Shares were deemed to belong
Page 9
to the Corporation; (b) unless it is a Selling Shareholder, BCI shall
indicate, in its Purchase Notice required for the exercise of its Right of
First Offer, its preferred position (i) if either Holdco or WorldTel were
deemed to hold the Allocable Shares, and (ii) if the Allocable Shares were
deemed to belong to the Corporation; and (c) with respect to each
Shareholder, the preferred position indicated in its Purchase Notice that
is consistent with the actual deemed status of the Allocable Shares shall
be the one used and shall be binding upon such Shareholder;
1.58 "Qualified Offering" means a public placement of Shares of the Corporation
and their listing on either the Mexico Stock Exchange or another
internationally recognized stock exchange (including the US National
Association of Securities Dealers Automated Quotation System) representing
not less than fifteen per cent (15%) of the issued and outstanding Shares
of the Corporation after giving effect to such placement;
1.59 "Qualified Sale" means (i) any sale or private placement to a Third Party
of Shares of the Corporation, representing not less than twenty per cent
(20%) of the issued and outstanding Shares of the Corporation (in one
transaction or in a series of related transactions) after giving effect to
such sale or placement, (ii) any merger, consolidation or other similar
business combination involving the Corporation and a Third Party, or (iii)
any sale to a Third Party of all or substantially all of the assets of the
Corporation, in each case for cash or cash equivalent consideration
(including securities that are marketable and freely tradable);
1.60 "Re-allocation" means the re-allocation of Allocable Shares in accordance
with Clause 3.3.9;
1.61 "Relative" with respect to any individual means any person related by blood
(up to the fourth degree), marriage or adoption (or formerly related by
marriage) to such individual, including, without limitation, spouses,
in-laws, parents, grandparents, children, grandchildren, aunts, uncles,
great-aunts, great-uncles, nieces, nephews, great-nieces and great-nephews;
1.62 "Relevant Proportion" means, with respect to a subject Shareholder, the
percentage obtained by dividing: (i) the number of Shares of the relevant
Class of Shares held of record by such subject Shareholder at the time of
such calculation adjusted to give pro-forma effect to the subscription of
Shares pursuant to the BCI Option; by (ii) the Total Shares at the time of
such calculation adjusted to give pro-forma effect to the subscription of
Shares pursuant to the BCI Option; provided that, solely for the purposes
of this definition, until such time as the Allocable Shares are allocated
between WorldTel and
Page 10
Holdco pursuant to the Trust Agreement, the Allocable Shares shall be
deemed to be held (i) by Holdco, if (x) Holdco is a Non-Defaulting
Shareholder and (y) Holdco elects to exercise its Pre-emptive Rights in
full with respect to the percentage interest represented by such Allocable
Shares, (ii) by WorldTel, if (xx) either one of the conditions set forth in
(x) or (y) above is not met, and (yy) WorldTel is a Non-Defaulting
Shareholder, or (iii) if neither (i) nor (ii) applies, by the Corporation
(in effect, as if the Allocable Shares were not outstanding); and provided,
further, that upon each exercise of Pre-emptive Rights which requires the
calculation of a Shareholder's Relevant Proportion (a) unless it is a
Defaulting Shareholder, each of Holdco and WorldTel shall indicate, in its
Subscription Form, its preferred position (i) if it were deemed to hold the
Allocable Shares, (ii) if the other Shareholder (excluding BCI) were deemed
to hold the Allocable Shares, and (iii) if the Allocable Shares were deemed
to belong to the Corporation; (b) unless it is a Defaulting Shareholder,
BCI shall indicate, in its Subscription Form, its preferred position (i) if
either Holdco or WorldTel were deemed to hold the Allocable Shares, and
(ii) if the Allocable Shares were deemed to belong to the Corporation; and
(c) with respect to each Shareholder, the preferred position indicated in
its Subscription Form that is consistent with the actual deemed status of
the Allocable Shares shall be the one used and shall be binding upon such
Shareholder;
1.63 "Restricted Third Party" means for the purpose of the consent from BCI,
Persons, who, directly or indirectly through their Subsidiaries, or whose
Controlling Persons, provide telecommunications services, as their primary
business, anywhere in the world and, for the purpose of the consent from
the Corporation, Persons who, directly or indirectly, through their
Subsidiaries, or whose Controlling Persons, directly compete with the
Business in Mexico by providing comparable services at comparable prices;
1.64 "Rights of First Offer" means the rights described in Clause 4.4;
1.65 "Second Subscription" means the subscriptions for Shares in the aggregate
amount of US $245,000,000 contemplated by Clause 3.3.2;
1.66 "Second Subscription Conditions" means the delivery by the Corporate
Secretary of all of the following documents in form and substance
reasonably satisfactory to each Shareholder:
a) certificate from an Officer of the Corporation, in English, with
official documentation or other evidence reasonably satisfactory to
each Shareholder attached, confirming that the Corporation has been
awarded a Spectrum Concession
Page 11
by the Ministry, which allows the Corporation to use no less than 30
MHz of radio frequency spectrum within the 1850 to 1970 MHz bands or
50 MHz of radio frequency spectrum within the 3425 to 3600 MHz
frequency bands in at least six (6) of the nine (9) geographic regions
of Mexico, as currently defined by COFETEL, provided that such
Spectrum Concession covers the regions that include Mexico City, D.F.
as well as the geographic region that covers either Monterrey or
Guadalajara;
b) certificate from an Officer of the Corporation, in English, with
official documentation or other evidence reasonably satisfactory to
each Shareholder attached, confirming that the total price to be paid
by the Corporation for the Spectrum Concession (net of value added
taxes to the extent recoverable) (i) divided by the population in the
regions covered by such Spectrum Concession does not exceed $1.50 and
(ii) does not exceed $100,000,000 in the aggregate (the "Spectrum
Cost"). For purposes of this Clause 1.66 (b), the population of the
regions in question shall be determined on the basis of the official
census conducted by the Instituto Nacional de Estadistica, Geografia e
Informatica in 1995; and
c) copies of offers from the manufacturers of telecommunications
equipment (the "Vendors") pursuant to which (i) the Vendors are
prepared to sell network equipment to the Corporation and install said
equipment on a turn-key basis (ii) at least seventy-five per cent
(75%) of the Corporation's capital expenditures on imported
telecommunications network equipment contemplated in the Preliminary
Business Plan for the first three (3) full years of operations would
be covered thereunder, and (iii) the Vendors are prepared to provide
or arrange non-recourse debt financing (i.e. non-recourse to
Shareholders) under terms which, in aggregate, are no less
advantageous to the Corporation than the terms set forth in the sample
Vendor financing term sheet attached hereto as Schedule "I"; in the
event that the offers received from the Vendors cover a lesser
percentage of the Corporation's capital expenditures than the
percentage indicated above in this Clause 1.66 (c) (ii), each
Shareholder must be reasonably satisfied that the terms of the offers
can be realistically extrapolated to the higher percentage indicated
in such Clause 1.66 (c) (ii);
A Shareholder shall be deemed to be satisfied with the documentation
described in paragraph (a) and (b) if within ten (10) Days from
receipt of such documentation, it has not indicated in writing by
notice to the Corporate Secretary the exercise of its right to
terminate this Agreement, and a Shareholder shall be deemed to be
satisfied with the
Page 12
documentation described in paragraph (c) if within fifteen (15)
Business Days from receipt of such documentation, it has not indicated
in writing by notice to the Corporate Secretary the exercise of its
right to terminate this Agreement, provided that in both cases, the
fact that there is a deemed acceptance is indicated in capital letters
in the Corporate Secretary's letter transmitting the above documents;
For the purposes of Clause 1.66 (b) with respect to the calculation of
the Spectrum Cost, in the event that the Corporation is required to
make periodic payments for the Spectrum, the Spectrum Cost will be
calculated as the present value of all future payments by applying a
compounded annual discount rate of twelve per cent (12%). In the event
that the Corporation is required to make periodic payments for the
Spectrum equivalent to a percentage of its future revenues or
earnings, the Spectrum Cost will be calculated as the present value of
such payments determined on the basis of the Preliminary Business
Plan;
1.67 "Second Subscription Date" means the date which is fifteen (15) Days after
receipt by the Shareholders of the Corporate Secretary's notice of the
fulfilment of the Second Subscription Conditions described in Clause 1.66
(a) and (b) in accordance with Clause 3.3.5;
1.68 "Secondment Agreement" means the Secondment Agreement between Bell Canada
International Inc. and the Corporation attached hereto as Schedule "G" as
same may be amended, supplemented, restated, extended or renewed from time
to time;
1.69 "Series" or "Series of Shares" means, as the context requires, the Series A
Shares, the Series B Shares, the Series C Shares, or the Series N Shares or
any other series of a Class of Shares of the Corporation authorized under
the By-laws, as the case may be;
1.70 "Services" means the services to be offered by the Corporation in
connection with the Licenses;
1.71 "Shareholder" or "Shareholder of the Corporation" means any Person who is
the registered holder of Shares of the Corporation and who is a party to,
or agrees to be bound by the terms and conditions of, this Agreement;
1.72 "Shareholder Guarantee(s)" means any guarantee(s), letter(s) of credit,
mortgage(s), deed(s) of trust, cash security, Pledge(s), "keep-well" or
"comfort" arrangement(s) or other similar
Page 13
instruments or agreements of indemnity given (or required by a lender(s) or
issuer(s) to be given) by one or more of the Shareholders to ensure payment
of Indebtedness incurred (or to be incurred) by the Corporation to such
lender(s) or issuer(s);
1.73 "Shares" or "Shares of the Corporation" means, as the case may be, any or
all of the Equity Shares and any other shares of any Class authorized under
the By-laws or the Original By-laws and includes any shares or securities
into which Equity Shares may be converted or changed or which result from a
consolidation, subdivision, reclassification or redesignation of Equity
Shares, any shares or securities which are received as a stock dividend or
distribution payable in shares or securities of the Corporation, any shares
received on the exercise of any option, warrant or other similar right and
any shares or securities which may be received by the Shareholders as a
result of an amalgamation, merger, arrangement or other reorganization of
or including the Corporation, and any instrument of the Corporation that is
convertible into Shares or evidences the right to acquire Shares;
1.74 "Spectrum" has the meaning ascribed thereto in recital "B" hereof and for
greater clarity shall not include the Point-to Point Spectrum;
1.75 "Spectrum Concession" means the concession titles to be issued by the
Government to the Corporation to utilize the Spectrum in one or more
regions of Mexico;
1.76 "Standstill Period" means the period commencing on the date hereof and
terminating with respect to each Shareholder on the earlier of: (i) the
date when the Shareholder has complied with its obligations in respect of
its mandatory First Stage Equity contributions; and (ii) three (3) years
from the date hereof;
1.77 "Subsidiary" means, with respect to any subject Person, any Person that is
wholly owned or Controlled by the subject Person;
1.78 "Tag-Along Rights" means the rights described in Clause 4.6;
1.79 "Technical Services Agreement" means the Technical Services Agreement
between Bell Canada International Inc. and the Corporation attached hereto
as Schedule "B" as same may be amended, supplemented, restated, extended or
renewed from time to time;
1.80 "Third Party" with respect to any Shareholder means any Person which is
neither an Affiliate nor a Relative of such Shareholder;
Page 14
1.81 "Total Shares" means the aggregate of all Shares of the relevant Class of
Shares issued and outstanding at the time of the calculation;
1.82 "Transfer" means any sale, exchange, assignment, gift, bequest, transfer,
alienation, disposition or any arrangement by which possession, legal title
or beneficial ownership passes from one Person to another, or to the same
Person in a different capacity, whether voluntary or involuntary, or by
operation of law, and whether or not for value, and any agreement or
arrangement (e.g. any step transactions) to effect any of the foregoing
including by way of gift, combination (merger, amalgamation),
reorganization, dissolution, lease, option, or Transfer between co-owners
but excluding any Transfer of Shares pursuant to the Call Option, the
Termination Call Option, the WorldTel Put Option or the BCI Put Option;
1.83 "Transferee" means any Person to whom Shares have been transferred in
accordance with the provisions of this Agreement;
1.84 "Transferor" means any Shareholder proposing to Transfer any of its Shares
in accordance with the terms hereof including any Selling Shareholder;
1.85 "Trust Agreement" means the agreement between Holdco, the Corporation,
WorldTel and the trustee of the Trust in respect of the Re-allocation, the
whole substantially in the form of the agreement attached hereto as
Schedule "F";
1.86 "US Dollars", "Dollars", "US $" or "$" means the legal currency of the
United States of America;
1.87 "Voting Shares" means the voting common shares in the share capital of the
Corporation, with no expressed par value, held by the Shareholders,
including the Series A, Series B and Series C Shares authorized pursuant to
the By-laws and, until the First Subscription Date, shall include the
series A Shares and series B Shares currently authorized under the Original
By-laws; and
1.88 "WorldTel" means WorldTel Mexico Telecom Ltd. and includes any successor to
WorldTel Mexico Telecom Ltd. resulting from any amalgamation, merger,
arrangement or other reorganization (other than pursuant to a transaction
that constitutes a change of Control as defined under Clause 5.1.2) of or
including WorldTel or any continuance under the laws of another
jurisdiction.
In addition to the definitions set forth above, the words and phrases set forth
below shall have the meaning ascribed thereto in the Clause indicated
Page 15
next to the word and/or phrase, unless the context otherwise requires:
-------------------------------------------------------------------------
Word/Phrase Clause
-------------------------------------------------------------------------
"Acceptance Period" 4.4.5
-------------------------------------------------------------------------
"Allocable Shares" 3.3.9
-------------------------------------------------------------------------
"Annual Operating Plan and Budget" 10.4.3
-------------------------------------------------------------------------
"Auction" Recital "B"
-------------------------------------------------------------------------
"Auction Penalty LC" 10.3.7
-------------------------------------------------------------------------
"Auction Business Plan" 10.4.5
-------------------------------------------------------------------------
"BCI Parties" 16.1.1 (b)
-------------------------------------------------------------------------
"BCI Put Closing" 14.2.7
-------------------------------------------------------------------------
"BCI Put Notice" 14.2.7
-------------------------------------------------------------------------
"BCI Put Option" 14.2.7
-------------------------------------------------------------------------
"BCI Put Option Event" 14.2.7
-------------------------------------------------------------------------
"BCI Put Option Period" 14.2.7
-------------------------------------------------------------------------
"BCI Put Shares" 14.2.7
-------------------------------------------------------------------------
"Bid Guarantee Amount" 10.3.3
-------------------------------------------------------------------------
"Bid Guarantees" 10.3.3
-------------------------------------------------------------------------
"Call Allocable Shares" 5.2.2
-------------------------------------------------------------------------
"Call Option Notice" 14.2.6
-------------------------------------------------------------------------
"Call Proportionate Entitlement" 5.2.2
-------------------------------------------------------------------------
"Call Shares" 5.2.1
-------------------------------------------------------------------------
"Cash Flow Event" 3.7.3
-------------------------------------------------------------------------
"Contributing Shareholders" 3.4.1
-------------------------------------------------------------------------
"Defaulting Shareholder" 5.1.1
-------------------------------------------------------------------------
"Disclosing Party" 12.1
-------------------------------------------------------------------------
"Dispute" 17.2.1
-------------------------------------------------------------------------
"Event of Default" 5.1.1
-------------------------------------------------------------------------
"Excess Amount" 10.3.4
-------------------------------------------------------------------------
"Excess Call Shares" 5.2.2
-------------------------------------------------------------------------
"Excess First Offer Shares" 4.4.6
-------------------------------------------------------------------------
"Excess Offset Shares" 3.4.1
-------------------------------------------------------------------------
"Excess Pre-emptive Shares" 3.6.7
-------------------------------------------------------------------------
"Exercising Shareholder" 6.2
-------------------------------------------------------------------------
"Experts" 5.2.4
-------------------------------------------------------------------------
"Extraordinary Meetings" 9.2
-------------------------------------------------------------------------
"Fair Market Value" 5.2.4
-------------------------------------------------------------------------
"First Call Board Quorum" 7.7.1
-------------------------------------------------------------------------
"First Call Committee Quorum" 7.9.2
-------------------------------------------------------------------------
"First Offer Notice" 4.4.1
-------------------------------------------------------------------------
"First Stage Equity" 3.3.1
-------------------------------------------------------------------------
"Foreign Holder" 6.1
-------------------------------------------------------------------------
"Governance Rights" 4.9.2
-------------------------------------------------------------------------
"Guarantee Obligations" 1.36
-------------------------------------------------------------------------
"Guarantees" 10.3.4
-------------------------------------------------------------------------
"Guarantor" 10.3.4
-------------------------------------------------------------------------
"Holdco Parties" 16.1.1 (a)
-------------------------------------------------------------------------
"Indirect 5% Investor" 4.10
-------------------------------------------------------------------------
Page 16
-------------------------------------------------------------------------
"Information" 12.1
-------------------------------------------------------------------------
"Initial Cash Contributions" 3.2.2
-------------------------------------------------------------------------
"LC Fees" 10.3.7
-------------------------------------------------------------------------
"Loan Guarantee Amount" 10.3.2
-------------------------------------------------------------------------
"Loan Guarantees" 10.3.2
-------------------------------------------------------------------------
"New Business" 16.3
-------------------------------------------------------------------------
"Non-Contributing Shareholder" 3.4.1
-------------------------------------------------------------------------
"Non-Defaulting Shareholders" 5.2.1
-------------------------------------------------------------------------
"Non-Funding Event" 3.4.1
-------------------------------------------------------------------------
"Non-Funding Notice" 3.4.1
-------------------------------------------------------------------------
"Non-Guaranteeing Shareholder" 10.3.4
-------------------------------------------------------------------------
"Non-Payment LC" 10.3.7
-------------------------------------------------------------------------
"Non-Providing Shareholders" 10.3.6
-------------------------------------------------------------------------
"Offered Shares" 4.4.1
-------------------------------------------------------------------------
"Offerees" 4.4.2
-------------------------------------------------------------------------
"Offset Shares" 3.4.1
-------------------------------------------------------------------------
"Option Shares" 14.2.6
-------------------------------------------------------------------------
"Optioned Interest" 3.7.1
-------------------------------------------------------------------------
"Ordinary Meetings" 9.4
-------------------------------------------------------------------------
"Original By-laws" 1.13
-------------------------------------------------------------------------
"Other Bids" 7.10.3 f)
-------------------------------------------------------------------------
"Other Party" 16.3
-------------------------------------------------------------------------
"Other Shareholder Party" 16.1.1 (c)
-------------------------------------------------------------------------
"Paying Shareholders" 4.3.1 d)
-------------------------------------------------------------------------
"Payment Amount" 10.3.4
-------------------------------------------------------------------------
"Pledged Shares" 4.3.1
-------------------------------------------------------------------------
"Pledgee" 4.3.1
-------------------------------------------------------------------------
"Pledgor" 4.3.1
-------------------------------------------------------------------------
"Pre-emptive Acceptance Delay" 3.6.6 d)
-------------------------------------------------------------------------
"Pre-emptive Offer" 3.6.6
-------------------------------------------------------------------------
"Primary Obligations" 1.36
-------------------------------------------------------------------------
"Primary Obligor" 1.36
-------------------------------------------------------------------------
"Proportionate Amount" 10.3.2
-------------------------------------------------------------------------
"Proposing Party" 16.3
-------------------------------------------------------------------------
"Providing Shareholders" 10.3.6
-------------------------------------------------------------------------
"Purchase Notice" 4.4.6
-------------------------------------------------------------------------
"Put Note" 14.2.5
-------------------------------------------------------------------------
"Qualified Majority Matters" 7.10.1 a)
-------------------------------------------------------------------------
"Qualified Majority Meetings" 9.3
-------------------------------------------------------------------------
"Receiving Party" 12.1
-------------------------------------------------------------------------
"Regions" 16.1.1
-------------------------------------------------------------------------
"Related Party Transaction" 7.9.4
-------------------------------------------------------------------------
"Representatives" 12.1
-------------------------------------------------------------------------
"Restricted Third Party Notice" 4.4.12
-------------------------------------------------------------------------
"Rights" 6.1
-------------------------------------------------------------------------
"Rules" 17.2.1 b)
-------------------------------------------------------------------------
"Second Call Board Meeting" 7.7.2
-------------------------------------------------------------------------
"Second Call Board Quorum" 7.7.2
-------------------------------------------------------------------------
Page 17
-------------------------------------------------------------------------
"Selling Notice" 4.4.4
-------------------------------------------------------------------------
"Selling Shareholder" 4.4.1
-------------------------------------------------------------------------
"Series A Directors" 7.3.1
-------------------------------------------------------------------------
"Series B Directors" 7.3.1
-------------------------------------------------------------------------
"Series C Directors" 7.3.1
-------------------------------------------------------------------------
"Series A Shareholders" 7.3.1
-------------------------------------------------------------------------
"Series B Shareholders" 7.3.1
-------------------------------------------------------------------------
"Series C Shareholders" 7.3.1
-------------------------------------------------------------------------
"Special Meetings" 9.5
-------------------------------------------------------------------------
"Spectrum Cost" 1.66 b)
-------------------------------------------------------------------------
"Subscription Form" 3.6.6 d)
-------------------------------------------------------------------------
"Super Majority Matters" 7.10.1 a)
-------------------------------------------------------------------------
"Tag-Along Notice" 4.6.5
-------------------------------------------------------------------------
"Tag-Along Trigger" 4.6.1
-------------------------------------------------------------------------
"telecom business" 16.1.1 (c)
-------------------------------------------------------------------------
"Tender Documents" Recital "B"
-------------------------------------------------------------------------
"Termination Call Option" 14.2.6
-------------------------------------------------------------------------
"Trust" 3.3.9
-------------------------------------------------------------------------
"Trustee" 3.2.3 g)
-------------------------------------------------------------------------
"Unilateral Guarantee" 10.3.6
-------------------------------------------------------------------------
"Vendors" 1.66 c)
-------------------------------------------------------------------------
"WorldTel Put Notice" 14.2.5
-------------------------------------------------------------------------
"WorldTel Put Option" 14.2.5
-------------------------------------------------------------------------
"WorldTel Put Shares" 14.2.5
-------------------------------------------------------------------------
2. CREATION, BY-LAWS, PURPOSE AND CORPORATE DOMICILE
2.1 Creation
The Corporation is a limited liability stock corporation (Sociedad
Anonima de Capital Variable) incorporated under the Company Act.
2.2 By-laws
The form of the By-laws shall be agreed to prior to the Closing. The
Shareholders shall adopt, in an Extraordinary Meeting, as soon as permitted
by law, including the Bid Regulations, the By-laws to conform to this
Agreement and to facilitate the achievement of the purposes of this
Agreement. The Corporation shall cause the By-laws to be formalized before
a notary public promptly after their adoption by the Shareholders.
2.3 Purpose
The primary purpose of the Corporation is to establish and operate the
Business as licensed or otherwise permitted by the Government.
Page 18
2.4 Corporate Domicile
The corporate domicile of the Corporation shall be in San Pedro, Garza
Garcia, Nuevo Leon, Mexico.
3. SHARE CAPITAL AND SHAREHOLDINGS
3.1 Authorized Share Capital and Initial Capital Structure
3.1.1 The authorized share capital of the Corporation shall be as set out
in the By-laws from the time of their adoption.
3.1.2 The By-laws shall provide that the maximum authorized capital of the
Corporation shall be unlimited. The By-laws shall also provide that
the Corporation shall have an initial variable capital which shall be
represented by three (3) Series of Voting Shares: the Series A Shares,
the Series B Shares and the Series C Shares. The Series A Shares shall
represent at least fifty-one per cent (51%) of the total issued and
outstanding Voting Shares and may only be subscribed and paid for by
Persons deemed as Mexican investors under Mexican foreign investment
laws and regulations. The Series B Shares will initially represent
twenty-six and nine tenths of one per cent (26.9%) of the total issued
and outstanding Voting Shares and may be freely subscribed and paid
for by Mexican or non-Mexican investors. The Series C Shares will
initially represent twenty-two and one tenth of one per cent (22.1%)
of the total issued and outstanding Voting Shares and may be freely
subscribed and paid for by Mexican or non-Mexican investors. The
Series B Shares and the Series C Shares may together represent up to
forty-nine per cent (49.0%) of the total issued and outstanding Voting
Shares and may be freely subscribed and paid for by Mexican or
Non-Mexican investors. Except as otherwise provided in this Agreement,
the Series A Shares, the Series B Shares, and the Series C Shares
shall all be common shares, in nominee form and with no par value; in
addition, each Series A Share, each Series B Share and each Series C
Share shall confer one (1) vote at any Extraordinary, Ordinary or
Special Meeting of Shareholders of the Corporation, and shall
otherwise convey equal rights and obligations to all Shareholders. The
minimum fixed capital shall be represented by Series A Shares.
The Corporation shall also issue Series N Shares, without par value,
in accordance with the terms hereof which shall be without voting
rights (except in such
Page 19
limited circumstances, if any, as may be required under applicable
Mexican law) to be regarded as neutral investment for purposes of laws
applicable to foreign investment in Mexico. Except for the
restrictions on vote, Series N Shares shall convey equal rights and
obligations to its holders as those for Series A Shares, Series B
Shares and Series C Shares.
3.2 Initial Equity Contributions
3.2.1 On or before October 6, 1997, 1,000 series B Shares authorized under
the Original By-laws shall have been subscribed for and issued to each
of BCI and WorldTel at a price in Mexican Pesos equivalent to US $1.00
per Share. On the First Subscription Date, the Corporation shall
redeem such Shares by payment to BCI and WorldTel of an amount equal
to their issuance price, whereupon such Shares shall be cancelled. On
or before the First Subscription Date, 22,000,000 Series A Shares,
fully paid and non-assessable, will have been subscribed for and
issued to Holdco.
3.2.2 Subject to Clause 3.2.3, at the Closing, a contribution pending
capitalisation (Aportacion para futuros aumentos de capital) equal to
the Mexican Pesos equivalent of: one million four hundred thousand
dollars (US $1,400,000) for Holdco, one million eight hundred thousand
dollars (US $1,800,000) for BCI and one million eight hundred thousand
dollars (US $1,800,000) for WorldTel (collectively the "Initial Cash
Contributions") shall be made by the Shareholders. As soon as each
Shareholder shall receive the By-laws duly adopted and notarized in
conformity with Clause 2.2 and the other conditions set forth in
Clause 3.2.4 shall be fulfilled, the Initial Cash Contributions shall
be capitalized as follows (with, for purposes of such capitalization,
a rate of conversion of US dollars into Mexican Pesos to be based on
the rate of exchange described in Clause 17.8 taken on the Business
Day prior to the Closing Date) and shall be considered to be the
Initial Equity Contributions:
a) The Corporation shall issue and deliver to Holdco and Holdco
shall fully subscribe for eight hundred and twenty-six thousand
six hundred and ninety-nine (826,699) Series A Shares (variable
capital) at a price in Mexican Pesos equivalent to US $1.120830
per Share and four million seven hundred and thirty-four thousand
and one hundred and ten (4,734,110) Series N
Page 20
Shares at a price in Mexican Pesos equivalent to US $0.10 per
Share;
b) The Corporation shall issue and deliver to BCI and BCI shall
fully subscribe for twelve million forty-one thousand and
sixty-nine (12,041,069) Series B Shares at a price in Mexican
Pesos equivalent to US $0.124232 per Share and three million
forty-one thousand one hundred and ninety-two (3,041,192) Series
N Shares at a price in Mexican Pesos equivalent to US $0.10 per
Share, such subscription price to be subject to the adjustment
mentioned below. The Corporation shall also issue and retain in
treasury for the benefit of BCI two million thirty-seven thousand
six hundred and seventy-four (2,037,674) Series N Shares as part
of BCI's Optioned Interest, which Series N Shares shall be
subscribed by and delivered to BCI in accordance with the terms
of Clause 3.7. Upon the subscription and delivery of those
Shares, the Corporation shall record an adjustment to the price
for the subscription of all of the Series N Shares subscribed by
BCI as part of the Initial Equity Contributions, namely five
million seventy-eight thousand and eight hundred and sixty-six
(5,078,866) Series N Shares to reflect a price equivalent to US
$0.059879 per Share, on the understanding that the aggregate
purchase price for the full subscription shall not be modified;
and
c) The Corporation shall issue and deliver to WorldTel and WorldTel
shall fully subscribe for nine million eight hundred and ninety
thousand and three hundred and twenty-nine (9,890,329) Series C
Shares at a price in Mexican Pesos equivalent to US $0.156764 per
Share and two million four hundred and ninety-five thousand four
hundred and ninety-six (2,495,496) Series N Shares at a price in
Mexican Pesos equivalent to US $0.10 per Share.
The table attached hereto as Schedule "C" illustrates this equity
allocation.
3.2.3 Each Shareholder hereby acknowledges and agrees that its
participation in the Corporation and obligations to make the Initial
Cash Contributions contemplated in Clause 3.2.2 shall be subject to
the completion of all of
Page 21
the following conditions to the reasonable satisfaction of each
Shareholder:
a) the receipt by each Shareholder of all necessary Government
Approvals in respect of such participation (including the
respective percentage interests of the Shareholders following the
Initial Equity Contributions), in form and substance reasonably
satisfactory to such Shareholders;
b) the compliance by each Party with all of the provisions of this
Agreement, including without limitation, the accuracy of all
representations and warranties made by the Parties pursuant to
Clause 15, at all times from the date of this Agreement up to and
including the Closing Date;
c) receipt by each Shareholder of the form of the By-laws in English
and Spanish, the terms of which shall be consistent with this
Agreement and which By-laws shall otherwise be in a form and
substance satisfactory to each Shareholder, together with a
certificate issued by legal counsel of the Corporation certifying
that the Spanish version of the By-laws conforms to the English
version thereof;
d) receipt by each Shareholder of unsecured guarantees or
subscription agreements naming the Corporation as third party
beneficiary, executed by each of the Persons identified in
Schedule "K" with respect to First Stage Equity funding
contributions of each Shareholder which subscription agreements
will provide that the only conditions to the obligation of each
such Person to subscribe its allocation of shares in the relevant
Shareholder shall be i) the subscription of Shares representing
the Initial Equity Contributions by the relevant Shareholder, ii)
the occurrence of the Second Subscription Conditions, iii) the
satisfaction of the conditions set out in Clause 3.3.7 to the
extent applicable to the capital call; and iv) the giving of
notices of capital calls as provided in Clause 3.3.10;
e) receipt by each Shareholder of the report and documentation
referred to in Clause 13.2 as well as of an audited balance
sheet, income
Page 22
statement and statement of changes in financial position of the
Corporation as of June 30, 1997;
f) receipt by each Shareholder of a monthly pro-forma budget for the
Corporation for the period from July 1, 1997 to December 31,
1997, which shall be presented for approval at the first Board
meeting following the Closing;
g) the following legal opinions from counsel for each Shareholder,
the Corporation or the trustee of the Trust (the "Trustee"), as
the case may be, satisfactory to the Shareholders i) as to the
due authorization, delivery and execution of this Agreement by
the Corporation, Holdco, BCI, and WorldTel, ii) as to the due
incorporation, valid subsistence and good standing of the
Corporation under the laws of Mexico and that the By-laws would
not result in any disqualification under the Bid Regulations,
iii) in respect of the due authorization, delivery, execution and
enforceability of the guarantees or subscription agreements
referred to in Clause 3.2.3 (d) iv) in respect of the due
authorization, delivery and execution of the Consulting Services
Agreements and v) in respect of the due authorization, delivery
and execution as well as enforceability of the Trust Agreement
and of the undertaking referred to in Clause 3.2.3 (i) by the
Trustee;
h) receipt of an opinion from counsel to the Corporation that the
series B Shares authorized under the Original By-laws have been
duly authorized for issuance and have been validly issued as
fully paid Shares to and registered in the names of BCI and
WorldTel;
i) receipt of an undertaking of adherence substantially in the form
appended hereto as Schedule "H" duly executed by the Trustee;
j) receipt by each Shareholder of the Preliminary Business Plan
initialled by each Shareholder;
k) the absence of any material adverse change in the business,
assets, properties or financial condition of Holdco, the
shareholders of Holdco or the Corporation since June 30, 1997;
Page 23
l) evidence of Government Approval for the extension of the date for
initiating the exploitation of the network and for network
coverage requirements under the Existing Concession;
m) the initial Board of Directors described in Clause 7.2 shall have
been formed with two Directors appointed by BCI and two Directors
appointed by WorldTel;
n) receipt by each Shareholder of the form of the Minutes in English
and Spanish, the terms of which shall be consistent with this
Agreement and which Minutes shall otherwise be in a form and
substance satisfactory to each Shareholder; and
o) delivery of all documents contemplated in the list of documents
appended hereto as Schedule "E".
3.2.4 In relation to the issuance of Shares at the First Subscription Date
to each of the Shareholders, the Corporation and Holdco shall
represent and warrant to each of the Shareholders, and shall, on the
First Subscription Date, deliver a legal opinion addressed to each
Shareholder from counsel and in form acceptable to each Shareholder,
confirming that:
a) the Corporation is a corporation duly incorporated and validly
subsisting and in good standing under the laws of Mexico and it
has the corporate power to own or lease all of its properties and
rights and to conduct its business, to issue the said Shares and
to execute and deliver this Agreement and the Consulting Services
Agreements and that the Existing Concession is in full force and
effect as of the Closing Date;
b) the By-laws and the Minutes have been adopted and notarized as
required by the terms of this Agreement;
c) on the date thereof, the authorized share capital of the
Corporation and the issued share capital of the Corporation are
as contemplated in Clause 3.1 and Clause 3.2 hereof and the
By-laws;
d) no offer or any rights for any Shares or any founder's bonds
["bonos de fundador`"] have
Page 24
been authorized or made by the Corporation to any Person other
than the Shareholders pursuant to Clause 3.2 and the BCI Option;
e) the Shares issued on the date thereof to the Shareholders have
been duly authorized for issuance and have been validly issued as
fully paid Shares to and registered in the names of the
Shareholders acquiring Shares under Clause 3.2;
f) the Shares issued as part of the Optioned Interest and retained
in treasury for the benefit of BCI have been duly authorized and
validly issued and will be deemed to be fully paid Shares upon
the occurrence of the triggering events described in Clause
3.7.3;
g) all legal formalities and registration required for the issuance
and subscription of the Shares were duly complied with;
h) the issuance and subscription of the Shares are in all respects
valid and made in accordance with Mexican law;
i) no consent, approval, authorization or order of, or filing with,
the Government or any court of Mexico, other than those delivered
at Closing, is required for the issuance to, and subscription of
the Shares by, the Shareholders; and
j) the Shares issued to the Shareholders have been recorded by the
Corporation as part of its paid-in capital "capital social
pagado" account without any subscription premium paid by a
Shareholder.
3.2.5 From and as of the making of the Initial Cash Contributions on the
Closing Date until the First Subscription Date, each Shareholder shall
be entitled to exercise all rights hereunder, including nomination of
Directors, as if the Shares to be issued on the First Subscription
Date had been issued and Holdco shall perform all such acts as are
necessary to give effect thereto and Holdco shall vote its Shares
accordingly (except that Holdco shall vote twenty-six and eighty-nine
hundredths of one percent (26.89%) of its Voting Shares as directed by
BCI and twenty-two and nine hundredths of one per cent (22.09%) of its
Voting Shares as directed by WorldTel). In addition, any rights
Page 25
granted in this Agreement to Series B Directors and Series C Directors
shall, until the First Subscription Date, be exercised, respectively,
by the Directors appointed by BCI and WorldTel. Furthermore, until
such date, all rights granted herein to the Series B Shareholders
shall be exercised by BCI and all rights granted herein to the Series
C Shareholders shall be exercised by WorldTel.
3.3 First Stage Equity
3.3.1 The Shareholders acknowledge and agree that successive increases in
equity capital beyond the Initial Equity Contributions will be needed
to launch and operate the Business, and in order to meet the
Corporation's commitments pursuant to the Bid, the whole in accordance
with and in the amounts and at the times contemplated in Clause 3.3.2
(the Second Subscription and the Initial Equity Contributions
collectively the "First Stage Equity").
3.3.2 Subject to the subscription and issuance of Shares representing the
Initial Equity Contributions and all of the Second Subscription
Conditions having been fulfilled and further subject to Clauses 3.3.5,
3.3.6(b), 3.3.7 and 14.2.3, the Corporation shall issue on the Second
Subscription Date fifty-seven million sixty-six thousand five hundred
and sixty-nine (57,066,569) Shares, which shall be divided and
subscribed (but only partially paid) as follows (the table attached as
Schedule "C" further illustrating this allocation):
a) The Corporation shall issue to and Holdco shall fully subscribe
for twenty-two million eight hundred and twenty-six thousand six
hundred and ninety-nine (22,826,699) Series A Shares at a price
in Mexican Pesos equivalent to US $2.797859 per Share and four
million seven hundred and thirty-four thousand one hundred and
ten (4,734,110) Series N Shares at a price in Mexican Pesos
equivalent to US $1.00 per Share for an aggregate purchase price
of sixty-eight million six hundred thousand Dollars (US
$68,600,000);
b) The Corporation shall issue to and BCI shall fully subscribe for
twelve million forty-one thousand and sixty-nine (12,041,069)
Series B Shares at a price in Mexican Pesos equivalent to US
$7.072363 per Share and three million forty-one thousand one
hundred and ninety-
Page 26
two(3,041,192) Series N Shares at a price in Mexican Pesos
equivalent to US $1.00 per Share for an aggregate purchase price
equivalent to eighty-eight million two hundred thousand Dollars
(US $88,200,000), subject to the adjustment mentioned below;
c) The Corporation shall issue to and WorldTel shall fully subscribe
for nine million eight hundred and ninety thousand three hundred
and twenty-nine (9,890,329) Series C Shares at a price in Mexican
Pesos equivalent to US $8.665486 per Share and two million four
hundred ninety-five thousand four hundred and ninety-six
(2,495,496) Series N Shares at a price in Mexican Pesos
equivalent to US $1.00 per Share for an aggregate purchase price
equivalent to eighty-eight million two hundred thousand Dollars
(US $88,200,000);
d) The Corporation shall also issue and retain in treasury for the
benefit of BCI an additional two million thirty-seven thousand
six hundred and seventy-four (2,037,674) Series N Shares as part
of BCI's Optioned Interest which Series N Shares shall be
subscribed by and delivered to BCI in accordance with the terms
of Clause 3.7. Upon the subscription and delivery of these
Shares, the Corporation shall record an adjustment to the price
for the subscription of all of the Series N Shares subscribed by
BCI as part of the Second Subscription, namely five million
seventy-eight thousand eight hundred and sixty-six (5,078,866)
Series N Shares to reflect a price equivalent to US $0.598794 per
Share on the understanding that the aggregate purchase price for
the full subscription shall not be modified.
3.3.3 Subject to Clause 3.3.9 in the case of WorldTel, on the Second
Subscription Date, BCI and WorldTel shall pay for twenty-six per cent
(26%) of the subscription price for each of the Shares of each Series
issued and subscribed by them pursuant to the Second Subscription, and
the Corporation shall maintain in custody that number of Shares that
represent seventy-four per cent (74%) of the Shares of each Series of
Shares issued to BCI and WorldTel, and actually deliver to the
relevant Shareholder that number of Shares that represent the
twenty-six per cent (26%) balance of each Series of Shares. Holdco
shall pay, on such date for twenty-two and sixty-six hundredths of one
per cent
Page 27
(22.66%) of the subscription price for each Class A Share issued and
subscribed by Holdco and one hundred per cent (100%) of the
subscription price for each Series N Share subscribed by Holdco on the
Second Subscription Date. The Corporation shall maintain in custody
seventy-seven and thirty-four hundredths of one per cent (77,34%) of
the Class A Shares subscribed by Holdco and deliver the twenty-two and
sixty-six hundredths of one per cent (22.66%) balance to Holdco. The
Series N Shares shall be dealt with in accordance with Clause 3.3.9.
Furthermore, the Corporation shall promptly deliver to each
Shareholder upon further partial payments of the subscription price
that number of Shares which represents the additional percentage of
the unpaid subscription price for each of the Shares paid by such
Shareholder. For instance, when a Shareholder pays an additional ten
per cent (10%) of the original subscription price of each Share
subscribed, the Corporation shall deliver such number of Shares that
represent ten per cent (10%) of each Series of Shares originally
subscribed for.
3.3.4 For greater clarity and notwithstanding anything herein to the
contrary, the Shareholders agree that no contributions to the Second
Subscription will be called for or required prior to the fulfilment of
all of the Second Subscription Conditions as provided in Clauses 1.66
and 3.3.5 without the written unanimous approval of the Shareholders.
3.3.5 The Corporate Secretary shall deliver to the Shareholders the
documents described in Clause 1.66 (c) prior to the beginning of the
Auction. Following the expiry of the fifteen (15) Business Day period
mentioned in such Clause 1.66, the Corporate Secretary shall notify
the Shareholders of the fulfilment or non-satisfaction of the Second
Subscription Conditions described in such Clause 1.66 (c). Following
the Auction and the award of the Spectrum, the Corporate Secretary
shall deliver to the Shareholders the documents described in Clause
1.66 (a) and (b). Following the expiry of the ten (10) Day period
mentioned in such Clause 1.66, the Corporate Secretary shall notify
the Shareholders of the fulfilment or non-satisfaction of the Second
Subscription Conditions described in such Clause 1.66 (a) and (b).
3.3.6 In connection with the Second Subscription, the Parties agree as
follows:
Page 28
a) The Corporation shall adopt the Initial Business Plan no later
than four (4) months following the Second Subscription Date in
accordance with the terms hereof which shall, subject to Clauses
3.3.2 and 3.3.7, determine the precise timing and the amounts of
each payment of all or part of the Shares subscribed as part of
the Second Subscription but not fully paid by the Shareholders,
provided that for each such payment of Shares, each Shareholder
shall pay an equal percentage of their subscribed and unpaid
Shares and provided that if any part of the First Stage Equity
remains unpaid at the end of the Standstill Period, the
Shareholders shall pay the remaining unpaid balance. In the event
that at such time the Initial Business Plan is not duly adopted
by such time, the schedule attached hereto as Schedule "J" shall
determine the precise timing and amounts of the unpaid balance of
the Second Subscription provided that within sixty Business Days
from the Second Subscription Date, the Shareholders shall
contribute an amount of seventy-one million three hundred
thousand Dollars (US $71,300,000), unless another amount is
otherwise agreed to unanimously by all Shareholders prior to such
date;
b) If the Shareholders unanimously approve a decrease in the amount
of the Second Subscription following the award of the Spectrum
Concession to the Corporation, such lower amount shall from then
on be the Second Subscription and the issuance price of Shares
provided for in Section 3.3.2 shall be modified accordingly. If
such decrease is approved following the Second Subscription Date,
the Corporation shall adjust the subscription price for each
issued Share in order to reduce the total subscription price to
the then agreed amount of the Second Subscription; and
c) a legal opinion shall be delivered on the Second Subscription
Date to each Shareholder from counsel to the Corporation and in
form acceptable to each Shareholder confirming with respect to
the Second Subscription the items described in Clause 3.2.4 e) to
i).
3.3.7 All contributions of First Stage Equity shall be subject to: i) the
continued accuracy of the representations
Page 29
and warranties with respect to the Corporation and the continued
performance by the Corporation of the covenants set forth in Clause
15.1 f) and Clause 15.2 (i) and (ii); ii) the continuing validity of
the Licenses necessary to operate the Business as contemplated by the
Business Plan then in effect; iii) the continued compliance by the
Corporation with all applicable laws in all material respects; iv) no
voluntary or involuntary filing of a petition or proceeding in
bankruptcy or insolvency by, or the voluntary or involuntary
liquidation, dissolution or winding-up of, the Corporation shall have
occurred and the Corporation shall not have made any arrangements with
all or substantially all of its creditors; v) such contribution not
constituting a violation by the contributing Shareholder of the US
Foreign Corrupt Practices Act or of any other material applicable law
or regulations enacted after the date hereof or which have been the
subject of an adverse re-interpretation by a competent authority or
tribunal after the date hereof, the whole subject to the obligation of
such contributing Shareholder to mitigate the effect of such
violation, subject to such Shareholder's sole determination that such
mitigation would not otherwise have any material adverse effect upon
such Shareholder or its shareholders; and vi) the fifteen day prior
notice to be sent by the Corporate Secretary to each Shareholder as
provided in Clause 3.3.10.
3.3.8 The Shareholders further acknowledge and agree that increases in
equity capital in addition to the First Stage Equity may be needed
during the period of time covered in the Initial Business Plan and may
be authorised by the Shareholders in accordance with the terms hereof
and issued pursuant to Clause 3.5. Any such increases shall not be
treated as First Stage Equity for the purposes of Clause 3.4.
3.3.9 To permit the possible Re-allocation to WorldTel of interests in the
Series N Shares issued to Holdco, nine million four hundred and
sixty-eight thousand two hundred and twenty (9,468,220) Series N
Shares (the "Allocable Shares") shall be contributed by Holdco, on the
Second Subscription Date to a trust or other limited liability vehicle
(the "Trust") pursuant to the Trust Agreement. Schedule "C" hereto
illustrates the shareholdings of the Corporation upon giving effect to
such Re-allocation on the assumption that the Project IRR, as defined
in the Trust Agreement, is less than or equal to forty five per cent
(45%).
Page 30
3.3.10 The Corporate Secretary shall send to each Shareholder and to each
shareholder of such Shareholders identified in Schedule "K" (at the
fax number and to the individual identified in Schedule "K") at least
fifteen (15) days prior to any scheduled capital calls, a notice
specifying the amount in US dollars to be paid by each Shareholder.
3.4 Failure to Contribute to First Stage Equity
3.4.1 In the event of the failure by any Shareholder (the
"Non-Contributing Shareholder") to (i) subscribe for Shares on
the Second Subscription Date subject to and in accordance with
the terms hereof, or to (ii) pay on any payment due date, all or
any portion of its share of the outstanding portion of the
subscription price of the First Stage Equity payable in
accordance with Clause 3.3.6 or to (iii) vote its Shares and
cause its nominee Directors to give effect to or otherwise
perform its obligations under Clause 3.3, the Corporate Secretary
shall, within fifteen (15) Days of any such event send a written
notice to the Non-Contributing Shareholder requesting it to
remedy to such breach. If the breach is not cured by the
Non-Contributing Shareholder within forty-five (45) Business Days
from such notice, a "Non-Funding Event" shall be deemed to have
then occurred. Upon the occurrence of a Non-Funding Event
described in this Clause 3.4.1 (ii) above, the Corporation shall,
without prejudice to the fact that such event shall be deemed an
Event of Default, apply the amount of the subscription price
actually paid-in by the Non-Contributing Shareholder entirely and
exclusively to the Shares that were delivered to the
Non-Contributing Shareholder pursuant to Clause 3.3.3. The
Extraordinary Meeting that authorizes the issuance of Shares in
connection with the Second Subscription or any other subscription
for Shares, shall also authorize the issuance of such number of
treasury Shares as may be necessary in order for the Corporate
Secretary to give effect to the subscription of treasury Shares
referred to hereinafter and such Extraordinary Meeting may
delegate to the Corporate Secretary the power to make the
application of subscription moneys referred to hereinabove and to
cancel the balance of the Shares subscribed by the
Non-Contributing Shareholder which were maintained in the custody
of the Corporation. This procedure is referred to in this
Agreement as an "offset". The Corporate Secretary shall then
notify the Shareholders who are not the subject of a Non-Funding
Event (the "Contributing Shareholders"), of the nature of and of
the occurrence
Page 31
of a Non-Funding Event (the "Non-Funding Notice"), and the
Contributing Shareholders shall have the right to subscribe as
follows in respect of the number of treasury Shares that may be
issued pursuant to the offset equal to those cancelled pursuant
to the offset (the "Offset Shares"):
(a) their Call Proportionate Entitlement for such number of Offset
Shares; or
(b) a lesser number of Offset Shares than such Call Proportionate
Entitlement; or
(c) their Call Proportionate Entitlement plus any additional Offset
Shares in excess of their Call Proportionate Entitlement (the
"Excess Offset Shares").
The purchase price per Offset Share shall be equal to the prices set
in Clause 3.3.2 for Shares of each Series of Shares. This subscription
right must be exercised by the Contributing Shareholders, if they
elect to do so, within thirty (30) Days from the date of receipt of a
notice of a Non-Funding Event described in Clause 3.4.1 (ii).
Unless otherwise indicated in this Clause, all of the terms contained
in Clauses 3.6.6 to 3.6.12 governing subscriptions for Additional
Shares pursuant to the Pre-Emptive Rights shall apply mutatis mutandis
to all subscriptions for Offset Shares under this Clause, provided,
however, that for purposes of this Clause, all references in said
Clause 3.6 to Additional Shares shall be deemed to be references to
the Offset Shares, all references to Relevant Proportion shall be to
Call Proportionate Entitlement, and the Non-Funding Notice shall also
include the elements set forth in Clause 3.6.6, the Non-Funding Notice
to be deemed to be a Pre-Emptive Offer.
If the Contributing Shareholders exercise said right, the subscription
price of the subscribed Offset Shares shall be paid by the subscribing
Contributing Shareholders to the Corporation within thirty (30) Days
of the exercise of the subscription right. Any such Offset Shares
which remain unsubscribed by the Contributing Shareholders shall be
cancelled.
3.4.2 In addition and not in lieu of the foregoing Clause 3.4.1, the
Corporation and the Contributing Shareholders shall have all of the
rights against the Non-Contributing Shareholder set out in the Company
Page 32
Act, and each Contributing Shareholder shall be entitled to cause the
Corporation to exercise any or all of such rights.
3.4.3 The Non-Contributing Shareholder shall indemnify and hold harmless
the Contributing Shareholders and the Corporation against any loss,
damage (excluding consequential damages), penalty and expense
(including, but not limited to, legal fees) suffered or incurred as a
result of the occurrence of a Non-Funding Event.
3.4.4 The Non-Contributing Shareholder shall, without limitation to Clause
3.4.3, and upon the occurrence of a Non-Funding Event be liable to pay
to the Corporation a penalty (to cover costs of funds) on the unpaid
subscription price outstanding on the date of the Non-Funding Event
which shall accrue at the rate equivalent to twenty-five per cent
(25%) per annum compounded annually from the Second Subscription Date
or the payment due date, depending on the Non-Funding Event. This
penalty shall cease to accrue on the earlier of (i) the full cure of
the Non-Funding Event by the Non-Contributing Shareholder; or (ii) the
purchase of all the Call Shares by the Contributing Shareholders; or
(iii) the second anniversary of the Non-Funding Event.
3.4.5 The Corporation hereby covenants in favour of the Contributing
Shareholders to diligently exercise all of its rights pursuant to the
subscription agreements/guarantees to be delivered at Closing in
accordance with Clause 3.2.3 (d) and any of the Contributing
Shareholders is hereby authorized to exercise such rights on behalf of
and for the account of the Corporation.
3.4.6 The rights provided in this Clause 3.4 shall be without prejudice to
any of the Corporation's or the Contributing Shareholders' rights
under this Agreement or at law, including the Contributing
Shareholders' rights under the Call Option.
3.4.7 The Parties agree that in the event that Holdco is a Non-Contributing
Shareholder and a Non-Funding Event has consequently occurred, the
Corporation shall apply any amounts which may be paid by Holdco
thereafter first to payment of the Allocable Shares.
3.5 Subsequent Capital Needs
Page 33
3.5.1 The Shareholders may, in accordance with the terms hereof, from time
to time, determine to issue Additional Shares of any Class subsequent
to the Second Subscription in accordance with the funding policy set
forth in Clause 10.3.1.
3.5.2 After a Shareholder has made its contribution to First Stage Equity,
such Shareholder shall not be compelled to subscribe for its Relevant
Proportion of Shares in any subsequent share capital increase and, in
such event, the other Shareholders shall be entitled, as set forth in
Clause 3.6 to subscribe for all or part of the unsubscribed Shares.
3.5.3 Where unallotted Additional Shares are issued to a Third Party in
accordance with Clause 3.6.14, the Parties hereby undertake (i) to
modify the By-laws and this Agreement to ensure that such Third Party
shall have the right to appoint one (1) Director (plus two (2)
alternates) for each ten per cent (10%) of Voting Shares that it holds
with an appropriate decrease, if any, in the number of Directors to be
appointed by the other shareholders and (ii) to make such other
amendments to such documents as may be required to adequately reflect
the addition of such Third Party. The Shareholders shall not approve
the issuance of Participating Shares where, after such issuance,
Participating Shares would represent more than twenty-five per cent
(25%) of the total and outstanding Equity Shares.
3.5.4 In the event that any foreign ownership restrictions in Mexico are
amended or modified so as to permit an increase in the level of
foreign ownership of the Voting Shares beyond the current limitation
of forty nine per cent (49%) of the Voting Shares or such forty nine
per cent (49%) limitation is otherwise modified or eliminated or an
authorization from the Comision Nacional de Inversiones
Extranjeras is obtained to increase such level of foreign ownership,
then the By-laws shall be amended to either remove the condition that
Series A Shares must represent at least fifty-one per cent (51%) of
the total issued and outstanding Voting Shares or to reduce such
minimum percentage to reflect any such revised foreign ownership
limitations from time to time. To reflect any such new limitations,
the terms of the Series B Shares and Series C Shares shall also be
amended to increase the maximum percentage of Voting Shares that they
may thereafter represent. If the issuance of Additional Shares is
authorized pursuant to the terms hereof
Page 34
s following any modification of foreign ownership limitations in Mexico
and Holdco subscribes for less than its Relevant Proportion of Voting
Shares, the holders of Series B Shares and Series C Shares shall be
entitled to increase their holdings of Voting Shares of the
Corporation.
3.6 Pre-emptive Rights
3.6.1 Each Shareholder shall have Pre-emptive Rights, as described in this
Clause 3.6, to subscribe for any Additional Shares which may be issued
beyond the Shares issued to satisfy the mandatory First Stage Equity
funding contributions described in Clause 3.3.
3.6.2 The exercise of the Pre-emptive Rights herein provided shall be
optional, and therefore the failure by a Shareholder to subscribe to
any share capital increase of the Corporation shall not, except for
the mandatory First Stage Equity funding subscriptions referred to in
Clause 3.3 hereof, constitute an Event of Default under this
Agreement, but will have a dilutive effect.
3.6.3 The issuance of any Additional Shares shall first be authorised by
the Shareholders in accordance with the terms hereof.
3.6.4 Any Additional Shares of an existing Class shall, before they are
issued, be offered to the Shareholders holding Shares of the same
Class in their Relevant Proportion of Shares of such Class at the date
of the Pre-emptive Offer.
3.6.5 Any Additional Shares of a newly created Class shall, before they are
issued, be offered to the Shareholders holding Equity Shares in their
Relevant Proportion of Equity Shares at the date of the Pre-emptive
Offer.
3.6.6 Every such offer of Additional Shares (the "Pre-emptive Offer") shall
be made in writing by the Corporate Secretary acting on behalf of the
Shareholders and shall specify:
a) the aggregate number, Class and Series of Additional Shares;
b) the terms (including the price per Additional Share which shall
be determined by the Shareholders in accordance with Clause 9.2
and the method of payment);
Page 35
c) the number of Additional Shares offered to each Shareholder; and
d) that any Shareholder who wishes to accept the Pre-emptive Offer
must do so by completing and signing the subscription form, a
copy of which shall be attached to the Pre-emptive Offer (the
"Subscription Form"), and returning it to the Corporation, to the
attention of the Corporate Secretary, within the period of thirty
(30) Days from the dispatch of the Pre-emptive Offer (the
"Pre-emptive Acceptance Delay").
3.6.7 A Shareholder shall specify in the Subscription Form the number of
Additional Shares for which it desires to subscribe, which may be (i)
its Relevant Proportion; or (ii) a lesser number of Additional Shares
than its Relevant Proportion; or (iii) its Relevant Proportion plus
any Additional Shares of any Class in excess of its Relevant
Proportion (the "Excess Pre-emptive Shares").
3.6.8 Every such Pre-emptive Offer shall be irrevocable and remain open for
acceptance during the Pre-emptive Acceptance Delay and otherwise
comply with the Company Act.
3.6.9 If a Shareholder fails to so notify the Corporation of its acceptance
of the Pre-emptive Offer during the Pre-emptive Acceptance Delay, then
such Shareholder shall be conclusively deemed to have waived its
Pre-emptive Right in connection with such issue of Additional Shares.
3.6.10 Any Shareholder may waive its Pre-emptive Right for a particular
offering of Additional Shares and, unless expressly so stated in
writing, same shall not constitute, or be deemed to constitute, a
waiver of such Shareholder's Pre-emptive Rights with respect to any
other or further offering of Additional Shares, but it shall have a
dilutive effect.
3.6.11 At the expiration of the Pre-emptive Acceptance Delay, the Corporate
Secretary shall cause the allotment of the Additional Shares in the
following manner:
a) to each Shareholder there shall be allotted its Relevant
Proportion or such lesser number of Additional Shares which it
has accepted;
Page 36
b) if the number of any Additional Shares which remain unallotted is
less than the number of Additional Shares for which applications
for Excess Pre-emptive Shares have been made, the unallotted
Additional Shares shall be allotted to the Shareholders having
subscribed for Excess Pre-emptive Shares in accordance with the
following calculation: such number of unallotted Additional
Shares multiplied by the percentage obtained by dividing (i) the
aggregate number of Shares of the relevant Class held by the
subject Shareholder, by (ii) the sum of the aggregate number of
Shares of the relevant Class then held by all such Shareholders
who have subscribed for Excess Pre-emptive Shares (calculated
prior to giving effect to any Additional Shares subscribed for).
To the extent that, following this allocation, any amount of
Additional Shares remain unsubscribed then such Additional Shares
shall continue to be allocated, issued and allotted amongst those
Shareholders still able to subscribe for Additional Shares
pursuant to their Subscription Form, to the extent possible, in
accordance with the formula set forth in this Clause 3.6.11 b),
so far as possible until no Additional Shares remain unsubscribed
by Shareholders having made applications for Excess Pre-emptive
Shares. No Shareholder shall, however, be bound to take any
Additional Shares in excess of the number for which it has
applied; and
c) if the number of Additional Shares which remain unallotted is
equal to or greater than the number of Additional Shares for
which excess applications for Excess Pre-emptive Shares have been
made, a Shareholder who has applied for Excess Pre-emptive Shares
shall be allotted the number of Excess Pre-emptive Shares for
which it applied.
3.6.12 The Parties agree that the Corporate Secretary will, if necessary,
vary the allotments provided for in this Clause 3.6 in order to avoid
the issuance of fractional shares by rounding to the nearest whole
Additional Share, with fractions .50 and more being rounded up to the
next higher whole number and fractions less than .50 being rounded
down to the next lower whole number.
Page 37
3.6.13 No Additional Shares shall be released or delivered unless the
required payment indicated in the Pre-emptive Offer has been received
along with the Subscription Form in the case of a subscription for
Additional Shares less than or equal to a Relevant Proportion and, in
the case of Excess Pre-emptive Shares, within fifteen (15) Days of
receipt of a notice from the Corporate Secretary specifying the number
of Excess Pre-emptive Shares allotted. Any Shares which are not paid
as required under the Pre-emptive Offer or subscribed within the
delays stipulated above shall be offered to the Shareholders who have
applied for Excess Pre-emptive Shares and who have not been allotted
all of the Excess Pre-emptive Shares for which they have applied in
accordance with Clause 3.6.11 (b).
3.6.14 The resolution or approval of the Shareholders authorising the
issuance of any Additional Shares in accordance with the terms hereof
may provide that, if the entire Additional Share capital increase is
not subscribed to, the share capital increase will be decreased to the
amount actually subscribed by the Shareholders. If the resolution of
the Shareholders does not so provide, the Board of Directors may (i)
call an Extraordinary Meeting of Shareholders to decrease the share
capital increase to the amount actually subscribed by the
Shareholders, or (ii) offer the unsubscribed Additional Shares to
Third Parties, subject to BCI's approval of such Third Parties that
are Restricted Third Parties (which right shall be exercised in the
manner contemplated in Clause 4.4.12), at the same price and terms as
those offered to the Shareholders.
3.6.15 Prior to, or, in accordance with Clause 4.5, after, the issue of
Additional Shares pursuant to this Clause 3.6, each Shareholder may
designate (in the Subscription Form if prior to the release of
Additional Shares) one or more of its Affiliates to hold all or a
portion of such Additional Shares. In addition, WorldTel may so
designate any of its direct shareholders to hold a portion of the
Additional Shares allocated to WorldTel. In all such cases, the
Additional Shares to be so issued shall be issued or Transferred to
such designated Affiliate(s) or Persons subject to Clause 4.7 and
4.4.12 (which shall apply mutatis mutandis).
3.7 Option In Favour of BCI
3.7.1 BCI shall have the right (the "BCI Option") to receive from the
Corporation without further payment four
Page 38
million seventy-five thousand three hundred and forty-eight
(4,075,348) Series N Shares of the Corporation (the "Optioned
Interest") immediately upon the trigger of the BCI Option, in
accordance with the terms hereof.
3.7.2 If the BCI Option is not triggered by January 1, 2017, the Optioned
Interest will be cancelled.
3.7.3 Subject to Clause 5.2.10, the BCI Option will be deemed to have been
triggered: (a) immediately after the end of the fiscal year
immediately following the first fiscal year of the Corporation for
which the Corporation reports a positive EBITDA (the "Cash Flow
Event") or; (b) if either of the following events occur prior to the
Cash Flow Event, (i) immediately prior to the closing of a Qualified
Offering or any other Liquidation Event or, (ii) immediately prior to
the first declaration of a cash or Share dividend by the Corporation
as proposed in the agenda of the Shareholders meeting sent to the
Shareholders in accordance with the terms hereof.
3.7.4 BCI shall be advised by the Corporate Secretary of a Qualified
Offering, a Liquidation Event or declaration of dividend at least ten
(10) Days prior to such event taking place.
3.7.5 The table attached hereto as Schedule "C" illustrates the allocation
of Equity Shares upon receipt of the Optioned Interest.
3.7.6 If any change in the Corporation's capital stock shall occur by
reason of stock dividends, stock splits, mergers, consolidations,
recapitalizations, combinations, conversions, exchanges of shares, or
other changes in the corporate or capital structure of the
Corporation, the Optioned Interest shall be adjusted so that BCI shall
receive upon the triggering of the BCI Option the number and Class of
Shares or other securities or property that BCI would have received in
respect of the Optioned Interest deliverable upon trigger of the BCI
Option as if the BCI Option had been triggered immediately prior to
such event.
3.8 Shares Legended
The By-laws, the Shareholders Registry Book of the Corporation and
each certificate evidencing Shares of the Corporation shall bear the
following legend:
"The Shares of the Corporation represented by this certificate are
subject to restrictions including, but not
Page 39
limited to, restrictions on transfer and encumbrances, which are set
forth in the by-laws and the agreements between the Shareholders and
the Corporation. Any attempted transfer or encumbrance of Shares in
breach of the by-laws or any such agreements will be deemed for all
purposes as null and void, and no registration shall be made in the
Stock Register Book or other corporate books of the Corporation unless
said restrictions have been satisfied. The Shares have not been
registered with any securities authority in the United States of
America, Canada or Mexico."
4. TRANSFER AND PLEDGE OF SHARES
4.1 General Restriction on Transfer
No Shareholder shall, directly or indirectly, Transfer any of its
Shares without complying with the provisions of this Clause 4, or in
such a manner as would cause the Corporation to be in breach of the
Existing Concession, the Spectrum Concession or the Tender Documents;
and no Shareholder shall, except with the prior written consent of the
other Shareholders or as specifically set forth in the following
provisions of this Clause 4, in any manner, whether directly or
indirectly, create, or cause or permit to occur, any Pledge of any of
its Shares.
4.2 Transfers of Shares During and After the Standstill Period
4.2.1 During the Standstill Period, other than for a Transfer of Allocable
Shares in accordance with Clause 3.3.9, the Shareholders agree not to,
directly or indirectly, Transfer any of their Shares except to one or
more of their Permitted Assignees or otherwise in accordance with
Clause 4.5.
4.2.2 Following the expiry of the Standstill Period, no Shareholder may,
directly or indirectly, Transfer any of its Shares except:
a) to one or more of its Permitted Assignees or otherwise in
accordance with Clause 4.5; or
b) to any other Shareholder or Third Party pursuant to and in
accordance with Clause 4.4.
4.3 Pledges
4.3.1 Subject to Clause 4.7, any Shareholder (the "Pledgor") may Pledge any
of the Shares from time to time held by
Page 40
it (the "Pledged Shares") for the purpose of obtaining bona fide
financing for the Corporation, provided that, in connection with any
Pledge, the Person in favour of whom the Shares are to be pledged (the
"Pledgee") must agree in writing at such time that:
a) the Pledgee shall be fully bound, upon taking possession of
and/or title to the Pledged Shares, by the terms and
conditions of this Agreement and all other agreements
relating to Shares or shareholdings between the
Shareholders;
b) the Pledgee shall not exercise any of its rights pursuant to
any such Pledge in any manner, or take any other action with
respect to such Pledged Shares which might constitute a
violation of any provision of this Agreement or of any
Licenses granted to or operated by the Corporation;
c) the Pledgee shall not make any demand requiring that prior
to any event of default with respect to the obligations
secured by such Pledge, any Pledged Shares shall be
transferred in the books of the Corporation to the name of
such Pledgee or its nominee;
d) the Pledgee shall, prior to exercising any power of
foreclosure or sale or any other remedy which it may have as
a secured party, give to the Shareholders twenty (20) Days'
notice in writing of its intention to do so and, if any such
Shareholders (the "Paying Shareholders") shall during such
period pay or cause to be paid to the Pledgee all amounts
both by way of principal and interest owing to it by the
Corporation, the Pledgee shall transfer and assign the
Pledged Shares free from such Pledge to such Paying
Shareholders, or as directed by such Paying Shareholders;
e) the Pledgee shall provide to the Shareholders rights of
first offer (mutatis mutandis to the Rights of First Offer
set out in Clause 4.4) in any judicial or public sale of the
Pledged Shares by the Pledgee; provided, however, that such
rights of first offer must be exercised by the Shareholders
within seven (7) Days after receipt of the notice referred
in Clause 4.3.1 d); and
Page 41
f) to such other conditions in lieu of the foregoing paragraphs
a) to e) that may be decided by the Directors.
4.3.2 No Transfer of registered Shares in the books of the Corporation to
any Pledgee shall release any Pledgor from its obligations under this
Agreement.
4.4 Rights of First Offer
4.4.1 Subject to Clauses 4.2.1, 4.6, and 4.7, if any Shareholder desires to
Transfer all or any portion of the Shares then held by it (the
Shareholder desiring to so Transfer such Shares, the "Selling
Shareholder"; and any such Shares proposed to be transferred, the
"Offered Shares"), the Shareholders hereby agree that the Selling
Shareholder shall first give notice in writing to the Corporate
Secretary (the "First Offer Notice") of its desire to Transfer the
Offered Shares.
4.4.2 In the First Offer Notice, the Selling Shareholder shall identify the
number, Class and Series of Offered Shares it desires to Transfer, the
price in U.S. Dollars per Offered Share (net of any commissions,
brokerage fees or other transaction costs) which it is willing to
accept, the type of any non-cash consideration which it is prepared to
accept together with the basis of valuation of such non-cash
consideration and the other terms and conditions on which the Offered
Shares are offered and shall irrevocably offer to sell the Offered
Shares to the other Shareholders (the "Offerees").
4.4.3 Upon delivery of a First Offer Notice, the Corporate Secretary shall
offer the Offered Shares, on behalf of the Selling Shareholder, for
purchase by the Offerees, in the manner provided herein, at the price
and on the terms contained in the First Offer Notice.
4.4.4 Within five (5) Days after receipt of the First Offer Notice, the
Corporate Secretary shall give notice (the "Selling Notice") to each
of the Offerees, which Selling Notice shall offer for sale to each of
the Offerees upon the terms and conditions set forth in the First
Offer Notice their Proportionate Entitlement (subject to adjustments
with respect to the Allocable Shares) of the Offered Shares. The
Selling Notice shall indicate the Proportionate Entitlement of the
Offered Shares applicable to each Shareholder. A copy of the First
Offer Notice shall also be forwarded to each Offeree along with the
Selling Notice.
Page 42
4.4.5 The offer by the Selling Shareholder constituted by the Selling
Notice and the First Offer Notice shall remain irrevocable and open
for acceptance as hereinafter provided by each Offeree for a period of
thirty (30) Days following dispatch of the Selling Notice (the
"Acceptance Period").
4.4.6 Each Offeree shall have the right, exercisable by notice given to the
Corporate Secretary within the Acceptance Period (the "Purchase
Notice"), to accept and agree that it will purchase its Proportionate
Entitlement of the Offered Shares or, if it wishes to purchase less
than or more than its Proportionate Entitlement, to indicate how many
Offered Shares less than its Proportionate Entitlement or how many
Offered Shares in excess of its Proportionate Entitlement (the "Excess
First Offer Shares") it wishes to purchase. A Purchase Notice shall be
irrevocable. If no Purchase Notice is given by an Offeree under this
Clause 4.4.6 during the Acceptance Period, the Offeree shall be deemed
to have rejected the offer made available to it to purchase Offered
Shares.
4.4.7 Subject to Clauses 4.4.9 and 4.4.10, at the expiration of the
Acceptance Period, the Corporate Secretary shall cause the Offered
Shares to be allocated to the Offerees having sent Purchase Notices in
the following manner:
a) to each Offeree there shall be allocated its Proportionate
Entitlement or such lesser number of Offered Shares which it has
accepted;
b) if the number of any Offered Shares which remain unallocated is
less than the number of Offered Shares for which applications for
Excess First Offer Shares have been made, the unallocated Offered
Shares shall be allocated to the Offerees having applied for
Excess First Offer Shares in accordance with the following
calculation: such number of unallocated Offered Shares multiplied
by the percentage obtained by dividing (i) the aggregate number
of Shares of the relevant Class held by the subject Offeree, by
(ii) the sum of the aggregate number of Shares of the relevant
Class then held by all such Offerees who have applied for Excess
First Offer Shares (calculated prior to giving effect to the
purchase of any Offered Shares). To the extent that, following
this allocation, any amount of Offered Shares remain unallocated
then such Offered Shares shall continue to be allocated to
Offerees
Page 43
to whom there has not been allocated all of the Excess First
Offer Shares for which they applied, in accordance with the
formula set forth in this Clause 4.4.7 b), so far as possible
until no Offered Shares remain unallocated to Offerees having
applied for Excess First Offer Shares. No Offeree shall, however,
be bound to take any Offered Shares in excess of the number for
which it has applied; and
c) if the number of Offered Shares which remain unallocated is equal
to the number of Offered Shares for which applications for Excess
First Offer Shares have been made, an Offeree who has applied for
Excess First Offer Shares shall be allocated the number of Excess
First Offer Shares for which it applied.
4.4.8 The Parties agree that the Corporate Secretary will, if necessary,
vary the allocations provided for in this Clause 4.4 in order to avoid
the Transfer of fractional shares by rounding to the nearest whole
Offered Share, entire fractions .50 and more being rounded up to the
next higher whole number and fractions less than .50 being rounded
down to the next lower whole number.
4.4.9 Subject to Clause 4.4.12, if none of the Offerees accepts the offer
by the Selling Shareholder constituted by the Selling Notice or the
Offerees accepting such offer collectively are not prepared to
purchase all of the Offered Shares, then the Selling Shareholder may
Transfer all, but not less than all, of the Offered Shares to a Third
Party at a price and upon terms and conditions taken as a whole which
are no more favourable to such Third Party than those specified in the
First Offer Notice, provided, however, that (i) if there is a non-cash
consideration, it shall have been identified in the First Offer Notice
and shall be valued in accordance with the basis for valuation
identified therein (ii) all other restrictions on such Transfer set
forth in this Agreement shall have been satisfied, and (iii) such
Transfer is completed within one hundred and twenty (120) Days
following the expiry of the Acceptance Period. In the event that the
Selling Shareholder does not Transfer the Offered Shares to the Third
Party within such period, then the provisions of this Agreement shall
once again apply and so on from time to time.
4.4.10 Subject to Clause 4.4.9 above, the purchases by the Offerees having
exercised their Right of First Offer
Page 44
hereunder and the sales by the Selling Shareholder to them, shall be
made at the head office of the Corporation at the same price in U.S.
Dollars and upon same terms and conditions as set forth in the Selling
Notice and shall be completed within ninety (90) Days following the
expiry of the Acceptance Period or earlier if the Selling Shareholder
and the Offerees agree, provided, however, that all the restrictions
on such Transfer set forth in this Agreement, including those pursuant
to Clauses 4.4.12, 4.4.13 and 4.7, shall have been satisfied. Each
Shareholder shall bear its own costs and fees in connection with any
Transfer of Offered Shares.
4.4.11 In connection with the Transfer of Shares under this Clause 4.4, (i)
the Selling Shareholder shall deliver or cause to be delivered to the
Offerees stock certificate(s) representing the Offered Shares, duly
endorsed, together with the written representation of the Selling
Shareholder that such Offered Shares are free and clear of all Pledges
except those created and continuing under the terms of this Agreement
or those created in accordance with Clause 4.3.1, and (ii) the
Offerees shall deliver or cause to be delivered to the Selling
Shareholder the full purchase price for such Offered Shares.
4.4.12 In the event that the Offered Shares are not all taken up by the
Offerees and the Selling Shareholder intends to proceed with the
Transfer of the Offered Shares to a Third Party, a written notice (the
"Restricted Third Party Notice") shall first be given to BCI and to
the Corporation by the Selling Shareholder to that effect which shall
also identify the Third Party, the shareholders (or the largest
shareholder if the Third Party is a public company), the officers and
directors and the Subsidiaries and Controlling Persons of the Third
Party to the extent the Selling Shareholder has actual knowledge of
such information or can reasonably obtain it, and any other
non-confidential information with respect to the operations of the
Third Party in the possession of the Selling Shareholder reasonably
necessary for BCI and the Corporation to determine whether the Third
Party is a Restricted Third Party. BCI and the Corporation shall have
fifteen (15) Days from receipt of the Restricted Third Party Notice to
consent or object to the Transfer of the Offered Shares to such Third
Party, and such consent shall not be withheld without a valid business
reason, and in the event that either BCI or the Corporation indicates
that it does not consent to a Transfer to the Third Party on
Page 45
the basis that the Third Party is a Restricted Third Party, such a
purported Transfer shall not be valid. BCI shall be deemed to have
consented to a Transfer to a Third Party if it does not reply to a
Restricted Third Party Notice within the fifteen (15) Day period
stipulated in this Clause 4.4.12, provided that this deemed consent is
indicated in capital letters in the Restricted Third Party Notice. The
Corporation shall also be deemed to have consented to a Transfer to a
Third Party in the same circumstances. If either BCI or the
Corporation objects to a Transfer to a Restricted Third Party, the
Corporation shall not have any obligation to appoint a substitute
buyer. BCI's rights provided for in this Clause 4.4.12 shall terminate
if (i) it ceases to hold, together with its Affiliates or Permitted
Assignees, the majority of the Series B Shares or (ii) the Technical
Services Agreement has been terminated by the Corporation on the basis
of Clause 11.5 a) or b) thereof . Each Shareholder shall also send a
notice to each of the Corporation and BCI before each Transfer of
Shares contemplated in Clause 4.5 and upon any assignment of Rights
pursuant to Clauses 3.6.15, 4.4.15 and 5.2.8, containing essentially
the same information as a Restricted Third Party Notice and this
Clause 4.4.12 shall apply mutatis mutandis to any such Transfer and to
any such assignment of Rights.
4.4.13 Upon any Transfer to a Third Party, the Selling Shareholder shall
deliver to the Offerees a copy of the document evidencing such
Transfer together with a statutory declaration of the President of the
Selling Shareholder stating that the Transfer of the Offered Shares of
the Selling Shareholder to the Third Party was made for the price and
upon terms and conditions taken as a whole which were not more
favourable to the Third Party than those set forth in the First Offer
Notice.
4.4.14 The Right of First Offer procedure set forth in this Clause 4.4
shall not apply to:
a) any Transfer of Shares by any Shareholder to any of its Permitted
Assignees or otherwise in accordance with Clause 4.5;
b) any Transfer of Shares carried out pursuant to a Qualified
Offering or other subsequent public offering permitted under this
Agreement;
c) any Re-allocation;
Page 46
d) any Transfers permitted under Clauses 3.6.15 and 5.2.8; and
e) any Transfers of Shares carried out pursuant to the Allocable
Shares Agreement, which is a schedule to the Trust Agreement.
4.4.15 Notwithstanding anything to the contrary expressed or implied in
this Clause 4.4, each Shareholder may, in its sole discretion (but
subject to Clause 4.7), assign its rights to acquire any Shares under
this Clause 4.4 to any of its Affiliates in accordance with Clause
4.5. In addition, WorldTel may assign to any of its direct
shareholders its right to acquire the Offered Shares. In all such
cases, the Offered Shares shall be Transferred to such Affiliates or
Persons subject to Clauses 4.7 and 4.4.12 (which shall apply mutatis
mutandis).
4.4.16 The Shareholders hereby acknowledge that it would not be practical
to conduct more than one Right of First Offer process at any given
time or to permit the conduct of overlapping Right of First Offer
processes at any given time and, therefore, hereby agree that each
Right of First Offer process shall be commenced in the order of
receipt of First Offer Notices by the Corporate Secretary, and that
once one Right of First Offer process has been commenced, any
subsequent Right of First Offer process(es) shall not be commenced
until completion of the first Right of First Offer process in
accordance with this Clause 4.4.
4.5 Transfers to Permitted Assignees
Subject to Clause 4.7 below, each Shareholder may, at any time, Transfer
any or all of the Shares held by it, at any price, without compliance with
the Rights of First Offer contained in Clause 4.4 to one or more Permitted
Assignees of such Shareholder subject to BCI's or the Corporation's
approval of such Permitted Assignee(s) that are Restricted Third Parties
(such rights of BCI and the Corporation to be exercised in the manner
contemplated in Clause 4.4.12).
In addition, WorldTel shall have the right, after it has satisfied all of
its First Stage Equity funding commitments, to Transfer any or all of the
Shares held by it without compliance with the Rights of First Offer
contained in Clause 4.4, to its own direct shareholders upon its
liquidation. Furthermore, to the extent that any investment fund is a
direct shareholder of WorldTel at the time of such liquidation, and
receives Shares, it shall have the right to Transfer any or all of the
Shares held by it to its
Page 47
own direct investors upon its liquidation without compliance with the
Rights of First Offer contained in Clause 4.4, provided that such Transfer
shall not take place for a period of five (5) years from the date hereof.
Such Transfers to the shareholders of WorldTel and investors in such
investment fund shall be subject to BCI's and the Corporation's approval of
such Transferees that are Restricted Third Parties (such rights of BCI and
the Corporation, to be exercised in the manner contemplated in Clause
4.4.12).
4.6 Tag-Along Rights
4.6.1 For the purposes of this Clause 4.6, a "Tag-Along Trigger" shall
occur if a Selling Notice refers to more than fifty per cent (50 %) of
the issued and outstanding Voting Shares or if giving effect to a
Selling Notice would result in a Transfer of a Controlling Interest of
the Corporation.
4.6.2 In the event of a Tag-Along Trigger, the First Offer Notice and the
Selling Notice shall also stipulate that a Tag-Along Trigger has
occurred and disclose the identity of the Third Party to whom the
Selling Shareholder wishes to Transfer the Offered Shares along with
the names of the shareholders (or the largest shareholder if the Third
Party is a public company), officers and directors of the Third Party
and any other information with respect to the financial capacity of
the Third Party in the possession of the Selling Shareholder.
4.6.3 Where the Selling Notice stipulates that a Tag-Along Trigger has
occurred, the Offerees shall provide in their Purchase Notice either
that:
a) they wish to exercise their Right of First Offer and do not wish
to exercise their Tag-Along Right;
b) they wish to exercise their Right of First Offer and, in the
event that the Offerees do not purchase all of the Offered
Shares, wish to exercise their Tag-Along Right;
c) they do not wish to exercise their Right of First Offer but wish
to exercise their Tag-Along Right in the event that the Offerees
do not purchase all of the Offered Shares; or
d) that they do not wish to exercise their Right of First Offer or
their Tag-Along Right.
Page 48
4.6.4 If a Purchase Notice is not given by an Offeree prior to the expiry
of the Acceptance Period, such Offeree shall be deemed to have refused
to purchase any or all of the Offered Shares and to have waived its
Tag-Along Right in connection with the Transfer of the Offered Shares.
4.6.5 In the event of a Tag-Along Trigger, as a condition of and before
completing any Transfer to a Third Party, the Selling Shareholder
shall arrange for the Third Party to provide in writing (the
"Tag-Along Notice") to the Offerees an offer to purchase, at an
Offeree's option, all or part of an Offeree's Shares by the Third
Party at the same price and on the same terms and conditions as set
forth in the Selling Notice. If the Selling Shareholder does not
intend to Transfer a Class of Shares held by an Offeree, the Third
Party in its Tag-Along Notice shall offer to purchase such Shares at
the price paid for such Shares by an Offeree or if the Offeree wishes
that an Expert be engaged, at the Fair Market Value for such Shares.
In the event that an Offeree wishes that an Expert be engaged to
determine the Fair Market Value of any Class of Shares it holds which
are not referred to in the Selling Notice, it shall so stipulate in
its Purchase Notice and the Corporate Secretary shall follow the
procedure set forth in Clause 5.2.4 for the determination of Fair
Market Value except that the Selling Shareholder shall bear the costs
of the Expert. The purchase offer provided by the Third Party shall be
irrevocable and bind such Person to purchase the Shares of any Offeree
exercising its Tag-Along Right and the Tag-Along Notice shall be
attached to the Selling Notice.
4.6.6 If any Offeree so elects to sell all of its Shares, then the Transfer
of the Shares sold by the Selling Shareholder and by the Offerees
which have so elected shall be completed contemporaneously, on or
before one hundred and twenty (120) Days following the expiry of the
Acceptance Period or, in the event that a determination of Fair Market
Value is requested in accordance with Clause 4.6.5, ninety (90) Days
following the submission of the Expert's determination of Fair Market
Value. Each Transfer shall be carried out as a separate transaction
between the Third Party and each of the Selling Shareholder and the
Offerees.
4.6.7 If the Corporate Secretary is in receipt of any Purchase Notice which
includes the exercise of the Tag-Along Right, the Selling Shareholder
shall only be entitled to complete a Transfer to a Third Party if
either (i) all of
Page 49
the Shares that have been the subject of the exercise of Tag-Along
Rights are also Transferred contemporaneously therewith to the Third
Party in accordance with the terms of this Clause 4.6, or (ii) if the
Transfer of Shares that have been the subject of the exercise of
Tag-Along Rights does not occur for a reason attributable to an
Offeree.
4.6.8 If the Corporate Secretary does not receive any Purchase Notice which
includes the exercise of a Tag-Along Right and the Offerees have not
purchased all of the Offered Shares under Clause 4.4, then the Selling
Shareholder shall have the right to Transfer to the Third Party all,
but not less than all, of the Offered Shares at the same price and on
the same terms and conditions as set forth in the Selling Notice
within the period set out in Clause 4.4.9.
4.6.9 If no Transfer of the Offered Shares to a Third Party is completed
within the period set out in Clause 4.4.9, the Selling Shareholder
shall not proceed with any Transfer of Shares without again complying
with all relevant provisions of this Agreement.
4.7 Conditions Applicable to, and Effects of, all Permitted Transfers, Pledges,
or Issuances of Shares
4.7.1 Unless already obtained prior to the date of the subject Transfer,
Pledge, or issuance, the Transferee or Pledgor shall obtain and
deliver to the Corporate Secretary (with a copy to each Shareholder)
satisfactory proof of receipt of all required Government Approvals
which affect the Corporation, the Shareholders or the Licenses.
4.7.2 Notwithstanding any other provision of this Agreement, no Transfer,
Pledge, or issuance of Shares shall be permitted to be made to any
Person if such Transfer, Pledge, or issuance to such Transferee would
(i) result in a violation of applicable law regarding any applicable
maximum foreign ownership of Shares or any securities laws, or (ii)
result in revocation of the Existing Concession or the Spectrum
Concession, or (iii) subject the Corporation to any penalty (financial
or otherwise) imposed by any regulatory agency with jurisdiction over
the Corporation.
4.7.3 Except as set forth in Clause 3.3.9, no Shareholder may Transfer any
Shares to any Person who is not a Shareholder unless such Person
agrees in writing, concurrently with such Transfer to be fully bound
by
Page 50
the terms and conditions of this Agreement, including the applicable
obligations of the Transferor, and all other agreements between the
Transferor and any Shareholders or the Corporation (other than the
Consulting Services Agreements). Thereafter such Person shall be
entitled to the rights of the Transferor under this Agreement, except
that no Transfer of Shares by a Shareholder contemplated in Clause 4.5
shall relieve such Shareholder of its First Stage Equity funding
commitment, and each such Transferor shall be jointly and severally
liable therefor with such Transferees.
4.7.4 Subject to Clause 4.7.3, in connection with any Transfer of Shares,
including pursuant to the Call Option, the Termination Call Option,
the WorldTel Put Option or the BCI Put Option, the Transferees, and,
in the case of the exercise of the Termination Call Option, the
WorldTel Put Option and of the BCI Put Option, the Corporation and the
non-Transferring Shareholders shall (i) ensure that the Transferor is
completely released from any Shareholder Guarantees, Unilateral
Guarantees, Loan Guarantees or Bid Guarantees or provide indemnities
satisfactory to the Transferor in lieu thereof, and (ii) cause the
Transferee to purchase contemporaneously with such Transfer any
shareholder loans or advances made by the Transferor in the same
proportion as in respect of the accompanying Transfer of Shares in the
amount of principal outstanding, and unpaid accrued interest, on such
loans and advances.
4.8 Unauthorized Transfers Void
Any purported Transfer, issuance or Pledge of any Shares which is not in
full compliance with the provisions of this Agreement shall be null and
void and the Corporation shall not register the subject Transfer, issuance
or Pledge and the Transferee shall not be entitled to vote or receive
dividends or distributions with respect to such Shares.
4.9 Public Flotation and Registration Rights
4.9.1 The Shareholders agree that the Corporation will seek a Qualified
Offering of its Shares as soon as practicable following the award of
the Spectrum Concession to the Corporation and the commencement of the
offering of the Services, depending on the then prevailing market
conditions and the financial condition of the Corporation.
Page 51
4.9.2 In the event that the Shares or other securities of the Corporation
become subject to a public offering, the Shareholders, having due
regard to the demands of the relevant market, applicable law and
relevant policies, undertake to re-negotiate in good faith the
provisions of this Agreement, upon mutually acceptable terms and
conditions, and to use their best efforts to maintain after the public
offering, to the extent possible, the governance rights set forth in
Clauses 7, 8, 9 and in such other provisions of this Agreement which
confer governance rights (the "Governance Rights") and rights with
respect to the Transfer of Shares and to restructure the Corporation,
as necessary, to give effect to the foregoing, save and except that
Clauses 12, 16, 17.1 and 17.2 shall, in any event, survive and remain
in effect after a public offering. It is understood that (i) until
such re-negotiation is completed and this Agreement is modified
accordingly, the terms of this Agreement will remain in full force and
effect, and (ii), for purposes of Schedule "D", a Shareholder may not
withhold any required consent to effect such offering based on the
fact that some Governance Rights or Transfer restrictions could not be
maintained as a result of the actions described in this Clause 4.9.2.
4.9.3 Subject to Clause 4.9.2, the Shareholders shall have the registration
rights set forth in Schedule "D".
4.10 Disclosure of Indirect 5% Investors
Each Shareholder hereby agrees that if, at any time prior to the completion
of a public offer of Shares, it becomes aware that any Third Party has
acquired an Indirect Interest in the Corporation representing five per cent
(5%) or more of the total Equity Shares issued and outstanding (any such
Third Party or group of Third Parties being referred to as an "Indirect 5%
Investor"), such fact, as well as the identity of such Indirect 5%
Investor, shall be promptly disclosed in writing by the Shareholder to the
Corporate Secretary (who shall promptly send a copy thereof to each other
Shareholder), but shall not be subject to the consent or approval of any
other Shareholder or of the Board; provided, however, that each Indirect 5%
Investor shall be subject to all applicable requirements, conditions and
other terms of the Bid Regulations applicable to Indirect Investors, if
any.
4.11 Designation of Agent
In the event of the Transfers by WorldTel and any investment fund referred
to in Clause 4.5 or if WorldTel elects to assign any of its Rights
hereunder to one or more of its direct
Page 52
shareholders in accordance with the terms hereof, WorldTel, such WorldTel
shareholders and such investors in such investment fund shall designate a
common agent for the exercise of any Rights by such Persons or by other
Shareholders and for purposes of any notices, documents and materials to be
sent to Shareholders under this Agreement.
5. EVENTS OF DEFAULT, CHANGES OF CONTROL AND CALL OPTION
5.1 Events of Default
5.1.1 Definition of Event of Default
The occurrence of any of the following events (each, an "Event of
Default") by or with respect to any Shareholder shall constitute a
default hereunder by such Shareholder (any such defaulting Shareholder
being referred to as a "Defaulting Shareholder"):
a) a material breach by a Shareholder of Clause 16.1 which breach
has not been remedied after a delay of twenty (20) Business Days
following the giving by any Shareholder of a written notice of
the said breach;
b) a Shareholder has become (i) a Non-Guaranteeing Shareholder and
has failed to pay any Payment Amount when due or (ii) a
Non-Providing Shareholder and has failed to reimburse any amount
under Clause 10.3.8 when due;
c) a Shareholder has become a Non-Contributing Shareholder and has
failed to pay any amounts due to the Corporation (including the
penalty provided in Clause 3.4.4) in connection with a
Non-Funding Event;
d) subject to Clause 5.1.2, a change of Control of a Shareholder;
and
e) (i) the voluntary or the involuntary filing of a petition or
proceeding in bankruptcy or insolvency by a Shareholder, where
involuntary petitions or proceedings in bankruptcy or insolvency
are not dismissed within sixty (60) Days of the date of their
filing; or (ii) the making of any arrangement by the Shareholder
with all or substantially all of its creditors.
Page 53
5.1.2 Definition of Change of Control and Covenant to Notify of a Change of
Control
a) A change of Control shall be deemed to have occurred with respect
to a Shareholder if a Third Party acquires directly or indirectly
a Controlling Interest of the subject Shareholder, provided that,
for greater certainty:
i) a "change of Control" shall not be deemed to occur upon a
public offering of equity securities of a Shareholder where,
immediately upon consummation of such public offering, no
Person (or group of Persons acting in concert) possesses
Control of such Shareholder other than the Persons that
previously Controlled such Shareholder;
ii) a "change of Control" shall not be deemed to occur in the
event of any amalgamation, merger, arrangement or other
reorganization of a Shareholder with an Affiliate or any
continuance of any Shareholder under the laws of another
jurisdiction;
iii) following a Transfer of Shares by WorldTel upon its
liquidation under Clause 4.5, there shall be deemed to be a
"change of Control" with respect to each Shareholder who is
a former shareholder of WorldTel if any Person (or group of
Persons acting in concert, other than the shareholders of
WorldTel identified in Schedule "K") acquires more than
fifty per cent (50%) of the Voting Shares held collectively
by such Shareholders;
iv) a "change of Control" shall be deemed to have occurred if,
at any date, there had been no Person (or group of Persons
or entities acting in concert) possessing a Controlling
Interest of a Shareholder and, thereafter, an event occurs
resulting in a Third Party (or group of Persons acting in
concert of
Page 54
which at least one Person is a Third Party) acquiring a
Controlling Interest in such Shareholder or, with respect to
WorldTel, a Third Party (or group of Persons acting in
concert of which at least one Person is a Third Party) other
than i) the shareholders of WorldTel identified in Schedule
"K" or ii) any Third Party who becomes a shareholder of
WorldTel that has assigned to those shareholders of WorldTel
identified in Schedule "K" the effective control and
direction over its shares of WorldTel, acquiring a
Controlling Interest in WorldTel;
v) a "change of Control" shall be deemed to have occurred in
respect of Holdco if Foreign Holders acquire, directly or
indirectly, any Shares in Holdco which would result in a
violation of foreign ownership restrictions applicable to
the Corporation; and
vi) a "change of Control" shall be deemed to occur if during the
Standstill Period i) any one or more of the first four
individuals identified in Schedule "K" (i.e. in items i) to
iv)) as shareholders of Holdco no longer holds of record and
beneficially, either directly or indirectly, at least 10% of
all the outstanding shares of Holdco or ii) all such
individuals no longer hold of record and beneficially,
either directly or indirectly, at least 50.1% of all the
outstanding shares of Holdco in the aggregate.
For further clarity, the current shareholders of Holdco listed in
Schedule "K" shall be allowed to Transfer all of their shares
which they currently own in Holdco to a newly-created Mexican
corporation owned and controlled by these shareholders, without
the previous approval of BCI and/or WorldTel. If this Transfer is
to take place, it will not be deemed a "change of Control".
b) Each of the Shareholders hereby covenant and agree with each of
the other Shareholders and the Corporation to promptly deliver,
upon the occurrence of a change of Control of such Shareholder or
of such Shareholder's Controlling Persons, a written notice
specifying the details of such change of Control to the Corporate
Page 55
Secretary (who shall promptly send a copy thereof to each of the
other Shareholders).
c) WorldTel further covenants in favour of each Shareholder and the
Corporation to promptly deliver upon any change in its
shareholdings (i.e. transfers of shares or the addition of new
shareholders) a written notice specifying the details of such
change to the Corporate Secretary (who shall promptly send a copy
thereof to each of the other Shareholders).
5.2 Call Option
5.2.1 Upon the occurrence of an Event of Default: (i) the Shareholders who
are not in Default (the "Non-Defaulting Shareholders") shall have the
irrevocable right and option (the "Call Option") to purchase from the
Defaulting Shareholder and the Defaulting Shareholder shall be
required to sell, transfer and assign to the Non-Defaulting
Shareholders all of the Shares held by the Defaulting Shareholder that
are fully paid following the offset procedure described in Clause
3.4.1 (the "Call Shares") in accordance with the terms of this Clause
5.2; and (ii) all of the rights (but not the obligations) of the
Defaulting Shareholder under this Agreement and By-laws which are not
mandatorily granted to a shareholder under Mexican law shall
immediately cease including, without limitation, the right to appoint
members to the Board of Directors of the Corporation and the
Defaulting Shareholder shall forthwith procure that all such Directors
are removed from office and that such Directors, when offering their
resignations to the Board of Directors, shall incorporate in their
resignations an acknowledgement that they have no claims for loss of
office or otherwise. All economic rights (such as the right to receive
redemption proceeds and dividends) of the Defaulting Shareholder and
contractual rights (such as the Pre-emptive Rights, Rights of First
Offer and Tag-Along Rights) shall be deemed to have accrued to the
Non-Defaulting Shareholders retroactively to the date of the Event of
Default upon the final and definitive exercise of the Call Option or
an arbitration award confirming the exercise of the Call Option and
any amount payable pursuant to those economic rights shall be kept by
the Corporation pending such final determination, and the Corporation
shall be required to abstain from paying any amounts pursuant to such
economic rights pending such final determination.
Page 56
5.2.2 The Non-Defaulting Shareholders shall have the right and option to
purchase Call Shares: (i) in proportion to the number of Shares of
such Class respectively held by such Non-Defaulting Shareholders
calculated as a proportion of all issued and outstanding Shares of the
particular Class less the Defaulting Shareholder's Shares of such
Class, adjusted to give pro forma effect to the subscription pursuant
to the BCI Option, and if none of the Non-Defaulting Shareholders hold
any Shares of a Class of the Call Shares, in proportion to the number
of Equity Shares held by such Non-Defaulting Shareholders, adjusted to
give pro forma effect to the subscription pursuant to the BCI Option
(the "Call Proportionate Entitlement") or (ii) a number of Call Shares
which is less than its Call Proportionate Entitlement; and (iii) any
of the Defaulting Shareholder's Shares of any Class, whether or not a
Non-Defaulting Shareholder holds Shares of that Class, in excess of
such Call Proportionate Entitlement which a Non-Defaulting Shareholder
desires to purchase (the "Excess Call Shares") along with its Call
Proportionate Entitlement provided that, solely for the purposes of
this provision, until such time as the Allocable Shares are allocated
between WorldTel and Holdco pursuant to the Trust Agreement, the
Allocable Shares shall be deemed to be held (i) by Holdco, if (x)
Holdco is a Non-Defaulting Shareholder and (y) Holdco elects to
exercise its Call Option in full with respect to the percentage
interest represented by such Allocable Shares, (ii) by WorldTel, if
(xx) either one of the conditions set forth in (x) or (y) above is not
met, and (yy) WorldTel is a Non-Defaulting Shareholder, or (iii) if
neither (i) nor (ii) applies, by the Corporation (in effect, as if the
Allocable Shares were not outstanding); and provided, further, that
upon each exercise of a Call Option which requires the calculation of
a Shareholder's Call Proportionate Entitlement (a) unless it is a
Defaulting Shareholder, each of Holdco and WorldTel shall indicate, in
its Purchase Notice for the exercise of its Call Option in respect of
such Call Proportionate Entitlement, its preferred position (i) if it
were deemed to hold the Allocable Shares, (ii) if the other
Shareholder (excluding BCI) were deemed to hold the Allocable Shares,
and (iii) if the Allocable Shares were deemed to belong
Page 57
to the Corporation; (b) unless it is a Defaulting Shareholder, BCI
shall indicate, in its Purchase Notice required for the exercise of
its Call Option in respect of such Call Proportionate Entitlement, its
preferred position (i) if either Holdco or WorldTel were deemed to
hold the Allocable Shares, and (ii) if the Allocable Shares were
deemed to belong to the Corporation; and (c) with respect to each
Shareholder, the preferred position indicated in its Purchase Notice
that is consistent with the actual deemed status of the Allocable
Shares shall be the one used and shall be binding upon such
Shareholder.
In the event that either Holdco or WorldTel is a Defaulting
Shareholder, the Non-Defaulting Shareholders shall have the right and
option to purchase the Allocable Shares that shall thereafter be
distributed by the Trustee to any such Defaulting Shareholder pursuant
to the Trust Agreement (the "Call Allocable Shares"), and the
Defaulting Shareholder shall be required to sell, transfer and assign
to the Non-Defaulting Shareholders, at the time of such distribution,
all of its Call Allocable Shares in accordance with the terms of this
Clause 5.2. The Fair Market Value of the Call Allocable Shares shall
be established at the time of the distribution of the Allocable Shares
to WorldTel and/or Holdco.
5.2.3 The purchase price for the Call Shares shall be equal to ninety per
cent (90%) of the Fair Market Value of the Call Shares in the case of
an Event of Default described in Clause 5.1.1 (a); the purchase price
for the Call Shares shall be seventy-five per cent (75%) of the Fair
Market Value of the Call Shares in the case of an Event of Default
described in Clauses 5.1.1 (b) and (c); and the purchase price for the
Call Shares shall be the Fair Market Value of the Call Shares in the
case of an Event of Default described in Clauses 5.1.1 (d) and (e).
5.2.4 Upon the occurrence of an Event of Default and at the request of any
Shareholder, the Corporate Secretary shall cause the Corporation to
engage two (2) independent and internationally recognised investment
banking firms (the "Experts") provided the Experts first confirm that
they have no conflict of interest with the Defaulting Shareholder. The
Experts shall be directed to determine the fair market value per Call
Share, considering the Corporation as a going concern, for a sale
between a willing vendor and a willing purchaser without taking into
account any minority discount or control premium and without
differentiating between Voting or non-Voting Shares, the Call Shares
to be evaluated as a whole (the "Fair Market Value") within sixty (60)
Days following their acceptance of the engagement. The Experts shall
deliver their written determination of the Fair Market Value to the
Corporate Secretary who shall transmit a copy of same within the next
five (5) Days
Page 58
simultaneously to each Shareholder. If the Fair Market Values of the
Call Shares so determined by such Experts are within ten per cent
(10%) of each other, then the Fair Market Value of the Call Shares
will be the arithmetic average of both. If the Fair Market Values of
the Call Shares so determined by such Experts are more than ten per
cent (10%) apart from each other, then both of the Experts so
appointed shall nominate a third Expert, and the Fair Market Value of
the Call Shares shall be the arithmetic average of the two closest
values amongst the three appraisals. The cost of the determination of
Fair Market Value by the Experts shall be borne by the Defaulting
Shareholder.
5.2.5 The Shareholders hereby irrevocably appoint the Corporate Secretary
as their special attorney-in-fact for the sole purpose of acting on
their behalf for executing all necessary documents and taking all
other necessary steps on behalf of such Shareholders in the event that
they become a Defaulting Shareholder to effect the sale of Call Shares
to the Non-Defaulting Shareholders.
5.2.6 All of the terms contained in Clause 4.4 above governing procedures
for Transfers of Shares by any Shareholder pursuant to the Rights of
First Offer above shall apply mutatis mutandis to all Call Options
under this Clause, provided, however, that:
a) the offer process described in Clause 4.4 shall be commenced, for
purposes of the Call Options, by a Selling Notice addressed and
delivered by the Corporate Secretary of the Corporation to each
Shareholder within thirty (30) Days after the expiry of the
delays set forth in Clause 5.2.4 and such Selling Notice shall
specify:
i) the identity of the Defaulting Shareholder;
ii) the subject Event of Default and the date of occurrence
thereof; and
iii) the Transfer price per Share as determined pursuant to
Clause 5.2.3; and
b) for purposes of this Clause, all references in said Clause 4.4 to
the Offered Shares, shall be deemed to be references to the Call
Shares.
5.2.7 If, after satisfying all claims for Excess Call Shares, there remain
unclaimed Call Shares, the Defaulting Shareholder and the Call Shares
which are then held
Page 59
by it as well as the Allocable Shares shall continue to be subject to
all of the terms and conditions of this Agreement.
5.2.8 Notwithstanding anything to the contrary expressed or implied in this
Clause 5.2, each Shareholder may, in its sole discretion, assign its
rights to acquire any Shares under this Clause to any of its
Affiliates or Relatives in accordance with Clause 4.5. In addition,
WorldTel may assign to any of its direct shareholders its right to
acquire the Call Shares. In all such cases, the Call Shares shall be
transferred to such Affiliates or Persons subject to Clauses 4.7 and
4.4.12 (which shall apply mutatis mutandis).
5.2.9 The Shareholders hereby acknowledge and agree that the provisions of
this Clause 5 shall be in addition to all other rights and remedies
which the Corporation or the Non-Defaulting Shareholders may have
under this Agreement or at law.
5.2.10 If BCI becomes a Defaulting Shareholder, the BCI Option shall be
triggered and the Optioned Interest shall be subject to the Call
Option as provided in this Clause 5.2.
5.2.11 With respect to the Defaulting Shareholders, the terms of this
Clause 5.2 shall survive the termination of this Agreement.
6. LEGAL BARS
6.1 If there are any legal bars under applicable Mexican law (including,
without limitation, limits of foreign ownership) against the acquisition by
any Shareholder who is not a citizen or resident of, or who is not
incorporated or organized under the laws of Mexico or who otherwise is
regarded as a foreign or non-Mexican investor under applicable Mexican
foreign investment laws (any such Shareholder, being referred to in this
Clause 6.1 as a "Foreign Holder") of any additional Shares pursuant to the
exercise of any rights granted under any provision of this Agreement (the
"Rights"), such Foreign Holder shall be entitled to invest at least to the
maximum extent permissible under Mexican law for foreign investment then in
force. If such Foreign Holder were to exceed such limits permissible under
Mexican law for foreign investment in the process of the exercise of any
Right, or otherwise be barred from acquiring Shares as a result of the
exercise of any Right, and such Foreign Holder does not obtain the
necessary permission or approval to acquire the Shares, such Foreign
Page 60
Holder shall be entitled, at its discretion, subject to necessary
Government Approvals, to assign such Rights to any Person designated by
such Foreign Holder who is not regarded as a non-Mexican or foreign
investor under applicable Mexican foreign investment laws, subject to BCI's
approval of such designated Persons that are Restricted Third Parties in
the manner provided for in Clause 4.4.12. Any such Foreign Holder shall
remain jointly and severally liable with the Person designated by it with
respect to its funding obligations under this Agreement. In the event of
the subscription or acquisition of at least ten per cent (10%) of the
Voting Shares by such Person, the Parties hereby undertake (i) to modify
the By-laws and this Agreement to ensure that this new Shareholder shall
have the right to appoint one Director (plus two (2) alternates) for each
ten per cent (10%) of Voting Shares that it holds with a corresponding
decrease in the number of Directors to be appointed by Holdco and (ii) to
make such other amendments to such documents as may be required to
adequately reflect the addition of this new Shareholder.
6.2 If a Shareholder attempts to exercise any Right under this Agreement (an
"Exercising Shareholder"), such Exercising Shareholder shall apply for
whatever Government Approvals as may be necessary for the exercise of such
Right and for the Corporation to retain the Existing Concession and the
Spectrum Concession, as expeditiously as may be practicable after giving
notice of its intention to exercise such Right and the Corporation shall
cooperate with the Exercising Shareholder. Any time or notice periods
specified in this Agreement shall be extended for such period of time to
accommodate such approval process. In the event that any such required
approvals for the issue, Pledge or Transfer of Shares to such Exercising
Shareholder is not granted or is otherwise prohibited by law or regulation,
the Exercising Shareholder shall be deemed, subject to the provisions of
Clause 6.1 above, not to have exercised such Rights, and the rights of all
of the Shareholder(s) shall remain as if the Exercising Shareholder had not
attempted to exercise such Rights under this Agreement.
7. BOARD OF DIRECTORS
7.1 Responsibilities
Subject to Clause 9, the Board of Directors shall have the responsibility,
power and authority to manage and supervise the business and affairs of the
Corporation in accordance with this Agreement, the By-laws and the Company
Act.
7.2 Number of Directors
Page 61
The initial Board of Directors shall be composed of nine (9) Directors.
Each Director shall be entitled to two (2) alternates. Each person to serve
as a Director shall be nominated in the manner described in Clause 7.3.
7.3 Nomination of Directors
7.3.1 The Directors shall be elected at Special Meetings of Shareholders of
the Corporation, with five (5) Directors (the "Series A Directors")
and up to two (2) alternates for each such Series A Director elected
at a Special Meeting of the holders of Series A Shares (the "Series A
Shareholders"); two (2) Directors (the "Series B Directors") and up to
two (2) alternates for each such Series B Director elected at a
Special Meeting of the holders of Series B Shares (the "Series B
Shareholders"); and two (2) Directors (the "Series C Directors") and
up to two (2) alternates for each such Series C Director elected at a
Special Meeting of the holders of Series C Shares (the "Series C
Shareholders"); provided, however, that the Series A Directors, the
Series B Directors and the Series C Directors and their alternates may
be elected at an Ordinary Meeting if the Shareholders agree to elect
the Directors and their alternates pursuant to a list presented
separately by the Series A Shareholders, the Series B Shareholders and
the Series C Shareholders at an Ordinary Meeting of Shareholders. All
references in the By-laws to Series A Directors, Series B Directors
and Series C Directors shall be interpreted consistently with the
intent and purpose of this Clause 7.
7.3.2 Notwithstanding the foregoing, the Parties agree that the composition
of the Board of Directors shall be modified in the event that, as a
result of the issuance or Transfer of Shares to a Shareholder pursuant
to the exercise of any Rights, or the issuance or Transfer of Shares
to a Third Party, any of the Shareholders' percentage shareholdings of
Voting Shares is different than the initial percentages at the Date of
Closing after the Initial Equity Contributions, in which event the
Shareholders shall be entitled to elect the number of Directors to the
Board of Directors as set forth in the following table and the number
of Directors may be increased to ten (10) Directors where necessary to
give effect to same, with each Director continuing to be entitled to
two (2) alternates. Notwithstanding the foregoing, to the extent that
an outstanding Series of Voting Shares represents between twenty per
cent (20%) to less than thirty per cent (30%) of the outstanding
Voting Shares, the holders of Shares of
Page 62
such Series shall continue to be entitled to elect two (2) Directors
(and up to two (2) alternates) at a Special Meeting of the holders of
such Series of Shares or at an Ordinary Meeting if the Shareholders
agree to elect the Directors and their alternates pursuant to a list
presented separately by the holders of such Series of Shares. The
other Shareholders however, shall elect the Directors in accordance
with the following table:
================================================================================
VOTING SHARES HELD NUMBER OF DIRECTORS
================================================================================
100% 10
--------------------------------------------------------------------------------
90% or more 9
--------------------------------------------------------------------------------
80% or more 8
--------------------------------------------------------------------------------
70% or more 7
--------------------------------------------------------------------------------
60% or more 6
--------------------------------------------------------------------------------
50% or more 5
--------------------------------------------------------------------------------
40% or more 4
--------------------------------------------------------------------------------
30% or more 3
--------------------------------------------------------------------------------
20% or more 2
--------------------------------------------------------------------------------
10% or more 1
================================================================================
7.4 Removal of Directors
Each Director shall remain in office indefinitely until the earlier of his
resignation, removal, incapacity, or death; provided, however, that in the
case of resignation or removal, unless otherwise consented to in writing by
all of the Shareholders, such Director shall remain in office until his
successor is designated and has accepted his appointment. Any Director may
resign at any time upon written notice to the Chairman of the Board. The
Series A Shareholders shall have the exclusive right, without the approval
or consent of the Series B Shareholders, the Series C Shareholders or the
Corporation, and without any condition or restriction whatsoever, to
select, designate, appoint, remove or replace at any time any one or all of
the Series A Directors (or their
Page 63
alternates) by means of a resolution of a Special Meeting of the Series A
Shareholders, if necessary. The Series B Shareholders shall have the
exclusive right, without the approval or consent of the Series A
Shareholders, the Series C Shareholders or the Corporation, and without any
condition or restriction whatsoever, to select, designate, appoint, remove
or replace at any time any one or all of the Series B Directors (or their
alternates) by means of a resolution of a Special Meeting of the Series B
Shareholders, if necessary. The Series C Shareholders shall have the
exclusive right, without the approval or consent of the Series A
Shareholders, the Series B Shareholders or the Corporation, and without any
condition or restriction whatsoever, to select, designate, appoint, remove
or replace at any time any one or all of the Series C Directors (or their
alternates) by means of a resolution of a Special Meeting of the Series C
Shareholders, if necessary.
7.5 Chairman
For so long as Holdco holds more than fifty per cent (50%) of the Voting
Shares, Holdco shall have the right to appoint, with BCI's and WorldTel's
consent, not to be unreasonably withheld, the Chairman of the Board who
shall be one of Holdco's nominees to the Board of Directors and if Holdco
holds less than fifty per cent (50%) of the Voting Shares, the Chairman
shall be appointed by the Directors from amongst themselves. The Chairman
should be perceived by the investment, business and political communities
as having an outstanding reputation in both private and public affairs. The
Chairman of the Board will not have a tie-breaking vote.
7.6 Meetings of the Board
7.6.1 Notice of each meeting of the Board of Directors, together with a
written agenda for such meeting, shall be sent to all the Directors
and shall be given not less than thirty (30) Days before the date on
which the meeting is proposed to be held, and not less than three (3)
Business Days before any special or urgent Board meeting. Supporting
material (including text of proposed resolutions) shall be sent by
courier to each Director at least seven (7) Business Days in advance
of a Board meeting. The Directors which are not resident in Mexico
shall be additionally sent a copy of such documents by telecopier to
the telecopier number registered by them with the Corporation. The
notice will be issued, after reasonable attempts at consultation with
the other Directors in order to accommodate their calendar as far as
possible, by the Corporate Secretary or at the instance of any one (1)
Director. All notices, agenda, materials (including materials
submitted or otherwise circulated at Board Meetings) and minutes of
meetings of the Board of Directors shall be in English and to the
extent necessary, also in Spanish.
7.6.2 The meetings of the Board of Directors (or of the committees provided
for in Clause 7.9, as the case may be) will be held at the head office
of the Corporation or any place inside or outside Mexico as mutually
agreed by the Directors . The Board shall meet at least four (4) times
a year. All meetings of the Board of Directors may be attended in
person or by telephone conference call, video conference or similar
communications equipment whereby each Director participating in the
meeting can hear and be heard by all other Directors participating in
the meeting. Any one of the alternates will be allowed to attend the
relevant meeting.
Page 64
7.6.3 If the First Call Board Quorum or the First Call Committee Quorum is
not reached at any meeting of the Board of Directors (or any committee
thereof) duly convened for the first time in the manner set out in
Clause 7.6.1 (or as referred to in Clause 7.9.2 with respect to
committee meetings), such meeting shall be adjourned to a subsequent
date determined by the Chairman of the Board (or the committee, as the
case may be) and notice of such new meeting (with the same agenda as
for the Board meeting called on first notice) shall be provided
promptly as indicated in Clause 7.6.1 above (or as referred to in
Clause 7.9.2 with respect to committee meetings), provided that such
notice shall be given not less than seven (7) Business Days, and not
more than ten (10) Business Days, in advance of the new meeting. The
same rules will apply to a third and subsequent meeting of the Board
(or any committee thereof) if the quorum is not reached at the second
meeting or such other subsequent meeting. For greater certainty, no
action shall be taken at such second or subsequent Board or committee
meeting if such action did not appear as an item for discussion in the
agenda accompanying the first notice.
7.7 Quorum of the Board
7.7.1 Six (6) Directors shall constitute a quorum at any meeting of the
Board of Directors; provided that (except as otherwise expressly
permitted in Clause 7.7.2 with respect to a Second Call Board Meeting)
one (1) or more Series A Directors, one (1) or more Series B Directors
and one (1) or more Series C Directors (or their respective
alternates) are attending (a "First Call Board Quorum"). Any meeting
of the Board without such a First Call Board Quorum shall, subject to
Clause 7.7.2, be irregular and its proceedings void.
7.7.2 If a second meeting of the Board is called pursuant to Clause 7.6.3
(the "Second Call Board Meeting"), any four (4) Directors (or their
alternates) shall constitute a valid quorum (the "Second Call Board
Quorum") for such Second Call Board Meeting, and any such meeting
without such a Second Call Board Quorum shall be irregular and its
proceedings void.
7.7.3 If a third or other subsequent meetings are required because the
Second Call Board Quorum is not reached, the quorum at such subsequent
meetings shall remain the Second Call Board Quorum.
Page 65
7.8 Expenses
Each Director or, if such Director is not attending the Board or committee
meeting in person, one alternate Director to such Director, will be
reimbursed for his out-of-pocket expenses in attending Board or committee
meetings. Reimbursement for Directors residing outside the city where the
meeting is held will include expenses in the city where the meeting is held
and business class air fare to and from such city. Such reimbursements
shall not exceed the limits authorized under Mexican law.
7.9 Committees of the Board
7.9.1 Subject to Clauses 7.9.4 and 7.10.2, the Board of Directors shall be
entitled to establish one or more advisory committees of the Board of
Directors, including an Audit Committee and Remuneration Committee
both of which shall be established as soon as practicable following
the Closing Date. Each such committee shall be composed of such number
of Directors as is determined by resolution of the Board and shall
include an equal number of Directors nominated by each of the Series A
Shareholders, Series B Shareholders and Series C Shareholders. The
Chairman of the Board and the Chief Executive Officer shall be
permanent invitees of each such committee. Each committee shall have
such advisory authority and responsibilities as the Board may
establish by resolution in favour of such committee. All decisions of
each such committee duly adopted by a majority of the Directors who
are members of a subject committee and at a meeting at which a quorum
is present shall be noted and presented for approval by the Board.
7.9.2 Each committee shall, consistent with the By-laws, fix its own
procedures to be followed at meetings and the procedure for calling
meetings; provided that subject to Clause 7.9.3 at least two-thirds of
the Directors that are members of a committee of the Board shall
constitute a quorum at any duly called meeting of such committee;
provided further that at least one Director nominated by the Series A
Shareholders, Series B Shareholders and Series C Shareholders (or
their respective alternates) who is a member of such committee is
attending (the "First Call Committee Quorum"); and any meeting of any
committee without such a First Call Committee Quorum shall subject to
Clause 7.9.3, be irregular and its proceedings void.
7.9.3 If a second meeting of a Committee is called pursuant to Clause
7.6.3, two-thirds of the Directors that are members of a committee (or
their respective alternates) shall constitute a valid quorum for such
meeting.
Page 66
7.9.4 The By-laws shall provide that the Board shall delegate to the Audit
Committee the final responsibility to approve all contracts or
transactions (other than any interconnect agreements) including any
loans, investments or advances, between the Corporation and any
Shareholder, Director, Officer or employee of the Corporation or any
Relative, or any entity in which any of the foregoing has a
substantial interest (with the understanding that a ten per cent (10%)
voting or equity investment will be presumed substantial without
prejudice to any determination as to whether a smaller investment or a
different interest is or is not substantial), or any Controlling
Persons of any of the foregoing, other than in connection with
policies and plans approved in accordance with the terms of Clauses
7.10.2 (j) and 7.10.2 (k) (a "Related Party Transaction"). Resolutions
of the Audit Committee dealing with the approval of Related Party
Transactions shall be adopted by the affirmative vote of the majority
of the members of the Audit Committee, provided that such majority
includes at least one (1) Director appointed by the Shareholders of
each Series of Voting Shares which are not connected directly to the
Related Party Transaction.
7.10 Action by the Board and Rights of Affirmative Vote of Certain Directors
7.10.1 Subject to Clause 9.2 of this Agreement:
a) in Board meetings convened by a first notice, Board resolutions
shall be adopted by the affirmative vote of the majority of the
Directors attending the meeting, provided however that with
respect to the matters listed under Clause 7.10.3 below (the
"Super Majority Matters") such majority includes at least one (1)
Director appointed by each of the Series A Shareholders, Series B
Shareholders and Series C Shareholders, and provided further,
that with respect to the matters listed under Clause 7.10.2 below
(the "Qualified Majority Matters"), such majority includes at
least the affirmative vote of one (1) Director appointed by
either the Series B Shareholders or the Series C Shareholders;
and
b) in the event a Second Call Board Meeting is convened by reason of
the failure to reach the First Call Board Quorum , then the
affirmative vote of a majority of the Directors attending the
meeting shall be required to
Page 67
adopt any resolution, provided however that with respect to the
Super Majority Matters, such majority includes at least (i) the
affirmative vote of one (1) Series A Director, one (1) Series B
Director and one (1) Series C Director in attendance at the
Second Call Board Meeting and (ii) the affirmative vote, to the
extent not already counted in i) above, of one (1) Series A
Director, one (1) Series B Director and one (1) Series C
Director, to the extent that any one such Director was in
attendance at the meeting that the first notice attempted to
convene. With respect to the Qualified Majority Matters, such
majority shall include at least the affirmative vote of at least
one (1) Director appointed by either the Series B Shareholders or
the Series C Shareholders.
7.10.2 The Qualified Majority Matters shall be:
a) any decision on the application or utilisation of any
special reserves, provisions or retentions not in the
ordinary course of business and not contemplated in the most
recently approved Annual Operating Plan and Budget, and the
application or utilisation of same (except for mandatory
reserves established by law or specifically set out in the
By-laws);
b) the initiation or settlement of any litigation or
arbitration proceedings to which the Corporation is a party
in an amount in excess of US $1,000,000;
c) the revision of general policies regarding the appointment
and replacement of agents, selling agents and distributors,
and the establishment of general guidelines regarding the
terms and conditions of important contracts therewith;
d) the implementation, change and termination of research and
development programs;
e) any transaction not in the ordinary course of business in
excess of $5,000,000 which is not specifically addressed by
other Clauses of this Agreement dealing with rights of
affirmative vote including Clauses 7.10.2 h), 7.10.3 c),
7.10.3 h), 7.10.3 m) and 7.10.3 n);
f) the adoption or deletion of trademarks, trade names or other
symbols to identify the Corporation, its Subsidiaries or the
wares of the Corporation or its Subsidiaries;
Page 68
g) approval of the audited financial statements of the
Corporation and any report or statement accompanying such
financial statements for submission to the Shareholders;
h) the entering into, making any material amendment to, or
terminating any contract that provides for aggregate
payments by the Corporation in excess of $5,000,000 which is
not contemplated in the most recently approved Annual
Operating Plan and Budget;
i) establishment of a schedule of authorities which shall set
forth, among other things, the delegation of powers to
management as well as general and special powers of attorney
and signing authority of the Chairman of the Board, the
Chief Executive Officer and other Officers, including
authority to sign, on the Corporation's behalf, cheques and
contracts;
j) the adoption and revision of any general policy or plan
regarding employee salaries, benefits and compensation
(including any employee stock option plan and plan for loans
and advances to employees);
k) the Corporation's compensation policy and remuneration of
executive Officers;
l) the establishment of advisory committees of the Board, and
the advisory authority or discretion of any such committees;
m) the establishment of the Corporation's debt to equity ratio
for financing purposes unless established in the most
recently approved Annual Operating Plan and Budget; and
n) the removal of any Officer except in respect of the Chief
Executive Officer whose removal shall be exclusively
determined in accordance with Clause 8.2.
7.10.3 The Super Majority Matters shall be:
a) the determination of and any material change to the Corporation's
accounting or reporting practices and standards other than as
required by law or GAAP;
b) (i) the Initial Business Plan and any Business Plans and/or
revised Business Plans of the Corporation in accordance with
Clause 10.4; and (ii) any Annual
Page 69
Operating Plan and Budget in accordance with Clause 10.4.3;
c) the imposition or creation of any Pledge (other than those
created by law) on any assets of the Corporation (tangible or
intangible) other than such Pledges as are required by the
express terms of the Licenses awarded to the Corporation and
those granted in the ordinary course of business or those granted
in connection with authorised capital expenditures under the most
recently approved Annual Operating Plan and Budget;
d) the entering into by the Corporation of joint ventures, the
creation or increase of participation in any Subsidiary of the
Corporation (it being understood that corresponding governance
arrangements will be put in place with respect to any such
Subsidiary having the same effect, and giving the Shareholders,
directly or indirectly, the same rights as those provided herein
with respect to the Corporation), joint venture or other business
interest, or the participation (including acquisition of equity
or debt securities or other interests) by the Corporation in any
other Persons or any other businesses and the offer of shares in
the capital of a Subsidiary to any Third Party, except if the
specific terms of participation in any new Person or business or
such offer has been approved in the most recently approved Annual
Operating Plan and Budget and provided that this Clause shall not
apply to the acquisition of short-term investment grade
securities for cash management purposes;
e) any Transfer or the grant, amendment or termination of any
license or other right in respect of, any technology, copyright,
patent, trademark, industrial design or other intellectual
property of the Corporation subject to Clause 7.10.2 f); f) the
parameters of the Bid strategy for the Spectrum Concession,
including the Auction Business Plan, or the parameters of any
other bid strategy for a telecommunications license or concession
title (collectively "Other Bids"), or any change in the Other
Bids strategy ;
g) the Transfer, amendment or surrender of the Licenses, or any
other telecommunications license or concession awarded to the
Corporation;
h) any capital expenditures (including acquisitions of leases or
costs associated with acquisitions of
Page 70
subscribers and the selection of the supplier of major equipment)
and capital dispositions (including leasing) by the Corporation
exceeding by five per cent (5%) and at least $2,000,000 the
amount budgeted for such purpose in the most recently approved
Annual Operating Plan and Budget;
i) the cancellation of any existing product or service of the
Corporation which may affect the Licenses, or any other license
or concession granted by the Government to the Corporation;
j) the appointment of, and any subsequent change in, the
Corporation's accountants, Auditors or bankers;
k) the transfer of surplus funds to the general reserves of the
Corporation;
l) the financing policy and financing requirements of the
Corporation in accordance with Clause 10.3.1;
m) the incurring, extending or amending of any Indebtedness, by the
Corporation, exceeding by five per cent (5%) and at least
$5,000,000 in the aggregate what is contemplated in the most
recently approved Annual Operating Plan and Budget, in a
transaction or in a series of transactions during any rolling
twelve (12) month period or if the maximum debt/equity ratio
contemplated in the most recently approved Annual Operating Plan
and Budget is exceeded by said transactions;
n) Transferring or parting with control of any interest in all or
any material part of the business, property or assets (tangible
or intangible) of the Corporation (whether by a single
transaction or a series of transactions), or contracting to do so
(including the termination of any participation in, or wind-up
of, a Subsidiary, joint venture or other business interest) or
acquiring or contracting to acquire any business, property or
assets (tangible or intangible) or any interest therein which
would, following such acquisition constitute a material part of
the business, property or assets of the Corporation (and for the
purposes of this Clause 7.10.3 n), any such business, property or
assets accounting for, or which would following such acquisition
by the Corporation account for $10,000,000, shall be deemed
material); and
Page 71
o) the designation of foreign markets in which the products or
services of the Corporation will be offered or the establishment
of any representative offices by the Corporation.
7.10.4 A resolution in writing (circulated together with an agenda and an
explanatory statement setting out in reasonable detail the rationale
for proposing the resolution) signed by all of the Directors shall be
valid and effectual as if it has been a resolution passed at a meeting
of the Board of Directors duly convened and held. Any such resolution
may be contained in a single document or may consist of several
documents all in like form. For the purpose of this paragraph, "in
writing" and "signed" include signature by telecopier, provided that
an original resolution signed by all Directors, whether or not in
counterparts, follows. The Directors shall procure that the original
signed resolutions shall promptly be forwarded to the Corporation by
the respective signatories for its records.
7.11 Standard of Care
7.11.1 Any Director in the performance of his duties shall be fully
protected in relying in good faith on information, opinions, reports,
or statements (including financial statements, books of account and
other financial data) if prepared or presented by (i) one or more
officers or employees of the Corporation, or (ii) legal counsel,
public accountants, or other persons holding themselves out as having
professional or expert competence and acting on behalf of the
Corporation.
7.11.2 No Director shall be liable to the Corporation or any Shareholder
for monetary damages for breach of fiduciary duty in his capacity as
Director, except for liability (i) for any breach of such Director's
duty of loyalty to the Shareholder that nominated such Director, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or an intentional violation of law, or (iii) for any
transaction from which such Director derived an improper personal
benefit. Any Director who is deemed to be an interested Director must
refrain from voting in any decision of the Board or Committee of the
Board in which he is an interested Director. An interested Director
for purposes of this Clause 7.11.2 shall be any Director which either
himself, a Relative of such Director in the direct line (i.e. spouse,
parents and children), the Shareholder that nominated such Director,
any entity in which any of the foregoing has a substantial interest
(with the understanding that a ten per cent (10%) voting or equity
investment will be presumed substantial without prejudice to any
determination as to whether a
Page 72
smaller investment or a different interest is or is not substantial)
or a Controlling Person of such Shareholder will derive a benefit from
any decision to be taken by the Board or Committee of the Board.
8. OFFICERS
8.1 The Corporation shall have the following senior employees:
a) The Chief Executive Officer who shall be the senior officer of the
Corporation entrusted with the responsibilities of operating and
managing the Corporation, and shall be appointed by Holdco for so long
as Holdco holds more than fifty per cent (50%) of the Voting Shares
and has the right to elect the majority of the Board, failing which
the Chief Executive Officer shall be appointed by the Board;
b) The Chief Financial Officer, Vice-President Human Resources, and
Vice-President Law and Corporate Secretary all of whom shall be
appointed by Holdco for so long as Holdco holds more than fifty per
cent (50%) of the Voting Shares and is entitled to elect the majority
of the Board, failing which such Persons shall be appointed by the
Board; and
c) The Chief Operating Officer, the Vice-President Marketing and Sales,
the Vice-President Customer Services, the Vice-President Technology
Planning and Assistant Vice-President Finance (or any other position
which is the second most senior position in the finance department),
all of whom shall be appointed by BCI for so long as BCI and its
Affiliates hold at least ten per cent (10%) of the Equity Shares or as
long as the Technical Services Agreement is not terminated by the
Corporation pursuant to Clause 11.5 (a) or (b) thereof, failing which
such Persons shall be appointed by the Board.
8.2 The right to appoint the Persons identified in this Clause 8.1 a) and 8.1
b) by Holdco shall be subject to the approval of BCI, not to be
unreasonably withheld, and vice-versa in respect of the Persons identified
in Clause 8.1 c) to be appointed by BCI. However, all appointments of the
Persons identified in Clause 8.1 shall be for a minimum of two years and
shall be presented to the Board for confirmation, subject to Clause 8.3.
Notwithstanding Clause 7.10, the Chief Executive Officer can
Page 73
be removed by a resolution adopted at a Board meeting at which a quorum is
present, by the affirmative vote of all of the Series B Directors and
Series C Directors (or their respective alternates) if the standards and
the responsibilities set out in an employment contract between the Chief
Executive Officer and the Corporation are not met or fulfilled to the
satisfaction of the Board, as determined unanimously by the Series B
Directors and Series C Directors acting reasonably.
8.3 Each Shareholder agrees to cause its nominees on the Board of Directors to
vote in favour of the appointment of the Persons nominated in accordance
with this Agreement or their replacement in the event any such Person
resigns, dies or for any other reason vacates his position.
9. SHAREHOLDERS
9.1 Meetings of the Shareholders
9.1.1 Meetings of Shareholders shall constitute the ultimate authority of
the Corporation. Meetings of Shareholders may approve and ratify any
action or transaction of the Corporation and their resolutions shall
be executed by the person specifically appointed to that effect at
such meetings, or, if no appointment is made, by the Chairman of the
Board. Resolutions legally adopted at a meeting of Shareholders shall
be legal and binding on the Corporation, its Board and the
Shareholders.
9.1.2 The By-laws shall provide that the meetings of Shareholders shall be
either Ordinary, Extraordinary, or Special.
9.2 Extraordinary Meetings
"Extraordinary Meetings" of Shareholders shall be those called to discuss
any of the following matters in accordance with the Company Act:
a) extension of the duration of the Corporation;
b) dissolution of the Corporation prior to the duration stipulated in the
By-laws;
c) increases, reductions or other alterations of the authorized fixed
and/or variable capital of the Corporation;
d) amendment of the purpose of the Corporation;
Page 74
e) changing the nationality of the Corporation;
f) transforming the corporate nature or status of the Corporation;
g) the issuance of preferred, limited or non-voting stock;
h) amortization by the Corporation of its Shares or the issuance of
participating securities ("acciones de goce");
i) the issuance of bonds or debentures or other debt securities;
j) the adoption, amendment, modification, supplement or change of the
Charter or By-laws of the Corporation or the variation of any rights
attached to any Shares;
k) any creation (including the determination of the rights, privileges
and other attributes), issue, or allotment of Shares (subject to
Clause 14.2.7);
l) the repurchasing, redeeming (otherwise than in accordance with the
terms of redemption established at the time of issue of the relevant
share capital), reorganizing, consolidating, subdividing, cancelling,
reducing or converting (otherwise than in accordance with the terms of
conversion established at the time of issue of the relevant share
capital) any of the share capital of the Corporation or in any way
altering the rights attaching thereto;
m) any voluntary liquidation, termination, dissolution and/or winding-up
of the Corporation, and any amalgamation, merger, spin-off,
consolidation, reconstitution, continuation, voluntary insolvency
proceeding, scheme of arrangement, composition with creditors,
corporate reorganisation or restructuring of the Corporation;
n) without prejudice to any registration rights granted to the
Shareholder pursuant to Schedule "D", the listing of any Shares on a
stock or securities exchange or the conversion of the Corporation into
a public company for listing
Page 75
purposes and the appointment of an underwriter for the purposes of
providing the necessary advice to the Corporation;
o) any change in the legal form, domicile or registered, legal, or head
office of the Corporation, any change in the name or corporate
identity (including the logo) of the Corporation, or any change in the
objects and scope of the Business of the Corporation (including adding
or terminating any line of Business);
p) any change in the number, manner of nomination, election, removal,
replacement or filling of vacancies of Directors from that provided
for herein and any action which would derogate from the right to
nominate Directors;
q) any change in the fiscal year of the Corporation to the extent
permitted by Mexican law;
r) any act or omission that would cause the Corporation to no longer be
resident and managed and controlled in Mexico for tax purposes;
s) the granting of an option, warrant or other right for the purchase of
or subscription of Shares;
t) such other matters as may be required by law; and
u) the matters referred to in Clause 7.10.3 herein to the extent that
they are not resolved by resolution of the Board of Directors or are
raised at a Shareholders meeting.
For purposes of Clause 9.2 (k) and (l), the Shareholders adopting
resolutions in respect of items referred to therein may delegate to
the Board the determination of the terms and conditions upon which
same will take place.
Page 76
9.3 Qualified Majority Meetings
"Qualified Majority Meetings" of Shareholders shall be those Ordinary
Meetings called to resolve any Qualified Majority Matter to the extent it
is not resolved by resolution of the Board of Directors or is raised at a
Shareholders meeting.
9.4 Ordinary Meetings
"Ordinary Meetings" of Shareholders shall be the Qualified Majority
Meetings, and those called to resolve any other action or approve any other
transaction not specifically reserved by the By-laws to an Extraordinary
Meeting of Shareholders or to a Special Meeting of Shareholders. There
shall be at least one annual Ordinary Meeting to be held within four (4)
months from year-end.
9.5 Special Meetings
"Special Meetings" of Shareholders shall be those called to resolve or
approve any action or transaction of any specific Series of Shares voting
as a class, such as to address the appointment or removal of Directors,
Comisarios or liquidators on behalf of each Series of Shares. Such meetings
shall be held in the manner provided in this Agreement and the By-laws.
9.6 Quorum and Voting
9.6.1 The By-laws shall provide that holders of at least eighty per cent
(80%) of all of the issued and outstanding Voting Shares of the
Corporation shall constitute a quorum for any Extraordinary Meeting of
Shareholders. If such quorum is not reached at the outset of a
scheduled Extraordinary Meeting of Shareholders, the meeting shall be
adjourned and a second notice shall be given promptly by the Chairman
calling for a second Extraordinary Meeting of Shareholders not less
than seven (7) Business Days or more than ten (10) Business Days in
advance of the new meeting. The quorum at such second meeting shall be
met by the attendance of Shareholders holding at least sixty-five per
cent (65%) of all the issued and outstanding Voting Shares of the
Corporation.
9.6.2 The By-laws shall provide that holders of at least sixty-three per
cent (63%) of all of the issued and outstanding Voting Shares of the
Corporation shall constitute a quorum for any Qualified Majority
Meeting of Shareholders. If such quorum is not
Page 77
reached at the outset of a scheduled Qualified Majority Meeting of
Shareholders, the meeting shall be adjourned and a second notice shall
be given promptly by the Chairman calling for a second Qualified
Majority Meeting of Shareholders not less than seven (7) Business Days
or more than ten (10) Business Days in advance of the new meeting. The
quorum at such second meeting shall be the same as for the first
meeting.
9.6.3 The By-laws shall provide that holders of more than sixty-five per
cent (65%) of all of the issued and outstanding Voting Shares of the
Corporation shall constitute a quorum for any Ordinary Meeting of
Shareholders. If such quorum is not reached at the outset of a
scheduled Ordinary Meeting of Shareholders, such meeting shall be
adjourned and a second notice shall be given by the Chairman calling
for a second Ordinary Meeting of Shareholders not less than seven (7)
Business Days or more than ten (10) Business Days in advance of the
new meeting. The quorum at such second meeting shall be met by the
attendance of Shareholders holding at least forty per cent (40%) of
all the issued and outstanding Voting Shares of the Corporation.
9.6.4 The By-laws shall provide that holders of more than fifty per cent
(50%) of all of the issued and outstanding Shares of a specific Series
of Shares of the Corporation shall constitute a quorum for any Special
Meeting of Shareholders. If such quorum is not reached at the outset
of a scheduled Special Meeting of Shareholders, such meeting shall be
adjourned and a second notice shall be given by the Chairman calling
for a second meeting not less than seven (7) Business Days or more
than ten (10) Business Days in advance of the new meeting. The quorum
of such second meeting shall be the same as for the first meeting.
9.6.5 The By-laws shall provide, and the Shareholders hereby agree, that
every Shareholder shall be entitled to one (1) vote per Voting Share
at meetings of Shareholders, and that the following minimum voting
requirements are necessary to approve or resolve any action or
transaction at meetings of Shareholders:
a) when a quorum is present at an Extraordinary Meeting of
Shareholders, the affirmative vote of Shareholders representing
at least eighty per
Page 78
cent (80%) of all of the issued and outstanding Voting Shares,
whether in person or by proxy on first notice shall be required.
On second notice, the affirmative vote of Shareholders
representing at least fifty per cent (50%) of all the issued and
outstanding Voting Shares shall be required to adopt any
resolution, provided however that such percentage shall include
the affirmative vote of Shareholders holding a majority of the
votes attached to each Series of Voting Shares to the extent such
Shareholders are in attendance or represented at such second
meeting and the affirmative vote, to the extent not already
counted, of Shareholders holding a majority of each of the Series
of Voting Shares to the extent such Shareholders were in
attendance or represented at the first meeting that the first
notice attempted to convene.
b) When a quorum is present at a Qualified Majority Meeting called
by first, second or subsequent notice, the affirmative vote of
Shareholders representing at least sixty-three per cent (63%) of
all the issued and outstanding Voting Shares of the Corporation,
whether in person or by proxy, shall be required.
c) When a quorum is present at an Ordinary Meeting called by first
notice, the affirmative vote of Shareholders representing at
least sixty per cent (60%) of the Voting Shares of the
Corporation, whether in person or by proxy shall be required. For
a meeting called by a second notice, the affirmative vote of
Shareholders representing at least a majority of the Voting
Shares represented at the meeting shall be required to adopt any
resolution.
d) When a quorum is present at a Special Meeting of Shareholders, a
majority of the Shares represented by Shareholders present at
such Special Meeting of Shareholders, whether in person or by
proxy and whether on first, second or subsequent notice, shall be
required.
e) The By-laws shall provide, and the Shareholders hereby agree,
that the quorum and voting requirements for meetings of
Page 79
Shareholders held on third and subsequent notices shall remain
the same as for the second meeting.
9.7 Notice and Other Requirements
9.7.1 Shareholder meetings shall be convened at the instance of the Board
of Directors, any one of the Director or at the instance of any one of
the Shareholders owning at least five per cent (5%) of the Voting
Shares.
9.7.2 Shareholder meetings shall be held at the head office of the
Corporation or such other place as may be agreed by the Board, within
the corporate domicile.
9.7.3 All notices, agenda, draft resolutions and minutes of each
Shareholder meeting shall be in both the Spanish and English
languages. All other materials submitted at a Shareholder meeting or
otherwise circulated to the Shareholder meeting (including, without
limitation, the materials prepared by an Officer) shall be in the
English language only and also in the Spanish language, if necessary.
9.7.4 Shareholder meetings shall be held principally in the English
language. Each Shareholder shall have the right to have at its expense
a translator present with it at each such Shareholder meeting.
9.7.5 Notice of each Shareholder meeting, together with a written agenda
for such Shareholder meeting, shall be delivered to each Shareholder
not less than thirty (30) Days before the date on which the
Shareholder Meeting is proposed to be held. Supporting material
(including the text of proposed resolutions or consents) shall be sent
by courier to each Shareholder at least seven (7) Business Days in
advance of a Shareholder Meeting. Notice to any Foreign Shareholder
shall, at the earliest opportunity, be delivered additionally by
telecopier at numbers registered with the Corporation. In
extraordinary circumstances, the Shareholders will attend meetings of
the Shareholders within a shorter delay as contemplated by the By-laws
which shall be reasonable in the circumstances. In all cases, the
Foreign Shareholders shall be consulted prior to the calling of any
Shareholders' meeting with a view to ensuring their presence at all
such meetings. No notice shall be required if, at the time of the
Page 80
Shareholder meeting, all of the Shareholders entitled to vote are
represented, either in person or by proxy.
9.7.6 Any Shareholder may participate in a Shareholder meeting of the
Corporation by means of telephone conference call, video conference or
similar communications equipment whereby all persons participating in
the meeting can hear and be heard by each other and participation in a
meeting in this manner shall be deemed to constitute presence in
person at such meeting.
9.7.7 The Shareholders hereby agree that no registration or notarization of
Shareholders' resolutions in relation to increases of capital stock in
the variable portion shall take place. However, the Shareholders
hereby empower the Corporate Secretary to effect such registration or
notarization at any time following the adoption of Shareholders'
resolutions if the Corporate Secretary considers that such
registration or notarization is necessary.
9.7.8 Any notice for a second or subsequent Shareholders' meeting shall be
accompanied by the same agenda as for the Shareholders' meeting called
on first notice. For greater certainty, no action shall be taken at
such second or subsequent Shareholders' meeting if such action did not
appear as an item for discussion in the agenda accompanying the first
notice.
9.8 Resolutions in Writing
A resolution in writing (circulated together with an agenda and an
explanatory statement setting out in reasonable detail the rationale for
proposing the resolution) signed by all of the Shareholders shall be valid
and effectual as if it has been a resolution passed at a Shareholder
meeting duly convened and held. Any such resolution may be contained in a
single document or may consist of several documents all in like form. For
the purpose of this paragraph, "in writing" and "signed" include signature
by telecopier, provided that an original resolution signed by all
Shareholders, whether or not in counterparts, follows. The Shareholders
shall procure that the original signed resolutions shall promptly be
forwarded to the Corporation by the respective signatories for its records.
Page 81
10. FINANCIAL MATTERS
10.1 Financial Information
10.1.1 Any Director or any Shareholder holding the majority of any Series
of Voting Shares through their Director-nominees or their
representatives (employees, attorneys, accountants and other advisors,
subject to such representatives being directed to treat the
information described herein as confidential), shall have full right
and complete timely access to all information, records and premises of
the Corporation, including such financial, accounting, management,
taxation and other information and records of the Corporation and such
audit documents and papers of the Auditors or (unless same would
constitute a waiver of any applicable solicitor-client privilege)
records of their external counsel as they may reasonably require from
time to time, as well as the right to make copies of such information
and records, provided that any such Director or Shareholder
representative fully discloses the identity of the requesting
Shareholder and further provided that any such Director or Shareholder
shall ensure through appropriate safeguards that the information
described herein shall not be disclosed to any Persons who either
directly or through any Affiliate directly competes with the Business
or is an officer or director of such competitor. The Officers of the
Corporation shall furnish such access on demand to each such
Shareholder (and its representatives) or Director.
10.1.2 The Corporation will provide, at the Corporation's expense, to the
Shareholders referred to in Clause 10.1.1, a monthly report outlining
key financial data and, to the extent reasonably available, key
operating data with respect to the Corporation and shall also provide
on a timely basis such other information and assistance as requested
to:
a) conform financial statements to Canadian and U.S. generally
accepted accounting principles or any international accounting
standards, including information on the book value of assets and
inflation adjustments;
b) enable compliance with Canadian and U.S. requirements for
financial, securities law and tax reporting purposes;
Page 82
c) enable compliance on a quarterly basis with obligations in
relation to the preparation and announcement of financial results
and other financial information of Affiliates, tax and any
regulatory filings; and
d) enable on a monthly basis an appropriate accounting and
management reporting for the investment in the Corporation.
10.1.3 The Corporation shall also provide to each Shareholder referred to
in Clause 10.1.1 quarterly unaudited financial statements and to each
Shareholder, annual audited financial statements (including a
statement of change in financial position) within thirty (30) Days of
the end of each quarter with respect to quarterly financial statements
and ninety (90) Days of the end of each fiscal year with respect to
annual financial statements. The Parties hereby agree that a fiscal
year shall have a duration of twelve (12) consecutive months, that
will correspond to a calendar year, from January first (1st) until
December thirty-one (31).
10.1.4 The Corporation undertakes to have its financial statements prepared
in accordance with GAAP consistently applied from year to year.
10.1.5 The Board shall approve all financial statements to be submitted to
the Shareholders in accordance with Clause 7.10.2 prior to the
submission to the Shareholders.
10.1.6 The rights described in Clauses 10.1.1 and 10.1.2 shall be exercised
in a manner not to unduly harm the operations of the Corporation.
10.2 Profit and Distribution Policies
10.2.1 Subject to separating five per cent (5%) of earnings on an annual
basis until a reserve is created pursuant to Article 20 of the Company
Act and further subject to the projected requirements of the business
of the Corporation over the twelve (12) months following each proposed
distribution, including, but not limited to, investment and expansion
plans, the Shareholders agree that all funds reasonably available for
distribution to Shareholders shall be distributed by way of dividends
or such other means permitted by law in accordance with the dividend
and distribution
Page 83
policy established by the Shareholders, and the dividends or
distributions approved in accordance therewith by the Shareholders.
10.2.2 The Corporation will pay out dividends, as available upon the
adoption of accounts and declaration of dividends, within a period of
thirty (30) Days from such declaration. The annual Ordinary Meeting
for adoption of accounts shall be held not later than four (4) months
from the end of the fiscal year of the Corporation and in accordance
with the Company Act.
10.2.3 Dividends or distributions to BCI and WorldTel shall be
simultaneously paid with the dividends or distributions to Holdco and,
for greater certainty, the Equity Shares shall rank on a parity (i.e.
pari passu) with each other with respect to the payment of dividends
and with respect to the distribution of assets in the event of
liquidation, dissolution or winding-up of the Corporation. Dividends
or distributions may if and to the extent then permitted under the
laws of Mexico (at the option of BCI and WorldTel) be credited either
in Mexico or transferred abroad in a foreign currency account of such
Shareholders.
10.3 Funding Policy and Shareholder Guarantees
10.3.1 The financing policy and financing requirements of the Corporation
shall be from time to time established by the Board in accordance with
the provisions of this Agreement and the Initial Business Plan and any
revised Business Plan adopted by the Shareholders in accordance with
Clause 10.4. In all cases, the Corporation will first seek to obtain
favourable financing, such as suppliers' credits, loans from Mexican
governmental agencies, multilateral agencies, high yield bonds, or
other forms of non-recourse debt.
10.3.2 If the Corporation approves in accordance with Clause 7.10.3 a debt
financing on terms which require Shareholder Guarantees (the "Loan
Guarantees") to be provided to the lender(s) from one or more of the
Shareholders, then, subject to the unanimous approval of Shareholders,
each Shareholder shall provide a Loan Guarantee in an amount equal to
(the "Loan Guarantee Amount"): (i) the subject Shareholder's Relevant
Proportion (calculated with respect to WorldTel and Holdco as if the
Allocable Shares were held by WorldTel and Holdco pro rata to
Page 84
their respective holdings of all Shares, such proportion of holdings
of WorldTel and Holdco to be computed as if no Shares were held by BCI
and as if the Allocable Shares were not issued) of Equity Shares (the
"Proportionate Amount") multiplied by (ii) the aggregate principal
amount of all such Loan Guarantees so required by the lender(s).
10.3.3 If any financial institution or insurance company issuing any
guarantee required of the Corporation under the Bid Regulation, the
Existing Concession, or the Spectrum Concession require Shareholder
Guarantees (the "Bid Guarantees") to be provided to the issuer from
one or more Shareholders, then subject to unanimous approval by the
Shareholders, each Shareholder shall provide a Bid Guarantee in an
amount equal to (the "Bid Guarantee Amount"): (i) the subject
Shareholder's Proportionate Amount multiplied by (ii) the aggregate
principal amount of all such Bid Guarantees so required by the issuer.
10.3.4 If any Shareholder (a "Non-Guaranteeing Shareholder") fails to
provide any required Loan Guarantees or Bid Guarantees (collectively
the "Guarantees") approved in accordance with Clauses 10.3.2 or 10.3.3
within five (5) Days after a request therefor by the Corporate
Secretary, and any of the other Shareholders (each, a "Guarantor") has
provided a Guarantee in an amount greater than its Proportionate
Amount of the Loan Guarantee Amount or the Bid Guarantee Amount, as
the case may be (the "Excess Amount"), and any such Guarantor has made
any payment of the Excess Amount under its Guarantee, then the
Non-Guaranteeing Shareholders shall pay to such Guarantor within
fifteen (15) Days after the date such Guarantor has made any payment
under its Guarantee, an amount equal to (the "Payment Amount"): the
total amount of all payments of the Excess Amount made by a Guarantor
under such Guarantees plus daily interest on such amount at a rate per
annum, calculated in arrears and computed from the first day on which
said amount was paid by such Guarantor until paid in full, equal at
all times to the rate referred to in Clause 17.9, provided that the
total exposure of a Non-Guaranteeing Shareholder under this Clause
shall not exceed the amount it would have been required to pay if it
had provided its Guarantee as required initially plus its pro-rata
share of the interest as aforesaid.
Page 85
10.3.5 If any Payment Amount (or any portion thereof), including interest
thereon (as set forth above), is not repaid by the Non-Guaranteeing
Shareholder within the time period set forth above, then each
Guarantor may also exercise its Call Option with respect to the Shares
of the Non-Guaranteeing Shareholder, without prejudice to any of the
Guarantor's rights under this Agreement or at law.
10.3.6 In the event that one or more Shareholders or their Affiliates
provides Guarantees for the benefit of the Corporation in excess of
its Proportionate Amount and in the absence of a unanimous agreement
that all Shareholders provide the same (a "Unilateral Guarantee"), the
Shareholders that do not provide such Guarantee (the "Non-Providing
Shareholders") agree in good faith to cause the Corporation to
compensate the Shareholders or their Affiliates (as the case may be)
that provided the Guarantees (the "Providing Shareholders") with a
reasonable guarantee fee (adjusted to compensate for any withholding
taxes) acceptable to the Corporation and to be decided in accordance
with Clause 7.10.2.
10.3.7 Notwithstanding the above, in the event that Unilateral Guarantees
are provided in connection with the letters of credit or surety bonds
to be required from the Corporation to secure payment of any Spectrum
Concession acquired in the Auction ("Non-Payment LC") or to secure any
penalties imposed on the Corporation by COFETEL due to a breach of
rules of the Auction ("Auction Penalty LC"), the Corporation shall pay
to the Providing Shareholders pre-determined fees (the "LC Fees"). The
LC Fees payable to each Providing Shareholder shall be calculated by
applying a per annum interest rate equivalent to LIBOR plus seven
hundred (700) basis points compounded annually and payable in arrears
to the total amount of each Unilateral Guarantee provided by each
Providing Shareholder. The LC Fees will be computed over the period of
time from the date on which the Unilateral Guarantee is provided until
the earlier of (i) the date on which the relevant Unilateral Guarantee
is cancelled, (ii) the date on which the Providing Shareholder
receives the legally binding commitment to reimburse from the
Non-Providing Shareholder or Shareholders that reduces its total
financial exposure under the Unilateral Guarantee to an amount
equivalent to its Proportionate Amount of the Guarantee that gave rise
Page 86
to the LC Fees or (iii) the termination of this Agreement by the
Non-Providing Shareholders pursuant to Clause 14 of this Agreement.
The Corporation shall pay all LC Fees to each of the Providing
Shareholders no later than fifteen (15) Business Days following the
Second Subscription Date.
10.3.8 Only in connection with the Non-Payment LC, and upon fulfilment of
the Second Subscription Conditions, the Non-Providing Shareholders
agree to reimburse, within fifteen (15) Days from the date when the
Non-Payment LC is drawn for whatever reason, each of the Providing
Shareholders an amount up to the Non-Providing Shareholders'
Proportionate Amount multiplied by the lesser of i) the Unilateral
Guarantee provided by each Providing Shareholder or, ii) the total
loss suffered by such Providing Shareholder in the event that all or a
portion of the Non-Payment LC is drawn for whatever reason.
10.4 Business Plan and Bids
10.4.1 Prior to Closing, the Shareholders shall have agreed upon, and
adopted and initialled the Preliminary Business Plan. The Preliminary
Business Plan shall be replaced by the Initial Business Plan (in
accordance with the provisions of Clause 7.10.3 of this Agreement) to
take into account:
a) the issuance by the Government and the acceptance by the
Corporation of the terms and conditions of the Spectrum
Concession; and
b) the terms of equipment supply agreements and the financing
thereof proposed to be entered into by the Corporation.
10.4.2 The Initial Business Plan shall be adopted as soon as possible but
no later than four (4) months following the Second Subscription Date .
Subsequent Business Plans shall be adopted pursuant to Clause 7.10.3
for an upcoming five (5)-year period (or such other period agreed to
by the Board under Clause 7.10.3) within one (1) month but no more
than six (6) months prior to the end of the term of the Business Plan
then in effect, and revised annually subsequent to the adoption of an
Annual Operating Plan and Budget.
Page 87
10.4.3 No later than fifteen (15) Days prior to the commencement of each of
the Corporation's fiscal years, the Board shall prepare or cause to be
prepared an annual operating plan and budget (the "Annual Operating
Plan and Budget") for the next fiscal year and submit such Annual
Operating Plan and Budget to the Board for its approval in accordance
with Clause 7.10.3. It is anticipated that such Annual Operating Plan
and Budget shall be submitted to the Board for final approval no later
than December 15 of each fiscal year. Such Annual Operating Plan and
Budget shall always be prepared within the framework of the most
recently approved Business Plan then in effect.
10.4.4 If the Board approves a Business Plan or Annual Operating Plan and
Budget which involves a different marketing strategy or any other
changes or element, which have a significant negative impact on the
amount of EBITDA, the Shareholders undertake to enter into good faith
negotiations to reflect appropriate adjustments, if they mutually
agree to any, to the EBITDA calculation provided herein in Clause
1.26.
10.4.5 The Board shall also adopt in accordance with Clause 7.10.3 (f) a
Bid strategy, including a plan setting forth the maximum amount for
each region of Mexico to be submitted pursuant to the Bid (the
"Auction Business Plan"). Any proposed change to such Bid strategy and
Auction Business Plan shall be promptly notified to all Shareholders
by the Corporate Secretary but need not be approved by the Board in
accordance with Clause 7.10.3 (f).
10.4.6 Subject to Clause 7.10.3 (f), the Corporation undertakes to keep BCI
and WorldTel fully informed as to the status of the Auction, the
Point-to-Point Spectrum Auction or of any Other Bid and to involve and
seek recommendations from BCI regarding strategy and rel0ted network
design issues relating thereto.
10.5 Annual Tax Return The Corporation shall provide a copy of its annual tax
return within one month of it having been filed to each Shareholder
holding, together with its Affiliates, at least ten per cent (10%) of the
issued and outstanding Equity Shares of the Corporation.
10.6 The WorldTel Fee
Page 88
Subject to any mandatory requirements or provisions of applicable law, and
subject to WorldTel contributing its portion of the First Stage Equity
Contribution on the Second Subscription Date in accordance with Clause
3.3.2, the Corporation shall pay to WorldTel Limited, a fee equal to one
per cent (1%) of the First Stage Equity commitment of WorldTel, payable in
two equal instalments, the first on the Second Subscription Date and the
second on the date that is the six month anniversary thereof.
10.7 Statutory Auditors
Each Shareholder which holds, together with its Affiliates, a majority of
any Series of Voting Shares shall have the right to appoint a statutory
auditor (comisario) to act in accordance with Articles 164 through 171 of
the Company Act, unless otherwise agreed to by the Shareholders.
11. ROLE OF PARTIES, CONSULTING SERVICES AGREEMENTS
11.1 General Statement
The Corporation shall be an independent, commercially operating enterprise
and shall be managed upon commercial terms. Subject thereto and to Clauses
7.9.4 and 7.11.2, the Corporation may transact business with any of its
Shareholders on arms length commercial terms in accordance with the
corporate purpose of the Corporation and the terms hereof.
11.2 Consulting Services Agreements
The Corporation and BCI or an Affiliate of BCI shall, concurrently with the
signing of this Agreement, enter into the Consulting Services Agreements
setting forth, among other things, the provision by BCI (or an Affiliate of
BCI) of technical services upon the terms and conditions set out in the
Secondment Agreement and the Technical Services Agreement respectively.
12. CONFIDENTIALITY OF INFORMATION
12.1 Confidential Information
Each Shareholder (hereinafter referred to as a "Receiving Party") agrees to
hold in confidence and not to disclose to any Third Party (i) any and all
information relating to the business, affairs or the property of the other
Shareholder(s) or its/their Affiliates or of the Corporation (hereinafter
referred to as a "Disclosing Party") or their respective customers,
obtained directly or
Page 89
indirectly by a Receiving Party, whether orally or in writing and before or
after the date of this Agreement; (ii) all analyses, compilations, studies
and other documents and records prepared by a Receiving Party, its advisers
or its representatives that are generated from or reflect such information,
(iii) any technical, economic, business and market studies or strategies
and business plans prepared jointly by the Shareholders before or after the
date of this Agreement in relation to the Corporation and the transactions
contemplated hereby, and (iv) the terms of this Agreement or any other
facts relating to the transactions contemplated hereby (collectively, the
"Information"), except (1) if such Information is required by securities
laws or other applicable laws or court orders in Mexico or in any other
relevant jurisdiction to be disclosed by such Receiving Party or their
Affiliates, but only after written notice of such disclosure requirement
has been given by the Receiving Party or their Affiliates to the Disclosing
Party (it being understood and agreed that only one such notice shall be
required in respect of continuous disclosure requirements), (2) if such
Information is disclosed by the Receiving Party to its shareholders,
directors, officers, executives, employees, principals, investors and those
of its Affiliates, representatives, agents and legal, tax, finance and
other advisors (who may include lending institutions and insurance
companies) (collectively the "Representatives") who need to know such
information for the purpose of assisting the Receiving Party with the
evaluation, negotiation, planning, financing, establishment, implementation
and operation of the joint venture contemplated hereby, and for any other
financing of the Receiving Party to the extent necessary to obtain such
financing, but only if such Representatives are not employees, officers or
directors of any Person who, directly or indirectly through any Subsidiary,
or whose Controlling Persons compete with the Business in Mexico and after
such Representatives have been directed by the Receiving Party to treat
such Information in accordance with the terms of this Agreement, (3) with
the prior written consent of the Disclosing Party, which consent shall not
be unreasonably withheld or, (4) if such Information is disclosed by or on
behalf of the Receiving Party to a bona fide prospective purchaser of
Shares held by such Receiving Party, but only after such purchaser has
delivered to such Receiving Party a written undertaking to be bound by the
terms and conditions of this Clause 12. Subject to Clause 16, the Parties
acknowledge and agree that it is not intended that the provision of
Information should restrict the ability of any Shareholders to actively
pursue business opportunities or investments in the telecommunications
industry in Mexico whether before or following the termination of this
Agreement in respect of any Shareholders.
Page 90
12.2 Permitted Disclosures
The obligations set forth in Clauses 12.1 and 12.3 shall not apply to a
Receiving Party in respect of (i) Information that is or becomes generally
available to the public other than as a result of a disclosure directly or
indirectly by such Receiving Party in breach of this Agreement, or (ii)
Information that is or becomes generally available to such Receiving Party
on a non-confidential basis from a source other than the Disclosing Party,
provided that such source is not known by such Receiving Party to be bound
by any confidentiality obligation with respect to such Information, or
(iii) Information that the Receiving Party can demonstrate, was known to it
prior to the disclosure thereof by the Disclosing Party.
12.3 Further Covenants
12.3.1 Each Shareholder further agrees not to use, and to use its
reasonable efforts to procure that the Corporation not use, the
Information in a manner detrimental to the Disclosing Party.
12.3.2 Each Shareholder and the Corporation further agree to treat the
Information with the same degree of care as such Shareholder employs
for the protection of its own Information (and, in any event, with
reasonable care).
12.4 Survival of Confidentiality Obligations
Subject to the provisions of the Technical Services Agreement and the
Secondment Agreement between the Corporation and BCI, the obligations of
each Party contained in this Clause 12 shall continue for two (2) years
after the termination of this Agreement with respect to a subject Party.
13. EXPENSES
13.1 Internal Expenses
The Shareholders agree that they shall each be responsible for all of their
own expenses incurred in connection with their participation in the
Corporation, whether incurred prior or subsequent to the date of this
Agreement.
13.2 Pre-Auction Expenses
All reasonable expenses and costs incurred by the Corporation prior to the
Closing (but accrued since July 4th, 1997) in connection
Page 91
with the Closing, the Auction and the Point-to-Point Spectrum Auction
(including, without limitation, any placement, advisory, legal and
accounting fees and expenses), shall be paid by the Corporation. At
Closing, the Auditors of the Corporation shall give to each Shareholder a
report with supporting documentation and invoices of all expenses incurred
from July 1, 1997 until the Closing.
14. TERM AND TERMINATION
14.1 Term
This Agreement shall become effective upon execution by the Parties listed
on the signature pages hereto, and shall continue in full force and effect,
be binding upon and accrue to the benefit of the Shareholders for so long
as the Shareholders hold any Shares unless earlier terminated under this
Agreement or in accordance with the following provisions of this Clause 14.
14.2 Termination
14.2.1 Except as otherwise provided in this Agreement, the provisions of
this Agreement shall remain in full force and effect as between the
Shareholders until such time as any such Shareholder shall cease to
hold any Shares, in which case, such Shareholder shall procure the
resignation of its nominees from the Board in accordance with Clause
5.2.1 and this Agreement shall terminate in respect of such
Shareholder only.
14.2.2 This Agreement will automatically terminate; (i) if the Closing does
not take place by November 17, 1997; or (ii) if the First Subscription
Date has not occurred by June 30, 1998; or (iii) if by June 30, 1998
the Corporation has not been awarded the Spectrum or the Spectrum
Concession.
14.2.3 After the Initial Cash Contributions, each Shareholder shall also be
entitled to terminate this Agreement as to itself in accordance with
Clause 1.66, if the Second Subscription Conditions have not been met,
it being understood that the delivery of the documents referred to in
Clause 1.66 shall take place prior to August 31, 1998.
14.2.4 In the event of termination under Clause 14.2.3, and subject to
Clause 14.2.6, each Shareholder shall have a purchase option to
purchase the Shares of the
Page 92
terminating Shareholder(s) at a price per Share equivalent to the
price per Share paid by such terminating Shareholder(s) for such
Shares. The procedure for the exercise of such option shall be the
same as for the Termination Call Option . In the event that more than
one Shareholder exercises such a purchase option under this Clause
14.2.4, such purchases shall be made in the manner set out in Clause
5.2.
14.2.5 Upon the automatic termination of this Agreement pursuant to Clause
14.2.2 or by WorldTel in accordance with Clause 14.2.3, WorldTel shall
have the option (the "WorldTel Put Option") to offer for redemption,
by the Corporation, all issued and fully-paid Shares held by WorldTel
in connection with its Initial Equity Contribution (the "WorldTel Put
Shares") at a price of one million eight hundred thousand Dollars
($1,800,000). If the First Subscription Date has not occurred prior to
the termination by WorldTel, WorldTel shall have the right to require
repayment of the portion of the Initial Cash Contributions paid by
WorldTel, (i.e. one million eight hundred thousand Dollars
($1,800,000)). Such repayment by the Corporation shall be made in the
same manner as provided below for the redemption of the WorldTel Put
Shares.
The WorldTel Put Option may be exercised by WorldTel by providing
written notice (the "WorldTel Put Notice") to the Corporate Secretary
within fifteen (15) Days after termination of this Agreement as
aforesaid. Subject to Clause 16.2, the Corporation shall within thirty
(30) Days after receipt of the WorldTel Put Notice redeem the WorldTel
Put Shares for the consideration mentioned herein above consisting
either of cash or a note payable in US Dollars to WorldTel by the
Corporation (the "Put Note") or any combination of cash and the Put
Note. The proportion of the total consideration consisting of cash and
the Put Note shall be decided by the Series A Directors and the Series
B Directors in good faith based upon the existing assets and
obligations of the Corporation, and the contemplated equity
subscriptions by BCI and Holdco.
The Put Note shall have a maturity of the earlier of (i) the first
anniversary of the date of issuance of the Put Note and (ii) the date
additional equity is raised by the Corporation from a Third Party and
shall accrue a
Page 93
compounded annual interest rate equivalent to LIBOR plus seven hundred
(700) basis points.
14.2.6 Upon automatic termination of this Agreement pursuant to Clause
14.2.2 or by WorldTel or BCI in accordance with Clause 14.2.3, the
Corporation shall have the option (the "Termination Call Option") to
redeem all of WorldTel's Shares and/or, as the case may be, all of
BCI's Shares (the "Option Shares") at a price per Share equivalent to
the price per Share paid by WorldTel and/or BCI, as the case may be,
for the Option Shares.
The Termination Call Option may be exercised by the Corporation by
providing written notice(the "Call Option Notice") to WorldTel and/or
BCI at any time after termination as aforesaid and before the fifteen
(15) Day anniversary of such termination. Upon receipt of the Call
Option Notice by WorldTel and/or BCI, the Corporation shall have up to
fifteen (15) Days to redeem the Option Shares for cash.
14.2.7 In the event that the Technical Services Agreement is terminated by
the Corporation for a material breach of a material provision thereof
by Bell Canada International Inc. (the "BCI Put Option Event"), then
BCI shall have the exclusive right and option (the "BCI Put Option")
to require the Corporation to redeem all, but not less than all, of
the Shares, including the BCI Option or the Optioned Interest, held by
BCI and/or its Affiliates (the "BCI Put Shares") at their Fair Market
Value determined in accordance with Clause 5.2.4.
The BCI Put Option may be exercised by BCI and/or its Affiliates by
giving written notice to the Corporate Secretary (the "BCI Put
Notice") within three (3) months after the BCI Put Option Event (the
"BCI Put Option Period"), stating that it is exercising the BCI Put
Option and that it irrevocably offers to sell the BCI Put Shares to
the Corporation.
Upon receipt of the BCI Put Notice, the Corporation shall be deemed to
have accepted BCI's offer and shall be obligated to redeem all, but
not less than all, of the BCI Put Shares.
The redemption and cancellation of the BCI Put Shares shall take place
within three (3) months of the receipt of the BCI Put Notice (the "BCI
Put Closing").
Page 94
At the BCI Put Closing, (i) BCI shall deliver or cause to be delivered
to the Corporation stock certificate(s) or other appropriate
documentation representing the BCI Put Shares, duly endorsed, and (ii)
the Corporation shall deliver or cause to be delivered to BCI the
redemption price for such BCI Put Shares payable in full, in cash (in
US Dollars) by certified cheque or by wire transfer of immediately
available funds.
In the event a BCI Put Option Event has occurred and that BCI does not
exercise the BCI Put Option within the BCI Put Option Period, BCI's
right to veto a Transfer or an issuance of Shares to a Restricted
Third Party and BCI's right to appoint Officers under Clause 8 shall
lapse and the Corporation may issue Additional Shares to a Third Party
at Fair Market Value upon the approval of the Shareholders holding
sixty-seven per cent (67%) of the Voting Shares and without regard to
Clause 9.2(k).
14.2.8 In the event of any termination, each Shareholder shall return all
Information without retaining any duplicate or replicated copies
thereof except as permitted by the other Shareholder(s) and the
Corporation. The Shareholders shall be entitled, in proportion to
their then Relevant Proportion of Equity Shares, to distribution of
any unexpended surplus or realizations from the Corporation in the
event of any voluntary liquidation and dissolution unless otherwise
agreed upon in writing by the Shareholders and subject to Clause
14.2.9.
14.2.9 In the event of automatic termination under Clause 14.2.2 or of a
termination by BCI only or by all Shareholders under Clause 14.2.3,
the Shareholders shall, subject to Clause 14.2.6 or unless otherwise
agreed, proceed to work together to liquidate, dissolve and wind-up
the Corporation as expeditiously as possible. The Shareholders shall
distribute the surplus or net assets arising, if any, on such
liquidation and dissolution in the following proportions: BCI, 36%;
Holdco, 28%; WorldTel, 36% (provided that WorldTel has not exercised
the WorldTel Put Option) and the Shareholders shall in that event make
whatever assignment of liquidation quotas among themselves required to
give effect to this distribution. In the event that the WorldTel Put
Option is exercised, the Shareholders shall distribute
Page 95
the surplus or net assets arising, if any, on such liquidation and
dissolution in the following proportions: BCI, 56.3%; Holdco, 43.7%
and the Shareholders shall in that event make whatever assignment of
liquidation quotas among themselves required to give effect to this
distribution.
14.3 Effect of Termination
The termination of this Agreement, for whatever cause, shall not affect any
provision of this Agreement which expressly operates in the event of or
despite expiry or termination of this Agreement, including, without
limitation, the provisions of Clauses 12, 14.2.6, 16, 17.1 and 17.2 and the
termination of this Agreement shall be without prejudice to any claim which
has been made or may be made by one of the Shareholders hereto against
another for breach by such other Shareholder of any of its obligations
under this Agreement.
15. REPRESENTATIONS, WARRANTIES AND COVENANTS
15.1 In addition to the representations, warranties and covenants contained
elsewhere in this Agreement, each Party hereto represents and warrants to
and covenants with, the other Parties hereto that:
a) such Party has the full power and authority to execute, deliver, and
perform its obligations under this Agreement;
b) this Agreement, when executed and delivered by such Party, shall
constitute its valid and binding obligations enforceable in accordance
with the terms hereof, subject to specific performance and applicable
insolvency law;
c) neither the entering into nor the performance of this Agreement by
such Party shall result in the violation of (i) any of the terms of
the articles of incorporation, constituting documents or by-laws of
such Party, (ii) any material agreement to which such Party is a party
or (iii) any material order, writ, law, regulation, decree,
injunction, resolution or rule of any governmental agency in any
jurisdiction to which such Party is subject;
d) as regards the shareholders/investors of the Shareholders, each
Shareholder represents and warrants to the other Shareholders that the
sole
Page 96
registered and beneficial owners of the shares in such Shareholder are
those set forth in Schedule "K";
e) as regards each Shareholder, such Shareholder has not entered into any
collateral or ancillary agreement with respect to its interests in the
Corporation; and
f) it has not made or promised any payments, loans, or gifts, and has not
and shall not during the term of this Agreement promise, authorize, or
offer any payments, loans, or gifts of any money, stock, or anything
of value, directly or indirectly, for the purpose of securing the
award of the Licenses or to serve any business or contract for the
benefit of the Corporation (i) to or for the use or benefit of any
official or employee of any government or an agency or instrumentality
of any such government, (ii) to any political party or official or
candidate thereof, or (iii) to any other Person or entity, the payment
of which would violate the laws or policies of Mexico or the
applicable country or jurisdiction of such Person or entity, including
the U.S. Foreign Corrupt Practices Act.
15.2 Holdco hereby represents and warrants to each of the other Shareholders
that, (i) the Corporation has been duly incorporated and is validly
subsisting as a Mexican corporation under the Company Act and the laws of
Mexico and is in good standing in all of the jurisdictions in which it
conducts its business, (ii) has full, legal, valid and marketable title to
all of its property, (iii) is not subject to any actual or threatened
litigation which would have a materially adverse impact on the Corporation;
(iv) the Corporation has participated in the Point-to-Point Spectrum
Auction and has complied in all material respects with all the requirements
with respect to such Auction as of the date hereof; (v) the Corporation has
been awarded the right, subject to payment as required under the terms of
the Point-to-Point Spectrum Auction, to obtain the Point-to-Point Spectrum
for the provision of telecommunications services throughout Mexico and (vi)
all financial statements and budgets already delivered or to be delivered
by Holdco or the Corporation at Closing accurately state the financial
condition of the Corporation and there exist no liabilities actual or
contingent other than those reflected therein.
15.3 The Shareholders agree that at the first Board Meeting following the
Closing, they shall cause the Corporation to adopt the following statements
of policy: (i) the operating facilities of the Corporation shall be built
and operated in compliance with all
Page 97
applicable environmental and worker safety regulations and with due regard
for the environment and the health and safety of its workers, (ii) the
Corporation will provide comprehensive training on environmental health and
safety to its workers and implement a fire prevention and fire safety
program, (iii) there should be no use of PCB containing equipment; (iv) the
microwave transmitters shall be designed and maintained such that workers
are not exposed to unsafe levels of radiation, (v) routine monitoring of
microwave levels shall be carried out, and that (vi) the microwave
transmitters shall be high enough so that there is no exposure of the
public to microwaves.
15.4 The Corporation hereby covenants and agrees that all contributions to be
made by the Shareholders and represented by Equity Shares shall be recorded
as paid-in capital "capital social pagado" without any subscription premium
allocated thereto.
16. EXCLUSIVITY AND OTHER OPPORTUNITIES
16.1 Exclusivity
16.1.1 Subject to Clause 16.1.2 and Clause 16.2;
a) Holdco, notwithstanding any Transfer to any Permitted Assignee,
for itself and on behalf of its present and future shareholders
and any of their Affiliates or Relatives (in the direct line i.e.
parents, spouse and children) and on behalf of its Subsidiaries
(collectively the "Holdco Parties"), and
b) BCI, notwithstanding any Transfer to any Permitted Assignee, for
itself, Bell Canada International Inc., and on behalf of the
Subsidiaries of Bell Canada International Inc. (the "BCI
Parties"), and
c) any other Shareholder,
i) who, through Subsidiaries or whose Controlling Persons,
provides telecommunication services anywhere in the world (a
"telecom business") as its primary business,
for itself and on behalf of such Subsidiaries and
Controlling Persons (each an "Other Shareholder Party"); or
Page 98
ii) of which any shareholder, through Subsidiaries or whose
Controlling Persons, is engaged in a telecom business as its
primary business,
on behalf of any such shareholder and such Subsidiaries and
Controlling Persons, (each an "Other Shareholder Party"),
hereby covenant and agree and shall covenant and agree with
each other and the Corporation that, from the date hereof
until the termination of this Agreement with respect to such
Shareholder (and for a period of three (3) years thereafter
in the case of a Defaulting Shareholder, except if the Event
of Default is a change of Control), (i) it will not enter
into any agreements with any other Person(s) (including,
without limitation, any telecommunications operator in
Mexico) with respect to (x) except in the case referred to
in Clause 16.1.1 (i) (y) below, acquiring or owning an
interest in, or operating, an enterprise which is the same
as or substantially similar to or which competes directly
(i.e. offering comparable services at comparable prices)
with the Business of the Corporation or any of its
Subsidiaries in the regions of Mexico where the Business is
carried on or for which a Spectrum Concession has been
awarded to the Corporation (the "Regions"), including, for
greater certainty, mobile communications operators which
directly compete (i.e. offering comparable services at
comparable prices) in some significant way with the Business
of the Corporation in the Regions or (y) acquiring or owning
(directly or indirectly) more than five per cent (5%) of the
total outstanding equity shares of any telecommunications
provider in Mexico competing with the Corporation with
respect to the Business whose equity shares are publicly
traded or are listed on a stock exchange or otherwise quoted
to the public (other than the Corporation), and (ii) Holdco
shall cause the Holdco Parties, BCI shall cause the BCI
Parties and such Other Shareholder shall cause the Other
Shareholder Parties, not to enter into any such agreement.
16.1.2 Notwithstanding the foregoing, nothing in this Clause 16 shall be
construed as restricting the rights of a Shareholder or its Relatives
or Affiliates to (i) continue with its normal correspondent business
with any international telecommunications services carrier or
Page 99
provider in or outside Mexico, and the rendering and performance of
any such services or agreements by any Shareholder or its Relatives or
Affiliates shall not be deemed to be a breach or violation of this
Clause and (ii) to retain or increase any interests in any entities
which were not subject at the time of their original acquisition to
the non-compete restriction described in Clause 16.1.1 but which may
thereafter be considered to compete upon a change in the scope of
Business of the Corporation.
16.2 Exceptions to Prohibited Activities
Notwithstanding Clause 16.1.1 above, each of WorldTel, Holdco, BCI and any
other Shareholder, the Holdco Parties, the BCI Parties and the Other
Shareholder Parties shall be free to take any of the prohibited activities
specified in Clause 16.1 (i) with the prior written consent of the other
Shareholders or (ii) upon the termination of this Agreement with respect to
such Shareholder (or from and after the expiration of three (3) years
thereafter in the case of a Defaulting Shareholder, except if the Event of
Default is a change of Control). However, in the event that WorldTel
exercises the WorldTel Put Option, WorldTel for itself and on behalf of any
of its shareholders hereby covenants and agrees with the other Parties that
for a period of one year after such exercise, it will not enter and shall
procure that its shareholders do not enter into, any agreements with any
other Person(s) with respect to acquiring or owning an interest in an
enterprise which is the same as or substantially similar to, or which
competes directly (i.e. offering comparable services at comparable prices)
with, the Business of the Corporation in the Regions and which is bidding
for, receives or acquires a Spectrum concession in the Auction. The
Corporation shall not redeem the WorldTel Put Shares under Clause 14.2.5
until such time as the Corporation shall have received from each
shareholder of WorldTel an undertaking to comply with the restriction
described in this Clause 16.2. However, if not all shareholders provide an
undertaking as required under the preceding sentence, the WorldTel Put
Shares shall be redeemed only to the extent of the proportionate indirect
ownership thereof of the shareholders who have provided such an
undertaking.
16.3 Other Opportunities
If Holdco or the Holdco Parties or BCI or the BCI Parties propose to enter
into any telecommunications services business in Mexico other than the
Business (the "New Business"), Holdco and BCI (the "Proposing Party") shall
first offer to the other one (the "Other Party") to jointly pursue
Page 100
such New Business and the Other Party shall have thirty (30) Days to
determine whether or not it will pursue such New Business and shall notify
in writing the Proposing Party of this interest. If a Third Party is
proposed to be involved in the New Business, the Proposing Party shall
disclose to the Other Party the identity of such Third Party and the terms
and conditions proposed by such Third Party.
If Holdco and BCI are interested in pursuing jointly the New Business, they
shall enter into good faith discussions to establish mutually satisfactory
terms for the joint pursuit thereof. The terms offered to the Other Party
should not be less favourable globally than the terms offered by the Third
Party to the Proposing Party, subject to foreign ownership restrictions.
The proposing Party which brings the opportunity to the Other Party may add
Third Parties as partners to this New Business, including WorldTel. If the
Other Party is not interested in pursuing the New Business, the proposing
Party may pursue it on its own. Unless otherwise agreed, the New Business
shall be pursued through an entity other than the Corporation. If BCI and
Holdco determine to pursue the New Business through the Corporation they
shall present same to an Extraordinary Meeting of Shareholders and if the
Shareholders so agree that any New Business shall be pursued by the
Corporation, the non-compete obligation of Clause 16.1 shall extend to such
New Business.
This obligation and right of Holdco and BCI shall terminate in each case
when either Shareholder, with its Affiliates, holds less than ten per cent
(10%) of the Voting Shares of the Corporation.
17. MISCELLANEOUS
17.1 Governing Law
17.1.1 The Corporation shall operate subject to and in accordance with the
laws of general application in Mexico.
17.1.2 The validity, construction and performance of this Agreement shall
be governed by and interpreted in accordance with the laws of Mexico
without giving effect to any choice of conflict of law rules.
Page 101
17.2 Dispute Resolution
17.2.1 In the event of any dispute, claim, controversy or difference (a
"Dispute") among the Shareholders or between Shareholders and the
Corporation howsoever arising under or in connection with this
Agreement:
a) They shall use their good faith efforts to settle such Dispute.
To this end, any Shareholder may notify the other Shareholder(s)
of its desire to initiate the procedure contemplated by this
Clause 17.2, whereupon the Shareholders shall forthwith convene
to attempt to resolve such disputes through amicable and good
faith discussions. Disputes which the Shareholders are unable to
resolve through such discussions within thirty (30) Days
following receipt of the notice referred to in this Clause 17.2.1
a), shall upon the request of any Shareholder party to the
Dispute, be submitted to a panel consisting of designees from the
Chief Executive Officer of each Shareholder, provided that the
designees shall not be Directors or Officers of the Corporation.
The designees shall consult and negotiate with each other in good
faith in an effort to reach a just and equitable solution.
b) If the designees do not reach a solution within a period of
thirty (30) Days following the beginning of their consultations
and negotiations, any Shareholder may treat the same as an
arbitrable dispute by giving notice to the Corporation and the
other Shareholders, in which case the dispute shall be submitted
to a final and binding arbitration under the rules of the
American Arbitration Association's Commercial Arbitration Rules,
including the Supplementary Procedures for International
Commercial Arbitration excluding any such rules relating to the
posting of security for costs (the "Rules"). The arbitral
tribunal shall be composed of three persons, who shall be
appointed in accordance with the Rules; provided, however that
one (1) of the arbitrators must be an attorney admitted to the
Mexican bar and be fluent in English.
17.2.2 The arbitration shall be held in the English language. The
proceedings shall be conducted, and any arbitral award shall be made,
in the City of New York in the United States. The Shareholders agree
that the obligations herein are `commercial' and that the New York
Convention on Recognition and Enforcement of Foreign Arbitral Awards
is applicable. The prevailing
Page 102
Shareholder(s) shall be entitled to recover from the other
Shareholder(s) (as part of the arbitral award or order) its or their
reasonable attorneys' fees and other costs of arbitration.
17.2.3 The terms of this Clause 17.2 shall survive the termination of this
Agreement.
17.3 Public Announcement
17.3.1 No public announcement, including without limitation advertisement
or publicity, with respect to this Agreement or any transaction
contemplated hereby shall be made by any Party hereto unless and until
the text of the announcement and the time and manner of its release
have been consented by each of the other Parties hereto, provided
that, if at any time, any Shareholder hereto shall be bound by stock
exchange rules, listing agreements, securities laws or other
applicable laws or court orders to make any such public announcement,
such Shareholder shall be at liberty to do so without seeking consent
of the other Shareholders, but will, to the extent practicable, be
shown to the other Parties prior to such public announcement.
17.3.2 Copies of any press release, public circular or disclosure shall be
sent forthwith upon their release to the other Parties.
17.4 Entire Agreement; Oral Explanation; Amendments
This Agreement and its Schedules constitute the entire agreement of the
Parties hereto with respect to the subject matter covered herein and
supersedes all prior understandings and agreements, including the
Memorandums of Understanding referred to in recital Clause "A" hereof. No
oral explanation or oral information by any of the Shareholders shall alter
the meaning or interpretation of this Agreement. No amendment hereto shall
be effective or binding on any of the Shareholders unless reduced to
writing with specific reference to this Agreement, and executed by the
respective duly authorized representatives of each of such Shareholders.
17.5 Waiver
17.5.1 Except as otherwise expressly provided in this Agreement, no failure
or delay by any Shareholder in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor
shall
Page 103
any single or partial exercise by such Shareholder of any right, power
or privilege preclude any further exercise thereof or the exercise of
any other right, power or privilege.
17.5.2 Except as otherwise expressly provided in this Agreement, no waiver
of any right hereunder or of any breach or failure to perform shall be
effective unless executed in writing.
17.5.3 The waiver of any right hereunder or of any failure to perform or
breach hereof shall not constitute or be deemed as a waiver of any
other right hereunder or of any other failure to perform or other
breach hereof, whether of a similar or dissimilar nature thereto.
17.6 Legal Compliance; Implementation of this Agreement
Each Shareholder agrees to comply at all times with all laws of Mexico and
any other jurisdiction to which it is subject in relation to the matters
and transactions contemplated hereby or whose laws and regulations would be
applicable to the transactions contemplated hereby.
Each of the Shareholders hereto further agrees to cause compliance by its
directors, consultants, agents, employees, and sub-contractors with the
terms and conditions of this Agreement. Each of such Shareholders shall
also do or cause to be done any and all acts and things necessary or
desirable for implementation of the understandings of such Shareholders set
forth herein, including, but not limited to, casting their votes as
Shareholders of the Corporation and using their reasonable efforts to cause
their nominees to the Board of Directors of the Corporation or to
committees of the Board of the Corporation to cast their votes, and
executing all agreements and other documents, as may be necessary to
implement such understandings.
Each Party further undertakes that it or its Affiliates, directors,
shareholders, representatives, consultants, agents, employees and
sub-contractors, shall not during the term of this Agreement promise,
authorize, or offer any payments, loans, or gifts of any money, stock, or
anything of value, directly or indirectly, for the purpose of securing the
award of the Licenses or to serve any business or contract for the benefit
of the Corporation (i) to or for the use or benefit of any official or
employee of any government or an agency or instrumentality of any such
government, (ii) to any political party or official or candidate thereof,
or (iii) to any other Person or entity, the payment of which would violate
the laws or policies of Mexico
Page 104
or the applicable country or jurisdiction of such Person or entity,
including the U.S. Foreign Corrupt Practices Act.
17.7 Relationship of Parties
No Shareholder shall have the power or authority to legally bind any of the
other Shareholders; and nothing herein contained shall be construed as
authorizing any Shareholder to act as an agent or representative of any of
the other Shareholders or to legally bind any of the other Shareholders.
17.8 Conversion Rate
For purposes of this Agreement including Clause 3.2.2 and Clause 3.3.2, the
rate of exchange to be utilized for the conversion of the amounts stated in
Dollars into Mexican Pesos shall be that which is published in the "Federal
Official Daily" (Diario Oficial de la Federacion) on the Business Day prior
to the date in question including the Business Day prior to the Closing
Date or the Second Subscription Date, as the case may be.
17.9 Interest
Unless otherwise specifically provided herein any amount payable by any
Party (including any Shareholder's loans or advances) shall bear an
interest at a rate equivalent to LIBOR plus 700 basis points per annum
compounded annually from the payment due date (or from the date of the
Shareholder's loan or advance, as the case may be) to the date of payment.
17.10 Notices
Any notice which shall be given under this Agreement shall be made in
writing in the English language, and given by telecopier, with an original
sent by courier, addressed to a Party at its telecopier number and address
set forth below, or such other telecopier number and/or address for such
Party as shall have been communicated by it to the other Party in
accordance with this Clause 17.10. Any Notice or other communication shall
be deemed to have been received on the date of transmission but only if a
confirmation of the receipt by the recipient of the telecopier appears
correctly at the end of the sender's telecopy.
If to BCI :
Bell Canada International (Mexico Telecom) Limited Arawak
Chambers Road Town
Page 105
Tortola, British Virgin Islands
Telecopier No.: (809) 494-2914
Attention: President
with a copy to:
Bell Canada International Inc.
1000 de La Gauchetiere St. West
Suite 1100
Montreal, Quebec H3B 4Y8
Telecopier No.: (514) 392-2342
Attention: Vice-President, Law and
Corporate Secretary
If to HOLDCO:
Telinor Telefonia, S.A. de C.V.
Vasconcelos 210 Otc., Piso 9
Residencial San Agustin
Garza Garcia, N.L.
Mexico
Telecopier No.: (52-8] 363-3601
Attention: Tomas Milmo Santos
with a copy to:
D & A Morales Y Asociados, S.C.
Vallarta 811 Sur
Colonia Mirador
64070 Monterrey, N.L.
Mexico
Telecopier No.: (52-8) 342-9322
Attention: Alberto J. Morales
Page 106
If to WORLDTEL MEXICO TELECOM LTD.:
41 Cedar Avenue
Hamilton HM12
Bermuda
Telecopier No.: (441) 295-7768
Attention: Appleby, Spurling & Kempe
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopier No.: (212) 757-3990
Attention: Ruben Kraiem
with a copy to:
the shareholders of WorldTel identified in Schedule "K" at
the telecopier numbers and persons designated in such
Schedule "K" and WorldTel shall procure that such
shareholders shall treat any information contained in such
notices in accordance with the terms of Clause 12.
If to the CORPORATION:
Telefonia Inalambrica Del Norte, S.A. de C.V.
Vasconcelos 210 Otc. Piso 12
Residencial San Agustin
Garza Garcia, N.L.
Mexico
Telecopier No.: (52-8) 363-5091
Attention: Tomas Milmo Santos
with a copy to:
D & A Morales Y Asociados, S.C.
Vallarta 811 Sur
Colonia Mirador
64070 Monterrey, N.L.
Mexico
Telecopier No.: (52-8) 342-9322
Attention: Alberto J. Morales
Page 107
17.11 Assignment
No Shareholder may assign its rights and obligations under this Agreement,
in whole or in part, except as otherwise expressly provided herein or
except with the prior consent of each other Shareholder.
17.12 Language
This Agreement is executed in the English language only . For the purposes
of clarifying the intent of the Shareholders with respect to this
Agreement, in the event of a conflict or inconsistency between the English
and Spanish language versions of the By-laws, the English language version
shall prevail.
17.13 Survival of Obligations
Except as otherwise specifically provided herein, the termination of this
Agreement for any reason shall not release any Shareholder or the
Corporation from any liability that at the time of termination has already
accrued to any such other Parties hereto or which thereafter may accrue in
respect of any act or omission prior to such termination, nor shall any
such termination hereof affect in any way the survival of any right, duty
or obligation of any such Party hereto which is expressly stated elsewhere
in this Agreement to survive termination hereof.
17.14 Severability
The invalidity or unenforceability of any provision, in whole or in part,
of this Agreement shall not in any way affect the validity or
enforceability of any other parts or provisions thereof; provided, however,
that each of the Shareholders shall use their reasonable efforts to achieve
the purpose of the invalid or unenforceable provision or part thereof by a
new valid and enforceable stipulation.
17.15 Headings
Headings in this Agreement are for convenience only and shall not affect
the interpretation of this Agreement.
17.16 Gender and Number
Page 108
In this Agreement, unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender
include all genders.
17.17 Preamble
The preamble shall form an integral part hereof as if repeated at length
herein.
17.18 Rights and Remedies
All rights and remedies provided for in this Agreement are in addition to,
and not exclusive of, any other rights or remedies otherwise available at
law or in equity.
17.19 Agreement Provisions
The Parties agree to cause this Agreement to be registered at the corporate
domicile of the Corporation and recorded in its appropriate corporate books
in accordance with the Company Act. No Party will take any action contrary
to or inconsistent with the provisions of this Agreement, notwithstanding
anything to the contrary contained in the Charter or the By-laws.
17.20 Schedules
The following Schedules form an integral part of this Agreement:
Schedule "A" -By-laws
Schedule "B" -Technical Services Agreement
Schedule "C" -Schedule of Share Allocation
Schedule "D" -Registration Rights
Schedule "E" -List of Closing Documents
Schedule "F" -Trust Agreement
Schedule "G" -Secondment Agreement
Schedule "H" -Undertaking of Adherence
Schedule "I" -Vendor Financing Term Sheet
Schedule "J" -Schedule of Capital Calls
Schedule "K" -Persons providing guarantees or
executing Subscription Agreements
17.21 Execution by Corporation
The Corporation represents that it has knowledge of all the terms and
agrees to be bound by this Agreement and to enforce its provisions. To
this end, the Corporation shall take all necessary actions in order to
render the provisions of this Agreement enforceable.
17.22 This Agreement may be executed in one or more counterparts, each of
which when so executed and delivered shall be deemed
Page 109
an original, but all of which taken together shall constitute one and
the same complete and executed agreement.
Page 110
IN WITNESS, WHEREOF, this Agreement was executed on the date first above
written.
BELL CANADA INTERNATIONAL TELINOR TELEFONIA, S.A. DE C.V.
(MEXICO TELECOM) LIMITED
By: /S/ Michael Lisogurski By: /S/ Tomas Milmo Santos
------------------------------ -----------------------------
Name: Michael Lisogurski Name: Tomas Milmo Santos
Title: Authorized Signatory Title: Sole Director
Witness: Witness:
------------------------------ -----------------------------
WORLDTEL MEXICO TELECOM LTD. TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: /S/ Robert Rice Jenkins By: /S/ Tomas Milmo Santos
------------------------------ -----------------------------
Name: Robert Rice Jenkins Name: Tomas Milmo Santos
Title: Attorney-in-fact Title: Chief Executive Officer
Witness: Witness:
------------------------------ -----------------------------
Page 111
SCHEDULE "A"
BY-LAWS
The By-laws of the Corporation shall cover the following Clauses of the
Shareholders' Agreement:
1,
2,
3.1, 3.6, 3.8,
4.1 to 4.8,
6,
7,
8.1, 8.2,
9,
10.1, 10.2, 10.4.3, 10.7,
17.1.1 and 17.2
SCHEDULE "B"
TECHNICAL SERVICES AGREEMENT
TECHNICAL SERVICES AGREEMENT made and entered into as of October 6, 1997 between
Bell Canada International Inc. ("BCI"), a corporation organized under the laws
of Canada, having its principal office at 1000, rue de La Gauchetiere Ouest,
Bureau 1100, Montreal (Quebec) Canada H3B 4Y8, and Telefonia Inalambrica del
Norte, S.A. de C.V. ("Telinor"), a limited liability stock corporation organized
under the laws of the United Mexican States ("Mexico"), having its registered
office at Vasconcelos 210 Otc., Residencial San Agustin, San Pedro, Garza
Garcia, N.L., Mexico.
WHEREAS Telinor wishes to offer local telephone services and associated value
added services throughout Mexico;
WHEREAS Telinor will attempt to secure in auctions to be conducted under the
auspices of the Government of Mexico the right to use radio frequency spectrum
within the 1850 to 1970 MHz bandwidths and within the 3425 to 3600 MHz
bandwidths (the "Spectrum") as required to operate fixed wireless communications
networks in one or more regions of Mexico;
WHEREAS Bell Canada International (Mexico Telecom) Limited, an Affiliate of BCI,
is a party to a Shareholders' Agreement entered into as of October 6, 1997 among
the shareholders of Telinor and Telinor;
WHEREAS BCI has expertise in providing international consulting services in the
telecommunications sector and has experience, knowledge, trained personnel and
other capabilities in respect of engineering, operations, and other
miscellaneous services; and
WHEREAS BCI and Telinor desire to enter into this Agreement for the purpose of
making available to Telinor the experience, knowledge and other capabilities of
BCI by way of the provision of certain technical services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
In this Agreement, unless the context otherwise requires, the following
terms shall have the meaning set opposite, namely:
"Affected Party" has the meaning ascribed thereto in
Clause 10.2;
"Agreement" This Agreement, including its recitals
and Schedules, as amended from time to
time;
"BCI-Shareholder" Bell Canada International (Mexico
Telecom) Limited;
"Confidential Information" Any information, material and data of a
confidential nature furnished orally, in
any written, graphic, electronic,
magnetic or other tangible form
including (but not limited to)
technical, financial and business
information and models, names of
customers or partners (whether potential
or existing), proposed business deals,
corporate strategies, reports, plans
market and/or financial projections and
other data, of or relating to a party,
other than the information listed in
Clause 7.4;
"Consultant(s)" Person(s) provided by BCI to render
services to Telinor under this
Agreement, who is/are individually
present in Mexico for a period or
periods not exceeding one hundred and
eighty-two (182) calendar days during a
consecutive twelve (12)-month period;
"Costs" has the meaning ascribed thereto in
Clause 3.1.3;
"Deliverables" Any written summary of results or
recommendations or any other data or
data files, information or materials
whether in written, electronic or
magnetic form, provided to Telinor
pursuant to the Services (as hereinafter
defined) performed under this Agreement,
including market research reports,
functional or interface specifications,
and service or network architecture
plans, but shall exclude all software;
"Disposition" has the meaning ascribed thereto in
Clause 11.2;
"Fixed Fee" has the meaning ascribed thereto in
Clause 3.1.1;
"Indemnified Person" has the meaning ascribed thereto in
Clause 8.2;
Page 2
"receiving party" has the meaning ascribed thereto in
Clause 7.1;
"RFS" has the meaning ascribed thereto in
Clause 2.1;
"Rules" has the meaning ascribed thereto in
Clause 16.1(b);
"Services" The technical assistance provided under
this Agreement, including the services
identified in Clause 2 and Schedule "A";
"Services Fees" The fees described in Clause 3.1 of this
Agreement;
"Service Launch" means the date when commercial telephone
service is first offered by Telinor and
is generally and commercially available,
otherwise than on a trial basis, to
households in any area of Mexico
covering at least a population of
500,000 persons;
"Shareholders Agreement" The Unanimous Shareholders Agreement
dated as of October 6, 1997 between
BCI-Shareholder, Holdco, WorldTel and
Telinor;
"Subject Year" has the meaning ascribed thereto in
Clause 3.1.2;
"Taxes" has the meaning ascribed thereto in
Clause 4.1.
The expression "person" as used herein includes any individual, corporation,
company, partnership or other entity. The singular includes the plurals and vice
versa. Reference to one gender includes reference to the other gender.
References herein to Clauses and Schedules shall be taken as referring to
Clauses and Schedules to this Agreement. Headings to Clauses are for ease of
reference only and shall not affect the construction or interpretation of this
Agreement.
In this Agreement and the Schedules hereto, unless otherwise specified,
capitalized terms not defined herein but defined in the Shareholders Agreement
shall have the meanings assigned to them in the Shareholders Agreement.
2. SUPPLY OF SERVICES AND PERSONNEL
2.1 Supply of Services
Subject to the terms and conditions of this Agreement, BCI shall provide
from time to time such Services as shall be reasonably requested by Telinor
to prepare, launch and operate its Business in accordance with the
requirements of the Preliminary Business Plan and the Initial Business Plan
and such other Business Plans which may be adopted by Telinor
Page 3
from time to time. More specifically, these Services shall be the Services
identified in Schedule A, if requested in writing by an authorized person
at Telinor (which request for Services shall be substantially in the form
of Schedule B attached hereto (the "RFS")), and such other Services as may
be the subject of an RFS and are within the capabilities and expertise of
BCI.
2.2 Supply of Consultants
BCI shall, from time to time, following the receipt of an RFS, make
available to Telinor, within a reasonable period, such number of qualified
Consultants having expertise in engineering, operations, information
technology, personnel, recruitment, billing system, administration, legal,
sales, customer services, marketing matters and such other
telecommunications related expertise as may be reasonably requested by
Telinor to provide the Services identified in Clause 2.1.
The number and identity of Consultants and the date of commencement,
duration and location of the Services shall be as determined from time to
time by BCI and Telinor.
2.3 Training Programs
BCI shall from time to time, as necessary, make available to Telinor
training programs as described in Schedule A and such other training
programs reasonably requested by Telinor which are within the capabilities
of BCI. At least on an annual basis, BCI shall organize, at no cost to
Telinor (other than travel and accommodation expenses), a session in Canada
with knowledgeable representatives of operating companies in the BCI group
of companies during which an exchange of information and views shall take
place with certain employees of Telinor.
BCI will provide Telinor with information, at least annually, on the
training programs relevant to Telinor which are expected to be available
within BCI or its Affiliates. Such information may be provided to Telinor
more frequently as relevant training programs are published or offered from
time to time by BCI and its Affiliates.
2.4 Authorized Personnel
BCI shall designate in writing, within thirty (30) days of the date of this
Agreement, one or more of its senior employees from its headquarters as the
person(s) to whom all RFSs or other inquiries are to be directed and with
whom questions involving RFSs are to be coordinated. BCI may change its
designation(s) in this respect by notice in writing to Telinor at any time.
Telinor shall also designate in writing, within thirty (30) days of the
date of this Agreement, one or more of its senior employees as its
authorized persons to request and coordinate Services from BCI. Telinor may
change its designation(s) in this respect by notice in writing to BCI
Page 4
at any time. Costs relating to personnel designated under this Clause 2.4
and their activities shall be for the account of the designating party.
2.5 Employment Relationship
Each Consultant supplied to Telinor under this Agreement shall remain the
consultant, agent, independent contractor or employee of BCI.
2.6 Degree of Care
Telinor shall exercise the same degree of care in respect of each
Consultant as with employees of Telinor and, in any event, no less than the
degree of care required by any applicable laws of Mexico.
2.7 Right of Inspection and Recall
BCI shall have the right, upon reasonable notice, to inspect during normal
business hours the working environment of any Consultant; BCI may recall
any Consultant after consultation and reasonable notice to Telinor.
2.8 Discipline and Dismissal
BCI shall retain the absolute right to discipline and dismiss any
Consultant and Telinor shall not and shall not purport to exercise any such
right, provided that at any time Telinor may require BCI to recall any
Consultant and, as an immediate measure pending discussions with BCI and
any recall, may require that a Consultant leave any premises owned or
occupied by Telinor if Telinor in its reasonable discretion believes that
the Consultant has committed any act or omission which would entitle
Telinor to dismiss such Consultant had he or she been employed by Telinor
or if Telinor, in its reasonable discretion, believes that such Consultant
has conducted himself or herself in a manner which is contrary to or
otherwise not in the best interests of Telinor.
If any Consultant ceases to provide Services to Telinor during the duration
of the Services in accordance with this Clause 2.8, or if any such person
is unable due to illness, accident or other incapacity to perform his
duties, or if BCI recalls such Consultant in accordance with Clause 2.7,
BCI shall, if requested by Telinor, provide a substitute for such person.
Telinor shall provide BCI with all reasonable assistance as is necessary to
enable the disciplinary process of BCI to operate in respect of any
Consultant. Costs accrued to the date of recall shall be payable in
accordance with Clause 3.1.3.
2.9 Insurance
To the extent that such Consultants are not covered by an equivalent
insurance policy of BCI, Telinor shall ensure that all Consultants are
insured, to the extent insurance (other than civil liability insurance) is
available at reasonable cost, in the same manner as its own employees
Page 5
in comparable positions against insurable risks arising while any
Consultant is attending at the premises or other facilities of Telinor
pursuant to this Agreement and shall comply with the provisions of all
applicable legislation relating to health, safety and welfare at work from
time to time in force. BCI will give Telinor advance notice of any such
insurance requirements in sufficient time and detail as to permit BCI and
Telinor to coordinate the provision of insurance.
2.10 Deliverables and Third Party Services and Goods
The Consultants provided hereunder shall bring and use, at no cost to
Telinor, the analytical tools, including analytical software, needed to
perform the Services. However, to the extent that software owned by parties
other than BCI, including specialized software, is required by Telinor or
any Consultant to provide the Services and for which licenses need to be
issued in the name of Telinor, the cost for such licenses shall be paid
directly by Telinor to the software supplier.
The Deliverables developed by the Consultants for Telinor shall be
memorialized in written, graphic, electronic, magnetic or other tangible
form to allow Telinor to use the Deliverables after the departure of the
Consultants, such use to be subject to the rights of any party other than
BCI in any Deliverable or software which supports any Deliverable with
respect to which Telinor may need to acquire a licence and BCI undertakes
to cooperate with Telinor with respect to such acquisition (including the
acquisition of software pursuant to the foregoing paragraph), including
using reasonable efforts to allow Telinor to benefit from any discounts
available to Bell Canada from software suppliers or other relevant
suppliers, to the extent such discounts can be made available to a third
party.
In the event that Telinor believes that any specific technical assistance,
software or hardware should be provided by a Third Party, Telinor may
request BCI's assistance in engaging, and monitoring such Third Party's
services or provision of goods. In particular, BCI will use reasonable
efforts, as reasonably requested, to monitor the customization process of
any Third Party software. BCI, with respect to services and goods of Third
Parties, shall use reasonable efforts to allow the purchase of such
services and goods by Telinor in an efficient and economical way taking
advantage of any discounts available to Bell Canada from software suppliers
or other relevant suppliers, to the extent such discounts can be made
available to a third party.
BCI will use reasonable efforts, at least on an annual basis, to consult
with Telinor with a view to informing Telinor, within BCI's capabilities,
on developments and improvements related to Services previously rendered.
In this regard, BCI shall use reasonable efforts to assist Telinor, as
reasonably requested, to obtain upgrades and enhancements of software, for
which rights were previously obtained from parties other than BCI as part
of the Services, in an efficient and economical way,
Page 6
taking advantage of any discounts available to Bell Canada from software
suppliers or other relevant suppliers, to the extent such discounts can be
made available to a third party. No such obligation shall exist for any
software which is covered by a support services, maintenance and/or supply
agreement between Telinor and a party other than BCI.
2.1 Project Review Committee
A Project Review Committee composed of two designees from BCI and two
designees from Telinor shall be set up to review on a monthly basis the
resources needs of Telinor and any difficulties which may arise under this
Agreement and the Secondment Agreement referred to in Clause 3.1. Meetings
of this Committee may be held in person or by conference call. Telinor
shall ensure that BCI is given through this Committee or otherwise, on a
timely basis, any information with respect to the Business of Telinor which
may be relevant to or necessary for the performance of Services by BCI or
the Consultants hereunder.
3. COMPENSATION
3.1 Services Fees
In general consideration of the Services provided by BCI to Telinor under
this Agreement up to the date of termination in accordance with Clause 11
hereof and of the services provided under the Secondment Agreement entered
into between BCI and Telinor as of October 6, 1997, up to the date of its
termination in accordance with Clause 11 thereof and of the long term value
to Telinor to be created by the Secondees provided by BCI under such
Secondment Agreement, and the loss of such Secondees to BCI, Telinor shall
pay to BCI the following Services Fees:
3.1.1 A fixed fee (the "Fixed Fee") of US $11,500,000 payable in annual
installments over a five (5) - year period, commencing with respect to
the calendar year during which Service Launch occurs as follows:
i) US $ 2.5 million annually for each of the first three (3) years;
and ii) US $ 2 million annually for each of the last two (2)
years.
The Fixed Fee shall be due and payable within thirty (30) days from the end
of each calendar year in respect of which the Fixed Fee is payable.
3.1.2 a) An annual incentive fee for five (5) years commencing with respect
to the first of the following to occur:
i) the fourth fiscal year of Telinor following the fiscal year of
Telinor during which there has been Service Launch; or
Page 7
ii) the fiscal year of Telinor following the first fiscal year during
which Telinor generates positive EBITDA.
Notwithstanding the above, if the Initial Business Plan adopted by the
Board of Directors of Telinor in accordance with the Shareholders'
Agreement, does not contemplate positive EBITDA on or prior to the
fourth fiscal year referred to in paragraph i) above, such paragraph
i) shall be replaced as follows:
"i) the fiscal year of Telinor following the first fiscal year during
which the Initial Business Plan contemplates positive EBITDA."
b) The incentive fee shall be calculated as follows:
Year 1 : 6% of EBITDA, less any portion of the Fixed Fee paid for
such year;
Year 2 : 5% of EBITDA, less any portion of the Fixed Fee paid for
such year;
Year 3 : 4% of EBITDA, less any portion of the Fixed Fee paid for
such year;
Year 4 : 3% of EBITDA, less any portion of the Fixed Fee paid for
such year;
Year 5 : 2% of EBITDA, less any portion of the Fixed Fee paid for
such year;
The payment of the incentive fee shall be made by Telinor to BCI in US
dollars at the earlier of i) ten (10) days following the approval of
the audited financial statements by the Shareholders of Telinor for
the year for which the incentive fee is payable (the "Subject Year")
or ii) April 30 of the year following the Subject Year.
3.1.3 Such amount as is equivalent to BCI's direct and indirect costs of
providing the Services (the "Costs"). Indirect costs shall be
established as fifteen per cent (15%) of the direct costs with respect
to Services provided by Consultants listed in Schedule C.
With respect to the provision of Services by Consultants, the direct
costs shall be BCI's actual costs in relation thereto, including
without limitation, costs relating to compensation, benefits, taxes,
travel, lodging, and allowances.
Telinor may at its option pay directly to the Consultants or on behalf
of the Consultants various expenses such as accommodation, travel or
meals, in which case reimbursement to BCI will not apply for such
expenses paid directly by Telinor; further, in such instance,
Page 8
the parties agree that the fifteen per cent (15%) overhead recovery
cost shall not apply to any such expenses paid directly by Telinor.
3.1.4 The Services Fees referred to in Clauses 3.1.1 and 3.1.2 above shall
be deemed to have been earned and shall be fully vested in BCI on the
first anniversary of Service Launch, irrespective of the date of
termination of this Agreement provided that if this Agreement is
terminated pursuant to Clauses 11.2 or 11.5(a) or (c), prior to the
first anniversary of Service Launch no Service Fees shall be payable
under Clause 3.1 except in respect of amounts under Clause 3.1.3 with
regard to Services actually provided.
3.2 Until full and final payment of all Services Fees, Telinor shall furnish
BCI such information with respect to EBITDA as may be reasonably required
from time to time by BCI, including such information developed by Telinor
in connection with the preparation of any income or financial statements
and in connection therewith, BCI shall have the right at all reasonable
times on reasonable notice during usual business hours to audit, examine
and make copies of extracts from the books and records of Telinor. Such
right may be exercised by BCI through any agent, employee or independent
auditor designated by BCI. Such information shall be held by BCI as though
received by a Shareholder pursuant to Clause 12 of the Shareholders
Agreement.
3.3 If the Board approves a Business Plan or Annual Operating Plan and Budget
which involves a different marketing strategy or any other changes or
element, which have a significant negative impact on the amount of EBITDA,
the parties undertake to enter into good faith negotiations to reflect
appropriate adjustments, if they mutually agree to any, to the EBITDA
calculation provided in Clause 1.26 of the Shareholders Agreement.
4. TAXES
4.1 All amounts payable hereunder by Telinor to BCI shall be paid by Telinor
free and clear of any and all Mexican and any other non-Canadian taxes,
including but not limited to, value-added taxes, sales, withholding,
remittance, corporate, personal income, social security and other taxes,
import duties, levies, fees and assessments of any kind ("Taxes"), which
might otherwise be levied against BCI by the Mexican tax authorities or any
other non-Canadian tax authorities or any state or subdivision thereof. In
addition, Telinor shall be responsible for any and all Taxes assessed after
invoice or termination of this Agreement which are related to Services
rendered under this Agreement. Notwithstanding the other provisions in this
Clause 4, in the event that BCI is deemed to have a permanent establishment
in Mexico, Telinor shall only be responsible for reimbursement of,
indemnity for or payment of any Taxes imposed on BCI to the extent such
Taxes are attributable to BCI providing Services
Page 9
hereunder and/or providing Secondees under the Secondment Agreement. In
addition, subject to the Secondment Agreement, Telinor shall not be
responsible for reimbursement of, indemnity for or payment of any Taxes
imposed on payments to BCI or BCI's income other than for providing
Services pursuant to this Agreement.
4.2 Should any Taxes be levied by the Mexican tax authorities or any other
non-Canadian tax authorities, payment for such Taxes shall be the
responsibility of and be paid by Telinor directly to the appropriate tax
authority on behalf of BCI and these payments by Telinor shall not reduce
the amounts payable to BCI pursuant to this Agreement.
Within thirty (30) days after the date of any payment of Taxes, Telinor
shall furnish to BCI, at its address referred to in Clause 14, the original
receipt of payment thereof or a certified copy of such receipt evidencing
payment thereof.
In the event that BCI is required by law to make such payments for Taxes
directly to the Mexican or any other non-Canadian tax authorities, Telinor
shall reimburse BCI for such payments within thirty (30) days from the date
of BCI's invoice. Such reimbursement shall not be reduced by any Taxes and
shall not reduce the amounts otherwise payable to BCI pursuant to this
Agreement.
In addition, Telinor shall pay any present or future stamp duty,
documentary taxes, charges or similar levies imposed by the Mexican tax
authorities or any other non-Canadian tax authorities or any state or
subdivision thereof that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement.
4.3 If BCI is able to claim a tax benefit in computing its income tax liability
under the Income Tax Act (Canada) and under the tax statutes of any
relevant provincial jurisdiction, in Canada, by reason of
i) any taxes paid by Telinor to the Mexican or non-Canadian tax
authorities on behalf of BCI, or
ii) any increased payments by Telinor to BCI pursuant to Clauses 4.1 and
4.2;
collectively referred to as "reimbursable taxes",
BCI shall, within thirty (30) Days, of receiving the tax benefit from a
reduced final Canadian tax payment, pay to Telinor the amount of the tax
benefit which related to the reimbursable taxes. BCI will use reasonable
efforts to obtain promptly such tax benefit and, subject to such
undertaking, nothing in this Clause shall interfere with the right of BCI
to arrange its tax affairs in whatever manner it deems fit, or oblige BCI
to disclose any information relating to the assessment or computation of
its tax liabilities or benefits to Telinor or impose any obligation on BCI
to claim
Page 10
relief from its corporation, profits or similar tax liability in respect of
any such tax benefit in priority to any other reliefs, claims, credits or
deductions available to it.
5. PAYMENT TERMS
5.1 Invoice and Interest
BCI shall submit to Telinor invoices for the Services Fees in U.S. dollars.
With respect to the Costs, there shall be a monthly invoice indicating the
place and manner of payment. Such invoices shall describe in reasonable
detail the Services provided and the Costs with supporting documentation as
reasonably requested by Telinor to comply with accounting procedures and
other requirements of Telinor. In preparing the invoices for the Costs, all
Costs incurred in currencies other than U.S. dollars shall be converted
into U.S. dollars using the appropriate Bank of Canada exchange rate posted
at noon on the last Business Day of the month in which the Costs were
incurred.
All Costs payable under this Agreement, if not paid within thirty (30) Days
of the date of the invoice, shall bear interest on the outstanding
amount(s) from the date of the invoice until paid at a rate per annum,
compounded annually, equal to the Base Rate plus three percent (3%). The
Base Rate shall mean, for any day, the higher of (i) the per annum rate of
interest determined by Citibank N.A. in New York City, from time to time,
in its sole discretion, as its United States dollar prime commercial
lending rate for such day and (ii) the sum of (A) the average rate charged
to Citibank N.A. for overnight federal funds on such day (rounded upward,
if necessary, to the nearest 1/100 of 1%) plus (B) 1/2%.
The Services Fees described in Clauses 3.1.1 and 3.1.2, if not paid within
thirty (30) Days of the date of the invoice shall bear interest on the
outstanding amount(s) from the date of the invoice or their due date
(whichever date is the latest) until paid at a rate per annum, compounded
annually, equal to LIBOR plus seven hundred (700) basis points.
5.2 Currency
Unless otherwise agreed in writing between BCI and Telinor, all
compensation and all amounts owing under this Agreement shall be paid in
full by Telinor in US dollars to BCI.
6. OWNERSHIP
6.1 BCI shall own all right, title and interest in the Deliverables and in any
intellectual property embodied therein or related thereto. However, Telinor
shall have a right to use any such Deliverables or intellectual property
for purposes of carrying on its Business in Mexico which right shall be
non-exclusive, perpetual and free of charge. Telinor shall not
Page 11
have the right to assign this right to any Person other than its
Affiliates, subject to such Affiliates being bound by the same undertaking
not to assign this right.
6.2 For greater certainty, no term or condition in this Agreement shall be
construed as involving software development or to be a transfer by BCI or
its Affiliates of licenses, patents, trademarks or technology which could
give rise to royalty payments. Any software development requested by
Telinor or any transfer of intellectual property rights shall be dealt with
in separate agreements.
6.3 Other than for entities involved in activities comprising the Business or
competing with the Business of Telinor in the Regions, BCI and/or any
Subsidiaries thereof may perform for others the same or similar services as
those provided hereunder, including providing the same or similar
conclusions and recommendations.
7. CONFIDENTIAL INFORMATION
7.1 Each party (the "receiving party") shall for two (2) years from the date of
receipt of Confidential Information from the disclosing party, retain in
confidence all such Confidential Information disclosed pursuant to
activities carried on in providing the Services under this Agreement and
shall treat such Confidential Information with the same degree of care as
it employs for the protection of its own Confidential Information (and in
any event, with reasonable care).
7.2 The receiving party shall not, nor shall it permit any of its
Representatives to, without the written consent of the other, which consent
shall not be unreasonably withheld, use any Confidential Information of the
other for any purpose other than the provision of Services hereunder, or
disclose any Confidential Information of the other to any third party,
except to its Representatives with a need to know for purposes of this
Agreement or for the conduct of each party's business, including any
financing to the extent necessary to obtain such financing, but only if
such Representatives are not employees, officers or directors of any Person
who, directly or indirectly through any Subsidiary or whose Controlling
Persons, compete with the Business in the Regions and after such
Representatives have been directed by the Receiving Party to treat such
Confidential Information in accordance with the terms of this Clause 7 and
provided further that no party shall use any such Confidential Information
to the detriment of each other.
7.3 Each party also agrees to enter into such further undertakings of
confidentiality as may reasonably be required by the other party.
7.4 Confidential Information shall not include any information that:
Page 12
(a) is or becomes in the public domain other than as a result of a
disclosure directly or indirectly by the receiving party in breach of
this Agreement;
(b) the receiving party can demonstrate was known to it prior to the
disclosure thereof by the disclosing party;
(c) is or becomes generally available to such receiving party on a non-
confidential basis from a source other than the disclosing party,
provided that such source is not known by such receiving party to be
bound by any confidentiality obligation with respect to such
information;
This Clause 7 shall not restrict the disclosure of any Confidential
Information by either party as required by law, the rules of any
recognized stock exchange, any court of competent jurisdiction, any
governmental or regulatory authority, including any taxation authority
or broadcasting or telecommunications regulatory authority, but only
after written notice of such disclosure requirement has been given, to
the extent practicable, by such party to the disclosing party, (it
being understood and agreed that only one such notice shall be
required in respect of continuous disclosure requirements).
7.5 Upon termination of this Agreement, each party shall return all such
Confidential Information to the other party unless such Confidential
Information is necessary for the conduct of the ongoing business of either
party. Notwithstanding termination of this Agreement, the confidentiality
obligations of the parties pursuant to this Clause 7 shall continue for two
(2) years after the disclosure of Confidential Information.
7.6 It is understood by the parties that in the course of providing Services
hereunder, Consultants may acquire knowledge and experience and the terms
hereof will not prohibit the use of knowledge and experience by such
Consultants, provided that this Clause shall not operate as an assignment
or license of any intellectual property or other assets from Telinor or any
other person. BCI will use reasonable efforts in order that Consultants
will not provide, during six (6) months following their recall, similar
services to entities competing against Telinor in the Regions.
8. LIABILITY
8.1 BCI shall provide all Services with reasonable care and skill and such
Services shall be of a standard comparable to providers of similar types of
services and BCI shall use its reasonable commercial judgment and expertise
provided that:
(a) BCI and its Affiliates and the Consultants shall not be liable on
account of specific acts done or omitted to be done by the Consultants
or BCI or
Page 13
its Affiliates and their respective directors, officers, shareholders,
employees, agents or contractors in good faith in accordance with or
pursuant to the direction of Telinor;
(b) none of BCI, any of its Affiliates or the Consultants shall be liable
to Telinor for any error of judgment or for any loss or damage
suffered by Telinor in connection with the subject matter of this
Agreement (howsoever any such loss or damage may have occurred) unless
such loss or damage arises from gross negligence, bad faith, fraud,
intentional misconduct or willful default in the performance or
non-performance by BCI (or any Affiliate thereof or the Consultants)
of its obligations or duties under or pursuant to the terms of this
Agreement; and
(c) notwithstanding anything herein contained, in no event shall BCI be
held liable, accountable or in breach of this Agreement for the
failure by Telinor to meet any milestones, targets or goals set in the
Preliminary Business Plan, the Initial Business Plan and such other
Business Plans which may be adopted by Telinor from time to time.
8.2 Telinor shall indemnify and hold harmless BCI and its Affiliates and their
respective directors, officers, shareholders, employees and agents (each an
"Indemnified Person") against any claims, actions, proceedings, costs,
charges, losses, demands, liabilities and expenses which may be brought by
third parties against, suffered or incurred by any of such Indemnified
Persons arising from or related to the performance of BCI and its
Affiliates or the Consultant's obligations or duties under or pursuant to
the terms of this Agreement (including, without limitation, all reasonable
legal and professional fees and other expenses incurred by such Indemnified
Person) except claims arising from gross negligence, bad faith, fraud,
intentional misconduct or willful default in the performance or
non-performance by BCI or any Affiliate thereof (including Consultants
acting hereunder) of its obligations or duties under or pursuant to the
terms of this Agreement. BCI shall be entitled to defend itself against any
such claim with the involvement of Telinor but shall not settle the same
without the consent of Telinor, such consent not to be unreasonably
withheld.
8.3 Subject to Clause 8.1, each party shall be liable hereunder only for direct
damages incurred by the other and in no event shall either party be liable
for any consequential or indirect damages for any breach of this Agreement.
8.4 Telinor shall have no responsibility to BCI or a Consultant in respect of a
liability or payment arising under Mexican law on termination or severance
of a Consultant and BCI shall indemnify and hold Telinor harmless in
respect of any such liability or payment and any loss, damage, expense,
cost, (including attorneys fees) arising out of such a termination or
severance and Telinor shall be entitled to defend itself against any such
claim with the involvement of BCI but shall not settle the same without the
consent of BCI, which consent shall not be
Page 14
unreasonably withheld. For purposes of Clause 3.1.3, Costs shall include
any penalty for early termination of a Consultant whose Services are
terminated by Telinor, or by BCI upon request from Telinor and which is
paid by BCI, subject to a maximum amount representing the compensation
payable to such Consultant for a thirty (30) day period.
9. ADDITIONAL RESPONSIBILITIES OF TELINOR
9.1 In addition to its obligations under this Agreement, Telinor shall at no
cost to BCI:
(a) provide all necessary secretarial, office, telecommunications, and
other business facilities required by the Consultants in Mexico for
the performance of the Services;
(b) assist, on a reasonable efforts basis, BCI from time to time in
connection with the obtention of the visas and/or work permits and
such other necessary Mexican government permissions required to enable
the Consultants and their families to enter and work in Mexico and
allow payment outside Mexico of the fees in connection thereto;
(c) register this Agreement and all of its subsequent amendments with the
appropriate authorities (if legally required) and advise BCI of the
date of registration. Telinor will seek and obtain (if necessary) the
approval of this Agreement by all relevant Mexican authorities; and
(d) provide the Consultants with access to a sufficient number of
qualified and properly trained personnel, to be mutually agreed upon.
10. FORCE MAJEURE
10.1 Neither party shall be in default or liable for any loss or damage
resulting from delays in performance or from failure to perform or comply
with terms of this Agreement (other than payment obligations or obligations
that said party is unable to perform due to said party's breach of a
contract or contracts) due to any event, which event is beyond its
reasonable control, was not caused by it and, which despite such party's
reasonable efforts, will result in a delay in the performance or compliance
with any material term of this Agreement, including but not limited to:
(a) unusually severe weather, including lightning, storms, earthquakes,
landslides, floods, washouts, volcanic eruptions and other acts of
God;
(b) fires, explosion and destruction, whether accidentally or
intentionally caused and whether partial or complete, lack or failure
of transportation facilities, epidemic, quarantine, labour disputes;
Page 15
(c) war, declared or undeclared, revolution, civil commotion, acts of
public enemies, blockades, embargo, acts of civil disobedience, acts
of civil or military authorities, acts stemming from governmental
bodies, including courts and regulatory bodies;
provided that the party affected by such event has exercised
reasonable measures, if feasible, to mitigate such delays, loss or
damage.
10.2 The party affected by such event (the "Affected Party") shall within twenty
(20) Business Days notify the other party setting out in reasonable details
the nature of such event of force majeure and its effect upon the
obligations of the Affected Party, a detailed description, if applicable,
of work-around plans, alternative sources or any other means such party
will or proposes to utilize to make up for any such period of delay and to
prevent any further delay. Thereupon, the obligations of the Affected Party
shall be suspended during, but no longer than the continuance of the event
of force majeure, and the time for performance of any obligation hereunder
shall be extended by the actual time of delay caused by such event;
provided, however, that unless an Affected Party shall notify the other
party within the period (except if such period cannot be met because of the
event of force majeure) and in the manner stated in this Clause 10.2, such
party shall not be entitled to and shall not claim an extension of time for
that event of force majeure, and shall not by reason of any delay arising
from such event of force majeure, be relieved in any way, or to any extent,
from its obligations to proceed with, execute and complete its performance
of, and compliance with, the terms of this Agreement.
11. TERM AND TERMINATION
11.1 This Agreement shall have a minimum term of five (5) years from the date
hereof, unless otherwise mutually agreed, and may thereafter be extended by
mutual agreement of the parties.
11.2 This Agreement shall automatically terminate when BCI-Shareholder and any
Affiliate thereof no longer hold any Equity Shares (including for greater
certainty, the series B Shares authorized under the Original By-laws to be
held by BCI-Shareholder prior to the First Subscription Date) in Telinor
(the "Disposition") or when the Shareholders' Agreement is terminated with
respect to BCI in accordance with Clauses 14.2.2 or 14.2.3 of the
Shareholders' Agreement, unless otherwise agreed by the parties.
11.3 Notwithstanding any termination of this Agreement, the Shareholders'
Agreement, the Secondment Agreement referred to in Clause 3.1, or a
Disposition, Telinor's obligation to pay the Services Fees described in
Clauses 3.1.1 and 3.1.2 shall continue following termination of any such
agreements or a Disposition, and shall survive the termination of this
Agreement, the above referenced Secondment Agreement or of the
Page 16
Shareholders' Agreement or a Disposition. Notwithstanding the above, there
shall be no survival of such Fees beyond termination of this Agreement, if
this Agreement terminates pursuant to Clause 11.2 or Telinor terminates
this Agreement on the basis of an event described in Clause 11.5(a) or (c)
during the period from the date hereof to the first anniversary of the
Service Launch.
In the event of a Disposition, BCI may request that a lump sum payment in
lieu of such Services Fees payable after the Disposition, be made to it. In
such case, BCI and Telinor shall negotiate in good faith to determine the
present value of the future payments of Services Fees.
11.4 BCI may, at its option, terminate this Agreement by giving written notice
to Telinor in any of the following events, namely:
(a) a material breach by Telinor of any material obligations contained in
this Agreement which has not been cured within sixty (60) Business
Days after written notice thereof to Telinor specifying the breach and
requiring such remedy;
(b) the insolvency or bankruptcy of Telinor or the making of an assignment
for the benefit of creditors, or the appointment of a trustee or
receiver and manager or liquidator for Telinor or for all or a
substantial part of its property, or the commencement of a bankruptcy,
reorganization, arrangement, insolvency or similar proceedings by or
against Telinor under the laws of any jurisdiction;
(c) Telinor ceases to conduct its Business;
(d) all or substantially all of Telinor's assets are sold, or otherwise
disposed of; or
(e) the Spectrum Concession is terminated for any reason.
11.5 Telinor may at its option, terminate this Agreement, by giving written
notice to BCI in any of the following events, namely:
(a) a material breach by BCI of any material obligations contained in this
Agreement which has not been cured within sixty (60) Business Days
after written notice thereof by Telinor specifying the breach and
requiring such remedy;
(b) the insolvency or bankruptcy of BCI or the making of an assignment for
the benefit of creditors, or the appointment of a trustee or receiver
and manager or liquidator for BCI or for all or a substantial part of
its property, or the commencement of a bankruptcy, reorganization,
arrangement, insolvency or similar proceedings by or against BCI under
the laws of any jurisdiction; or
(c) If BCI-Shareholder and/or any Affiliate thereof owns less than one
thousand series B Shares of Telinor authorized under the Original
By-
Page 17
laws prior to the First Subscription Date and less than fifty percent
(50%) of the Series B Shares of Telinor after the First Subscription
Date.
11.6 The termination regardless of its cause or its nature shall be without
prejudice of any other rights or remedies of either party without liability
to the other party (except as provided in this Agreement) for any loss or
damage occasioned thereby, and each party shall remain responsible for its
obligations existing immediately prior to the termination.
The termination of this Agreement for any cause shall not release either
party hereto from any liability which at the time of termination has
already accrued to the other party hereto or which thereafter may accrue in
respect to any act or omission prior to termination or from any obligation
which is expressly stated herein to survive termination.
11.7 Notwithstanding the expiration or termination of this Agreement, Clauses
3.1 (other than 3.1.3 thereof), 3.2, 4, 5, 6, 7, 8, 11.3, 11.6, 11.7, 15
and 16, as well as all the definitions of the Shareholders' Agreement which
are incorporated in such Clauses by reference, shall survive any such
expiration or termination and shall remain in full force and effect until
completion of the obligations referred to therein.
12. ASSIGNMENT
No party may assign its rights and obligations under this Agreement, in
whole or in part, except with the prior consent of the other party, which
consent shall not be unreasonably withheld, provided, however, that BCI may
effect an assignment of its rights and obligations hereunder to an
Affiliate of BCI, upon mere written notice to Telinor subject to such
assignment not increasing Telinor's obligations under this Agreement
(except for a de minimis amount) and provided that BCI shall continue to
remain responsible, jointly with such Affiliate, for the provision of
Services hereunder.
BCI shall have the right from time to time to sub-contract any of the
Services to its Affiliates or Third Parties, although in such instances,
BCI shall continue to have primary responsibility towards Telinor with
respect to those Services subcontracted.
Page 18
13. WAIVER
13.1 Except as otherwise expressly provided in this Agreement, no failure or
delay by any party in exercising any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise by such party of any right, power or privilege preclude
any further exercise thereof or the exercise of any other right, power or
privilege.
13.2 Except as otherwise expressly provided in this Agreement, no waiver of any
right hereunder or of any breach or failure to perform shall be effective
unless executed in writing.
13.3 The waiver of any right hereunder or of any failure to perform or breach
hereof shall not constitute or be deemed as a waiver of any other right
hereunder or of any other failure to perform or other breach hereof,
whether of a similar or dissimilar nature thereto.
14. NOTICES
Any notice or communication which shall be given under this Agreement shall
be made in writing in the English language, and given by telecopier, with
an original sent by courier, addressed to a party at its telecopier number
and address set forth below, or such other telecopier number and/or address
for such party as shall have been communicated by it to the other party in
accordance with this Clause 14. Any notice or other communication shall be
deemed to have been received on the date of transmission but only if a
confirmation of the receipt by the recipient of the telecopier appears
correctly at the end of the sender's telecopy.
If to BCI :
Bell Canada International Inc.
1000 de La Gauchetiere St. West
Suite 1100
Montreal, Quebec
H3B 4Y8
Telecopier No.: (514) 392-2342
Attention: Vice-President, Law and
Corporate Secretary
Page 19
If to TELINOR:
Telefonia Inalambrica Del Norte, S.A. de C.V.
Vasconcelos 210 Otc.
Residencial San Agustin
Gorza Garcia, N.L.
Mexico
Telecopier No.: 011-528-363-5091
Attention: Tomas Milmo Santos
with a copy to:
D & A Morales Y Asociados, S.C.
Vallarta 811 Sur
Colonia Mirador
64070 Monterrey, N.L.
Mexico
Telecopier No.: (52-8) 342-9322
Attention: Alberto J. Morales
15. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Quebec and the laws of Canada applicable therein
without giving effect to any choice of conflict of law rules.
16. DISPUTE RESOLUTION
16.1 In the event of a Dispute among BCI and Telinor arising under or in
connection with this Agreement, including a Dispute over whether there has
been a material breach to this Agreement, the following shall apply:
a) They shall use their good faith efforts to settle such Dispute. To
this end, any party may notify the other party of its desire to
initiate the procedure contemplated by this Clause 16, whereupon the
parties shall forthwith convene to attempt to resolve such disputes
through amicable and good faith discussions. Disputes which the
parties are unable to resolve through such discussions within thirty
(30) days following receipt of the notice referred to in this Clause
16.1a), shall upon the request of any party to the Dispute, be
submitted to a panel consisting of designees from the chief executive
officer of BCI and Telinor. The designees shall consult and negotiate
with each other in good faith in an effort to reach a just and
equitable solution.
b) If the designees do not reach a solution within a period of thirty
(30) days following the beginning of their consultations and
negotiations, any party may treat the same as an arbitrable dispute by
giving notice
Page 20
to the other party, in which case the dispute shall be submitted to a
final and binding arbitration under the rules of the American
Arbitration Association's Commercial Arbitration Rules, including the
Supplementary Procedures for International Commercial Arbitration
excluding any such rules relating to the posting of security for costs
(the "Rules"). The arbitral tribunal shall be composed of three
persons, who shall be appointed in accordance with the Rules;
provided, however, that one (1) of the arbitrators must be an attorney
admitted to the Quebec bar.
16.2 The arbitration shall be held in the English language. The proceedings
shall be conducted, and any arbitral award shall be made, in the city of
New York in the United States. The parties agree that the obligations
herein are `commercial' and that the New York Convention on Recognition and
Enforcement of Foreign Arbitral Awards is applicable. The prevailing party
shall be entitled to recover from the other party (as part of the arbitral
award or order) its or their reasonable attorneys' fees and other costs of
arbitration.
17. ENTIRE AGREEMENT; ORAL EXPLANATION: AMENDMENTS
This Agreement and its Schedules together with the Secondment Agreement and
the Shareholders' Agreement constitute the entire agreement of the parties
hereto with respect to the subject matter covered herein and supersedes all
prior understandings, and agreements. No oral explanation or oral
information by any of the parties shall alter the meaning or interpretation
of this Agreement. No amendment hereto shall be effective or binding on any
of the parties unless reduced to writing with specific reference to this
Agreement, and executed by the respective duly authorized representatives
of each of such parties.
18. NON-SOLICITATION
Telinor agrees not to enter into any employment or consulting agreement or
arrangement, directly or indirectly, written or verbal with any Consultant,
agent, employee or independent contractor of BCI or any Affiliate thereof
who provides Services directly to Telinor hereunder for a period of twelve
(12) months following his or her completion of such Services, unless
authorized in advance by BCI in writing.
19. SEVERABILITY
The invalidity or unenforceability of any provision, in whole or in part,
of this Agreement shall not in any way affect the validity or
enforceability of any other parts or provisions thereof, provided, however,
that the parties hereto shall use their reasonable efforts to achieve the
purpose of the invalid or unenforceable provision or part thereof by a new
valid and enforceable stipulation.
Page 21
20. LANGUAGE
The English version of this Agreement is the only authentic version thereof
and it shall determine the construction, interpretation, application and
performance of this Agreement.
21. RELATIONSHIP OF THE PARTIES
No party has the power or authority to legally bind any of the other
parties. Nothing herein shall be construed as authorizing any party to act
as an agent or representative of the other parties and nothing herein shall
be taken to constitute or create a partnership, an agency or a joint
venture among any of the parties. 22. RIGHTS AND REMEDIES
All rights and remedies provided for in this Agreement are in addition to,
and not exclusive of, any other rights or remedies otherwise available at
law or in equity.
23. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
when so executed shall be deemed to be an original, but all of which taken
together shall constitute one and the same complete and executed agreement.
24. FURTHER ASSURANCES
Each of the parties hereto shall cooperate with the other and execute and
deliver to the other such instruments and documents and take such other
actions as may reasonably be requested from time to time in order to carry
out, evidence and confirm their respective rights and the intended purpose
of this Agreement.
25. CONSENTS
Telinor shall obtain at its own cost all licenses, permits or consents
which may be required by Telinor in order for BCI to be free to provide or
make available the Services.
Page 22
IN WITNESS WHEREOF, the parties have signed and delivered this Agreement on the
day and year set forth above.
BELL CANADA INTERNATIONAL INC. TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ______________________________ By: _______________________________
Name: Michael Lisogurski Name:
Title: Executive Vice-President, Title:
Corporate Development
Witness: _____________________________ Witness: __________________________
Page 23
SCHEDULES
SCHEDULE "A": General Description of Services
SCHEDULE "B": Request for Services
SCHEDULE "C": Direct costs on which the 15% charge is to be applied
Schedule "A"
Areas of BCI assistance to Telinor:
BCI is in a position to assist with respect to the following:
A) Network Plan
i) Network design
o Analysis of technology requirements and appropriate radio frequency
o Preparation of 5 year target architecture
o Preparation of requirements for switch, access, transport
o Finalization of Operations Support Systems requirements
o Preparation of Request for Quotations from Suppliers
o Analysis of Suppliers Responses
o Negotiation of Supplier contracts
o Release of equipment orders
o Development of interconnection requirements
ii) Radio Frequency Plan
o Clearing of spectrum where necessary
o Identify potential CellSite locations
o Negotiation of leases
o Monitoring of civil work
iii) Central Office
o Finalization of specific switch sites leases
o Negotiation of lease arrangements
o Development of site modifications plans
o Solicitation of bids for modifications
o Monitoring of site modifications
iv) Transport
o Identification of transport route plans for cable/ fiber
facilities, if any
o Acquisition of rights-of-way
v) Acceptance
o Preparation of acceptance for Operations Support Systems and billing
applications
o Network acceptance
vi) Project Management
Page 1
o Establishment of the project implementation program
o Provision of guidance on project management
o Coordination of the training program
B) Marketing Strategy & Sales
o Definition of Market segmentation
o Development of specific services offerings and price plans
o Finalization of strategic marketing partners
o Elaboration and development of overall marketing
and sales plans
o Development of advertising programs
o Participation in the development of system sales procedures
o Establishment of distribution channels
o Coordination of the training program
C) Customer Care
o Development of the implementation plan of the customer care services
o Development of the training programs for call center, activation and
credit control and face to face centers
o Development and establishment of procedure
o Coordination of sales training program
D) Information Technology
o Preparation of corporate Management Information Systems plan
o Evaluation of Business Support Systems
o Evaluation of billing application o Evaluation of
customer care application
o Evaluation of Network Management Systems
o Preparation and evaluation of Request for quotations
o Review of installation & acceptance
E) Organization Plan
o Set-up of management organization
o Identification of general training requirements
o Set-up of compensation plan with incentive programs
o Recruitment of personnel
o Preparation of staffing plans
F) Financial Matters
o Preparation of pre-operating budget
o Development and preparation of operating budgets
Page 2
o Evaluation of financing requirements
o Development and preparation of reporting structure
o Set-up of accounting system
G) Regulatory Matters
o Development of auction related activities
o Negotiation of interconnection agreements
o Establishment of rate structure and technical requirements
on interconnection
Page 3
Schedule "B"
Request for Services
1. Description of Services Required
2. Expected Duration of Services
3. Date of Commencement of Services
4. Location of Services
5. Contact Person at Telinor
Name: ________________________________
Address: ________________________________
________________________________
Telephone: ________________________________
Fax: ________________________________
Authorized Telinor Signatory
Date: _______________________________
Schedule "C"
Direct costs on which the 15% charge is to be applied
A. For purposes of Clause 3.1.3, the direct costs for the Services of a
Consultant, where the Consultant is an employee of BCI or one of its
Affiliates, shall be:
i) Salary
ii) Pro-rata portion of annual performance bonus and completion bonus, if
any
iii) Pro-rata portion of company benefits, when paid for directly by BCI or
reimbursed by BCI to one of its Affiliates, including such coverage as:
o Pensions
o Health care benefits
o Medical insurance
o Dental/vision care
o Survivor protection program
o Short and long-term disability
iv) Living expenses and allowance:
o Per-diem
o Lodging
o Mobilization and de-mobilization expenses
o Travel allowance
and any other direct related expenses.
B. For purposes of Clause 3.1.3, if the Consultant is employed by a Third Party,
the direct costs shall be:
i) Consulting fee
ii) Per-diem and lodging expenses
iii) Travel allowance
and any other direct related expenses.
Schedule "C" - Schedule of Share Allocations
[Enlarge/Download Table]
EQUITY OWNERSHIP AS OF June 30, 1997
New Shares Issued Pro forma Shares Outstanding
---------------------------------------- -----------------------------------------------------------------------
Voting Non-Voting Total Voting Non-Voting Total % Total % Voting
Holdco 0 0 0 22,000,000 0 22,000,000 100.000% 100.000%
BCI 0 0 0 0 0 0 0.000% 0.000%
WorldTel 0 0 0 0 0 0 0.000% 0.000%
----------- ------------- -------------- ------------- -------------- ------------- -------------- -------------
Total 0 0 0 22,000,000 0 22,000,000 100.000% 100.000%
=========== ============= ============== ============= ============== ============= ============== =============
EQUITY OWNERSHIP AFTER GIVING EFFECT TO THE INITIAL EQUITY CONTRIBUTIONS
New Shares Issued Proceeds Price per Pro forma Shares Outstanding
Voting
----------------------------------------- ---------------------------------------------------------
Voting * Non-Voting Total ($MM) Share** Voting Non-Voting Total % Total % Voting
Holdco 826,699 4,734,110 5,560,809 1.40 $1.120830 22,826,699 4,734s110 27,560,809 50.084% 51.000%
BCI 12,041,069 3,041,192 15,082,261 1.80 $0.124232 12,041,069 3,041,192 15,082,261 27.408% 26.903%
WorldTel 9,890,329 2,495,496 12,385,825 1.80 $0.156764 9,890,329 2,495,496 12,385,825 22.508% 22.097%
------------ ------------- -------------- ----------- ------------ ----------- ---------- ---------
Total 22,758,097 10,270,798 33,028,895 5.00 44,758,097 10,270,798 55,028,895 100.000% 100.000%
============ ============= ============== =========== ============ =========== ========== =========
EQUITY OWNERSHIP AFTER GIVING EFFECT TO SECOND SUBSCRIPTION
New Shares Issued Proceeds Price per Pro forma Shares Outstanding
Voting
---------------------------------------- ---------------------------------------------------------
Voting Non-Voting Total ($MM) Share Voting Non-Voting Total % Total % Voting
Holdco 22,826,699 4,734,110 27,560,809 68.60 $2.797859 45,653,398 9,468,220 55,121,618 50.084% 51.000%
BCI 12,041,069 3,041,192 15,082,261 88.20 $7.072363 24,082,138 6,082,384 30,164,522 27.408% 26.903%
WorldTel 9,890,329 2,495,496 12,385,825 88.20 $8.665486 19,780,658 4,990,992 24,771,650 22.508% 22.097%
----------- ------------- -------------- ------------ ----------- ------------ -------------------
Total 44,758,097 10,270,798 55,028,895 245.00 89,516,194 20,541,596 110,057,790 100.000% 100.000%
=========== ============= ============== ============ =========== ============ ========= =========
EQUITY OWNERSHIP AFTER GIVING EFFECT TO THE RE-ALLOCATION OF EQUITY INTERESTS (Assuming Project IRR < 45%)
Shares Transferred Pro forma Shares Outstanding
---------------------------------------- ------------------------------------------------------------------------
Voting Non-Voting Total Voting Non-Voting Total % Total % Voting
Holdco 0 (9,468,220) (9,468,220) 45,653,398 0 45,653,398 41.481% 51.000%
BCI 0 0 0 24,082,138 6,082,384 30,164,522 27.408% 26.903%
WorldTel 0 9,468,220 9,468,220 19,780,658 14,459,212 34,239,870 31.111% 22.097%
-------------- ------------- -------------- ------------- --------------
89,516,194 20,541,596 110,057,790 100.000% 100.000%
============== ============= ============== ============= ==============
EQUITY OWNERSHIP AFTER GIVING EFFECT TO THE EXERCISE OF BCI OPTION ***
New Shares Issued Pro forma Shares Outstanding
---------------------------------------- ------------------------------------------------------------------------
Voting Non-Voting Total Voting Non-Voting Total % Total % Voting
Holdco 0 0 0 45,653,398 0 45,653,398 40.000% 51.000%
BCI 0 4,075,348 4,075,348 24,082,138 10,157,732 34,239,870 30.000% 26.903%
WorldTel 0 0 0 19,780,658 14,459,212 34,239,870 30.000% 22.097%
----------- ------------- -------------- -------------- ------------- -------------- ------------- --------------
Total 0 4,075,348 4,075,348 89,516,194 24,616,944 114,133,138 100.000% 100.000%
=========== ============= ============== ============== ============= ============== ============= ==============
* Existing Shareholders (Holdco) to get Series Shares Issued Upon Exercise of BCI Option 4,075,348
A Voting Shares
BCI to get Series B Voting Shares New Shares Issued / Shares Outstanding (Pre-Exercise) 3.703%
WorldTel to get Series C Voting Shares Non Voting Shares / Total Shares 21.6%
Non-Voting Shares = Series N
** Series N Shares price = US $0.10 for Closing; US $1.00 for Second
Subscription subject to adjustment.
*** 2,037,674 Series N Shares to be issued with Initial Equity Contribution
of BCI and 2,037,674 Series N Shares to be issued with Second
Subscription by BCI.
SCHEDULE "D"
REGISTRATION RIGHTS
1. Definitions
1.1 Terms defined in the Unanimous Shareholders Agreement (the "USA")
dated as of October 6, 1997 among Bell Canada International (Mexico
Telecom) Limited, Telinor Telefonia, S. A. de C. V., WorldTel Mexico
Telecom Ltd. and Telefonia Inalambrica de Norte, S. A. de C. V. are
used herein as therein defined.
1.2 References to Clauses, unless otherwise indicated, are references to
the specified Clauses of this Schedule "D".
1.3 For purposes of this Schedule "D", the following terms have the
following meanings:
"BMV" means the Mexico Stock Exchange or successor entity;
"Commissions" means the relevant securities commissions and regulatory
authorities, and any Securities Exchanges;
"Demand Registration" shall have the meaning ascribed thereto in
Clause 2.1.1;
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended (or any successor laws thereto);
"Indemnified Party" shall have the meaning ascribed thereto in Clause
4.3;
"Indemnifying Party" shall have the meaning ascribed thereto in Clause
4.3;
"Inspectors" shall have the meaning ascribed thereto in Clause 3.1
(g);
"Jurisdiction" means any jurisdiction where Shares of the same Class
as the Registrable Securities included in the subject Demand or
Tag-Along Registration are registered, listed or quoted or, are
proposed to be registered, listed or quoted in accordance with Clause
2.1;
"NASD" means the National Association of Securities Dealers, Inc. or
any successor organization and any comparable organization in any
other applicable Jurisdiction other than the United States of America;
"Offering Shareholder" means i) for purposes of a Demand Registration
and Clause 3.1 (b), any holder (or group of holders acting in concert)
of at least 5% of the issued and outstanding Equity Shares of the
Corporation and ii) for purposes of a Tag-Along Registration any
holder of any Equity Shares of the Corporation or, as the context may
require, any one of such Persons that is entitled to and elects to
sell any Registrable Securities pursuant to a Demand Registration or a
Tag-Along Registration;
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any amendments or supplements
thereto, including post-effective amendments and all exhibits and
materials incorporated by reference in such prospectus;
"Records" shall have the meaning ascribed thereto in Clause 3.1 (g);
"Registration" means a registration of Shares or other securities of
the Corporation for trading in the BMV or pursuant to a Registration
Statement filed in the United States of America in accordance with the
requirements of the SEC, or a public offering pursuant to a
Registration Statement in any other relevant Jurisdiction ;
"Registrable Securities" means any Shares held by an Offering
Shareholder, from time to time, provided that such Shares shall cease
to be Registrable Securities if and when: (i) a Registration Statement
with respect to the disposition of such Shares shall have become
effective under the Securities Act and any applicable Securities Laws
and such Shares shall have been disposed of pursuant thereto, or (ii)
such Shares shall have been sold in a public transaction exempt from
the registration requirements of the Securities Act pursuant to Rule
144 of the Securities Act or analogous provisions of any applicable
Securities Laws, or (iii) such Shares shall have ceased to be
outstanding;
"Registration Statement" means any registration statement or other
similar document of the Corporation in connection with a Registration
under the Securities Act or other applicable Securities Laws which
covers Registrable Securities pursuant to the provisions of this
Schedule "D", including amendments and supplements to such
Registration Statement, including post-effective amendments, and all
exhibits and materials incorporated by reference in such Registration
Statement;
"Rule 144" shall have the meaning ascribed thereto in Clause 5.2;
"SEC" means the Securities and Exchange Commission of the United
States of America and any successor entity to any such agency;
"Securities Act" means the United States Securities Act of 1933, as
amended (or any successor laws thereto);
"Securities Exchanges" means the securities exchanges on which Shares
or other securities of the same Class as the Registrable Securities
included in the subject Demand or Tag-Along Registration are listed or
quoted or, are proposed to be listed or quoted in accordance with
Clause 2.1, including the US National Association of Securities
Dealers Automated Quotation System;
"Securities Laws" means the applicable securities legislation in
Canada, Mexico and the United States of America and the securities
legislation of any other relevant Jurisdictions;
"Tag-Along Registration" shall have the meaning ascribed thereto in
Clause 2.2; and
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal with a view toward re-sale.
2. Registration Rights
2.1 Demand Registration
2.1.1 Subject to the terms hereof and to the terms of Clause 4.9.2 of
the USA, the Offering Shareholders shall have the following
rights (in each case, a "Demand
-2-
Registration") to require the Corporation to effect Registration
of all or part of their Registrable Securities:
a) at any time after completion of First Stage Equity
contributions by all of the Shareholders and on or before
the fifth anniversary of the Closing Date, the holder (or
group of holders acting in concert) of a majority of Series
A Shares, with the consent of the holder (or group of
holders acting in concert) of a majority of Series B Shares
and of the holder (or group of holders acting in concert) of
a majority of Series C Shares (such consent not to be
unreasonably withheld), will be entitled to require the
Corporation to effect Registration in Canada, Mexico or the
United States of America, of all or part of its Registrable
Securities (including, without limitation, Series N Shares
owned by the Trust and in accordance with the Trust
Agreement), provided that if such Registration is an initial
public offering, such Registration must be in connection
with a Qualified Offering; and
b) at any time after the fifth anniversary of the Closing Date
, each Offering Shareholder will be entitled to cause the
Corporation to effect Registration in Canada, Mexico or the
United States of America of all or part of its Registrable
Securities, provided that if such Registration is an initial
public offering, such Registration must be in connection
with a Qualified Offering.
It is understood and agreed that, for purposes of this Schedule
"D", a Shareholder may not withhold any required consent to
effect any Registration based on the fact that some Governance
Rights or Transfer restrictions could not be maintained as a
result of the actions described in Clause 4.9.2. of the USA.
2.1.2 Notwithstanding Clause 2.1.1, the Corporation shall not be
obligated to effect (i) any Demand Registration covering
Registrable Securities representing less than five per cent (5%)
of the then issued and outstanding Shares of the Corporation,
(ii) more than one (1) Demand Registration pursuant to the
provisions of this Clause 2.1 in any nine-month period, and (iii)
a Demand Registration during the period starting fourteen (14)
Days prior to and ending ninety (90) Days after the effective
date of the Corporation's most recent Registration Statement
filed under the Securities Act or under applicable Securities
Laws covering Shares of the same Class as the Registrable
Securities included in the subject Demand Registration, except
that this restriction shall not apply to a U.S. Registration
Statement on Form S-8. It is understood that a Registration on
the BMV may not be effected unless such Registration is in
respect of at least 15% of the issued and outstanding Shares
after giving effect to the offering.
2.1.3 Any request for a Demand Registration will specify (i) the
aggregate number, Class and Series of Registrable Securities
proposed to be sold by the Offering Shareholder; (ii) the
intended method of disposition thereof including in which
Jurisdiction(s) the Offering Shareholder desires such offer to be
made and the Securities Exchange(s) on which the Offering
Shareholder desires such Registrable Securities to be listed or
quoted, the whole subject to Clause 2.1.1; (iii) contain the
undertaking of the Offering Shareholder to provide all such
information
-3-
regarding its holdings and the proposed manner of distribution
thereof as may be required in order to permit the Corporation to
comply with all applicable Securities Laws and all requirements
of the relevant Commissions and Securities Exchanges, and to
obtain acceleration of the effective date of any Registration
Statement covering such Registrable Securities, and; (iv) specify
whether such offer and sale shall by made by an underwritten
public offering.
2.1.4 A Registration will not count as a Demand Registration until it
has become effective. In addition, if more than fifty per cent
(50%) of the aggregate number of Registrable Securities requested
to be Registered are excluded from the offering in accordance
with Clause 2.3, such offering will not count as a Demand
Registration.
2.1.5 If the offering of such Registrable Securities pursuant to such
Demand Registration is an underwritten offering, the Offering
Shareholder making the demand for such Demand Registration shall
select the book-running managing Underwriter and any additional
investment bankers and managing Underwriters to be used in
connection with the offering, provided that such Underwriters and
investment bankers must be reasonably satisfactory to the
Corporation and the other Offering Shareholders.
2.2 Tag-Along Registration
If, subject to and in accordance with the terms of Clauses 4.9.2 and
9.2 of the USA, the Corporation proposes to file a Registration
Statement for any Shares (i) for the Corporation's own account (other
than (a) a Registration Statement on Form F-4, S-4 or any substitute
form that may be adopted by the SEC, or analogous forms of any
relevant Securities Exchanges, for the offering of Shares as
consideration for a business acquisition, (b) a Registration Statement
on Form S-8, or analogous forms of any relevant Securities Exchanges,
or other form for the offering of Shares in connection with employee
benefit plans, or (c) a Registration Statement in connection with a
dividend re-investment plan for the Corporation), or (ii) for the
Registration of Shares of any of its respective security holders,
including any Demand Registrations (other than a resale Registration
Statement for securities acquired in connection with employee benefit
plans), then the Corporation shall give written notice of such
proposed filing to each Offering Shareholder as soon as practicable
(but in no event less than fifteen (15) Business Days before the
anticipated filing date), and such notice shall offer each Offering
Shareholder the opportunity to register such number of Registrable
Securities as each Offering Shareholder may request on the same terms
and conditions as the proposed offering (a "Tag-Along Registration").
An Offering Shareholder will have ten (10) Days after receipt of any
such notice to notify the Corporation as to whether it wishes to
participate in a Tag-Along Registration and, if so, the number of
Registrable Securities proposed to be included in such offering. The
Offering Shareholders and Corporation shall use their best efforts to
cause the managing Underwriters of a proposed underwritten offering to
permit the Registrable Securities to be included in a Tag-Along
Registration to be so included on the same terms and conditions as any
similar securities, if any, included therein.
2.3 Reduction of Offering
Notwithstanding anything contained herein, if the book-running
managing Underwriter of an offering described in Clause 2.1 or Clause
2.2 states in writing that, in its good faith
-4-
judgement (i) the size of the offering that the Offering Shareholders,
the Corporation and any other Persons intend to make or (ii) the
combination of securities that the Offering Shareholders, the
Corporation and any such other Persons intend to include in such
offering are such that the success of the offering is reasonably
likely to be materially and adversely affected by the inclusion of the
Registrable Securities, then:
a) if the size of the offering is the basis of such Underwriter's
opinion, the aggregate amount of Registrable Securities to be
offered for the account of the Offering Shareholders shall be
reduced to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount
recommended by such Underwriter, provided that in the case of a
Demand Registration or a Tag-Along Registration, the amount of
Registrable Securities to be offered for the account of the
Offering Shareholders shall be reduced, proportionately to the
number of Registrable Securities each Offering Shareholder
proposes to include in the offering, only after the amount of
securities to be offered for the account of the Corporation and
any other Persons that are not Offering Shareholders has been
reduced to zero; and
b) if the combination of securities to be offered is the basis of
such Underwriter's opinion, the Registrable Securities to be
included in such offering shall be reduced as described in Clause
(a) above, except that in the case of a Tag-Along Registration,
if the actions described in Clause (a) would, in the judgment of
the managing Underwriter in consultation with the Corporation, be
insufficient to substantially eliminate the adverse effect that
inclusion of the Registrable Securities requested to be included
would have on such offering, the Registrable Securities that are
the cause of the Underwriter's concern with respect to the
combination of securities will be excluded from such offering or
reduced proportionately to the number of such Registrable
Securities each Offering Shareholder proposes to include in the
offering.
2.4 Registration Expenses
In connection with any Demand Registration or Tag-Along Registration,
the Corporation shall pay all reasonable and necessary expenses in
connection with the preparation of the Registration Statement (and the
related Prospectus) including, without limitation, the following
expenses incurred in connection with such Registration: (i) all SEC,
Securities Exchange and NASD registration and filing fees, (ii) fees
and expenses of compliance with applicable Securities Laws and "blue
sky" or similar laws (including reasonable fees and disbursements of
counsel in connection with "blue sky" qualifications of the
Registrable Securities), (iii) printing expenses, (iv) fees and
expenses incurred in connection with the listing of the Registrable
Securities on the relevant Securities Exchanges, (v) fees and expenses
of counsel and independent certified public accountants for the
Corporation (including fees and expenses associated with the delivery
of special audits or comfort letters), (vi) fees and expenses of any
additional experts retained by the Corporation in connection with such
Registration, (vii) internal expenses of the Corporation (including
salaries and expenses of officers and employees), and (viii) expenses
of marketing the offering (including, without limitation, road show
expenses). The Offering Shareholder shall pay any underwriting fees,
discounts or commissions attributable to the sale of Registrable
Securities.
-5-
3. Registration Procedures
3.1 Filing; Information
Whenever an Offering Shareholder requests that any Registrable
Securities be registered pursuant to Clause 2 hereof, the Corporation
will use its best efforts to effect the Registration and sale of such
Registrable Securities in accordance with the requested method of
disposition thereof as promptly as reasonably practicable, and in
connection with any such request:
a) The Corporation will as expeditiously as possible prepare and
file with the SEC and/or relevant Commissions a Registration
Statement on any form for which the Corporation then qualifies
and which counsel for the Corporation shall deem appropriate and
available for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended method of
distribution thereof, and use its best efforts to cause such
filed Registration Statement to become and remain effective for a
period of not more than six (6) months (or such shorter period
which will terminate when all Registrable Securities covered by
such Registration Statement have been sold but not before the
expiration of the period referred to in Section 4 (3) of the
Securities Act and Rule 174 thereunder, if applicable or any
analogous provisions of applicable Securities Laws) from the date
of the effectiveness of the Registration Statement or such longer
period as is necessary to comply with the provisions of the
Securities Act, and any applicable Securities Laws; provided that
if the Corporation shall furnish to the Offering Shareholders a
certificate signed by the Corporation's Chairman, President or
any Vice-President stating that in his good faith judgement it
would be materially detrimental or otherwise materially
disadvantageous to the Corporation or its shareholders for such a
Registration Statement to be filed as expeditiously as possible
(provided that such determination shall not be based on the fact
that some Governance Rights or Transfer restrictions could not be
maintained as a result of the actions described in Clause 4.9.2
of the USA), the Corporation shall have a period of not more than
ninety (90) Days within which to file such Registration Statement
measured from the date of the Corporation's receipt of the
Offering Shareholder's request for Registration in accordance
with Clause 2.1; provided, further, that the Corporation may only
furnish one such certificate before it has filed such
Registration Statement.
b) The Corporation will, if requested, at least five (5) Business
Days prior to filing such Registration Statement, furnish to each
Offering Shareholder and each applicable managing Underwriter, if
any, drafts in substantially final form of such Registration
Statement, and thereafter furnish to each Offering Shareholder
and each such Underwriter, if any, such number of copies of such
Registration Statement and the Prospectus included in such
Registration Statement (including each preliminary Prospectus) as
each Offering Shareholder or each such Underwriter may reasonably
request in order to facilitate the sale of the Registrable
Securities. The Corporation shall also furnish each Offering
Shareholder with
-6-
copies of all correspondence from the SEC or other relevant
Commissions and all response letters thereto.
c) After the filing of the Registration Statement, the Corporation
will promptly notify each Offering Shareholder of any stop order
issued or, to the Corporation's knowledge, threatened to be
issued by the SEC, any other relevant Commissions or any
Securities Exchanges and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered.
d) The Corporation will use its best efforts to register or
otherwise qualify the Registrable Securities for offer and sale
under such other securities or blue sky laws of such
jurisdictions in or within Mexico, Canada, the United States of
America or within any other applicable Jurisdiction as the
Offering Shareholder or the Underwriter reasonably (in the light
of the intended plan of distribution) request, and to do any and
all other acts and things that may be necessary or advisable to
consummate the requested disposition of the Registrable
Securities, provided that the Corporation will not be required to
(i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph
(d), (ii) subject itself to general taxation in any such
jurisdiction or (iii) consent to general service of process in
any such jurisdiction.
e) The Corporation will as promptly as practicable notify the
Offering Shareholders, of the occurrence of any event requiring
the preparation of a supplement or amendment to any of the
aforesaid Registration Statements so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
Registration Statements will not contain an untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading and promptly make available to the Offering
Shareholders and to the Underwriters any such supplement or
amendment. The Offering Shareholders agree that, upon receipt of
any notice from the Corporation of the occurrence of any event of
the kind described in the preceding sentence, the Offering
Shareholders will forthwith discontinue the offer and sale of
Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until receipt by the
Offering Shareholders and the Underwriters of the copies of such
supplement or amendment. In the event the Corporation shall give
such notice, the Corporation shall extend the period during which
such Registration Statement shall be maintained effective as
provided in Clause 3.1 (a) hereof by the number of Days in the
period from and including the date of the giving of such notice
to the date when the Corporation shall make available to the
Offering Shareholders and Underwriters if applicable , such
supplemented or amended Registration Statement.
f) The Corporation and each Offering Shareholder will enter into
customary agreements (including an underwriting agreement having
representations, warranties, covenants and closing conditions
consistent with un-
-7-
derwriting agreements heretofore entered into by other issuers
similarly situated and take such other actions as are reasonably
required in order to expedite or facilitate the sale of such
Registrable Securities.
g) The Corporation will make available for inspection by each
Offering Shareholder, any Underwriter participating in any
disposition pursuant to such Registration Statement and any
attorney, accountant or other professional retained by each
Offering Shareholder or Underwriter (collectively, the
"Inspectors"), all financial or other records, pertinent
corporate documents and properties of the Corporation
(collectively, the "Records") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and
cause the Corporation's officers, directors and employees to
supply all information reasonably requested by any Inspectors in
connection with such Registration Statement. Records which the
Corporation determines, in good faith, to be confidential and
which it notifies the Inspectors are confidential shall not be
disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or
omission in such Registration Statement, (ii) is or becomes in
the public domain other than as a result of a disclosure directly
or indirectly by Inspectors, or (iii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction; provided that nothing contained herein
shall be construed as prohibiting any Inspector from disclosing
any Records to any Offering Shareholders. Each Offering
Shareholder agrees that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give
notice to the Corporation and allow the Corporation, at its
expense, to undertake appropriate action to prevent disclosure of
the Records deemed confidential.
h) The Corporation will furnish to each Offering Shareholder and
each Underwriter a signed counterpart, addressed to each Offering
Shareholder or such Underwriter, of (i) an opinion or opinions of
counsel to the Corporation and (ii) a comfort letter or comfort
letters from the Corporation's independent public accountants,
each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case
may be, and shall furnish such other opinions, letters and
certificates as are then customary for offerings of the type
covered by such Registration Statements as each Offering
Shareholder or the managing Underwriter reasonably request.
i) The Corporation will otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC, any other
relevant Commissions and any relevant Securities Exchanges and
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of twelve
(12) months, beginning within three (3) months (or six (6) months
if semi-annual reporting is the requirement in the relevant
Jurisdiction) after the effective date of the Registration
Statement, which earnings statement need not be audited but shall
satisfy the provisions of Section 11 (a) of the Securities Act or
analogous Securities Laws and the rules and regulations of the
SEC thereunder, or any other relevant Securities Exchange.
-8-
j) The Corporation will use its best efforts to cause all such
Registrable Securities to be listed on each Securities Exchange
or trading system on which such Class of securities issued by the
Corporation are then listed.
k) The Corporation may require each Offering Shareholder to furnish
in writing to the Corporation such information regarding each
Offering Shareholder, the plan of distribution of the Registrable
Securities and other information as the Corporation may from time
to time reasonably request or as may be legally required in
connection with such Registration.
4. Indemnification and Contribution
4.1 Indemnification by the Corporation
In the event of any Registration covering Registrable Securities
pursuant hereto, the Corporation agrees to indemnify and hold
harmless, to the extent permitted by law, each Offering Shareholder ,
its officers and directors, each Person, if any, who controls the
Offering Shareholder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act or analogous
provisions of applicable Securities Laws and each Person retained by
an Offering Shareholder and who may be subject to liability under any
applicable Securities Laws, from and against any and all losses,
claims, damages, costs, expenses and liabilities, joint or several,
(including, without limitation, any legal or other expenses reasonably
incurred by such indemnified person in connection with defending or
investigating any such action or claim) to which they or any of them
may become subject under applicable Securities Laws or other
applicable laws or regulations, and which arise out of, are based
upon, or are caused by any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement
or Prospectus (as amended or supplemented if the Corporation shall
have furnished any amendments or supplements thereto) or any
preliminary Prospectus, or arise out of, are based upon, or are caused
by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, except with respect to a particular Offering
Shareholder insofar as such losses, claims, damages, costs, expenses
or liabilities arise out of, are based upon or are caused by (i) any
such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the
Corporation by or on behalf of such Offering Shareholder expressly for
use therein or (ii) such Offering Shareholder's failure to comply with
a Prospectus delivery requirement imposed on it under applicable law,
if any, including any failure to deliver, after delivery of a
preliminary Prospectus, a Prospectus containing corrected, modified or
amended disclosure with respect to any material fact. The Corporation
also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors and each Person who controls
such Underwriters on substantially the same basis as that of the
indemnification of the Offering Shareholder provided in this Clause
4.1.
4.2 Indemnification by the Offering Shareholder
In the event of any Registration covering Registrable Securities
pursuant hereto, each Offering Shareholder agrees to indemnify and
hold harmless the Corporation, its officers and directors and each
Person, if any, who controls the Corporation within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange
Act or analogous
-9-
provisions of applicable Securities Laws, and the other Offering
Shareholders, their officers and directors, each Person, if any, who
controls such Offering Shareholders within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act or
analogous provisions of applicable Securities Laws, and each Person
retained by an Offering Shareholder and who may be subject to
liability under applicable Securities Laws, to the same extent as the
foregoing indemnity from the Corporation to the Offering Shareholder,
but only with reference to information relating to such Offering
Shareholder or the plan of distribution furnished in writing by or on
behalf of such Offering Shareholder expressly for use in any
Registration Statement or Prospectus relating to the Registrable
Securities, or any amendment or supplement thereto, or any preliminary
Prospectus. The Offering Shareholder also agrees to indemnify and hold
harmless any Underwriters of the Registrable Securities, their
officers and directors and each Person who controls such Underwriters
on substantially the same basis as that of the indemnification of the
Corporation provided in this Clause 4.2, and subject to the
limitations thereto in this Clause 4.2, provided, however, that the
foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom
the Person asserting any such losses, claims, damages or liabilities
purchased Shares, or any Person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the
Corporation shall have furnished any amendments of supplements
thereto) was not sent or given by or on behalf of such Underwriter to
such person, if required by law so to have been delivered, at or prior
to the written confirmation of the sale of the Shares to such person,
and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities.
4.3 Conduct of Indemnification Proceedings
In case any proceeding (including any governmental investigation)
shall be instituted or threatened involving any Person in respect of
which indemnity may be sought pursuant to Clause 4.1 or Clause 4.2,
such Person (the "Indemnified Party") shall promptly notify the Person
against whom such indemnity may be sought (the "Indemnifying Party")
in writing, provided that the failure to provide such notification
shall not prejudice the rights of any Indemnified Party unless and
only to the extent that such failure results in the forfeiture by the
Indemnifying Party of substantial rights and defenses, and the
Indemnifying Party, upon the request of the Indemnified Party, shall
assume the defense of such proceeding and retain counsel reasonably
satisfactory to such Indemnified Party to represent such Indemnified
Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified
Party unless (i) the Indemnifying Party and the Indemnified Party
shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded
parties) include both the Indemnified Party and the Indemnifying Party
and representation of both Parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the Indemnifying Party shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any
time for all such Indemnified Parties, and that all such reasonable
fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Indemnified Parties, such firm
shall be designated in writing by the Indemnified Parties and shall be
reasonably satisfac-
-10-
tory to the Indemnifying Party. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its prior
written consent, which consent shall not be unreasonably withheld, but
if settled with such consent, or if there be a final judgement for the
plaintiff, the Indemnifying Party shall indemnify and hold harmless
such Indemnified Parties from and against any loss or liability (to
the extent stated above) by reason of such settlement or judgement. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability arising out of
such proceeding.
4.4 Contribution
a) If the indemnification provided for in Clause 4 from the
Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any losses, claims, damages, liabilities
or expense referred to therein, then the Indemnifying Party in
lieu of indemnifying such Indemnified Party, shall contribute to
the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Parties in connection with the
actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
consideration. The relative fault of such Indemnifying Party and
Indemnified Parties shall be determined by reference to, among
other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such Indemnifying Party or
Indemnified Parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action; provided, however, that in no event shall the liability
of any selling Offering Shareholder hereunder be greater in
amount than the difference between the dollar amount of the
proceeds received by such Offering Shareholder upon the sale of
the Registrable Securities giving rise to such contribution
obligation and all amounts previously contributed by such
Offering Shareholder with respect to such losses, claims,
damages, liabilities and expenses.
b) The Corporation and the Offering Shareholder agree that it would
not be just and equitable if contribution pursuant to this Clause
4.4 were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as
a result of the losses, claims, damages, costs, expenses or
liabilities referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending
any action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the
Securities Act or analogous provisions of any applicable
Se-
-11-
curities Laws) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
5. Miscellaneous
5.1 Participation in Underwritten Registrations
No Offering Shareholder may participate in any underwritten registered
offering pursuant to a Tag-Along Registration unless it (a) agrees to
sell its Registrable Securities on the basis provided in any
underwriting arrangements approved by the Person entitled to select
the Underwriter in accordance with Clause 2.1.5 and (b) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements an other documents reasonably required under
the terms of such underwriting arrangements and this Schedule "D".
5.2 Rule 144
To the extent that the Corporation is the issuer of any Class of
Shares or securities registered under the Exchange Act , the
Corporation covenants that it will file any reports required to be
filed by it under the Exchange Act and that it will take such further
action as each Offering Shareholder may reasonably request to the
extent required from time to time to enable it to sell Registrable
Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC ("Rule 144"). Upon the
request of the Offering Shareholder, the Corporation will deliver to
it a written statement as to whether it has complied with such
reporting requirements.
5.3 Restrictions on Public Sale by the Offering Shareholder
To the extent not inconsistent with applicable law, if any Registrable
Securities are included in a Demand Registration or a Tag-Along
Registration, each Offering Shareholder offering Shares in such Demand
or Tag-Along Registration will agree not to effect any public sale or
distribution of the issue being registered or a similar security of
the Corporation, or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to Rule
144, during the fourteen (14) Days prior to, and during the ninety
(90)-Day period beginning on, the effective date of such Registration
Statement (except as part of such Registration), if and to the extent
requested by the managing Underwriter or Underwriters in the case of
an underwritten offering.
5.4 Restrictions on Public Sale by the Corporation
The Corporation agrees, if and to the extent requested by the managing
Underwriter or Underwriters in the case of an underwritten offering,
not to effect any public sale or distribution of any securities
similar to those being registered in accordance with a Demand
Registration or a Tag-Along Registration, or any securities
convertible into or exchangeable or exercisable for such securities,
during the fourteen (14) Days prior to, and during the ninety (90)-Day
period beginning on, the effective date of any Registration Statement
(except as part of such Registration as permitted by Clause 2) or the
commencement of a public distribution of Registrable Securities.
-12-
5.5 No Prior Ranking Rights
Except with the prior written consent of the Offering Shareholders,
the Corporation shall not grant any registration rights to holders,
present or future, of any Shares or securities of the Corporation
which would rank prior to or pari passu with the registration rights
granted in this Schedule "D".
5.6 Duration
Except as otherwise specifically provided in this Schedule "D", the
provision of this Schedule "D" shall inure to the benefit of and be
binding upon each Offering Shareholder, the Corporation and their
respective successors.
5.7 Further Assurances
The Offering Shareholders and the Corporation, in connection with an
offering pursuant to this Schedule "D", will take such further
individual and corporate action as to grant authority (and to evidence
such authority) to effect the actions contemplated hereby, including
such resolutions of the Board of Directors and Shareholders of the
Corporation as may be required in connection with a Registration.
-13-
SCHEDULE "E"
LIST OF CLOSING DOCUMENTS
1. Powers of Attorney (revocation of old ones and execution of new ones)
2. Evidence of elimination of Randall & Ass. option granted by the Corporation
3. Executed copy of the Trust Agreement
4. Call Option Powers of Attorney
5. Representations and Warranties by Holdco and the Corporation (Clause 3.2.4)
SCHEDULE F
EXECUTION COPY
================================================================================
___________________
TRUST AGREEMENT
Dated as of November 13, 1997
___________________
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
Organization
SECTION 1.1 Name ..........................................................6
SECTION 1.2 Office.........................................................6
SECTION 1.3 Purposes and Powers............................................6
SECTION 1.4 Appointment of Trustee.........................................7
SECTION 1.5 Declaration of Trust...........................................8
SECTION 1.6 Liability of the Owners........................................8
SECTION 1.7 Title to Trust Property........................................8
SECTION 1.8 Situs of Trust.................................................9
SECTION 1.9 Shares Legended................................................9
SECTION 1.10 Representation, Warranties and Covenants of Holdco.............9
SECTION 1.11 Representations, Warranties and Covenants of OffshoreCo.......10
ARTICLE II
Owner Certificates and Transfer of Interests
SECTION 2.1 Initial Ownership.............................................11
SECTION 2.2 Ownership Interests...........................................12
SECTION 2.3 Registration of Transfer and Exchange of Owner Certificates...12
SECTION 2.4 Mutilated, Destroyed, Lost or Stolen Owner Certificates.......14
SECTION 2.5 Limitation on Transfer........................................14
ARTICLE III
Actions by Trustee
SECTION 3.1 Prior Notice to Owners with Respect to Certain Matters........15
SECTION 3.2 Action with Respect to Bankruptcy.............................15
SECTION 3.3 Restrictions on Owners' Power.................................15
SECTION 3.4 Majority Control..............................................15
ARTICLE IV
Application of Trust Funds; Certain Duties
SECTION 4.1 Establishment of Trust Accounts...............................16
SECTION 4.2 Distribution of Trust Funds and N Shares......................16
SECTION 4.3 Method of Payment.............................................21
-i-
SECTION 4.4 Accounting and Reports to the Owners, the Internal Revenue
Service and Others..........................................21
SECTION 4.5 Signature on Returns..........................................21
ARTICLE V
Authority and Duties of Trustee
SECTION 5.1 General Authority.............................................22
SECTION 5.2 General Duties................................................22
SECTION 5.3 Action upon Instruction.......................................22
SECTION 5.4 No Duties Except as Specified in This Agreement or in
Instructions................................................23
SECTION 5.5 No Action Except Under Specified Documents or Instructions....23
SECTION 5.6 Restrictions..................................................24
ARTICLE VI
Concerning the Trustee
SECTION 6.1 Acceptance of Trusts and Duties...............................24
SECTION 6.2 Furnishing of Documents.......................................25
SECTION 6.3 Representations and Warranties of Trustco.....................25
SECTION 6.4 Reliance; Advice of Counsel...................................27
SECTION 6.5 Not Acting in Individual Capacity.............................27
ARTICLE VII
Compensation of Trustee
SECTION 7.1 Trustee's Fees and Expenses...................................28
SECTION 7.2 Indemnification...............................................28
SECTION 7.3 Payments to the Trustee.......................................28
ARTICLE VIII
Termination of Trust Agreement
SECTION 8.1 Termination of Trust Agreement................................29
ARTICLE IX
Successor Trustees
and Additional Trustees
SECTION 9.1 Resignation or Removal of Trustee.............................29
SECTION 9.2 Successor Trustee.............................................30
SECTION 9.3 Merger or Consolidation of Trustee............................31
-ii-
ARTICLE X
Miscellaneous
SECTION 10.1 Supplements and Amendments....................................31
SECTION 10.2 No Legal Title to Trust Estate in Owners......................32
SECTION 10.3 Limitations on Rights of Others...............................32
SECTION 10.4 Notices.......................................................33
SECTION 10.5 Severability..................................................35
SECTION 10.6 Separate Counterparts.........................................35
SECTION 10.7 Successors and Assigns........................................35
SECTION 10.8 Headings......................................................35
SECTION 10.9 Governing Law.................................................35
-iii-
EXHIBIT A -- Class A Owner Certificate
EXHIBIT B -- Class B Owner Certificate
EXHIBIT C -- Certificate of Trust
EXHIBIT D -- Allocation of N Shares
EXHIBIT E -- Allocable Share Agreement
EXHIBIT F -- Shareholders Agreement
EXHIBIT G -- Undertaking of Adherence
-iv-
TRUST AGREEMENT dated as of November 13, 1997, by and among WorldTel Mexico
Telecom, Ltd., a Bermuda corporation ("OffshoreCo"), Telinor Telefonia, S.A. de
C.V., a Mexican corporation ("Holdco" and, together with OffshoreCo, the
"Owners" and each individually an "Owner"), Telefonia Inalambrica del Norte,
S.A. de C.V., a Mexican corporation (the "Company"), and Wilmington Trust
Company, a Delaware banking corporation (in its individual capacity, "Trustco"),
as Trustee (the "Trustee").
RECITALS
WHEREAS, OffshoreCo, Holdco, the Company and the Trustee intend to
establish a trust (the "Trust") pursuant to the Delaware Business Trust Act, as
amended (the "Act");
WHEREAS, Holdco intends to contribute 9,468,220 Series N Shares issued by
the Company (the "N Shares") representing 8.3% of the total issued and
outstanding Equity Shares of the Company on a fully diluted basis to the Trust
pursuant to that certain Unanimous Shareholders Agreement, dated as of October
6, 1997, among Holdco, OffshoreCo, Bell Canada International (Mexico Telecom),
Limited and the Company (the "Shareholders Agreement"); and
WHEREAS, it is the intention of the parties hereto that, upon determination
of the Project Equity IRR (as defined below), such N Shares shall be allocated
among the Owners.
NOW, THEREFORE, in consideration of the foregoing, other good and valuable
consideration and the mutual terms and covenants contained herein, the parties
hereto agrees as follows:
DEFINITIONS
In this Agreement, unless the context otherwise requires, the following
words and phrases shall have the respective meanings set forth below:
"Accountants" shall have the meaning set forth in Section 4.2(a)(i).
"Act" shall have the meaning set forth in the Recitals.
"Bankruptcy Law" shall mean any insolvency, reorganization, moratorium or
similar law for the general relief of debtors in any relevant jurisdiction.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which commercial banks are required or permitted to be closed in Montreal
(Canada), New York City (USA), Wilmington, Delaware (USA), Monterrey, Nuevo Leon
(Mexico), Bermuda or in the British Virgin Islands.
"Class A Interests" shall have the meaning set forth in Section 2.2.
"Class A Owner Certificates" shall have the meaning set forth in Section
2.1(a).
"Class B Interests" shall have the meaning set forth in Section 2.2.
"Class B Owner Certificates" shall have the meaning set forth in Section
2.1(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collection Account" shall have the meaning set forth in Section 4.1.
"Expenses" shall have the meaning set forth in Section 7.2.
"Holdco" shall have the meaning set forth in the Recitals.
"Indemnified Parties" shall have the meaning set forth in Section 7.2.
"IRR" means, in respect of any investment, that specific compounded annual
internal rate of return (rounded to the nearest whole number, with fractions .50
and higher being rounded up to the next higher whole number and fractions less
than .50 being rounded down to the next lower whole number) in respect of such
investment, determined as the discount rate, which when applied to all the
negative
-2-
and positive cash flows paid or received in connection with said investment,
yields a net present value of zero.
"N Shares" shall have the meaning set forth in the Recitals.
"OffshoreCo" shall have the meaning set forth in the Recitals.
"Owner Certificates" shall have the meaning set forth in Section 2.1(a).
"Owners" shall have the meaning set forth in the Recitals.
"Ownership Interests" shall have the meaning set forth in Section 2.2.
"Permitted Investments" shall mean (a) direct obligations of the United
States of America or of any agency directly backed by the full faith and credit
of the United States of America or obligations guaranteed as to principal and
interest by the United States of America and maturing within 180 days of the
acquisition thereof; (b) bankers' acceptances, certificates of deposit and
Eurodollar certificates of deposit issued by any bank or trust company having
capital, surplus and undivided profits of at least $100,000,000 whose long-term
debt is rated "AA-" or better by S&P and "Aa3" or better by Moody's and maturing
within 180 days of the acquisition thereof; (c) commercial paper rated A-1 by
S&P and P-1 by Moody's, maturing not more than 180 days from the date of
acquisition thereof; and (d) guaranteed investment contracts issued by any bank
or trust company described in clause (b) above.
"Project Equity IRR" means the IRR calculated on the basis of the following
negative and positive cash flows: (a) all cash equity investments in the
Corporation made by all the Shareholders in connection with and only with the
Initial Equity Contribution and First Stage Equity, (b) any and all dividends
and/or other distributions paid prior to the relevant Liquidation Event (or, if
no liquidation Event has occurred, as of the date of the relevant Valuation) by
the Corporation to all the holders of Shares issued in connection with the
Initial Equity Contribution and First State Equity, (c) the total pro-
-3-
ceeds of any Share repurchase completed by the Corporation prior to the relevant
Liquidation Event (or, if no Liquidation Event has occurred, as of the date of
the relevant Valuation) to the extent such Share repurchase involved Shares
issued in connection with the Initial Equity Contribution and First Stage Equity
and (d) the aggregate Realizable Value of all of the Voting Shares and N Shares
(other thaN Shares which were included in any Share repurchase completed by the
Corporation prior to the relevant Liquidation Event or Valuation) issued in
connection with the Initial Equity Contribution and First Stage Equity.
Where: "Realizable Value" means the sum of (I) the product of (a) the average
price per Voting Share (net of any taxes levied by the Mexican Government,
on a withholding basis or otherwise (other than income tax imposed on
OffshoreCo as a result of OffshoreCo being deemed to have a "permanent
establishment" in Mexico (except solely as a result of this Agreement))
(the "Mexican Taxes")) (x) actually received by OffshoreCo in the relevant
Liquidation Event or (y) which would have been received by OffshoreCo had
it sold any of its Voting Shares in connection with the relevant
Liquidation Event (or, if no Liquidation Event has occurred, if OffshoreCo
had sold its Voting Shares in the transaction considered for purposes of
the relevant Valuation), multiplied by (b) the total number of Voting
Shares (other than Voting Shares which were included in any Share
repurchase completed by the Corporation prior to the relevant Liquidation
Event or Valuation) issued in connection with the Initial Equity
Contribution and First Stage Equity, plus (II) the product of (a) the
average price per N Share (net of any Mexican Taxes) (x) actually received
by OffshoreCo in the relevant Liquidation Event or (y) which would have
been received by OffshoreCo had it sold any of its N Shares in connection
with the relevant Liquidation Event (or, if no Liquidation Event has
occurred, if OffshoreCo had sold its N Shares in the transaction considered
for purposes of the relevant Valuation), multiplied by (b) the total number
of N Shares (other than N Shares which were included in any Share
repur-
-4-
chase completed by the Corporation prior to the relevant Liquidation Event
or Valuation) issued in connection with the Initial Equity Contribution and
First Stage Equity.
Any dividends paid by the Corporation and/or proceeds from the repurchase
of Shares by the Corporation shall also be calculated net of Mexican Taxes.
Mexican Taxes shall be calculated to reflect any tax credits actually
realized by OffshoreCo or its shareholders or which OffshoreCo or its
shareholders know they will receive in the future by virtue of the payment of
such Taxes, it being understood that no such credit is presumed to exist, and it
is the current expectation of OffshoreCo that no such credit will be obtained.
An officer's certificate of OffshoreCo as to the amount (if any) of such tax
credits shall be conclusive and binding on the parties.
The effective date of all cash flows used to calculate the Project Equity
IRR (the "Effective Date") shall be deemed to be date on which cash payment is
received by the beneficiary in the form of immediately available funds. For
purposes of calculating the Project Equity IRR, all cash flows shall be
converted into United States Dollars using the rate of exchange published in the
"Federal Official Daily" ("Diario Official de la Federacion") on the Business
Day prior to the Effective Date.
"Second Valuation" shall have the meaning set forth in Section 4.2(a)(ii).
"Shareholders Agreement" shall have the meaning set forth in the Recitals.
"Third Valuation" shall have the meaning set froth in Section 4.2(a)(ii).
"Trust Estate" shall have the meaning set forth in Section 1.3(i).
"Valuation" shall have the meaning set forth in Section 4.2(a)(ii).
"Valuator" shall have the meaning set forth in Section 4.2(a)(ii).
-5-
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed thereto in the Shareholders Agreement.
ARTICLE I
Organization
SECTION 1.1 Name. The name of the Trust created hereby shall be "Mexico
Telecom N Share Trust," in which name the Trust and the Trustee on behalf of the
Trust may take any action as provided herein.
SECTION 1.2 Office. The office of the Trust shall be in care of the Trustee
at the address set forth in Section 104 or at such other address in Delaware as
the Trustee may designate by written notice to the parties hereto.
SECTION 1.3 Purposes and Powers. The purpose of the Trust is to engage in
the following activities:
(i) to receive and to own in trust, preserve and protect the N Shares
and all dividends and distributions thereon and all proceeds of any of the
foregoing, including without limitation any Permitted Investments
(collectively, the "Trust Estate"), in all respects subject to the terms of
this Agreement (including the possible reallocation of beneficial ownership
of the N Shares among the Owners or reversion to Holdco in whole or in
part);
(ii) to pay the fees of the Trustee and the costs and expenses of the
Trust and to perform the Trust's obligations under this Agreement;
(iii) to invest and reinvest the cash assets of the Trust, or any part
thereof, in any Permitted Investments;
-6-
(iv) to employ accountants, attorneys and agents and to pay the fees
and expenses thereof pursuant to Article IV;
(v) to make distributions out of the Trust Estate pursuant to Article
IV;
(vi) to exercise, upon the request of the holders of a majority of
each of the Class A and Class B Interests, any rights conferred on the
holders of Series N Shares under the Company's Bylaws and the Shareholders
Agreement not expressly reserved in such Bylaws or Agreement to one or more
of the Shareholders;
(vii) to engage in only those activities, including entering into,
executing, delivering and performing agreements, that are necessary,
suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith; and
(viii) to engage in such other activities as may be required in
connection with the protection or conservation of the Trust Estate and the
making of distributions to holders of the Class A and Class B Owner
Certificates.
The Trust shall not (i) engage in any activity other than (a) the foregoing
or (b) any activity that is both necessary to the foregoing and within the
contemplation of this Agreement or that is required or authorized or otherwise
permitted by the terms of this Agreement, nor (ii) own or hold any assets other
than the Trust Estate.
SECTION 1.4 Appointment of Trustee. Holdco and OffshoreCo hereby appoint
Trustco as trustee of the Trust and Trustco hereby accepts such appointment, and
the Company consents to such appointment, in each case effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
-7-
SECTION 1.5 Declaration of Trust. Holdco hereby declares that, immediately
after the satisfaction of the Second Subscription Conditions and the issuance of
all of the N Shares to Holdco and by way of an endorsement in trust (endoso en
propiedad fiduciaria) it will transfer, assign, set over and otherwise convey to
the Trust, for the benefit of the Owners and for the purposes set forth in
Section 1.3, all of the N Shares, free of any lien, encumbrance or limitation of
any kind (except pursuant to this Agreement or the Shareholders Agreement). The
Trustee on behalf of the Trust hereby declares that it will hold the Trust
Estate in trust upon and subject to the conditions set forth herein for the sole
use and benefit of the Owners.
Holdco hereby assumes the obligation of informing the Secretary of the
Company of the endorsement of the Series N Shares immediately after such
endorsement takes place so that the Trust shall be recorded by the Company as
the legal holder in trust of the Series N Shares in the Company's Shareholder
Registry Book.
It is the intention of the parties hereto that the Trust constitute a
business trust under the Act and that this Agreement constitute the governing
instrument of such business trust. Prior to the Closing, the Trustee shall cause
the filing of the Certificate of Trust in the form attached hereto as Exhibit C
with the Secretary of State. Effective as of the date hereof, the Trustee shall
have all rights, powers, authority and authorization set forth herein and in the
Act with respect to accomplishing the purposes of the Trust.
SECTION 1.6 Liability of the Owners. Subject to Section 7.3, no Owner shall
have any personal liability for any liability or obligation of the Trust.
SECTION 1.7 Title to Trust Property. Legal title to all of the Trust Estate
shall be vested at all times in the Trust as a separate legal entity during the
term of this Agreement except where applicable law in any jurisdiction in which
all or a part of the Trust Estate is located requires title to any
-8-
part of the Trust Estate to be vested in a trustee or trustees, in which case
title to such part of the Trust Estate shall be deemed to be vested in the
Trustee, a co-trustee and/or a separate trustee, as the case may be.
SECTION 1.8 Situs of Trust. The Trust will be located and administered in
the State of Delaware. All bank accounts maintained by the Trustee on behalf of
the Trust shall be located in the State of Delaware. The Trust shall not have
any employees in any state other than Delaware. The only office of the Trust
will be at the address set forth in Section 10.4 in Delaware.
SECTION 1.9 Shares Legended. Each certificate evidencing N Shares shall
bear the following legend:
"Endoso en Propiedad Fiduciaria la Totalidad de las acciones que
ampara el presente Certificado Provisional (o Titulo Definitivo) en favor
de Wilmington Trust Company en su caracter de Fiduciario/Trustee de
conformidad con y para los efectos de Contrato de Fideicomiso celebrado el
dia ______ del mes de Octubre de 1997." [Fecha, Lugar Y Firma del
representante legal de Holdco]"
SECTION 1.10 Representation, Warranties and Covenants of Holdco. Holdco
represents, warrants and covenants to OffshoreCo, the Company and the Trustee
that:
(a) Holdco is a subsisting corporation duly organized under the laws of
Mexico and has all requisite corporate power and authority to own its properties
and to carry on its business as now being and heretofore conducted.
Holdco's representative for purposes of this Agreement and for purposes of
subscribing the endorsement on each of the certificates evidencing the N Shares
as contemplated hereby has all requisite powers and faculties to perform such
acts on behalf of Holdco.
(b) Holdco has the corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; Holdco has full power
and authority to transfer and assign the N Shares to the Trust, and prior to the
Closing Holdco shall have duly authorized such transfer and
-9-
assignment to the Trust by all necessary corporate actions; and the execution,
delivery and performance of this Agreement has been duly authorized by Holdco by
all necessary corporate action.
(c) The consummation of the transactions contemplated by this Agreement and
the fulfillment of the terms hereof do not result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, the constitutive documents of Holdco, or any material
indenture, agreement or other instrument to which Holdco is a party or by which
it is bound; nor result in the creation or imposition of any material lien or
encumbrance upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to this
Agreement); nor violate any law, order, rule or regulation applicable to Holdco
of any court or of any regulatory body of the government of Mexico, or of any
agency or other governmental instrumentality having jurisdiction over Holdco or
its properties.
(d) Holdco is the duly recorded holder of the Series N Shares issued by the
Company, all of which are free and clear of liens, encumbrances and limitation
of ownership (except pursuant to this Agreement or the Shareholders Agreement).
SECTION 1.11 Representations, Warranties and Covenants of OffshoreCo.
OffshoreCo represents, warrants and covenants to Holdco, the Company and the
Trustee that:
(a) OffshoreCo is a corporation duly organized and validly existing under
the laws of Bermuda and has all requisite corporate power and authority to own
its properties and to carry on its business as now being and heretofore
conducted.
(b) OffshoreCo has the corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; and the execution,
delivery and performance of this Agreement has been duly authorized by
OffshoreCo by all necessary corporate action.
-10-
(c) The consummation of the transactions contemplated by this Agreement and
the fulfillment of the terms hereof do not result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, the constitutive documents of OffshoreCo, or any
material indenture, agreement or other instrument to which OffshoreCo is a party
or by which it is bound; nor result in the creation or imposition of any
material lien or encumbrance upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument (other than pursuant to this
Agreement); not violate any law, order, rule or regulation applicable to
OffshoreCo of any court or of any regulatory body of the government of Bermuda,
or of any agency or other governmental instrumentality having jurisdiction over
OffshoreCo or its properties.
ARTICLE II
Owner Certificates and Transfer of Interests
SECTION 2.1 Initial Ownership.
(a) Upon the formation of the Trust, the contribution of the N Shares from
Holdco and the issuance by the Trust of the Class A Owner Certificates to Holdco
and the Class B Owner Certificates to OffshoreCo, Holdco and OffshoreCo shall be
the sole beneficial owners of the Trust. At the Closing, the Trustee on behalf
of the Trust shall execute, authenticate, issue and deliver to Holdco Class A
Owner Certificates in the form attached hereto as Exhibit A (the "Class A Owner
Certificates") representing the 500 Class A Interests (as defined below) and to
OffshoreCo Class B Owner Certificates in the form attached hereto as Exhibit B
(the "Class B Owner Certificates"; and together with the Class A Owner
Certificates, the "Owner Certificates") representing the 500 Class B Interests
(as defined below). OffshoreCo shall have no obligation whatsoever to make any
contribution to the Trust in return for the Class B Owner Certificates or for
any other reason.
-11-
(b) The Owner Certificates shall be executed on behalf of the Trust by
manual signature of an authorized officer of the Trustee. Owner Certificates
bearing the manual signatures of individuals who were, at the time such
signatures were affixed, authorized to sign on behalf of the Trustee shall be
deemed to be validly issued by the Trust and entitled to the benefits of this
Trust Agreement and to evidence validly issued Ownership Interests,
notwithstanding that such individual, or any of them, shall have ceased to be so
authorized prior to the authentication and delivery of such Owner Certificates
or did not hold such offices on the date of execution of such Owner Certificates
or at any other time.
SECTION 2.2 Ownership Interests. The units into which the beneficial
interest in the Trust will be divided shall be designated as "Ownership
Interests". The Ownership Interests shall be divided into two classes herein
designated as the "Class A Interests" and the "Class B Interests", respectively.
The total number of Ownership Interests which the Trust may issue is 1000, of
which 500 will be Class A Interests and 500 will be Class B Interests. Each
Owner will have one vote with respect to each Ownership Interest owned by such
Owner, and except as otherwise stated herein, each Owner of an Ownership
Interest shall vote with respect all matters to be voted upon by the Owners.
SECTION 2.3 Registration of Transfer and Exchange of Owner Certificates.
The Trustee shall maintain, at the office or agency referred to in Section 1.2,
a certificate register in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for the registration of Owner
Certificates and of transfers and exchanges of Owner Certificates as herein
provided.
Upon surrender for registration of transfer of any Owner Certificate at the
office or agency maintained pursuant to Section 1.2, the Trustee shall (subject
to the limitations on transfer in Section 2.5) execute, authenticate and
deliver, in the name of the designated transferee, one or more new Owner
Certificates representing a like aggregate interest dated the date of execution
by the Trustee. At the option of an Owner, an Owner Certificate may be exchanged
for one or more Owner Certificates rep-
-12-
resenting a like aggregate interest upon surrender of the Owner Certificate to
be exchanged at the office or agency maintained pursuant to Section 1.2.
Every Owner Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Trustee duly executed by the Owner. In addition, every
transferee of an Owner Certificate shall execute and deliver to the Trustee a
letter, in form and substance satisfactory to the Trustee, agreeing to be bound
by the terms of this Agreement, agreeing that prior to the distribution of any
Equity shares to it in accordance with this Agreement it will become bound by
the Shareholders Agreement, and representing that the transferee and the
proposed transfer satisfy the requirements of Section 2.5, which letter will
state that it also may be relied upon by the Corporation and its Shareholders.
No distribution of any Equity Shares may be made by the Trustee to any holder of
an Owner Certificate unless such holder has become bound in writing by the
Shareholders Agreement and the other conditions provided in Clause 4.7 of the
Shareholders Agreement have been complied with; provided, however, that the
Trustee may request a written opinion of counsel in form and substance
reasonably satisfactory to the Trustee to the effect that the foregoing
restrictions have been complied with. Each Owner Certificate surrendered for
registration of transfer and exchange shall be canceled and subsequently
disposed of by the Trustee.
The Trustee may request a written opinion of counsel in form and substance
reasonably satisfactory to the Trustee to the effect that the proposed transfer
of Owner Certificates may be effected without registration under any applicable
securities laws and is being effected in accordance with Section 2.5.
No service charge shall be made for any registration of transfer or
exchange of Owner Certificates, but the Trustee may require payment by the
transferring Owner or the transferee of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Owner Certificates.
-13-
SECTION 2.4 Mutilated, Destroyed, Lost or Stolen Owner Certificates. If (a)
any mutilated Owner Certificate shall be surrendered to the Trustee, or if the
Trustee shall receive evidence to its satisfaction of the destruction, loss or
theft of any Owner Certificate and (b) there shall be delivered to the Trustee
such security or indemnity as may be reasonably required by it to save it
harmless, then, in the absence of notice that such Owner Certificate shall have
been acquired by a bona fida purchaser, the Trustee on behalf of the Trust shall
executed and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Owner Certificate, a new Owner Certificate of like
tenor and denomination. In connection with the issuance of any new Owner
Certificate under this Section 2.4, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Owner Certificate issued pursuant to this
Section 2.4 shall bear the legend "Duplicate Owner Certificate substitution
Original Owner Certificate No. __" and will constitute conclusive evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Owner Certificate shall be found at any time.
SECTION 2.5 Limitation on Transfer. No Owner may Pledge or Transfer all or
any part of its right, title and interest in and to this Agreement, the Trust,
the Trust Estate, the Ownership Interests or any Owner Certificate; provided,
however, that notwithstanding anything to the contrary in this Section 2.5, the
record holder of any Ownership Interest may pledge or transfer all or any part
of its right, title and interest in and to this Agreement, the Trust, the Trust
Estate, its Ownership Interests and its Owner Certificates to any Person to
which it is permitted to Pledge its Equity Shares or to Transfer Equity Shares
in the Company pursuant to the Shareholders Agreement and the By-laws without
the consent of any other Person so long as it has complied with any pledge or
transfer restrictions which are set forth in the Shareholders Agreement and the
By-laws and are applicable to a Transfer or Pledge of Equity Shares. Any
purported Pledge or Transfer made in breach of this Section 2.5 (including,
without limitation, the failure to comply with the transfer or pledge
restrictions provided for in the Shareholders Agreement and the By-laws) shall
be null and void and of no effect.
-14-
ARTICLE III
Actions by Trustee
SECTION 3.1 Prior Notice to Owners with Respect to Certain Matters. With
respect to the following matters, the Trustee shall not take action unless at
least 30 days (or such shorter period of time as reasonably may be specified in
such notice or as may be necessary under the circumstances) before the taking of
such action, the Trustee shall have notified the Owners in writing of the
proposed action and the Owners shall not have notified the Trustee in writing
prior to the 30th day after such notice is given that such Owners have withheld
consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust and the compromise
or settlement of any action, claim or lawsuit brought by or against the Trust;
or
(b) the election by the Trust to file an amendment to the Certificate of
Trust (unless required to do so under the Act).
SECTION 3.2 Action with Respect to Bankruptcy. The Trustee shall not have
the power to commence or consent to the commencement of a proceeding relating to
the Trust under any Bankruptcy Law and the Trust shall not have the power to
commence a voluntary case under any Bankruptcy Law.
SECTION 3.3 Restrictions on Owners' Power. The Owners shall not direct the
Trustee to take or refrain from taking any action if such action or inaction
would be contrary to any obligation of the Trust or the Trustee under this
Agreement or would be contrary to Section 1.3, nor shall the Trustee be
obligated to follow or be liable for following any direction, if given by the
record holders of a majority (or such greater portion, if so expressly provided
herein) of each class of Ownership Interests.
SECTION 3.4 Majority Control. Except as expressly provided herein, any
action that may be, or is required to be, taken by the Owners under this
Agreement is to be taken by the record
-15-
holders of Owner Certificates evidencing not less than a majority of each class
of Ownership Interest. The Owners may act by written consent and any written
notice of the Owners delivered pursuant to this Agreement shall be effective if
signed by record holders of Owner Certificates evidencing not less than a
majority of the Ownership Interests of each class at the time of the delivery of
such notice.
ARTICLE IV
Application of Trust Funds; Certain Duties
SECTION 4.1 Establishment of Trust Accounts. The Trustee, for the benefit
of the Owners, shall establish and maintain in the name of the Trust a deposit
account at its offices in Wilmington, Delaware (the "Collection Account") under
the sole control and dominion of the Trustee. All funds received by the Trustee
on behalf of the Trust from any person in respect of the N Shares shall be
deposited in the Collection Account to be distributed pursuant to this Article
IV. All funds on deposit in the Collection Account shall be invested by the
Trustee in Permitted Investments as directed in writing by the Owners or, if the
Owners have not so directed, in Permitted Investments described in clause (a) of
the definition thereof. All proceeds from such investment shall immediately
become part of the Trust Estate.
The Trust shall possess (for the benefit of the Owners) all right, title
and interest in all funds on deposit from time to time in the Collection Account
and in all proceeds thereof, which shall become part of the Trust Estate.
SECTION 4.2 Distribution of Trust Funds and N Shares.
(a) Allocation of Interests
(i) Liquidation Event. Upon receipt of written notice from the holder or
holders of a majority or each of the Class A and Class B Interests as to the
occurrence of a Liquidation Event, the Trustee shall, if instructed pursuant to
a joint written notice of holders of a majority of each of the Class A and Class
B Interests, promptly engage the internationally recognized firm of certified
public accountants
-16-
or investment bankers (the "Accountants") identified in such instructions or, if
the Trustee obtains actual knowledge that a Liquidation Event has occurred and
the Trustee has not received such joint instructions, the Trustee shall promptly
engage one of the firms set forth on the list attached hereto as Schedule I to
determine the Project Equity IRR. Absent manifest error, the Accountants'
determination shall be final and binding on the Company, the Trustee and the
holders of the Class A Owner Certificates and the Class B Owner Certificates.
After determination of the Project Equity IRR, the Accountants will, by
reference to the table attached hereto as Exhibit D, determine the portion of
the N Shares (or if all or a portion of the N Shares was disposed of in
connection with such Liquidation Event, the proceeds of such disposition) to be
allocated to the holders of the Class A and/or Class B Owner Certificates and
distributed by the Trustee.
(ii) Valuation. If a Liquidation Event has not occurred on or prior to the
eighth anniversary of the date hereof, a valuation of the Company shall be
performed in accordance with the following procedures:
(1) the record holders of a majority of the Class B Interests shall,
in their sole discretion, select an internationally recognized investment
banking firm, accounting firm or other valuator (each, a "Valuator") to
determine the Project Equity IRR based on the price per N Share (the "Class
B Valuation") which would most likely be obtained under the then current
market conditions by a willing seller from a willing buyer considering the
Company as a going concern and without taking into account any minority
-17-
discount or control premiums, and concurrently therewith, the record
holders of a majority of the Class A Interests shall, in their sole
discretion, select a Valuator to determine the Project Equity IRR based on
the price per N share (the "Class A Valuation" and together with the Class
B Valuation, the "Valuations") which would most likely be obtained under
the then current market conditions by a willing seller from a willing buyer
considering the Company as a going concern and without taking into account
any minority discount or control premiums. Each Valuator will deliver its
written determination of such Valuation to the Trustee within 60 days
following acceptance of its engagement and the Trustee shall deliver copies
of the Valuations to each record holder of an Ownership Certificate.
(2) If the higher Valuation is no more than ten (10) percent greater
than the lower Valuation, then the price per N Share used to calculate
Project Equity IRR will be the arithmetic average of both Valuations. If
the higher Valuation is more than ten (10) percent greater than the lower
Valuation, then both of the Valuators appointed in accordance with the
immediately preceding paragraph shall together appoint a third Valuator to
determine the price per N Share (the "Third Valuation", and together with
the Valuations, the "Three Valuations") in accordance with the immediately
preceding paragraph, and the valuation used to determine Project Equity IRR
shall be the arithmetic average of the two closest valuations of the Three
Valuations.
(b) The Valuator whose valuation was the lower of the two of the Three
Valuations averaged in accordance with Section 4.2(a)(ii)(2) will use the
average valuation determined in accordance with such Section to determine the
Project Equity IRR, and will by reference to the table attached hereto as
Exhibit D, determine the portion of the N Shares to be allocated to the holders
of the Class A and/or Class B Owner Certificates. Absent manifest error, the
valuations of the Company and allocation of N Shares determined in accordance
with Section 4.2(a)(ii) shall be final and binding on the Company, the Trustee,
the holders of the Class A Interests and the holders of the Class B Interests.
(c) Procedure for Reallocation of N Shares and Proceeds
(i) Proceeds. If the Trustee has received any proceeds of any disposition
of the N Shares, then within 5 Business Days immediately following the Business
Day on which the Trustee receives written notice of the determination of Project
Equity IRR and the allocation of such proceeds between the holders of the Class
A Owner Certificates and the Class B Owner Certificates in accordance
-18-
with Section 2.4(a), the Trustee shall distribute such proceeds then held by it
to the record holders of the Class A and/or Class B Owner Certificates in
accordance with such allocation.
(ii) N Shares. Within 5 Business Days immediately following the Business
Day on which the Trustee receives written notice of the determination of Project
Equity IRR and the allocation of the N Shares in accordance with Section 4.2(a),
the Trustee shall distribute the N Shares then held by it to the holders of the
Class A and/or Class B Owner Certificates in accordance with such allocation.
Such distribution will be effected through an endorsement of the relevant Share
certificate, by the Trustee on behalf of the Trust, in favor of the relevant
Owner or Owners, as the case may be, in the following form:
"Endoso en Propiedad la totalidad de las acciones que ampara el
presente Certificado Provisional (o Titulo Definitivo) en favor de
"[OffshoreCo] [Holdco]" en ejecucion del Contrato de Fideicomiso de
Fecha __ de [month] de [year]. [Fecha, Lugar y Firma del representate
legal del Trust]"
The Trustee will notify the Secretary of the Company in writing of any
distribution of N Shares in accordance with this Section 4.2(c)(ii), requesting
that the Company register the N Shares in the name(s) of the holders of the
Class A and/or Class B Owner Certificates, as the case may be, in accordance
with the allocation determined in accordance with Section 4.2(a). The Company
hereby covenants and agrees to register the N Shares in the Company's
Shareholders Registry Book in the name(s) of the holders of the Class A and/or
Class B Owner Certificates, as the case may be, in accordance with the
allocation determined in accordance with Section 4.2(a), and to deliver written
notice of such registration to the Trustee upon receipt of such written notice
given by the Trustee stating that such allocation has taken place.
Notwithstanding the foregoing, no such registration by the Company shall be made
unless such holders of the Class A and/or Class B Owner Certificates have become
bound in writing by the Shareholders Agreement and unless the other conditions
provided in Clause 4.7 of the Shareholders Agreement have been complied with.
-19-
(iii) Failure of the Company to Register N Shares. Until it has received
written notice from the Company that the Company has registered the N Shares as
requested by the Trustee pursuant to Section 4.2(c)(ii), the Trustee shall
continue to hold the N Shares in trust for holders of the Class A and/or Class B
Owner Certificates in the proportions which correspond to the allocation
determined in accordance with Section 4.2(a), and the Trustee shall pay any
dividends and/or distributions received by it with respect to the N Shares to
the holders of the Class A and/or Class B Owner Certificates solely in
accordance with such proportions and the Trust shall vote in any meeting of the
shareholders of the Company in which such shares are entitled to vote, the
proportions of the N Shares (a) allocated to the holders of the Class A
Certificates, if any, strictly in accordance with the written instructions of
the holders of a majority of the Class A Interests (and if no such written
instructions are received, to abstain from voting the N Shares so allocated) and
(b) allocated to the holders of the Class B Owner Certificates, if any, strictly
in accordance with the written instructions of the holders of a majority of the
Class B Interests (and if no such written instructions are received, to abstain
from voting the N Shares so allocated).
(d) Procedure upon Declaration of Dividends or Distributions. If the
Company declares any dividends and/or distributions on the N Shares, the Trustee
shall receive not less than 7 Business Days prior written notice of the intended
payment thereof and shall cause the Trust to organize a trust under the laws of
Bermuda (the "Distribution Trust"), the sole purpose of which is to hold such
dividends and/or distributions until required to be distributed to the holders
of the Class A and/or Class B Owner Certificates. The Trustee shall use its
reasonably best efforts to cause the Distribution Trust to be organized prior to
the payment of any such dividend or distribution and such payment shall be made
by the Company, on behalf of the Trust, directly to the Distribution Trust. The
trust agreement of the Distribution Trust shall contain provisions substantially
similar to the provisions of this Agreement and the fees, costs and expenses of
the Distribution Trust and of the trustee of the Distribution Trust shall be
deemed fees and expenses of the Trust and shall be recoverable by the Trustee in
accordance with Article VII. The Distribution Trust shall hold such dividends
and/or distributions in trust for the benefit of the
-20-
Owners until the Project Equity IRR is determined in accordance with Section
4.2(a). Upon allocation of the N Shares in accordance with Section 4.2(a), the
Distribution Trust shall pay over such distributions and/or dividends to the
holders of the Class A and/or Class B Owner Certificates in the exact same
proportions as the N Shares are allocated to the holders of the Class A and/or
Class B Owner Certificates.
SECTION 4.3 Method of Payment. Distributions of cash required to be made to
the Owners shall be made by the Trustee by wire transfer, in immediately
available funds, to such accounts as shall be designated by the Owners to the
Trustee, at a bank or other entity having appropriate facilities therefor. All
other distributions shall be delivered to the Owners by reputable overnight
courier at the addresses set forth in Section 10.4.
SECTION 4.4 Accounting and Reports to the Owners, the Internal Revenue
Service and Others. The Trustee shall (a) maintain (or cause to be maintained)
the books of the Trust, (b) prepare or cause to be prepared audited annual
financial statements of the Trust in accordance with generally accepted
accounting principles, (c) deliver or cause to be delivered to each Owner, as
may be required by the Code, such information as may be required to enable each
Owner to prepare its U.S. (if any) and foreign income tax returns, (d) prepare
or cause to be prepared in the manner required by law and file such tax returns
relating to the Trust consistent with the characterization of the Trust as a
grantor trust for U.S. Federal income tax purposes unless otherwise required by
law and (c) cause such tax returns to be signed in the manner required by law.
SECTION 4.5 Signature on Returns. The Trustee shall sign on behalf of the
Trust the tax returns of the Trust.
-21-
ARTICLE V
Authority and Duties of Trustee
SECTION 5.1 General Authority. The Trustee is authorized and directed to
take all actions required of the Trust pursuant to this Agreement and to
execute, deliver and perform its obligations under the Undertaking of Adherence
substantially in the form of Exhibit G attached to this Agreement.
SECTION 5.2 General Duties. It shall be the duty of the Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer the Trust in the interest of the
Owners and in accordance with the provisions of this Agreement.
SECTION 5.3 Action upon Instruction.
(a) Except as otherwise specified to the contrary herein, the record
holders of a majority of the Class A Interests and the record holders of a
majority of the Class B Interests, acting jointly, may by written instruction
direct the actions of the Trustee in the management of the Trust, and such
holders hereby agree not to issue such instructions that are inconsistent with
the express terms set forth in this Agreement.
(b) The Trustee shall not be required to take any action hereunder if the
Trustee shall have reasonably determined (but shall have no obligation to make
such determination), or shall have been advised by counsel (such counsel to be
selected in good faith, without gross negligence or willful misconduct), that
such action is likely to result in liability on the part of Trustco or the
Trustee or is contrary to the terms hereof or is otherwise contrary to law.
(c) Whenever (i) the Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or (ii)
in the event that the Trustee is unsure as to the application of any provision
of this Agreement or reasonably believe that any such provision is am-
-22-
biguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement permits any
determination by the Trustee or is silent or is incomplete as to the course of
action that the Trustee is required to take with respect to a particular set of
facts, the Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Owners requesting written
instruction and to the extent the Trustee acts in good faith in accordance with
any written instruction it received from Owners holding a majority of each of
the Class A and Class B Interests, the Trustee shall not be liable on account of
such action to any Person. If the Trustee shall not have received appropriate
written instruction within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or as may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action as it shall deem to be in the best interests
of the Owners, and shall have no liability to any Person for such action or
inaction.
SECTION 5.4 No Duties Except as Specified in This Agreement or in
Instructions. The Trustee shall not have any duty or obligation to manage, make
any payment with respect to, register, record, sell, dispose of, perfect or
maintain any security interest in, or otherwise deal with the Trust Estate,
prepare, file or record any document or report, or to otherwise take or refrain
from taking any action under, or in connection with, any document contemplated
hereby to which the Trust is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Trustee in accordance with Section 3.1 or Section 5.3; and no implied duties or
obligations shall be read into this Agreement against the Trustee. Trustco
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Trust
Estate that result from actions by, or claims against, Trustco that are not
related to the ownership or the administration of the Trust Estate.
SECTION 5.5 No Action Except Under Specified Documents or Instructions. The
Trustee shall not manage, control, use, sell, dispose of or otherwise deal with
any part of the Trust Estate
-23-
except (i) in accordance with the powers granted to and the authority conferred
upon the Trustee pursuant to this Agreement and (ii) in accordance with any
document or instruction delivered to the Trustee in accordance with Section 3.1
or Section 5.3.
SECTION 5.6 Restrictions. The Trustee shall not take any action (a) that,
to the actual knowledge of the Trustee, is inconsistent with the purposes of the
Trust set forth in Section 1.3 or (b) that, to the actual knowledge of the
Trustee, would result in the Trust being treated as an association taxable as a
corporation for U.S. Federal income tax purposes. The Owners shall not direct
the Trustee to take any action that would violate the provisions of this Section
5.6.
ARTICLE VI
Concerning the Trustee
SECTION 6.1 Acceptance of Trusts and Duties. The Trustee accepts the trusts
hereby created and agrees to perform its duties hereunder with respect to such
trusts but only upon the terms of this Agreement. The Trustee also agrees to
disburse all monies, N Shares and other property and assets actually received by
it constituting part of the Trust Estate upon the terms of this Agreement. The
Trustee or Trustco, as the case may be, shall not be answerable or accountable
under any circumstances, except (i) to the Owners for its own willful misconduct
or gross negligence, (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 6.3 expressly made by Trustco, (iii) for
liabilities arising from the failure by Trustco to perform obligations expressly
undertaken by it in the last sentence of Section 5.4, and (iv) for taxes, fees,
or other charges that are imposed on, based on, or measured by any fees,
commissions or compensation received by the Trustee in connection with any of
the transactions contemplated by this Agreement. In particular, but not by way
of limitation (and subject to the exceptions set forth in the preceding
sentence):
-24-
(a) the Trustee shall not be liable for any error of judgment made by a
responsible officer of the Trustee, except to the extent such error constitutes
bad faith, gross negligence or willful misconduct;
(b) no provision of this Agreement shall required the Trustee to expend or
risk funds or otherwise incur any financial liability in the performance of any
of its rights or powers hereunder, if the Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured or provided to it;
(c) under no circumstances shall the Trustee be liable for any
representation, warranty, covenant or agreement made by any party other than the
Trustee in this Agreement;
(d) the Trustee shall not be responsible for or in respect of the validity
or sufficiency of this Agreement or for the due execution hereof by any of the
other parties hereto or for the form, character, genuineness, sufficiency, value
or validity of any of the Trust Estate, and the Trustee shall in no event assume
or incur any liability, duty, or obligation to any Owner, other than as
expressly provided for herein; and
(e) the Trustee shall not be liable for any action or inaction taken or
omitted in accordance with the written instructions of the Owners pursuant to
this Agreement.
SECTION 6.2 Furnishing of Documents. The Trustee shall furnish to the
Owners, promptly upon receipt of a request therefor, duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and any
other instruments furnished to or issued by the Trustee hereunder.
SECTION 6.3 Representations and Warranties of Trustco. Trustco hereby
represents and warrants to the Owners that:
-25-
(a) It is a banking corporation duly organized and validly existing in good
standing under the laws of the State of Delaware. It has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement.
(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and deliver
this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor the
consummation by it of the transactions contemplated hereby nor compliance by it
with any of the terms or provisions hereof will contravene any U.S. Federal or
Delaware law, governmental rule or regulation governing the banking or trust
powers of the Trustee (excluding, if applicable, any securities laws) or any
judgment or order binding on it, or constitute any default under its charter
documents or by-laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be
bound, or require any authorization or approval or other action by, or notice to
or filing with, any governmental or regulatory authority under Delaware or U.S.
Federal law with respect to the banking or the trust powers of the Trustee
(excluding, if applicable, any securities laws), except such as have been
obtained, given or accomplished.
(d) There is no action, suit, investigation or proceeding pending (or, to
the knowledge of Trustco, threatened) against Trustco or affecting the property
of Trustco before any court, arbitrator or administrative or governmental body
which, individually or in the aggregate, if decided adversely to the interests
of Trustco, would have a material adverse effect upon the ability of Trustco to
perform its obligations under this Agreement.
-26-
SECTION 6.4 Reliance; Advice of Counsel.
(a) The Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, instruction, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Trustee may accept a certified copy of a resolution of the board of directors or
other governing body of any party as conclusive evidence that such resolution
has been duly adopted by such body and that the same is in full force and
effect. As to any fact or matter the method of the determination of which is not
specifically prescribed herein, the Trustee may for all purposes hereof rely on
a certificate, signed by any officer of the relevant party, as to such fact or
matter, and such certificate shall constitute full protection to the Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement, the Trustee (i)
may act directly or through its agents or attorneys pursuant to agreements
entered into with any of them, and the Trustee shall not be liable for the
conduct or misconduct of such agents or attorneys if such agents or attorneys
shall have been selected by the Trustee in good faith and without gross
negligence or willful misconduct, and (ii) may consult with counsel, accountants
and other skilled persons to be selected in good faith and without gross
negligence or willful misconduct and employed by it. The Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion of any such counsel, accountants, or other such
persons.
SECTION 6.5 Not Acting in Individual Capacity. Except as otherwise
expressly provided in this Article VI, in accepting the trusts hereby created,
Trustco acts solely as Trustee hereunder and not in its individual capacity and
all Persons having any claim against the Trustee by reason of the transactions
contemplated by this Agreement shall look only to the Trust Estate for payment
or satisfaction thereof.
-27-
ARTICLE VII
Compensation of Trustee
SECTION 7.1 Trustee's Fees and Expenses. The Trustee shall receive as
compensation for its services hereunder pursuant to Section 4.2 such reasonable
fees as have been separately agreed upon between the Owners and the Trustee. The
Trustee shall be entitled to be reimbursed pursuant to Section 4.2 for its other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives, experts and counsel as the
Trustee may employ in connection with the exercise and performance of its rights
and its duties hereunder.
SECTION 7.2 Indemnification. The Trust shall be liable as primary obligor
for, and hereby indemnifies and holds harmless Trustco, in its individual
capacity and as Trustee, and its successors, assigns, directors, officers,
agents and servants (collectively, the "Indemnified Parties") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which any at any time be imposed on, incurred by, or
asserted against the Indemnified Parties in any way relating to or arising out
of this Agreement, the Trust Estate, the administration of the Trust and the
Trust Estate or the action or inaction of the Trustee hereunder, except only
that the Trust shall not be liable for or be required to indemnify or hold
harmless the Indemnified Parties from and against Expenses to the extent arising
or resulting from any of the matters described in the third sentence of Section
6.1. The indemnities contained in this Section 7.2 shall survive the termination
of this Agreement.
SECTION 7.3 Payments to the Trustee. Any amounts due to Trustco, in its
individual capacity or as Trustee, or any Indemnified Party pursuant to this
Article VII shall be paid severally, but not jointly and severally, by the
holders of the Class A Interests and the Class B Interests.
-28-
ARTICLE VIII
Termination of Trust Agreement
SECTION 8.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VII) and the Trust shall terminate
and be of no further force or effect, upon the earlier of (i) the twentieth
anniversary of the Closing; or (ii) the first date upon which each of the
Trustee, the holders of the Class A Owner Certificates and the holders of the
Class B Owner Certificates consent in writing to the termination of the Trust.
The bankruptcy, liquidation, dissolution, death or incapacity of any Owner shall
not (x) operate to terminate this Agreement or the Trust, nor (y) entitle such
Owner's legal representatives or heirs to claim an accounting or to take any
action or proceeding in any court for a partition or winding-up of all or any
part of the Trust or Trust Estate nor (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 8.1(a), neither Holdco nor any other
Owner or holder of an Owner Certificate shall be entitled to revoke or terminate
the Trust.
(c) Upon the winding-up of the Trust and its termination, the Trustee shall
cause the Certificate of Trust to be canceled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
the Act.
ARTICLE IX
Successor Trustees
and Additional Trustees
SECTION 9.1 Resignation or Removal of Trustee. The Trustee may at any time
resign and be discharged from the trusts hereby created by giving ten days
written notice thereof to each of the Owners. Upon receiving such notice of
resignation the Owners shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resign-
-29-
ing Trustee and one copy to the successor Trustee. If no successor Trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall fail to resign after written request
therefor by the Owners or if at any time the Trustee shall be legally unable to
act, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or
of its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property of affairs for the purpose of
rehabilitation, conservation or liquidation, then the Owners may remove the
Trustee. If the Owners shall remove the Trustee under the authority of the
immediately preceding sentence, the Owners shall promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the outgoing Trustee so removed and one copy to the successor
Trustee and payment of all fees, expenses and other amounts owed to the outgoing
Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 9.1 shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 9.2 and payment of all fees, expenses and other amounts owed to the
outgoing Trustee, at which time the retiring Trustee will be fully discharged of
its duties and liabilities hereunder, except for liabilities arising prior to
the date of such resignation or removal.
SECTION 9.2 Successor Trustee. Any successor Trustee shall at all times by
a trust company or a banking corporation organized under the laws of the State
of Delaware having all corporate powers and all material government licenses,
authorizations, consents and approvals required to carry on a trust business and
having at all times an aggregate capital, surplus and undivided profits of not
less than $50,000,000 (or the obligations and liabilities of which are
irrevocably and unconditionally guaranteed by the affiliated Person having a
combined capital and surplus of at least $50,000,000 and shall not be an
affiliate of the Owners). Any successor Trustee appointed pursuant to Section
9.1 shall execute, ac-
-30-
knowledge and deliver to its predecessor Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become fully vested with all
the estates, properties, rights, powers, duties, trusts, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trustee. The predecessor Trustee shall upon payment of its fees and expenses and
other amounts due to it under this Agreement, deliver to the successor Trustee
all documents and statements and monies held by it under this Agreement; and the
Owners and the predecessor Trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Trustee all such rights, powers, duties
and obligations.
SECTION 9.3 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, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder without the execution or filing (other than
any filing required under the Act) of any instrument or any further act on the
part of any of the parties hereto; anything herein to the contrary
notwithstanding.
ARTICLE X
Miscellaneous
SECTION 10.1 Supplements and Amendments. Subject to the Undertaking of
Adherence which is attached hereto as Exhibit G and dated the date hereof,
between BCI, the Trustee, OffshoreCo and Holdco, this Agreement and the
Certificate of Trust may only be amended (except for amendments, if any, of the
Certificate of Trust required by the Act) from time to time by the Trustee with
the consent of a majority of the holders of each of the Class A and Class B
Interests (which consent of
-31-
any holder given pursuant to this Section 10.1 or pursuant to any other
provision of this Agreement shall be conclusive and binding on such holder and
on all future holders of the Owner Certificates representing such Interests and
of any Owner Certificate issued upon the transfer thereof or in exchange or in
lieu thereof whether or not notation of such consent is made upon such Owner
Certificate) for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or the Certificate
of Trust or of modifying in any manner the rights of the Owners.
Promptly after the execution of any amendment to the Certificate of Trust,
the Trustee shall cause the filing of such amendment with the Secretary of State
of Delaware and provide copies thereof to the Owners.
The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
SECTION 10.2 No Legal Title to Trust Estate in Owners. The Owners shall not
have legal title to any part of the Trust Estate and shall not be entitled to
create any liens in the Trust Estate. The Owners shall be entitled to receive
distributions with respect to their undivided ownership interest in the Trust
only in accordance with Article IV. No transfer, by operation of law or
otherwise, of any right, title, and interest of the Owners to and in their
undivided ownership interest in the Trust Estate shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee or other successor
to an accounting or to the transfer to it of legal title to any part of the
Trust Estate. It is expressly acknowledged and agreed that, pursuant to Section
4.2 of this Agreement, title to the N Shares may under certain circumstances
revert to Holdco, as more fully provided herein.
SECTION 10.3 Limitations on Rights of Others. Except as otherwise expressly
provided herein, no person other than the Trustee or the Owners shall have any
legal or equitable right, remedy or claim in the Trust Estate or under or in
respect of this Agreement or any covenants, conditions or
-32-
provisions contained herein. No creditor of an Owner shall have any right to
obtain possession of, or otherwise exercise legal or equitable remedies with
respect to, the property of the Trust.
SECTION 10.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile or telegram or on the next Business Day when sent by
reputable overnight courier or on the second succeeding Business Day when sent
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified by like notice);
(i) if to OffshoreCo, to WorldTel Mexico Telecom, Ltd. c/o Appleby,
Spurling & Kempe 1 Cedar Avenue Hamilton HM 12 Bermuda Attention: President
Telecopies: (441) 292-8666
with a copy to:
Paul, Wiess, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Ruben Kraiem, Esq.
Telecopier: (212) 757-3990
(ii) if to the Trustee, to
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust
Administration/Mexico
Telecom N Share Trust
Telecopier: (302) 651-8882
-33-
with a copy to:
Morris, James, Hitchens & Williams
222 Delaware Avenue
P.O. Box 2306 Wilmington, Delaware 19801
Attention: Robert L. Symonds Jr., Esq.
Telecopier: (302) 571-1750
(iii) if to Holdco, to
Telinor
Telefonia, S.A. de C.V.
Vasconcelos 210 Otc., Piso 9
Residencial San Agustin
Garza Garcia, N.L.
Mexico
Attention: Tomas Milmo Santos
Telecopier: (52-8) 363-3601
with a copy to:
D&A Morales Y Asociados, S.C.
Vallarta 811 Sur
Colonia Mirador
64070 Monterrey, N.L.
Mexico
Attention: Alberto J. Morales
Telecopier: (52-8) 342-9322
(iv) if to the Company, to
Telefonia Inalambrica Del Norte, S.A. de C.V.
Vasconcelos 210 Otc., Piso 12
Residencial San Agustin
Garza Garcia, N.L.
Mexico
with a copy to:
D&A Morales Y Asociados
Vallarta 811 Sur
Colonia Mirador
64070 Monterrey, N.L.
Mexico
Attention: Albert J. Morales
Telecopier: (52-8) 342-9322
-34-
SECTION 10.5 Severability. Any provision of this Agreement that 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 10.6 Separate Counterparts. This Agreement may be executed by the
parties hereto in 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.
SECTION 10.7 Successors and Assigns. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of the Trustee and its
successors and each Owner and its successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by an Owner shall bind the successors and assigns of such
Owner.
SECTION 10.8 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 10.9 Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
-35-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
days and year first above written.
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: ________________________________
Name:
Title:
-36-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: ________________________________
Name:
Title:
-37-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: ________________________________
Name:
Title:
-38-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: ________________________________
Name:
Title:
-39-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: ________________________________
Name:
Title:
-40-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: ________________________________
Name:
Title:
-41-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: ________________________________
Name:
Title:
-42-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: ________________________________
Name:
Title:
-43-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: ________________________________
Name:
Title:
-44-
EXHIBIT A
THIS OWNER CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITES ACT OF 1933,
AND MAY NOT BE SOLD, OR OFFERED FOR SALE, UNLESS REGISTERED PURSUANT TO SUCH ACT
OR UNLESS AN EXEMPTION UNDER SUCH ACT IS AVAILABLE.
TRANSFER OF THIS OWNER CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS AND
LIMITATIONS SET FORTH IN THE TRUST AGREEMENT.
MEXICO TELECOM N SHARE TRUST
CLASS A OWNER CERTIFICATE
UNDER TRUST AGREEMENT DATED AS
OF NOVEMBER 13, 1997
Wilmington Trust Company, a Delaware banking corporation, acting not in its
individual capacity but solely as trustee (the "Trustee") under a Trust
Agreement (the "Trust Agreement") dated as of November 13, 1997, by and among
Telinor Telefonia, S.A. de C.V. ("Holdco"), WorldTel Mexico Telecom, Ltd.
("WorldTel") Telefonia Inalambrica del Norte, S.A. de C.V. and the Trustee, on
behalf of the holders from time to time (each, an "Owner") of beneficial
interests in the Mexico Telecom N Share Trust (the "Trust"), hereby executes
this Owner Certificate on behalf of the Trust, and the Trust hereby certifies
that Holdco is the owner of the Class A Ownership Interests as described in the
Trust Agreement. This Owner Certificate is issued pursuant to and is entitled to
the benefits of the Trust Agreement, and each Owner by acceptance hereof shall
be bound by the terms of the Trust Agreement. Reference is hereby made to the
Trust Agreement for a statement of the rights and obligations of the Owner
hereof. The Trustee may treat the person shown on the register maintained by the
Trustee pursuant to Section 2.3 of the Trust Agreement as the absolute Owner
hereof for all purposes.
Capitalized terms used herein without definition have the meanings ascribed
to them in the Trust Agreement.
In the manner more fully set forth in, and as limited by, the Trust
Agreement, this Owner Certificate may be transferred upon the books of the
Trustee by the registered Owner upon surrender of this Owner Certificate to the
Trustee accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Owner.
In addition, any transferee of this Owner Certificate shall execute and
deliver to the Trustee a letter, in form and substance satisfactory to the
Trustee, agreeing to be bound by the terms of the Trust Agreement, representing
that the transferee and the proposed transfer satisfy the requirements of
Section 2.5 of the Trust Agreement and agreeing that prior to the distribution
of any Equity Shares to it in accordance with the Trust Agreement it will become
bound by the Shareholders Agreement.
The Trustee may request an opinion of counsel in form and substance
satisfactory to the Trustee to the effect that the proposed transfer of this
Owner Certificate may be effected without registration under any state or
Federal securities laws and is being effected in accordance with Section 2.5 of
this Trust Agreement.
IN WITNESS WHEREOF, the Trust, pursuant to the Trust Agreement, has caused
this Owner Certificate to be issued as of the date hereof:
Dated: As of November 13, 1997
MEXICO TELECOM N SHARE TRUST
By: Wilmington Trust Company,
not in its individual capacity
but solely as Trustee
By: _________________________
Name:
Title:
-2-
EXHIBIT B
THIS OWNER CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITES ACT OF 1933,
AND MAY NOT BE SOLD, OR OFFERED FOR SALE, UNLESS REGISTERED PURSUANT TO SUCH ACT
OR UNLESS AN EXEMPTION UNDER SUCH ACT IS AVAILABLE.
TRANSFER OF THIS OWNER CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS AND
LIMITATIONS SET FORTH IN THE TRUST AGREEMENT.
MEXICO TELECOM N SHARE TRUST
CLASS A OWNER CERTIFICATE
UNDER TRUST AGREEMENT DATED AS
OF NOVEMBER 13, 1997
Wilmington Trust Company, a Delaware banking corporation, acting not in its
individual capacity but solely as trustee (the "Trustee") under a Trust
Agreement (the "Trust Agreement") dated as of November 13, 1997, by and among
Telinor Telefonia, S.A. de C.V. ("Holdco"), WorldTel Mexico Telecom, Ltd.
("WorldTel"), Telefonia Inalambrica del Norte, S.A. de C.V. and the Trustee, on
behalf of the holders from time to time (each, an "Owner") of beneficial
interests in the Mexico Telecom N Share Trust (the "Trust"), hereby executes
this Owner Certificate on behalf of the Trust, and the Trust hereby certifies
that Holdco is the owner of the Class B Ownership Interests as described in the
Trust Agreement. This Owner Certificate is issued pursuant to and is entitled to
the benefits of the Trust Agreement, and each Owner by acceptance hereof shall
be bound by the terms of the Trust Agreement. Reference is hereby made to the
Trust Agreement for a statement of the rights and obligations of the Owner
hereof. The Trustee may treat the person shown on the register maintained by the
Trustee pursuant to Section 2.3 of the Trust Agreement as the absolute Owner
hereof for all purposes.
Capitalized terms used herein without definition have the meanings ascribed
to them in the Trust Agreement.
In the manner more fully set forth in, and as limited by, the Trust
Agreement, this Owner Certificate may be transferred upon the books of the
Trustee by the registered Owner upon surrender of this Owner Certificate to the
Trustee accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Owner.
In addition, any transferee of this Owner Certificate shall execute and
deliver to the Trustee a letter, in form and substance satisfactory to the
Trustee, agreeing to be bound by the terms of the Trust Agreement, representing
that the transferee and the proposed transfer satisfy the requirements of
Section 2.5 of the Trust Agreement and agreeing that prior to the distribution
of any Equity Shares to it in accordance with the Trust Agreement it will become
bound by the Shareholders Agreement.
The Trustee may request an opinion of counsel in form and substance
satisfactory to the Trustee to the effect that the proposed transfer of this
Owner Certificate may be effected without registration under any state or
Federal securities laws and is being effected in accordance with Section 2.5 of
this Trust Agreement.
IN WITNESS WHEREOF, the Trust, pursuant to the Trust Agreement, has caused
this Owner Certificate to be issued as of the date hereof:
Dated: As of November 13, 1997
MEXICO TELECOM N SHARE TRUST
By: Wilmington Trust Company,
not in its individual capacity
but solely as Trustee
By: _________________________
Name:
Title:
-2-
EXHIBIT C
CERTIFICATE OF TRUST
OF
MEXICO TELECOM N SHARE TRUST
THIS Certificate of Trust of Mexico Telecom N Share Trust (the "Trust") is
being duly executed and filed by Wilmington Trust Company, a Delaware banking
corporation, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del.C. ss. 3801 et seq.).
1 Name: The name of the business trust formed hereby is Mexico Telecom N
Share Trust.
2 Delaware Trustee: The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19801.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as trustee
By: ________________________________
Name:
Title:
EXHIBIT D
Allocation of N Shares Based on Project Equity IRR
Project
Equity IRR Holdco OffshoreCo
---------- ------ ----------
45.0% -- 9,468,220
46.0% 631,215 8,837,004
47.0% 1,262,629 8,205,790
48.0% 1,893,644 7,574,575
49.0% 2,524,858 6,943,361
50.0% 3,156,073 6,312,146
51.0% 3,787,288 5,680,931
52.0% 4,418,502 5,049,717
53.0% 5,049,717 4,418,502
54.0% 5,680,931 3,787,288
55.0% 6,312,146 3,156,073
56.0% 6,943,361 2,524,858
57.0% 7,574,575 1,893,644
58.0% 8,205,790 1,262,429
59.0% 8,837,004 631,215
60.0% 9,468,220 --
EXHIBIT E
ALLOCABLE SHARE AGREEMENT
ALLOCABLE SHARE AGREEMENT, dated as of November 13, 1997, by and among
WorldTel Mexico Telecom, Ltd., a Bermuda corporation ("WorldTel"), and Telinor
Telefonia, S.A. de C.V., a Mexican corporation ("Holdco"). Capitalized terms
used herein and not otherwise defined shall have the respective meanings
ascribed thereto in that certain Shareholders Agreement (the "Shareholder
Agreement"), dated as of October 6, 1997, among Holdco, WorldTel, Telefonia
Inalambrica Del Norte, S.A. de C.V. and Bell Canada International (Mexico
Telecom), Limited.
R E C I T A L S
WHEREAS, WorldTel and Holdco have entered into the Trust Agreement pursuant
to which the Trust shall hold the Allocable Shares until allocated and
distributed in accordance therewith;
WHEREAS, the parties desire to set forth their understanding as to the
exercise of certain rights relating to the Allocable Shares prior to the
allocation and distribution of the Allocable Shares;
NOW, THEREFORE, in consideration of the foregoing, other good and valuable
consideration and the mutual covenants contained herein, the parties hereto
agree as follows:
SECTION 1
DEFINITIONS
1.1 "Pro Rata Share" means, with respect to each of the parties
hereto, the product of (a) 100%, multiplied by (b) the quotient of (x) the
number of Allocable Shares allocated to such party pursuant to the Trust
Agreement, divided by (y) 9,468,220.
1.2 "Allocable Share Purchase Price" means, with respect to the Equity
Shares purchased on any date that constitute Offered Equity Shares, the price
that would result in the Deemed Offer-
ing Shareholder receiving as the purchase price therefor, that price which would
result in the Deemed Offering Shareholder obtaining on such Shares the same
Project Equity IRR (as defined in the Trust Agreement) as was used to calculate
the allocation of the Allocable Shares in accordance with the Trust Agreement.
SECTION 2
RIGHT TO ACQUIRE SHARES
2.1 As set forth in the Shareholders Agreement, Holdco shall be deemed
to hold the Allocable Shares for the purpose of exercising all subscription
rights with respect to such Shares; provided that if Holdco fails to exercise
such subscription rights in full WorldTel shall be deemed to hold such Shares
for the purpose of exercising such subscription rights. Notwithstanding the
foregoing, it is the intention of the parties hereto that each party which is
allocated Allocable Shares pursuant to the Trust Agreement have the right to
acquire its Pro-Rata Share of all Equity Shares purchased by the other party
pursuant to any subscription rights exercised with respect to the Allocable
Shares. Therefore, each party hereto that has purchased any Equity Shares
pursuant to the exercise of subscription rights with respect to the Allocable
Shares (each, a "Deemed Offering Shareholder") agrees that it shall be deemed to
have offered (the "Deemed Offering Notice") to the other party (the "Deemed
Offeree") the right to purchase such other party's Pro-Rata Share of all of the
Equity Shares acquired by it (the "Offered Equity Shares") pursuant to the
exercise of subscription rights with respect to the Allocable Shares. The
purchase price for the Offered Equity Shares shall be the price (the "Allocable
Share Purchase Price") which would give the Deemed Offering Shareholder the same
Project Equity IRR on the Offered Equity Shares as the Project Equity IRR which
was used to determine the allocation of the Allocable Shares between the parties
in accordance with the Trust Agreement. Such offer shall be deemed to have been
made on the date (the "Reallocation Date") the Allocable Shares are allocated
between the parties in accordance with the Trust Agreement.
-2-
Each Deemed Offer Notice shall remain irrevocable and open for acceptance
by the Deemed Offeree for a period of thirty (30) Days following the
Reallocation Date (the "Allocable Share Acceptance Period"). Each Deemed Offeree
shall have the right, exercisable by notice (the "Allocable Share Purchase
Notice") to the Offering Shareholder within the Allocable Share Acceptance
Period, to accept and agree that it will purchase its Pro-Rata Share of the
Offered Equity Shares or, if it wishes to purchase less than its Pro-Rata Share,
to indicate how many Offered Equity Shares it wishes to purchase. An Allocable
Share Purchase Notice shall be irrevocable. If no Allocable Share Purchase
Notice is given by the Allocable Share Offeree during the Allocable Share
Acceptance Period, the Allocable Share Offeree shall be deemed to have refused
the offer deemed made to it to purchase Offered Equity Shares.
2.2 Unless the parties hereto otherwise agree, the purchase made by
each Deemed Offeree having exercised its rights to purchase Offered Equity
Shares and the sale by each Deemed Offering Shareholder to such Offeree, shall
be made at the head office of the Corporation at the Allocable Share Purchase
Price and shall be completed within ninety (90) Days following the expiry of the
Allocable Share Acceptance Period or earlier if the Deemed Offering Shareholder
and the Deemed Offeree agree. Each Shareholder shall bear its own costs and fees
in connection with any Transfer of Offered Equity Shares. In connection with any
Transfer of Offered Equity Shares under this Agreement (i) the Deemed Offering
Shareholder shall deliver to the Deemed Offeree such certificate(s) representing
the Offered Equity Shares purchased by the Deemed Offeree pursuant to this
Agreement, duly endorsed, together with the written representation of the Deemed
Offering Shareholder that such Offered Equity Shares are free and clear of all
Pledges except those created and continuing under the terms of the Shareholders
Agreement and (ii) the Deemed Offeree shall deliver or cause to be delivered to
the Deemed Offering Shareholder the Allocable Share Purchase Price for such
Offered Equity Shares payable in full by wire transfer of immediately available
funds.
-3-
SECTION 3
MISCELLANEOUS
3.1 Amendments. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by each of the parties hereto, or in the case of a
waiver, by the party against whom the waiver is to be effective.
3.2 Waiver. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor will any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
3.3 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party hereto may assign, delegate or
otherwise transfer any of its respective rights or obligations hereunder except
to a person who is or, concurrently with such assignment, delegation or
transfer, is becoming a Shareholder (other than solely as a result of such
assignment, delegation or transfer).
3.4 Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of New York without regard
to its conflict of laws and principles.
3.5 Counterparts. This Agreement may be signed in a number of
counterparts, each of which shall be an original, with the same effect as if the
signature thereto and hereto were upon the same instrument.
3.6 Notices. All notices, requests and other communications to any
party hereunder shall be in writing and shall be given if given in person, by
facsimile, telegram, telex or registered or certified mail (postage prepaid,
return receipt requested) or by reputable overnight courier to the respective
-4-
parties at the following addresses (or at such other address for a party as will
be specified in a notice given in accordance with this Section 3.6):
(i) if to WorldTel, to
WorldTel Mexico Telecom, Ltd.
c/o Appleby, Spurling &Kempe
1 Cedar Avenue
Hamilton HM 12
Bermuda
Attention: President
Telecopier: (441) 292-8666
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Ruben Kraiem, Esq.
Telecopier: (212) 757-3990
(ii) if to Holdco, to
Telinor Telefonia, S.A. de C.V.
Vasconcelos 210 Otc., Piso 9
Residencial San Agustin
Garza Garcia, N.L.
Mexico
Attention: Tomas Milmo Santos
Telecopier: (52-8) 363-3601
with a copy to:
D&A Morales Y Asociados, S.C.
Vallarta 811 Sur
Colonia Mirador
64070 Monterrey, N.L.
Mexico
Attention: Alberto J. Morales
Telecopier: (52-8) 342-9322
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
-6-
EXHIBIT F
Intentionally Omitted
EXHIBIT G
UNDERTAKING OF ADHERENCE
Undertaking of Adherence, dated as of November 13, 1997, among Wilmington
Trust Company, not in its individual capacity but solely as trustee of Mexico
Telecom N Share Trust (the "Trustee"), Bell Canada International (Mexico
Telecom), Limited, a British Virgin Islands corporation ("BCI"), WorldTel Mexico
Telecom, Ltd., a Bermuda corporation ("OffshoreCo"), and Telinor Telefonia, S.A.
de C.V., a Mexican corporation ("Holdco"). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in that certain Trust
Agreement (the "Trust Agreement"), dated the date hereof, among OffshoreCo,
Holdco, the Trustee and Telefonia Inalambrica del Norte, S.A. de C.V., a Mexican
corporation (the "Company").
Each of the Trustee, Holdco and OffshoreCo hereby covenants and agrees that
it will not consent to any amendment of the Trust Agreement that (i) amends the
definition of "N Shares" set forth therein, (ii) amends Section 2.3, 2.5 or
4.2(b)(ii) thereof, (iii) provides for the distribution of the N Shares to any
Person other than the holder of a Class A or Class B Owner Certificate or (iv)
provides for the distribution of any capital stock other than the N Shares to
OffshoreCo or Holdco, in each case without the written consent of BCI.
The Trustee will not execute, authenticate or deliver a new Owner
Certificate in the name of any designated transferee unless the transfer is in
accordance with the provisions of Section 2.5 of the Trust Agreement.
This Undertaking of Adherence may be executed by the parties hereto in
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. This Undertaking of Adherence shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered in person, by facsimile
or telegram or on the next Business Day when sent by reputable overnight courier
or on the second succeeding Business Day when sent by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(A) If the Trustee, OffshoreCo or Holdco, to the respective
address set forth in Section 10.4 of the Trust Agreement; and
(B) if to BCI, to
Bell Canada International Inc.
1000 de la Gauchetiere St. West
Suite 1100
Montreal, Quebec, Canada
H3B 4Y8
Attention: Vice-President, Law and Corporate Secretary
Telecopier No.: (514) 392-2342
This Undertaking of Adherence shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
IN WITNESS WHEREOF, the parties hereto have caused this Undertaking of
Adherence to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
TELINOR TELEFONIA, BELL CANADA INTERNATIONAL
S.A. DE C.V. (MEXICO TELECOM), LIMITED
By: By:
Name: Name:
Title: Title:
-2-
WORLDTEL MEXICO WILMINGTON TRUST COMPANY, not in its individual
TELECOM, LTD. capacity but solely as Trustee
By: By:
Name: Name:
Title: Title:
-3-
THIS OWNER CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITES ACT OF 1933,
AND MAY NOT BE SOLD, OR OFFERED FOR SALE, UNLESS REGISTERED PURSUANT TO SUCH ACT
OR UNLESS AN EXEMPTION UNDER SUCH ACT IS AVAILABLE.
TRANSFER OF THIS OWNER CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS AND
LIMITATIONS SET FORTH IN THE TRUST AGREEMENT.
MEXICO TELECOM N SHARE TRUST
CLASS A OWNER CERTIFICATE
UNDER TRUST AGREEMENT DATED AS
OF NOVEMBER 13, 1997
Wilmington Trust Company, a Delaware banking corporation, acting not in its
individual capacity but solely as trustee (the "Trustee") under a Trust
Agreement (the "Trust Agreement") dated as of November 13, 1997, by and among
Telinor Telefonia, S.A. de C.V. ("Holdco"), WorldTel Mexico Telecom, Ltd.
("WorldTel"), Telefonia Inalambrica del Norte, S.A. de C.V. and the Trustee, on
behalf of the holders from time to time (each, an "Owner") of beneficial
interests in the Mexico Telecom N Share Trust (the "Trust"), hereby executes
this Owner Certificate on behalf of the Trust, and the Trust hereby certifies
that Holdco is the owner of the Class A Ownership Interests as described in the
Trust Agreement. This Owner Certificate is issued pursuant to and is entitled to
the benefits of the Trust Agreement, and each Owner by acceptance hereof shall
be bound by the terms of the Trust Agreement. Reference is hereby made to the
Trust Agreement for a statement of the rights and obligations of the Owner
hereof. The Trustee may treat the person shown on the register maintained by the
Trustee pursuant to Section 2.3 of the Trust Agreement as the absolute Owner for
all purposes.
Capitalized terms used herein without definition have the meanings ascribed
to them in the Trust Agreement.
In the manner more fully set forth in, and as limited by, the Trust
Agreement, this Owner Certificate may be transferred upon the books of the
Trustee by the registered Owner upon surrender of this Owner Certificate to the
Trustee accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Owner.
In addition, any transferee of this Owner Certificate shall execute and
deliver to the Trustee a letter, in form and substance satisfactory to the
Trustee, agreeing to be bound by the terms of the Trust Agreement, representing
that the transferee and the proposed transfer satisfy the requirements of
Section 2.5 of the Trust Agreement and agreeing that prior to the distribution
of any Equity Shares to it in accordance with the Trust Agreement it will become
bound by the Shareholders Agreement.
The Trustee may request an opinion of counsel in form and substance
satisfactory to the Trustee to the effect that the proposed transfer of this
Owner Certificate may be effected without registration under any state or
Federal securities laws and is being effected in accordance with Section 2.5 of
this Trust Agreement.
IN WITNESS WHEREOF, the Trust, pursuant to the Trust Agreement, has caused
this Owner Certificate to be issued as of the date hereof:
Dated: As of November 13, 1997
MEXICO TELECOM N SHARE TRUST
By: Wilmington Trust Company,
not in its individual capacity
but solely as Trustee
By: _________________________
Name:
Title:
-2-
THIS OWNER CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITES ACT OF 1933,
AND MAY NOT BE SOLD, OR OFFERED FOR SALE, UNLESS REGISTERED PURSUANT TO SUCH ACT
OR UNLESS AN EXEMPTION UNDER SUCH ACT IS AVAILABLE.
TRANSFER OF THIS OWNER CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS AND
LIMITATIONS SET FORTH IN THE TRUST AGREEMENT.
MEXICO TELECOM N SHARE TRUST
CLASS B OWNER CERTIFICATE
UNDER TRUST AGREEMENT DATED AS
OF NOVEMBER 13, 1997
Wilmington Trust Company, a Delaware banking corporation, acting not in its
individual capacity but solely as trustee (the "Trustee") under a Trust
Agreement (the "Trust Agreement") dated as of November 13, 1997, by and among
Telinor Telefonia, S.A. de C.V. ("Holdco"), WorldTel Mexico Telecom, Ltd.
("WorldTel"), Telefonia Inalambrica del Norte, S.A. de C.V. and the Trustee, on
behalf of the holders from time to time (each, an "Owner") of beneficial
interests in the Mexico Telecom N Share Trust (the "Trust"), hereby executes
this Owner Certificate on behalf of the Trust, and the Trust hereby certifies
that Holdco is the owner of the Class B Ownership Interests as described in the
Trust Agreement. This Owner Certificate is issued pursuant to and is entitled to
the benefits of the Trust Agreement, and each Owner by acceptance hereof shall
be bound by the terms of the Trust Agreement. Reference is hereby made to the
Trust Agreement for a statement of the rights and obligations of the Owner
hereof. The Trustee may treat the person shown on the register maintained by the
Trustee pursuant to Section 2.3 of the Trust Agreement as the absolute Owner for
all purposes.
Capitalized terms used herein without definition have the meanings ascribed
to them in the Trust Agreement.
In the manner more fully set forth in, and as limited by, the Trust
Agreement, this Owner Certificate may be transferred upon the books of the
Trustee by the registered Owner upon surrender of this Owner Certificate to the
Trustee accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Owner.
In addition, any transferee of this Owner Certificate shall execute and
deliver to the Trustee a letter, in form and substance satisfactory to the
Trustee, agreeing to be bound by the terms of the Trust Agreement, representing
that the transferee and the proposed transfer satisfy the requirements of
Section 2.5 of the Trust Agreement and agreeing that prior to the distribution
of any Equity Shares to it in accordance with the Trust Agreement it will become
bound by the Shareholders Agreement.
The Trustee may request an opinion of counsel in form and substance
satisfactory to the Trustee to the effect that the proposed transfer of this
Owner Certificate may be effected without registration under any state or
Federal securities laws and is being effected in accordance with Section 2.5 of
this Trust Agreement.
IN WITNESS WHEREOF, the Trust, pursuant to the Trust Agreement, has caused
this Owner Certificate to be issued as of the date hereof:
Dated: As of November 13, 1997
MEXICO TELECOM N SHARE TRUST
By: Wilmington Trust Company,
not in its individual capacity
but solely as Trustee,
By: _________________________
Name:
Title:
-2-
ALLOCABLE SHARE AGREEMENT
ALLOCABLE SHARE AGREEMENT, dated as of November 13, 1997, by and among
WorldTel Mexico Telecom, Ltd., a Bermuda corporation ("WorldTel"), and Telinor
Telefonia, S.A. de C.V., a Mexican corporation ("Holdco"). Capitalized terms
used herein and not otherwise defined shall have the respective meanings
ascribed thereto in that certain Shareholders Agreement (the "Shareholders
Agreement"), dated as of October 6, 1997, among Holdco, WorldTel, Telefonia
Inalambrica del Norte, S.A. de C.V. and Bell Canada International (Mexico
Telecom), Limited.
R E C I T A L S
WHEREAS, WorldTel and Holdco have entered into the Trust Agreement pursuant
to which the Trust shall hold the Allocable Shares until allocated and
distributed in accordance therewith;
WHEREAS, the parties desire to set forth their understanding as to the
exercise of certain rights relating to the Allocable Shares prior to the
allocation and distribution of the Allocable Shares;
NOW, THEREFORE, in consideration of the foregoing, other good and valuable
consideration and the mutual covenants contained herein, the parties hereto
agree as follows:
SECTION 1
DEFINITIONS
1.1 "Pro Rata Share" means, with respect to each of the parties hereto, the
product of (a) 100%, multiplied by (b) the quotient of (x) the number of
Allocable Shares allocated to such party pursuant to the Trust Agreement,
divided by (y) 9,468,220.
1.2 "Allocable Share Purchase Price" means, with respect to the Equity
Shares purchased on any date that constitute Offered Equity Shares, the price
that would result in the Deemed Offer-
ing Shareholder receiving as the purchase price therefor, that price which would
result in the Deemed Offering Shareholder obtaining on such Shares the same
Project Equity IRR (as defined in the Trust Agreement) as was used to calculate
the allocation of the Allocable Shares in accordance with the Trust Agreement.
SECTION 2
RIGHT TO ACQUIRE SHARES
2.1 As set forth in the Shareholders Agreement, Holdco shall be deemed to
hold the Allocable Shares for the purpose of exercising all subscription rights
with respect to such Shares; provided that if Holdco fails to exercise such
subscription rights in full WorldTel shall be deemed to hold such Shares for the
purpose of exercising such subscription rights. Notwithstanding the foregoing,
it is the intention of the parties hereto that each party which is allocated
Allocable Shares pursuant to the Trust Agreement have the right to acquire its
Pro-Rata Share of all Equity Shares purchased by the other party pursuant to any
subscription rights exercised with respect to the Allocable Shares. Therefore,
each party hereto that has purchased any Equity Shares pursuant to the exercise
of subscription rights with respect to the Allocable Shares (each, a "Deemed
Offering Shareholder") agrees that it shall be deemed to have offered (the
"Deemed Offering Notice") to the other party (the "Deemed Offeree") the right to
purchase such other party's Pro-Rata Share of all of the Equity Shares acquired
by it (the "Offered Equity Shares") pursuant to the exercise of subscription
rights with respect to the Allocable Shares. The purchase price for the Offered
Equity Shares shall be the price (the "Allocable Share Purchase Price") which
would give the Deemed Offering Shareholder the same Project Equity IRR on the
Offered Equity Shares as the Project Equity IRR which was used to determine the
allocation of the Allocable Shares between the parties in accordance with the
Trust Agreement. Such offer shall be deemed to have been made on the date (the
"Reallocation Date") the Allocable Shares are allocated between the parties in
accordance with the Trust Agreement.
-2-
Each Deemed Offer Notice shall remain irrevocable and open for acceptance
by the Deemed Offeree for a period of thirty (30) Days following the
Reallocation Date (the "Allocable Share Acceptance Period"). Each Deemed Offeree
shall have the right, exercisable by notice (the "Allocable Share Purchase
Notice") to the Offering Shareholder within the Allocable Share Acceptance
Period, to accept and agree that it will purchase its Pro-Rata Share of the
Offered Equity Shares or, if it wishes to purchase less than its Pro-Rata Share,
to indicate how many Offered Equity Shares it wishes to purchase. An Allocable
Share Purchase Notice shall be irrevocable. If no Allocable Share Purchase
Notice is given by the Allocable Share Offeree during the Allocable Share
Acceptance Period, the Allocable Share Offeree shall be deemed to have refused
the offer deemed made to it to purchase Offered Equity Shares.
2.2 Unless the parties hereto otherwise agree, the purchase made by each
Deemed Offeree having exercised its rights to purchase Offered Equity Shares and
the sale by each Deemed Offering Shareholder to such Offeree, shall be made at
the head office of the Corporation at the Allocable Share Purchase Price and
shall be completed within ninety (90) Days following the expiry of the Allocable
Share Acceptance Period or earlier if the Deemed Offering Shareholder and the
Deemed Offeree agree. Each Shareholder shall bear its own costs and fees in
connection with any Transfer of Offered Equity Shares. In connection with any
Transfer of Offered Equity Shares under this Agreement (i) the Deemed Offering
Shareholder shall deliver to the Deemed Offeree such certificate(s) representing
the Offered Equity Shares purchased by the Deemed Offeree pursuant to this
Agreement, duly endorsed, together with the written representation of the Deemed
Offering Shareholder that such Offered Equity Shares are free and clear of all
Pledges except those created and continuing under the terms of the Shareholders
Agreement and (ii) the Deemed Offeree shall deliver or cause to be delivered to
the Deemed Offering Shareholder the Allocable Share Purchase Price for such
Offered Equity Shares payable in full by wire transfer of immediately available
funds.
-3-
SECTION 3
MISCELLANEOUS
3.1 Amendments. Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by each of he parties hereto, or in the case of a waiver, by
the party against whom the waiver is to be effective.
3.2 Waiver. No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor will any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
3.3 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party hereto may assign, delegate or
otherwise transfer any of its respective rights or obligations hereunder except
to a person who is or, concurrently with such assignment, delegation or
transfer, is becoming a Shareholder (other than solely as a result of such
assignment, delegation or transfer).
3.4 Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws of the State of New York without regard to its
conflict of laws and principles.
3.5 Counterparts. This Agreement may be signed in a number of counterparts,
each of which shall be an original, with the same effect as if the signature
thereto and hereto were upon the same instrument.
3.6 Notices. All notices, requests and other communications to any party
hereunder shall be in writing and shall be given if given in person, by
facsimile, telegram, telex or registered or certified mail (postage pre-paid,
return receipt requested) or by reputable overnight courier to the respective
-4-
parties at the following addresses (or at such other address for a party as will
be specified in a notice given in accordance with this Section 3.6):
(i) if to WorldTel, to
WorldTel Mexico Telecom, Ltd.
c/o Appleby, Spurling &Kempe
1 Cedar Avenue
Hamilton HM 12
Bermuda
Attention: President
Telecopier: (441) 292-8666
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Ruben Kraiem, Esq.
Telecopier: (212) 757-3990
(ii) if to Holdco, to
Telinor Telefonia, S.A. de C.V.
Vasconcelos 210 Otc., Piso 9
Residencial San Agustin
Garza Garcia, N.L.
Mexico
Attention: Tomas Milmo Santos
Telecopier: (52-8) 363-3601
with a copy to:
D&A Morales Y Asociados, S.C.
Vallarta 811 Sur
Colonia Mirador
64070 Monterrey, N.L.
Mexico
Attention: Alberto J. Morales
Telecopier: (52-8) 342-9322
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
-5-
WORLDTEL MEXICO TELECOM, LTD.
By: ________________________________
Name:
Title:
TELINOR TELEFONIA, S.A. DE C.V.
By: ________________________________
Name:
Title:
-6-
SCHEDULE "G"
SECONDMENT AGREEMENT
SECONDMENT AGREEMENT made and entered into as of October 6, 1997 between Bell
Canada International Inc. ("BCI"), a corporation organized under the laws of
Canada, having its principal office at 1000, rue de La Gauchetiere Ouest, Bureau
1100, Montreal (Quebec) Canada H3B 4Y8, and Telefonia Inalambrica del Norte,
S.A. de C.V.("Telinor"), a limited liability stock corporation organized under
the laws of the United Mexican States ("Mexico"), having its registered office
at Vasconcelos 210 Otc., Residencial San Agustin, San Pedro, Garza Garcia, N.L.,
Mexico.
WHEREAS Telinor wishes to offer local telephone services and associated value
added services throughout Mexico;
WHEREAS Telinor will attempt to secure in auctions to be conducted under the
auspices of the Government of Mexico the right to use radio frequency spectrum
within the 1850 to 1970 MHz bandwidths and within the 3425 to 3600 MHz
bandwidths(the "Spectrum") as required to operate fixed wireless communications
networks in one or more regions of Mexico;
WHEREAS Bell Canada International (Mexico Telecom) Limited, an Affiliate of BCI,
is a party to a Shareholders' Agreement entered into as of October 6, 1997 among
the shareholders of Telinor and Telinor;
WHEREAS BCI has expertise in providing international consulting services in the
telecommunications sector and has experience, knowledge, trained personnel and
other capabilities in respect of engineering, operations and other miscellaneous
services; and
WHEREAS the parties desire to record their mutual understanding regarding the
provision of secondees by BCI.
NOW, THEREFORE, the parties hereto agree as follows:
Page 1
1. DEFINITIONS
In this Agreement, unless the context otherwise requires, the following terms
shall have the meaning set opposite, namely:
"Affected Party" has the meaning ascribed thereto in
Clause 10.2;
"Agreement" This Agreement, including its recitals
and schedules, as amended from time to
time;
"Auditors" has the meaning ascribed thereto in
Clause 3.4;
"BCI-Shareholder" Bell Canada International (Mexico
Telecom) Limited);
"Confidential Information" Any information, material and data of a
confidential nature furnished orally, in
any written, graphic, electronic,
magnetic or other tangible form
including (but not limited to)
technical, financial and business
information and models, names of
customers or partners (whether potential
or existing), proposed business deals,
corporate strategies, reports, plans
market and/or financial projections and
other data, of or relating to a party
other than the information listed in
Clause 7.4;
"Costs" has the meaning ascribed thereto in
Clause 3.1;
"Deliverables" Any written summary of results or
recommendations or any other data or
data files, information or materials
whether in written, electronic or
magnetic form, provided to Telinor by
the Secondees, including market research
reports, functional or interface
specifications, and service or network
architecture plans, but shall exclude
all software;
"receiving party" has the meaning ascribed thereto in
Clause 7.1;
"RFS" has the meaning ascribed thereto in
Clause 2.1;
"Rules" has the meaning ascribed thereto in
Clause 16.1(b);
"Secondee(s)" Person(s) who are individually present
in Mexico for a period or periods
exceeding the aggregate of one hundred
and eighty-two (182) calendar days
during any consecutive twelve (12)-month
period and who are seconded to Telinor,
from time to time, under this Agreement
and take various positions within the
organization of Telinor, as identified
by the parties from time to time;
Page 2
"Secondment Costs" has the meaning ascribed thereto in
Clause 3.1;
"Shareholders Agreement" The Unanimous Shareholders Agreement
dated as of October 6, 1997 between
BCI-Shareholder, Holdco, WorldTel and
Telinor;
"Taxes" has the meaning ascribed thereto in
Clause 4.1.
The expression "person" as used herein includes any individual, corporation,
company, partnership or other entity. The singular includes the plurals and vice
versa. Reference to one gender includes reference to the other gender.
References herein to clauses and schedules shall be taken as referring to
clauses and schedules to this Agreement. Headings to clauses are for ease of
reference only and shall not affect the construction or interpretation of this
Agreement.
In this Agreement and the schedules hereto, unless otherwise specified,
capitalized terms not defined herein but defined in the Shareholders Agreement
shall have the meaning assigned to them in the Shareholders Agreement.
2. SUPPLY OF SECONDEES
2.1 Supply of Secondees
Subject to the terms and conditions of this Agreement, BCI shall, from
time to time, make available, within a reasonable period, such number
of Secondees as shall be reasonably requested by Telinor to prepare,
launch and operate its Business in accordance with the requirements of
the Preliminary Business Plan and the Initial Business Plan and such
other Business Plans which may be adopted by Telinor from time to
time.
Such Secondees shall have expertise in either engineering, operations,
information technology, personnel, recruitment, billing system,
administration, legal, sales, customer services, marketing matters or
such other telecommunications related expertise. Any request by
Telinor for a Secondee shall be in writing by an authorized person
substantially in the form of Schedule A attached hereto (the "RFS").
2.2 Supply of Certain Secondees
Under the Shareholder's Agreement, BCI-Shareholder has the right to
appoint individuals for the following positions at Telinor:
o Chief Operating Officer
o Vice-President Marketing and Sales
o Vice-President Customer Services
o Vice-President Technology Planning
Page 3
o Assistant Vice-President Finance (or second most senior position
in the Finance Department)
If BCI-Shareholder does not appoint Secondees pursuant to this right,
Telinor may request BCI to provide Secondees to fulfill such positions
under this Agreement.
2.3 Service Term
The service term of each Secondee shall be for a maximum of three (3)
years, unless agreed otherwise, which may be renewed by mutual
agreement.
2.4 Selection of Secondees
Subject to Clause 8.2 of the Shareholders' Agreement, Telinor shall
approve the engagement of all Secondees. Telinor may also participate,
to the extent reasonable and practicable, in the selection of
Secondees. The compensation to be paid to the Secondees shall be as
agreed between BCI and Telinor but shall include the elements
identified as Secondment Costs. Once, before the hiring of any
Secondee under this Agreement, Telinor shall approve the compensation
guidelines to be applicable to the hiring of Secondees. Such
guidelines shall not be modified without Telinor's consent. The
compensation to the Secondee shall be reflected in an employment
contract between Telinor and the Secondee. The employment contract
between the Secondee and Telinor shall provide that the completion
bonus shall be reduced to take into account any payments that Telinor
may have to pay to the Secondee upon termination of the secondment
under Mexican law. BCI will use its reasonable efforts to make
available to Telinor the best individuals that it has for the
positions requested.
2.5 Authorized Personnel
BCI shall designate in writing, within thirty (30) days of the date of
this Agreement, one or more of its senior employees from its
headquarters, as the person(s) to whom all RFSs or other enquiries are
to be directed and with whom questions involving RFSs are to be
coordinated. BCI may change its designation(s) in this respect by
notice in writing to Telinor at any time. Telinor shall also designate
in writing, within thirty (30) days of the date of this Agreement, one
or more of its senior employees as its authorized persons to request
and coordinate the provision of Secondees from BCI. Telinor may change
its designation(s) in this respect by notice in writing to BCI at any
time. Costs relating to personnel designated under this Clause 2.5 and
their activities shall be for the account of the designating party.
2.6 Employment Relationship
Each Secondee shall become an employee of Telinor and his compensation
shall be paid by Telinor directly in Canadian dollars (or in Mexican
pesos
Page 4
based on a conversion rate from Canadian dollars to Mexican pesos
determined on the basis of Clause 17.8 of the Shareholders' Agreement
on the date of each pay). Telinor will provide BCI, on a monthly
basis, with payroll information regarding each Secondee.
Each Secondee shall be managed by Telinor, shall perform such duties
at such times and at such places as Telinor may from time to time
reasonably require, shall carry out such reasonable directions as may
be given to him or her from time to time by Telinor and shall act in
accordance with and subject to the reasonable instructions of Telinor.
2.7 Degree of Care
Telinor shall exercise the same degree of care in respect of each
Secondee as with other employees of Telinor and, in any event, no less
than the degree of care required by any applicable laws of Mexico.
2.8 Discipline and Dismissal
Telinor may exercise the right to discipline and dismiss any Secondee.
Thus, at any time Telinor may dismiss any Secondee (and, as an
immediate measure pending discussions with BCI, may require that a
Secondee leave any premises owned or occupied by Telinor) if Telinor
in its reasonable discretion believes that the Secondee has committed
any act or omission which would entitle Telinor to dismiss such
Secondee under its general employment practices or if Telinor, in its
reasonable discretion, believes that such Secondee has conducted
himself or herself in a manner which is contrary to or otherwise not
in the best interests of Telinor.
If any Secondee ceases to provide services to Telinor during the
duration of the secondment in accordance with this Clause 2.8, or if
any such person is unable due to illness, accident or other incapacity
to perform his duties, BCI shall, if requested by Telinor, provide a
substitute for such person. Costs accrued to the date of recall shall
be payable in accordance with Clause 3.1.
2.9 Insurance
Telinor shall ensure that all Secondees are insured against reasonable
insurable risks arising while any Secondee is attending at the
premises or other facilities of Telinor pursuant to this Agreement and
shall comply with the provisions of all applicable legislation
relating to health, safety and welfare at work of employees from time
to time in force.
2.10 Project Review Committee
A Project Review Committee composed of two designees from BCI and two
designees from Telinor shall be set up to review on a monthly basis
the resources needs of Telinor and any difficulties which may arise
under this Agreement. Meetings of this Committee may be held in person
or by
Page 5
conference call. Telinor shall ensure that BCI is given through this
Committee or otherwise, on a timely basis, any information with
respect to the Business of Telinor which may be relevant to or
necessary for the performance of the Agreement.
3. COMPENSATION
3.1 Fees
In general consideration for the services provided by BCI to Telinor
under this Agreement, and of the long term value to Telinor to be
created by the Secondees provided by BCI and the loss of such
Secondees to BCI, BCI shall be entitled to the following:
(a) the Fees described in Clauses 3.1.1 and 3.1.2 of the Technical
Services Agreement entered into as of October 6, 1997 between BCI
and Telinor; and
(b) such amount as is equivalent to BCI's direct and indirect costs
of supplying the Secondees (the "Costs"). Indirect costs shall be
established as the lesser of (i) a fifteen percent (15%) charge
applicable solely on the basic salary portion of the Secondee's
compensation paid by Telinor for the first six (6) months of the
secondment, or (ii) an amount equal to one-month basic salary
paid by Telinor to each Secondee.
The direct costs shall be the actual costs, consistent with BCI
expatriate practices, in respect of the secondment of each
Secondee, including but not limited to, the salary, performance
and completion bonuses, payroll taxes and income taxes, costs of
pension and benefits, subsistence and/or other allowances,
travel, lodging, perquisites, currency fluctuation protection, if
required, and any mobilization and demobilization costs,
including costs or losses related to the maintenance or
disposition of the Secondee's Canadian residence, if applicable,
which are incurred by BCI (herein referred to as the "Secondment
Costs"). For greater certainty, Secondment Costs shall not
include any of such costs paid directly by Telinor to the
Secondee.
3.2 Perquisites
Telinor shall provide reasonable perquisites, allowances and logistic
expenses, such as housing, transportation, provision of motor
vehicles, etc. for each Secondee assigned to Telinor commensurate with
the rank and position of the Secondee. The details of such
perquisites, allowances and logistic expenses shall be subject to the
mutual agreement of Telinor and BCI. Such perquisites, allowances and
logistics shall also include travel and accommodation expenses
incurred in traveling on business which shall be reimbursed by
Telinor.
3.3 Tax Equalization Program
Page 6
The Secondees will be covered by the BCI tax equalization program.
Thus, compensation of Secondees will be subject to hypothetical tax
deductions as if the Secondee had received his/her compensation in
Canada. Telinor will be responsible to administer the tax equalization
program including deducting the hypothetical taxes, administering the
sums withheld and remitting taxes to the Mexican and the Canadian tax
authorities. BCI will assist Telinor in this respect by communicating
the applicable hypothetical tax deductions, by coordinating the filing
of the Canadian income tax returns and by preparing the annual tax
reconciliations.
3.4 Audit
Telinor may within sixty (60) days of the end of each full year of
this Agreement or, if earlier, within sixty (60) days of termination
of this Agreement require that the Secondment Costs charged to Telinor
in relation to the Secondees during the preceding year be subject to
audit in order to establish whether the Secondment Costs for such
Secondees have been calculated correctly. Secondment Costs shall be
verified by the auditors of BCI (the "Auditors") and shall be
determined in accordance with Canadian generally accepted accounting
principles. The parties shall give the Auditors all reasonable
assistance. If the Auditors shall determine that the amounts charged
to Telinor exceeded the actual relevant Secondment Costs, then BCI
shall repay any excess to Telinor and the reasonable professional
costs of the Auditors shall be borne by BCI. If there are no such
excess, the professional costs of the Auditors shall be borne by
Telinor.
4. TAXES
4.1 All amounts payable hereunder by Telinor to BCI shall be paid by
Telinor free and clear of any and all Mexican taxes and any other
non-Canadian taxes, including but not limited to, value-added taxes,
sales, withholding, remittance, corporate, personal income, social
security and other taxes, import duties, levies, fees and assessments
of any kind ("Taxes"), which might otherwise be levied against BCI by
the Mexican tax authorities or any other non-Canadian tax authorities
or any state or subdivision thereof. In addition, Telinor shall be
responsible for any and all Taxes assessed after invoice or
termination of this Agreement which are related to Secondees provided
under this Agreement. Notwithstanding the other provisions in this
Clause 4, in the event that BCI is deemed to have a permanent
establishment in Mexico, Telinor shall only be responsible for
reimbursement of, indemnity for or payment of any Taxes imposed on BCI
to the extent such taxes are attributable to BCI providing Secondees
hereunder and/or providing services under the Technical Services
Agreement. In addition, subject to the Technical Services Agreement,
Telinor shall not be responsible for reimbursement of, indemnity for
or payment of any Taxes imposed on payments to BCI or BCI's income
other than for providing Secondees pursuant to this Agreement.
Page 7
4.2 Should any Taxes be levied by the Mexican tax authorities or any other
non-Canadian tax authorities, payment for such Taxes shall be the
responsibility of and be paid by Telinor directly to the appropriate
tax authority on behalf of BCI and these payments by Telinor shall not
reduce the amounts payable to BCI pursuant to this Agreement.
Within thirty (30) days after the date of any payment of Taxes,
Telinor shall furnish to BCI, at its address referred to in Clause 14,
the original receipt of payment thereof or a certified copy of such
receipt evidencing payment thereof.
In the event that BCI is required by law to make such payments for
Taxes directly to the Mexican or any other non-Canadian tax
authorities, Telinor shall reimburse BCI for such payments within
thirty (30) days from the date of BCI's invoice. Such reimbursement
shall not be reduced by any Taxes and shall not reduce the amounts
otherwise payable to BCI pursuant to this Agreement.
In addition, Telinor shall pay any present or future stamp duty,
documentary taxes, charges or similar levies imposed by the Mexican
tax authorities or any other non-Canadian tax authorities or any state
or subdivision thereof that arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with
respect to, this Agreement.
4.3 If BCI is able to claim a tax benefit in computing its income tax
liability under the Income Tax Act (Canada) and under the tax statutes
of any relevant provincial jurisdiction, in Canada, by reason of
(i) any taxes paid by Telinor to the Mexican or non-Canadian tax
authorities on behalf of BCI, or
(ii) any increased payments by Telinor to BCI pursuant to Clauses 4.1
and 4.2;
collectively referred to as "reimbursable taxes",
BCI shall, within thirty (30) Days, of receiving the tax benefit from
a reduced final Canadian tax payment, pay to Telinor the amount of the
tax benefit which related to the reimbursable taxes. BCI will use
reasonable efforts to obtain promptly such tax benefit and, subject to
such undertaking, nothing in this clause shall interfere with the
right of BCI to arrange its tax affairs in whatever manner it deems
fit, or oblige BCI to disclose any information relating to the
assessment or computation of its tax liabilities or benefits to
Telinor or impose any obligation on BCI to claim relief from its
corporation, profits or similar tax liability in respect of any such
tax benefit in priority to any other relieves, claims, credits or
deductions available to it.
Page 8
5. PAYMENT TERMS
5.1 Invoice and Interest
BCI shall submit to Telinor a quarterly invoice in U.S. dollars with
respect to the Costs incurred during the previous quarter. Such
invoices shall describe the Costs in reasonable details with
supporting documentation as reasonably required by Telinor to comply
with accounting procedures and other requirements as well as the place
and manner of payment. In preparing invoices for the Costs, all Costs
incurred in currencies other than U.S. dollars shall be converted into
U.S. dollars using the appropriate Bank of Canada exchange rate posted
at noon on the last Business Day of the quarter in which the Costs
were incurred.
All Costs payable under this Agreement, if not paid within thirty (30)
Days of the date of the invoice, shall bear interest on the
outstanding amount(s) from the date of the invoice until paid at a
rate per annum, compounded annually equal to the Base Rate plus three
percent (3%). The Base Rate shall mean, for any day, the higher of (i)
the per annum rate of interest determined by Citibank N.A. in New York
City, from time to time, in its sole discretion, as its United States
dollar prime commercial lending rate for such day and (ii) the sum of
(A) the average rate charged to Citibank N.A. for overnight federal
funds on such day (rounded upward, if necessary, to the nearest 1/100
of 1%) plus (B) 1/2%.
5.2 Currency
Unless otherwise agreed in writing between BCI and Telinor, the
compensation with respect to the Costs shall be paid in full by
Telinor to BCI in US dollars.
6. OWNERSHIP
6.1 BCI shall own all right, title and interest in the Deliverables and in
any intellectual property embodied therein or related thereto.
However, Telinor shall have a right to use any such Deliverables or
intellectual property for purposes of carrying on its Business in
Mexico which right shall be non-exclusive, perpetual and free of
charge. Telinor shall not have the right to assign this right to any
Person other than its Affiliates, subject to such Affiliates being
bound by the same undertaking not to assign this right.
6.2 For greater certainty, no term or condition in this Agreement shall be
construed as involving software development or to be a transfer by BCI
or its Affiliates of licenses, patents, trademarks or technology which
could give rise to royalty payments. Any software development
requested by Telinor or any transfer of intellectual property rights
shall be dealt with in separate agreements.
6.3 Other than for entities involved in activities comprising the Business
or competing with the Business of Telinor in the Regions, BCI and/or
Page 9
any Subsidiaries thereof may perform for others the same or similar
services as those provided hereunder, including providing the same or
similar conclusions and recommendations.
7. CONFIDENTIAL INFORMATION
7.1 Each party (the "receiving party") shall for two (2) years from the
date of receipt of Confidential Information from the disclosing party,
retain in confidence all such Confidential Information disclosed
pursuant to activities carried on in providing the Secondees under
this Agreement and shall treat such Confidential Information with the
same degree of care as it employs for the protection of its own
Confidential Information (and in any event, with reasonable care).
7.2 The receiving party shall not, nor shall it permit any of its
Representatives to, without the written consent of the other, use any
Confidential Information of the other for any purpose other than the
purposes contemplated hereunder, or disclose any Confidential
Information of the other to any third party, except to its
Representatives with a need to know for purposes of this Agreement or
for the conduct of each party's Business, including any financing to
the extent necessary to obtain such financing, but only if such
Representatives are not employees, officers or directors of any Person
who, directly or indirectly through any Subsidiary or whose
Controlling Persons, compete with the Business in the Regions and
after such Representatives have been directed by the receiving party
to treat such Confidential Information in accordance with the terms of
this Clause 7 and provided further that no party shall use any such
Confidential Information to the detriment of each other.
7.3 Each party also agrees to enter into such further undertakings of
confidentiality as may reasonably be required by the other party.
7.4 Confidential Information shall not include any information that:
(a) is or becomes in the public domain other than as a result of a
disclosure directly or indirectly by the receiving party in
breach of this Agreement;
(b) the receiving party can demonstrate was known to it prior to the
disclosure thereof by the disclosing party;
(c) or becomes generally available to such receiving party on a
non-confidential basis from a source other than the disclosing
party, provided that such source is not known by such receiving
party to be bound by any confidentiality obligation with respect
to such information.
This Clause 7 shall not restrict the disclosure of any Confidential
Information by either party as required by law, the rules of any
recognized stock exchange, any court of competent jurisdiction, any
governmental or
Page 10
regulatory authority, including any taxation authority or broadcasting
or telecommunications regulatory authority, but only after written
notice of such disclosure requirement has been given, to the extent
practicable, by such party to the disclosing party, (it being
understood and agreed that only one such notice shall be required in
respect of continuous disclosure requirements).
7.5 Upon the expiration or early termination of this Agreement, each party
shall return all such Confidential Information to the other party
unless such Confidential Information is necessary for the conduct of
the on-going business of either party . Notwithstanding termination of
this Agreement, the confidentiality obligations of the parties
pursuant to this Clause 7 shall continue for two (2) years after the
disclosure of Confidential Information.
7.6 It is understood by the parties that in the course of providing
services hereunder, Secondees may acquire knowledge and experience and
the terms hereof will not prohibit the use of knowledge and experience
by such Secondees, provided that this clause shall not operate as an
assignment or license of any intellectual property or other assets
from Telinor or any other person. BCI will use reasonable efforts in
order that Secondees will not provide, during twelve (12) months
following the term of their employment with Telinor, similar services
to entities competing against Telinor in the Regions.
8. LIABILITY
8.1 BCI shall provide the services hereunder with reasonable care and
skill and such services shall be of a standard comparable to providers
of similar types of services and BCI shall use its reasonable
commercial judgment and expertise, provided that:
(a) BCI, its Affiliates and the Secondees shall not be liable on
account of specific acts done or omitted to be done by the
Secondees or BCI or its Affiliates and their respective
directors, officers, shareholders, employees, agents or
contractors in good faith in accordance with or pursuant to the
direction of Telinor,
(b) None of BCI, any of its Affiliates or the Secondees shall be
liable to Telinor for any error of judgment or for any loss or
damage suffered by Telinor in connection with the subject matter
of this Agreement (howsoever any such loss may have occurred)
unless such loss or damage arises from gross negligence, bad
faith, fraud, intentional misconduct or willful default in the
performance or non-performance by BCI (or any Affiliates thereof
or the Secondees) of its obligations or duties under or pursuant
to the terms of this Agreement, and
(c) Notwithstanding anything herein contained, in no event shall BCI
be held liable, accountable or in breach of this Agreement for
the
Page 11
failure by Telinor to meet any milestones, targets or goals set in the
Preliminary Business Plan, the Initial Business Plan and such other
Business Plans which may be adopted by Telinor from time to time.
8.2 Subject to Clause 8.1, each party shall be liable hereunder only for
direct damages incurred by the other and in no event shall either
party be liable for any consequential or indirect damages for any
breach of this Agreement.
9. ADDITIONAL RESPONSIBILITIES OF TELINOR
9.1 In addition to its obligations under this Agreement, Telinor shall at
no cost to BCI:
(a) provide all necessary secretarial, office, telecommunications,
and other business facilities required by the Secondees for the
performance of their duties under this Agreement;
(b) use reasonable efforts to assist BCI from time to time in
connection with the obtention of the visas and/or work permits
and such other necessary Mexican government permissions required
to enable the Secondees and their families to enter and work in
Mexico and allow payment outside Mexico of the fees in connection
thereto;
(c) use reasonable efforts to assist the Secondees and their
families, if requested, in satisfying the documentary
requirements that may arise from importing and exporting their
personal effects. Telinor shall also provide general assistance
to the Secondees and their families in settling in Mexico;
(d) register this Agreement and all of its subsequent amendments with
the appropriate authorities (if legally required) and advise BCI
of the date of registration. Telinor will seek and obtain (as
applicable) the approval of this Agreement by all relevant
Mexican authorities; and
(e) provide the Secondees with access to a sufficient number of
qualified and properly trained personnel to be mutually agreed
upon.
10. FORCE MAJEURE
10.1 Neither party shall be in default or liable for any loss or damage
resulting from delays in performance or from failure to perform or
comply with terms of this Agreement (other than payment obligations or
obligations that said party is unable to perform due to said party's
breach of a contract or contracts) due to any event, which event is
beyond its reasonable control, was not caused by it and, which despite
such party's reasonable efforts, will result in a delay in the
performance or
Page 12
compliance with any material term of this Agreement, including but not
limited to:
(a) unusually severe weather, including lightning, storms,
earthquakes, landslides, floods, washouts, volcanic eruptions and
other acts of God;
(b) fires, explosion and destruction, whether accidentally or
intentionally caused and whether partial or complete, lack or
failure of transportation facilities, epidemic, quarantine,
labour disputes; (c) war, declared or undeclared, revolution,
civil commotion, acts of public enemies, blockades, embargo, acts
of civil disobedience, acts of civil or military authorities,
acts stemming from governmental bodies, including courts and
regulatory bodies;
provided that the party affected by such event has exercised
reasonable measures, if feasible, to mitigate such delays, loss
or damage.
10.2 The party affected by such event (the "Affected Party") shall within
twenty (20) Business Days notify the other party setting out in
reasonable details the nature of such event of force majeure and its
effect upon the obligations of the Affected Party, a detailed
description, if applicable, of work-around plans, alternative sources
or any other means such party will or proposes to utilize to make up
for any such period of delay and to prevent any further delay.
Thereupon, the obligations of the Affected Party shall be suspended
during, but no longer than the continuance of the event of force
majeure, and the time for performance of any obligation hereunder
shall be extended by the actual time of delay caused by such event;
provided, however, that unless an Affected Party shall notify the
other party within the period (except if such period cannot be met
because of the event of force majeure) and in the manner stated in
this Clause 10.2, such party shall not be entitled to and shall not
claim an extension of time for that event of force majeure, and shall
not by reason of any delay arising from such event of force majeure,
be relieved in any way, or to any extent, from its obligations to
proceed with, execute and complete its performance of, and compliance
with, the terms of this Agreement.
11. TERM AND TERMINATION
11.1 This Agreement shall have a minimum term of five (5) years from the
date hereof unless otherwise mutually agreed, and may thereafter be
extended by mutual agreement of the parties.
11.2 This Agreement shall automatically terminate when (i) BCI-Shareholder
and any Affiliate thereof no longer hold any Equity Shares (including
for greater certainty, the series B Shares authorized under the
Original By-laws to be held by BCI-Shareholder prior to the First
Subscription Date)
Page 13
in Telinor, (ii) when the Shareholders' Agreement is terminated with
respect to BCI in accordance with Clauses 14.2.2 or 14.2.3 of the
Shareholders' Agreement, unless otherwise agreed to by the parties, or
(iii) when the Technical Services Agreement is terminated.
11.3 BCI may, at its option, terminate this Agreement by giving written
notice to Telinor in any of the following events, namely:
(a) a material breach by Telinor of any material obligations
contained in this Agreement which has not been cured within sixty
(60) Business Days after written notice thereof to Telinor
specifying the breach and requiring such remedy;
(b) the insolvency or bankruptcy of Telinor or the making of an
assignment for the benefit of creditors, or the appointment of a
trustee or receiver and manager or liquidator for Telinor or for
all or a substantial part of its property, or the commencement of
a bankruptcy, reorganization, arrangement, insolvency or similar
proceedings by or against Telinor under the laws of any
jurisdiction;
(c) Telinor ceases to conduct its Business;
(d) all or substantially all of Telinor's Business is assigned or
transferred; or
(e) the Spectrum Concession is terminated for any reason.
11.4 Telinor may at its option terminate this Agreement by giving written
notice to BCI in any of the following events, namely:
(a) a material breach by BCI of any material obligations contained in
this Agreement which has not been cured within sixty (60)
Business Days after written notice thereof to BCI specifying the
breach and requiring such remedy;
(b) the insolvency or bankruptcy of BCI or the making of an
assignment for the benefit of creditors, or the appointment of a
trustee or receiver and manager or liquidator for BCI or for all
or a substantial part of its property, or the commencement of a
bankruptcy, reorganization, arrangement, insolvency or similar
proceedings by or against BCI under the laws of any jurisdiction;
or
(c) If BCI-Shareholder and/or any Affiliate thereof owns less than
one thousand series B Shares of Telinor authorized under the
Original By-laws prior to the First Subscription Date and less
than fifty percent (50%) of the Series B Shares of Telinor after
the First Subscription Date.
Page 14
11.5 The termination regardless of its cause or its nature shall be without
prejudice of any other rights or remedies of either party without
liability to the other party (except as provided in this Agreement)
for any loss or damage occasioned thereby, and each party shall remain
responsible for its obligations existing immediately prior to the
termination.
The termination of this Agreement for any cause shall not release
either party hereto from any liability which at the time of
termination has already accrued to the other party hereto or which
thereafter may accrue in respect to any act or omission prior to
termination or from any obligation which is expressly stated herein to
survive termination.
11.6 Notwithstanding the expiration or termination of this Agreement,
Clauses 4, 5, 6, 7, 8, 11.5, 11.6, 15 and 16, as well as all the
definitions of the Shareholders' Agreement which are incorporated in
such Clauses by reference, shall survive any such expiration or
termination and shall remain in full force and effect until completion
of the obligations referred to therein.
12. ASSIGNMENT
No party may assign its rights and obligations under this Agreement, in
whole or in part, except with the prior consent of the other party, which
consent shall not be unreasonably withheld, provided, however, that BCI may
effect an assignment of its rights and obligations hereunder to an
Affiliate of BCI, upon mere written notice to Telinor subject to such
assignment not increasing Telinor's obligations under this Agreement
(except for a de minimis amount) and provided that BCI shall continue to
remain responsible, jointly with such Affiliate, for the provision of
Services hereunder.
BCI shall have the right from time to time to sub-contract any of the
Services to its Affiliates or Third Parties, although in such instances,
BCI shall continue to have primary responsibility towards Telinor with
respect to those Services subcontracted.
13. AMENDMENT; WAIVER
13.1 Except as otherwise expressly provided in this Agreement, no failure
or delay by any party in exercising any right, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise by such party of any right, power or
privilege preclude any further exercise thereof or the exercise of any
other right, power or privilege.
Page 15
13.2 Except as otherwise expressly provided in this Agreement, no waiver of
any right hereunder or of any breach or failure to perform shall be
effective unless executed in writing.
13.3 The waiver of any right hereunder or of any failure to perform or
breach hereof shall not constitute or be deemed as a waiver of any
other right hereunder or of any other failure to perform or other
breach hereof, whether of a similar or dissimilar nature thereto.
14. NOTICES
Any notice or communication which shall be given under this Agreement shall
be made in writing in the English language, and given by telecopier, with
an original sent by courier, addressed to a party at its telecopier number
and address set forth below, or such other telecopier number and/or address
for such party as shall have been communicated by it to the other party in
accordance with this Clause 14. Any notice or other communication shall be
deemed to have been received on the date of transmission but only if a
confirmation of the receipt by the recipient of the telecopier appears
correctly at the end of the sender's telecopy.
If to BCI :
Bell Canada International Inc.
1000 de La Gauchetiere St. West
Suite 1100
Montreal, Quebec
H3B 4Y8
Telecopier No.: (514) 392-2342
Attention: Vice-President, Law and Corporate Secretary
Page 16
If to TELINOR:
Telefonia Inalambrica Del Norte, S.A. de C.V.
Vasconcelos 210 Otc.
Residencial San Agustin
Gorza Garcia, N.L.
Mexico
Telecopier No.: 011-528-363-5091
Attention: Tomas Milmo Santos
with a copy to:
D & A Morales Y Asociados, S.C.
Vallarta 811 Sur
Colonia Mirador
64070 Monterrey, N.L.
Mexico
Telecopier No.: (52-8) 342-9322
Attention: Alberto J. Morales
15. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Quebec and the laws of Canada applicable therein
without giving effect to any choice of conflict of law rules.
16. DISPUTE RESOLUTION
16.1 In the event of a Dispute among BCI and Telinor arising under or in
connection with this Agreement, including a Dispute over whether there
has been a material breach to this Agreement, the following shall
apply:
(a) They shall use their good faith efforts to settle such Dispute.
To this end, any party may notify the other party of its desire
to initiate the procedure contemplated by this Clause 16
whereupon the parties shall forthwith convene to attempt to
resolve such disputes through amicable and good faith
discussions. Disputes which the parties are unable to resolve
through such discussions within thirty (30) days following
receipt of the notice referred to in this Clause 16.1a), shall
upon the request of any party to the Dispute, be submitted to a
panel consisting of designees from the Chief Executive Officer of
BCI and Telinor. The designees shall consult and negotiate with
each other in good faith in an effort to reach a just and
equitable solution.
(b) If the designees do not reach a solution within a period of
thirty (30) days following the beginning of their consultations
and negotiations, any party may treat the same as an arbitrable
Page 17
dispute by giving notice to the other party, in which case the
dispute shall be submitted to a final and binding arbitration
under the rules of the American Arbitration Association's
Commercial Arbitration Rules, including the Supplementary
Procedures for International Commercial Arbitration excluding any
such rules relating to the posting of security for costs (the
"Rules"). The arbitral tribunal shall be composed of three
persons, who shall be appointed in accordance with the Rules;
provided, however, that one (1) of the arbitrators must be an
attorney admitted to the Quebec bar.
16.2 The arbitration shall be held in the English language. The proceedings
shall be conducted, and any arbitral award shall be made, in the city
of New York in the United States. The parties agree that the
obligations herein are `commercial' and that the New York Convention
on Recognition and Enforcement of Foreign Arbitral Awards is
applicable. The prevailing party shall be entitled to recover from the
other party (as part of the arbitral award or order) its or their
reasonable attorneys' fees and other costs of arbitration.
17. ENTIRE AGREEMENT; ORAL EXPLANATION; AMENDMENTS
This Agreement and its Schedules together with the Technical Services
Agreement and the Shareholders' Agreement constitute the entire agreement
of the parties hereto with respect to the subject matter covered herein and
supersedes all prior understandings, and agreements. No oral explanation or
oral information by any of the parties shall alter the meaning or
interpretation of this Agreement. No amendment hereto shall be effective or
binding on any of the parties unless reduced to writing with specific
reference to this Agreement, and executed by the respective duly authorized
representatives of each of such parties.
18. NON-SOLICITATION
Telinor agrees not to enter into any employment or consulting agreement or
arrangement, directly or indirectly, written or verbal with any Secondee
hereunder for a period of twelve (12) months following his completion of
the secondment, unless authorized in advance by BCI in writing.
19. SEVERABILITY
The invalidity or unenforceability of any provision, in whole or in part,
of this Agreement shall not in any way affect the validity or
enforceability of any other parts or provisions thereof, provided, however,
that the parties hereto shall use their reasonable efforts to achieve the
purpose of the invalid or unenforceable provision or part thereof by a new
valid and enforceable stipulation.
Page 18
20. LANGUAGE
The English version of this Agreement is the only authentic version thereof
and it shall determine the construction, interpretation, application and
performance of this Agreement.
21. RELATIONSHIP OF THE PARTIES
No party has the power or authority to legally bind any of the other
parties. Nothing herein shall be construed as authorizing any party to act
as an agent or representative of the other parties and nothing herein shall
be taken to constitute or create a partnership, an agency or a joint
venture among any of the parties.
22. RIGHTS AND REMEDIES
All rights and remedies provided for in this Agreement are in addition to,
and not exclusive of, any other rights or remedies otherwise available at
law or in equity.
23. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
when so executed shall be deemed to be an original but all of which taken
together shall constitute one and the same complete and executed agreement.
24. FURTHER ASSURANCES
Each of the parties hereto shall cooperate with the other and execute and
deliver to the other such instruments and documents and take such other
actions as may reasonably be requested from time to time in order to carry
out, evidence and confirm their respective rights and the intended purpose
of this Agreement.
25. CONSENTS
Telinor shall obtain at its own cost all licenses, permits or consents
which may be required by Telinor in order for BCI to be free to provide or
make available the Secondees.
Page 19
IN WITNESS WHEREOF, the parties have signed and delivered this Agreement on the
day and year set forth above.
BELL CANADA INTERNATIONAL INC. TELEFONIA INALAMBRICA DEL NORTE,
S.A. DE C.V.
By: ________________________________ By: _________________________
Name: Michael Lisogurski Name:
Title: Executive Vice-President, Title:
Corporate Development
Witness: _____________________________ Witness: ___________________
SCHEDULES
SCHEDULE "A": Request for Services
Schedule "A"
Request for Services
1. Expertise and number of Secondees Required
2. Expected Term of Secondment
3. Date of Commencement of Secondment
4. Location of Work
5. Contact Person at Telinor
Name: ________________________________
Address: ________________________________
________________________________
Telephone: ________________________________
Fax: ________________________________
Authorized Telinor Signatory
Date: _______________________________
Page 20
Exhibit H
EXECUTION COPY
UNDERTAKING OF ADHERENCE
Undertaking of Adherence, dated as of November 13, 1997, among Wilmington
Trust Company, not in its individual capacity but solely as trustee of Mexico
Telecom N Share Trust (the "Trustee"), Bell Canada International (Mexico
Telecom), Limited, a British Virgin Islands corporation ("BCI"), WorldTel Mexico
Telecom, Ltd., a Bermuda corporation ("Offshoreco") and Telinor Telefonia, S.A.
de C.V., a Mexican corporation ("Holdco"). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in that certain Trust
Agreement (the "Trust Agreement"), dated the date hereof, among OffshoreCo,
Holdco, the Trustee and Telefonia Inalambrica del Norte, S.A. de C.V., a Mexican
corporation (the "Company").
Each of the Trustee, Holdco and OffshoreCo hereby covenants and agrees that
it will not consent to any amendment of the Trust Agreement that (i) amends the
definition of "N Shares" set forth therein, (ii) amends Section 2.3, 2.5 or
4.2(b)(ii) thereof, (iii) provides for the distribution of the N Shares to any
Person other than the holder of a Class A or Class B Owner Certificate or (iv)
provides for the distribution of any capital stock other than the N Shares to
OffshoreCo or Holdco, in each case without the written consent of BCI.
The Trustee will not execute, authenticate or deliver a new Owner
Certificate in the name of any designated transferee unless the transfer is in
accordance with the provisions of Section 2.5 of the Trust Agreement.
This Undertaking of Adherence may be executed by the parties hereto in
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. This
Undertaking of Adherence shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered in person, by facsimile
or telegram or on the next Business Day when sent by reputable overnight courier
or on the second succeeding Business Day when sent by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as shall be
specified by like notice);
(A) if to the Trustee, Offshoreco or Holdco, to the respective
address set forth in Section 10.4 of the Trust Agreement; and
(B) if to BCI, to
Bell Canada International Inc.
1000 de la Gauchetiere St. West
Suite 1100
Montreal, Quebec, Canada
H3B 4Y8
Attention: Vice-President, Law and Corporate Secretary
Telecopier No.: (514) 392-2342
This Undertaking of Adherence shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
-2-
IN WITNESS WHEREOF, the parties hereto have caused this Undertaking of
Adherence to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
TELINOR TELEFONIA, S.A. DE C.V. BELL CANADA INTERNATIONAL
(MEXICO TELECOM), LIMITED
By:
By: Name:
Name: Title:
Title:
WORLDTEL MEXICO TELECOM, LTD. WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
By:
By: Name:
Name: Title:
Title:
SCHEDULE "I"
SAMPLE VENDOR FINANCING TERM SHEET
Lender Equipment Vendor(s)
Borrower Telefonia Inalambrica Del Norte, S.A. de C.V.
Amount At least seventy-five per cent (75%) of the price of
the equipment quoted by the Vendors (excluding
duties, insurance, freight and taxes)
Interest Rate LIBOR + 450 b.p.
Average Life 4 years
Guarantees No Shareholder Guarantees
Fees Total set-up, syndication, advisory and other
one-time fees no greater than 5% of
the total amount of the vendor financing.
SCHEDULE "J"
SCHEDULE OF CAPITAL CALLS
Date United States Dollars
in Millions
Second Subscription Date $63.7
60 Business Days after the Second Subscription Date $71.3
January 29, 1999 $75.0
January 31, 2000 $35.0
Total $245.0
SCHEDULE "K"
PERSONS PROVIDING GUARANTEES OR
EXECUTING SUBSCRIPTION AGREEMENTS
NAME OF SHAREHOLDER NAME OF PERSONS PROVIDING GUARANTEES
OR EXECUTING SUBSCRIPTION AGREEMENTS
TELINOR TELEFONIA, S.A. DE C.V. i) Tomas Milmo Zambrano
Vasconcelos No. 811
Colonia Los Sabinos
San Pedro Garza Garcia, N.L.
Telecopier No.: (52-8) 363-3601
ii) Lorenzo H. Zambrano Trevino
Privada Cristal No. 22
Edificio Torre Cristal, Piso 11
Colonia Valle del Campestre
San Pedro Garza Garcia, N.L.
Telecopier No.: (52-8) 328-3030
iii) Alberto Santos De Hoyos
Mision de San Joaquin No. 105
Colonia Jardines Coloniales
San Pedro Garza Garcia, N.L.
Telecopier No.: (52-8) 338-9301
iv) Tomas Milmo Santos
San Bernadino No.
611 Colonia La
Jolla San Pedro
Garza Garcia, N.L.
Telecopier No.:
(52-8) 363-3601
v) Jose Alejandro
Mayagoitia Perez
Avenida Fuentes del
Valle No. 666
Oreinte,
Interior C
Colonia Fuentes del Valle
San Pedro Garza Garcia, N.L.
Telecopier No.: (52-8) 363-5091
vi) Reynaldo Vilarreal
Escamilla Linares
No. 220 Colonia
Real de San Agustin
San Pedro Garza
Garcia, N.L.
Telecopier No.:
(52-8) 363-5091
BELL CANADA INTERNATIONAL Bell Canada International Inc.
1
NAME OF SHAREHOLDER NAME OF PERSONS PROVIDING GUARANTEES
OR EXECUTING SUBSCRIPTION AGREEMENTS
(MEXICO TELECOM) LIMITED 1000 de la Gauchetiere St. West
Suite 1100
Montreal, Quebec, Canada
H3B 4Y8
Telecopier No.: (514) 392-2342
Attention: Vice-President,
Law and Corporate
Secretary
Bell Canada International (Mexico)
Limited
Arawak Chambers
Road Town
Tortola, British Virgin Islands
Telecopier No.: (809) 494-2914
Attention: President
WORLDTEL MEXICO TELECOM LTD. Metropolitan Life Insurance Company
Corporate Equities Unit
334 Madison Avenue
Convent Station, New Jersey
07961-0633
Telecopier No.: (201) 254-3055
Attention: Vice-President,
Corprate Equities
with a copy to:
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010-3690
Telecopier No.: (212) 578-3916
Attention: George M. Bryant (7H)
American International Underwriters
Overseas, Ltd.
American International Building
29 Richmond Road
Pembroke HM 08, Bermuda
Telecopier No.: (441) 295-6983
Attention: Stuart Osborne
AIG Latin America Equity
Partners, Ltd.
American International Building
29 Richmond Road
Pembroke HM 08, Bermuda
Telecopier No.: (212) 747-0326
Attention: Alberto Marcel
LAIF IV Ltd.
American International Building
2
NAME OF SHAREHOLDER NAME OF PERSONS PROVIDING GUARANTEES
OR EXECUTING SUBSCRIPTION AGREEMENTS
29 Richmond Road
Pembroke HM 08, Bermuda
Telecopier No.: (441) 295-6983
Attention: Rahul Desai
S-C Phoenix Holdings, L.L.C.
c/o Soros Fund Management LLC
888 Seventh Avenue
New York, New York 10106
Telecopier No.: (212) 664-0544
Attention: Michael C. Neus
Winston Partners
II, LDC c/o Curacao
Corporation
Company, N.V. Kaya
Flamboyan 9
Willemstad, Curacao
Netherlands
Antilles Telecopier
No.:
011-599-9-322-001
with a copy to:
The Chatterjee Group
888 Seventh Avenue
New York, New York 10106
Telecopier No.: (212) 489-2005
Attention: Arvind Rao/Peter Hurwitz
Winston Partners II, LLC
c/o Chatterjee Advisors L.L.C.
c/o The Chatterjee Group
888 Seventh Avenue
New York, New York 10106
Telecopier No.: (212) 489-2005
Attention: Arvind Rao/Peter Hurwitz
Strategic Investment Partners LDC
c/o Curacao Corporation, N.V.
Kaya Flamboyan 9
Willemstad, Curacao
Netherlands Antilles
Telecopier No.: 011-599-9-322-001
3
NAME OF SHAREHOLDER NAME OF PERSONS PROVIDING GUARANTEES
OR EXECUTING SUBSCRIPTION AGREEMENTS
with a copy to:
Soros Fund Management LLC
888 Seventh Avenue
New York, New York 10106
Telecopier No.: (212) 664-0544
Attention: Michael C. Neus
For S-C Phenix Holdings,
L.L.C., Winston Partners II,
LDC, Winston Partners II,
LLC and Strategic Investment
Partners LDC, notices should
be sent with a copy also to:
Akin, Gump, Strauss, Hauer
& Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Telecopier No.: (212) 872-1002
Attention: Patrick J. Dooley
4
FIRST
THIS AGREEMENT dated as of November 14, 1997
AMONG: BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED, a corporation duly
incorporated under the laws of the British Virgin Islands, with its
registered office at Arawak Chambers, Road Town, Tortola, British Virgin
Islands ("BCI"):
AND: TELINOR TELEFONIA, S.A. DE C.V., a corporation duly incorporated under the
laws of Mexico with its registered office at Vasconcelos 210 Ote., Piso 9,
Residencial San Agustin, San Pedro, Garza Garcia, N.L., Mexico ("Holdco"):
AND: WORLDTEL MEXICO TELECOM, LTD., a corporation duly incorporated under the
laws of Bermuda with its registered office at 41 Cedar Avenue, Hamilton, HM
12, Bermuda ("WorldTel"):
AND: TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V., a corporation duly
incorporated under the laws of the United Mexican States with its
registered office at Vasconscelos 210 Ote., Piso 12, Residencial San
Agustin, San Pedro, Garza Garcia, N.L., Mexico (the "Corporation"):
WITNESSETH
WHEREAS the Parties have entered into a Unanimous Shareholders Agreement dated
October 6, 1997 (the "USA") regarding the regulation of the affairs of the
Corporation and the interests of the Shareholders therein;
WHEREAS the Shareholders have made, as of this date, their Initial Cash
Contributions, and have agreed to modify and postpone certain Closing conditions
relating thereto;
WHEREAS the Parties wish to evidence their agreement with respect to the
modification and postponement of certain Closing conditions in respect of the
Initial Cash Contributions;
WHEREAS the Parties wish to amend Clause 9.2 of the Shareholders Agreement to
reflect the proposed By-laws of the Corporation;
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Definitions
Capitalized expressions not specifically defined herein shall have the
meanings ascribed to them in the USA.
2. By-laws
The Shareholders hereby waive the Closing condition set forth in Clause
3.2.3(c) of the USA in respect of the delivery of the Spanish version
of the By-laws and a certificate issued by legal counsel of the
Corporation certifying that the Spanish version of the By-laws conforms
to the English version thereof and the Corporation undertakes to
deliver same on or before December 31, 1997 as part of the issuance of
Shares at the First Subscription Date.
The Shareholders further agree that all required Government Approvals
in respect of the adoption of the By-laws shall be a condition
precedent to the capitalization of the Initial Cash Contributions and
shall be obtained by the Corporation on or before December 31, 1997,
Clause 3.2.2 of the USA being amended accordingly.
3. Opinions on Subscription Agreements/Guarantees
The Shareholders hereby waive the Closing condition set forth in Clause
3.2.3(g)(iii) of the USA calling for legal opinions in respect of the
due authorization, delivery execution and enforceability of the
guarantees or subscription agreements referred to in Clause 3.2.3(d) of
the USA.
4. Minutes
The Shareholders hereby waive the Closing condition set forth in Clause
3.2.3(n) of the USA, the Parties undertaking to deliver on or before
December 31, 1997, as part of the issuance of Shares at the First
Subscription Date, the duly executed Spanish version of the Minutes as
well as the English version of same, both of which shall be consistent
with the USA and otherwise in form and substance satisfactory to each
Shareholder.
5. Call Option Powers of Attorney
The Shareholders hereby waive the Closing condition set forth in Clause
3.2.3(o) of the USA in respect of the delivery of the Call Option
Powers of Attorney and replace it with the requirement that each
Shareholder receive same, with the Corporation hereby undertaking to
deliver same, on or before December 31, 1997 as part of the issuance of
Shares at the First Subscription Date.
The Shareholders shall also deliver on or before December 31, 1997
their resolutions authorizing the execution and delivery of the Call
Option Powers of Attorney, which shall be reasonably satisfactory to
the Shareholders.
6. Rendall Option Indemnity
The Parties agree that the execution and delivery of an Indemnity
Agreement by Holdco and by Mr. Tomas Milmo Santos in respect of the
Rendall & Associates option in form and substance satisfactory to each
Shareholder shall be a condition precedent to the Closing, Clause
3.2.3(o) of the USA being amended accordingly. Notwithstanding the
foregoing, Holdco and the Corporation will use their best efforts to
eliminate the Rendall & Associates option as soon as possible following
the Closing.
-2-
7. First Subscription Date
The Parties hereby confirm that the First Subscription Date shall occur
on or before December 31, 1997, and that unless the First Subscription
Date occurs on or before such date, the USA shall automatically
terminate, Clause 14.2.2(ii) of the USA being amended accordingly.
8. Amendment
The Parties hereby agree to amend Clause 9.2(u) of the Shareholders
Agreement which shall now read as follows:
"The matters referred to in Clauses 7.10.3 and 7.9.4 herein to
the extent that they are not resolved by resolution of the
Board of Directors (or committee of the Board as the case may
be) or are raised at a Shareholders meeting."
9. Continued Effect
The present Agreement constitutes an amendment and partial wavier of
some of the conditions of the USA in accordance with Clause 17.5 of the
USA, and except as amended herein, all of the other terms and
conditions of the USA shall remain in full force and effect.
-3-
IN WITNESS WHEREOF, this Agreement was signed at the date hereinabove mentioned.
BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED
per: /S/ David A. Raworth
_
Name: David A. Raworth
Title: President and Director
TELINOR TELEFONIA, S.A. DE C.V.
per: /S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title:
WORLDTEL MEXICO TELECOM, LTD.
per: /S/ Robert Rice Jenks
Name: Robert Rice Jenks
Title:
TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V.
per: /S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title:
-4-
SECOND
THIS AGREEMENT dated as of December 12, 1997
AMONG: BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED, a corporation duly
incorporated under the laws of the British Virgin Islands, with its
registered office at Arawak Chambers, Road Town, Tortola, British Virgin
Islands ("BCI");
AND: TELINOR TELEFONIA, S.A. DE C.V., a corporation duly incorporated under the
laws of Mexico with its registered office at Vasconcelos 210 Ote., Piso 9,
Residencial San Agustin, San Pedro, Garza Garcia, N.L., Mexico ("Holdco");
AND: WORLDTEL MEXICO TELECOM, LTD., a corporation duly incorporated under the
laws of Bermuda with its registered office at 41 Cedar Avenue, Hamilton,
HM12, Bermuda ("WorldTel");
AND: TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V., a corporation duly
incorporated under the laws of the United Mexican States with its
registered office at Vasconcelos 210 Ote., Piso 12, Residencial San
Agustin, San Pedro, Garza Garcia, N.L., Mexico (the "Corporation")
WITNESSETH
WHEREAS the Parties have entered into a Unanimous Shareholders Agreement
dated October 6, 1997 (the "USA") regarding the regulation of the affairs of the
Corporation and the interests of the Shareholders therein;
WHEREAS the Shareholders have entered into an Agreement dated November 14,
1997 (the "First Amendment") regarding the modification and amendment of certain
conditions of the USA;
WHEREAS the Parties wish to evidence their agreement with respect to the
modification and postponement of certain conditions with respect to the First
Subscription Date;
WHEREAS the Parties wish to amend Clauses 2, 4, 5 and 7 of the First
Amendment to reflect the intention of the parties with respect to the First
Subscription Date;
NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Definitions
Capitalized expressions not specifically defined herein shall have the
meanings ascribed to them in the USA.
2. By-laws
The Shareholders hereby waive the requirement of Section 2 of the First
Amendment in respect of the delivery by December 31, 1997 of the Spanish version
of the By-laws and a certificate issued by legal counsel of the Corporation
certifying that the Spanish version of the By-laws conforms to the English
version thereof and the Corporation undertakes to deliver same on or before
January 31, 1998 as part of the Issuance at Shares of the First Subscription
Date.
The Shareholders further agree that all required Government Approvals in
respect of the adoption of the By-laws shall be a condition precedent to the
capitalization of the Initial Cash Contributions and shall be obtained by the
Corporation on or before January 31, 1998, Clause 3.2.2 of the USA being amended
accordingly.
3. Minutes
The Shareholders hereby waive the requirement of Section 4 of the First
Amendment, the Parties undertaking to deliver on or before January 31, 1998, as
part of the Issuance of Shares at the First Subscription Date, the duly executed
Spanish version of the Minutes as well as the English version of same, both of
which shall be consistent with the USA and otherwise in form and substance
satisfactory to each Shareholder.
4. Call Option Powers of Attorney
The Shareholders hereby waive the requirement of Section 5 of the First
Amendment in respect of the delivery of the Call Option Powers of Attorney and
replace it with the requirement that each Shareholder receive same, with this
Corporation hereby undertaking as deliver same, on or before January 31, 1998 as
part of the Issuance of Shares at the First Subscription Date.
The Shareholders shall also deliver on or before January 31, 1998 their
resolutions authorizing the execution and delivery of the Call Option Powers of
Attorney, which shall be reasonably satisfactory to the Shareholders.
5. First Subscription Date
The Parties hereby amend the First Subscription Date which shall now be and
occur on or before January 31, 1998. Unless the First Subscription Date occurs
on or before such date, the USA shall automatically terminate, clause 14.2.2(ii)
of the USA being amended accordingly.
6. Continued Effect
The present Agreement constitutes an amendment and partial waiver of some
of the conditions of the USA as amended by the First Amendment in accordance
with Clause 17.5 of the USA, and except as amended herein, all of the other
terms and conditions of the USA shall remain in full force and effect.
2
IN WITNESS WHEREOF, this Agreement was signed at the date herein above
mentioned.
BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED
per: /S/ Anthony G. Lynton
Name: Anthony G. Lynton
Title: Secretary
TELINOR TELEFONIA, S.A. DE C.V.
per: /S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title: Sole Director
WORLDTEL MEXICO TELECOM, LTD.
per: /S/ Sam Pitroda
Name: Sam Pitroda
Title: President
TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V.
per: /S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title:
3
THIRD
THIS AGREEMENT dated as of January 23, 1998
AMONG: BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED, a corporation duly
incorporated under the laws of the British Virgin Islands, with its
registered office at Arawak Chambers, Road Town, Tortola, British Virgin
Islands ("BCI");
AND: TELINOR TELEFONIA, S.A. DE C.V., a corporation duly incorporated under the
laws of Mexico with its registered office at Vasconcelos 210 Ote., Piso 9,
Residencial San Agustin, San Pedro, Garza Garcia, N.L., Mexico ("Holdco");
AND: WORLDTEL MEXICO TELECOM, LTD., a corporation duly incorporated under the
laws of Bermuda with its registered office at 41 Cedar Avenue, Hamilton,
HM12, Bermuda ("WorldTel");
AND: TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V., a corporation duly
incorporated under the laws of the United Mexican States with its
registered office at Vasconcelos 210 Ote., Piso 12, Residencial San
Agustin, San Pedro, Garza Garcia, N.L., Mexico (the "Corporation");
WITNESSETH
WHEREAS the Parties have entered into a Unanimous Shareholders Agreement
dated October 6, 1997 (the "USA") regarding the regulation of the affairs of the
Corporation and the interests of the Shareholders therein;
WHEREAS the Shareholders have entered into an Agreement dated November 14,
1997 (the "First Amendment") regarding the modification and amendment of certain
conditions of the USA;
WHEREAS the Shareholders have entered into an Agreement dated December 12,
1997 (the "Second Amendment") regarding the modification and amendment of
certain conditions of the USA as amended by the First Amendment;
WHEREAS the Parties wish to evidence their agreement with respect to the
modification and postponement of certain conditions with respect to the First
Subscription Date;
WHEREAS the Parties wish to amend Clauses 2, 3, 4 and 5 of the Second
Amendment to reflect the intention of the parties with respect to the First
Subscription Date;
NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Definitions
Capitalized expressions not specifically defined herein shall have the
meanings ascribed to them in the USA.
2. By-laws
The Shareholders hereby waive the requirement of Section 2 of the Second
Amendment in respect of the delivery by January 31, 1997 of the Spanish version
of the By-laws and a certificate issued by legal counsel of the Corporation
certifying that the Spanish version of the By-laws conforms to the English
version thereof and the Corporation undertakes to deliver same on or before
February 27, 1998 as part of the issuance of Shares at the First Subscription
Date.
The Shareholders further agree that all required Government Approvals in
respect of the adoption of the By-laws shall be a condition precedent to the
capitalization of the Initial Cash Contributions and shall be obtained by the
Corporation on or before February 27, 1998, Clause 3.2.2 of the USA being
amended accordingly.
3. Minutes
The Shareholders hereby waive the requirement of Section 3 of the Second
Amendment, the Parties undertaking to deliver on or before February 27, 1998, as
part of the issuance of Shares at the First Subscription Date, the duly executed
Spanish version of the Minutes as well as the English version of same, both of
which shall be consistent with the USA and otherwise in form and substance
satisfactory to each Shareholder.
4. Call Option Powers of Attorney
The Shareholders hereby waive the requirement of Section 4 of the Second
Amendment in respect of the delivery of the Call Option Powers of Attorney and
replace it with the requirement that each Shareholder receive same, with the
Corporation hereby undertaking to deliver same, on or before February 27, 1998
as part of the issuance of Shares at the First Subscription Date.
The Shareholders shall also deliver on or before February 27, 1998 their
resolutions authorizing the execution and delivery of the Call Option Powers of
Attorney, which shall be reasonably satisfactory to the Shareholders.
5. First Subscription Date
The Parties hereby amend the First Subscription Date which shall now be and
occur on or before February 27, 1998. Unless the First Subscription Date occurs
on or before such date, the USA shall automatically terminate, clause 14.2.2(ii)
of the USA being amended accordingly.
-2-
6. Continued Effect
The present Agreement constitutes an amendment and partial waiver of some
of the conditions of the USA as amended by the First and Second Amendments in
accordance with Clause 17.5 of the USA, and except as amended herein, all of the
other terms and conditions of the USA shall remain in full force and effect.
IN WITNESS WHEREOF, this Agreement was signed at the date herein above
mentioned.
BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED
per: /S/ Anthony G. Lynton
Name: Anthony G. Lynton
Title: Secretary
TELINOR TELEFONIA, S.A. DE C.V.
per: /S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title: Sole Director
WORLDTEL MEXICO TELECOM, LTD.
per: /S/ Sam Pitroda
Name: Sam Pitroda
Title: President
TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V.
per: /S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title:
-3-
FOURTH
THIS AGREEMENT dated as of February 27, 1998
AMONG: BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED, a corporation duly
incorporated under the laws of the British Virgin Islands, with its
registered office at Arawak Chambers, Road Town, Tortola, British Virgin
Islands ("BCE");
AND: TELINOR TELEFONIA, S.A DE C.V., a corporation duly incorporated under the
laws of Mexico with its registered office at Vasconcelos 210 Ole., Piso 9,
Residencial San Agustin, San Pedro, Garza Garcia, N.L., Mexico ("Holdco");
AND: WORLDTEL MEXICO TELECOM, LTD., a corporation duly incorporated under the
laws of Bermuda with its registered office at 41 Cedar Avenue, Hamilton, HM
12, Bermuda ("WorldTel");
AND: TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V., a corporation duly
incorporated under the laws of the United Mexican States with its
registered office at Vasconcelos 210 Ote., Piso 12, Residencial San
Agustin, San Pedro, Garza Garcia, N.L., Mexico (the "Corporation");
WITNESSETH
WHEREAS the Parties have entered into a Unanimous Shareholders Agreement
dated October 6, 1997 (the "USA") regarding the regulation of the affairs of the
Corporation and the interests of the Shareholders therein;
WHEREAS the Shareholders have entered into an Agreement dated November 14,
1997 (the "First Amendment") regarding the modification and amendment of certain
conditions of the USA;
WHEREAS the Shareholders have entered into an Agreement dated December 12,
1997 (the "Second Amendment") regarding the modification and amendment of
certain conditions of the USA as amended by the First Amendment;
WHEREAS the Shareholders have entered into an Agreement dated January 23,
1998 (the "Third Amendment") regarding the modification and amendment of certain
conditions of the USA as amended by the Second Amendment;
WHEREAS the Parties wish to evidence their agreement with respect to the
modification and postponement of certain conditions with respect to the First
Subscription Date;
WHEREAS the Parties wish to amend Clause 4 of the Third Amendment to
reflect the intention of the parties with respect to the First Subscription
Date;
NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Definitions
Capitalized expressions not specifically defined herein shall have the
meanings ascribed to them in the USA.
2. Call Option Powers of Attorney
The Shareholders hereby waive the requirement of Section 4 of the Third
Amendment in respect of the delivery of the Call Option Powers of Attorney and
replace it with the requirement that each Shareholder hereby undertake to
deliver same, on or before March 31, 1998 as part of the issuance of Shares for
the First Subscription Date.
The Shareholders shall also deliver on or before March 31, 1998 their
resolutions authorizing the execution and delivery of the Call Option Powers of
Attorney, which shall be reasonably satisfactory to the Shareholders.
3. Continued Effect
The present Agreement constitutes an amendment and partial waiver of some
of the conditions of the USA as amended by the Third Amendment in accordance
with Clause 17.5 of the USA, and except as amended herein, all of the other
terms and conditions of the USA shall remain in full force and effect.
IN WITNESS WHEREOF, this Agreement was signed as of the date first above
mentioned.
BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED
per: _/S/ Anthony G. Lynton
Name: Anthony G. Lynton
Title: Secretary
TELINOR TELEFONIA, S.A. DE C.V.
per: /S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title: Sole Director
WORLDTEL MEXICO TELECOM, LTD.
per: _/S/ Robert Rice Jenks
Name: Robert Rice Jenks
Title: Attorney-in-Fact
-2-
TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V.
per: _/S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title: Chief Executive Officer
-3-
THIS FIFTH AMENDMENT AGREEMENT dated as of May 28th, 1998
AMONG: BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED, a corporation duly
incorporated under the laws of the British Virgin Islands, with its
registered office at Arawak, Chambers, Road Town, Tortola, British Virgin
Islands ("BCI");
AND: TELINOR TELEFONIA, S.A. DE C.V., a corporation duly incorporated under the
laws of the United Mexican States with its registered office at Vasconcelos
210 Ote, Piso 9, Residencial San Agustin, San Pedro Garza Garcia, N.L.,
Mexico ("Holdco");
AND; WORLDTEL MEXICO TELECOM, LTD., a corporation duly incorporated under the
laws of Bermuda with its registered office at 11 Cedar Avenue, Hamilton,
HM12, Bermuda ("WorldTel");
AND: TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V., a corporation duly
incorporated under the laws of the United Mexican States with its
registered office at Vasconcelos 210 Ote., Piso 12, Residencial San
Agustin, San Pedro Garza Garcia, N.L., Mexico (the "Corporation");
WITNESSETH
WHEREAS the Parties hereto have entered into a Unanimous Shareholders Agreement
dated October 6, 1997 (the "USA") regarding the regulation of the affairs of the
Corporation and the interests of the Shareholders thereon;
WHEREAS the Parties hereto have entered into an Agreement dated as of November
14, 1997 (the "First Amendment") regarding the modification and amendment of
certain conditions of the USA;
WHEREAS the Parties hereto have entered into an Agreement dated as of December
12, 1997 (the "Second Amendment") regarding the modification and amendment of
certain conditions of the USA as amended by the First Amendment;
WHEREAS the Parties hereto have entered into an Agreement dated as of January
23, 1998 (the "Third Amendment") regarding the modification and amendment of
certain conditions of the USA as amended by the First and Second Amendment;
WHEREAS the Parties hereto have entered into an Agreement dated as of February
27, 1998 (the "Fourth Amendment') regarding the modification and amendment of
certain provisions of the USA, as amended by the First, Second and Third
Amendment;
WHEREAS in light of the fact that the Spectrum Concession Bid has concluded, and
the Parties hereto are now aware of the total price to be paid for the Spectrum,
and therefore wish to adjust the Second Subscription contributions accordingly;
WHEREAS the Parties hereto have not yet delivered the Call Option Powers of
Attorney, and wish to amend Clause 2 of the Fourth Amendment;
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Definitions
Fifth Amendment Agreement
May 28, 1998
Page 2
Capitalized expressions not specifically defined herein shall have the meaning
ascribed to them in the USA, as amended.
2. First Stage Equity. Second Subscription Date
2.1. Clause 3.3.2. of the USA is amended and new Clauses 3.3.2.1, 3.3.2.2
and 3.3.2.3 are incorporated to the USA, as follows:
"3.3.2. Subject to the subscription and issuance of Shares representing the
Initial Equity Contributions and all of the Second Subscription
Conditions having been fulfilled and further subject to Clauses 3.3.5,
3.3.6(b), 3.3.7 and 14.2.3, the Corporation shall issue on the Second
Subscription Date fifty-seven million sixty-six thousand five hundred
and sixty-nine (57,066,569) Shares, which shall be divided and
partially subscribed and partially paid as follows (the table attached
as Schedule "C" further illustrating this allocation);
a) The Corporation shall issue to and Holdco shall fully subscribe on the
Second Subscription Date for eighteen million six hundred and
thirty-four thousand and forty (18,634,040) Series A Shares at a price
in Mexican Pesos equivalent to US $2.797859 per Share and three
million eight hundred and sixty-four thousand five hundred and eighty
(3,864,580) Series N Shares at a price in Mexican Pesos equivalent to
US $1.00 per Share for an aggregate purchase price of fifty-six
million Dollars (US $56,000,000). 15,904,536 Series A Shares
subscribed by Holdco are issued upon conversion of a loan (and accrued
interest thereon) of US$8,899,730 Dollars owed by the Corporation to
Holdco. The conversion is made pursuant to the terms of a loan
agreement (as amended) entered into as of December 11, 1997; the
outstanding amounts under the loan represent twenty percent (20%) of
the subscription price of the 15,904,536 Series A Shares. The
remainder of the subscription price payable by Holdco on the Second
Subscription Date shall be paid in cash.
The Corporation shall issue an additional 4,192,659 Series A Shares
and 869,530 Series N Shares to be subscribed and paid by Holdco at the
same price as for the Series A and Series N Shares indicated in the
preceding paragraph, in accordance with Clause 3.3.2.2 hereof. These
Shares shall be maintained in treasury of the Corporation until the
Third Subscription Date (as hereinafter defined).
b) The Corporation shall issue to and BCI shall fully subscribe for three
million five hundred and thirty-seven thousand five hundred and
thirty-seven (3,537,537) Series B Shares at a price in Mexican Pesos
equivalent to US $7.072363 per Share and two million four hundred and
eighty-two thousand six hundred and six (2,482,606) Series N Shares at
a price in Mexican Pesos equivalent to US $1.00 per Share for an
aggregate purchase price equivalent to twenty-seven million five
hundred and one thousand three hundred and fifty-three Dollars (US
$27,501,353), subject to the adjustment mentioned below;
The Corporation shall also issue to Bell Canada International Inc., an
affiliate of BCI, and Bell Canada International Inc. shall fully
subscribe 6,291,907 Series B Shares following the conversion of a loan
(and accrued interest thereon) of US$8,899,730 owed by the Corporation
to Bell Canada International Inc. The conversion is made pursuant to
the terms of the Loan Agreement (as amended) entered into as of
December 11, 1997. Such Shares are issued at a price in Mexican Pesos
equivalent to US$7.072363 per Share for an aggregate purchase price
equivalent to US$44,498,650. The outstanding amounts under the loan
represent 20% of the subscription price of the 6,291,907 Series B
Shares.
Fifth Amendment Agreement
May 28, 1998
Page 3
The Corporation shall issue an additional 2,211,625 Series B Shares
and 558,586 Series N Shares to be subscribed and paid by BCI at the
same price as for the Series B and Series N Shares indicated in the
first paragraph of this Clause 3.3.2.(b), in accordance with Clause
3.3.2.2 hereof. The Shares shall be maintained in treasury of the
Corporation until the Third Subscription Date.
c) The Corporation shall issue to and WorldTel shall fully subscribe for
eight million and seventy-three thousand seven hundred and
thirty-eight (8,073,738) Series C Shares at a price in Mexican Pesos
equivalent to US $8.665486 per Share and two million and thirty-seven
thousand one hundred and forty (2,037,140) Series N Shares at a price
in Mexican Pesos equivalent to US $1.00 per Share for an aggregate
purchase price equivalent to seventy-two million Dollars (US
$72,000,000);
The Corporation shall issue an additional 1,816,591 Series C Shares
and 458,356 Series N Shares to be subscribed and paid by WorldTel at
the same price as for the Series C and Series N Shares indicated in
the preceding paragraph, in accordance with Clause 3.3.2.2 hereof. The
Shares shall be maintained in treasury of the Corporation until the
Third Subscription Date.
d) The Corporation shall also issue and retain in treasury for the
benefit of BCI an additional two million thirty-seven thousand six
hundred and seventy-four (2,037,674) Series N Shares as part of BCI's
Optioned Interest which Series N Shares shall be subscribed by and
delivered to BCI in accordance with the terms of Clause 3.7. Upon the
subscription and delivery of these Shares, the Corporation shall
record an adjustment to the price for the subscription of all of the
Series N Shares subscribed by BCI as part of the Second Subscription,
namely five million seventy-eight thousand eight hundred and sixty-six
(5,078,866) Series N Shares to reflect a price equivalent to US
$0.598794 per Share on the understanding that the aggregate purchase
price for the full subscription shall not be modified.
3.3.2.1. In accordance with the preceding sections, the Shares to be issued by
the Corporation on the Second Subscription Date, which shall not be
immediately subscribed by the Shareholders, shall be subscribed by
Holdco, BCI and WorldTel effective as of August 15, 1998 the ("Third
Subscription Date") and until such date maintained in treasury by the
Corporation.
3.3.2.2. On the Third Subscription Date the contributions to be made by the
Shareholders shall be applied to subscribe and pay, in first instance,
an amount equal to 20% of the subscription price of the Shares which
subscription becomes effective on such date, and the remainder to be
applied towards the subscription price of all of the First Equity
Shares, pro rata, except in the case of the Series N shares to be
subscribed by Holdco, which shall be subject to the terms of Clause
3.3.3.
3.3.2.3. The parties hereto acknowledge that Bell Canada International Inc. is
subscribing for Series B Shares of the Corporation without becoming a
signatory to the USA. However, immediately following the acquisition of
such Series B Shares by Bell Canada International Inc., these Shares
will be transferred to BCI as evidenced by the Share Purchase Agreement
attached hereto as Schedule 1.
2.2. The Shareholders agree that the timing and amounts to be paid of the
outstanding balance of the subscription price for the Shares subscribed
and to be subscribed pursuant to Clause 3.3.2. above are reflected in
amended Schedule "J", as attached hereto.
Fifth Amendment Agreement
May 28, 1998
Page 4
2.3. Clause 3.3.3. of the USA is amended as follows:
"3.3.3. Subject to Clause 3.3.9 in the case of WorldTel, on the Second
Subscription Date, BCI and WorldTel shall pay for twenty per cent (20%)
of the subscription price for each of the Shares of each Series issued
and subscribed by them pursuant to the Second Subscription, and the
Corporation shall maintain in custody that number of Shares that
represent the eighty per cent (80%) of the Shares of each Series of
Shares issued to BCI and WorldTel, and actually deliver to the relevant
Shareholder that number of Shares that represent the twenty percent
(20%) balance of each Series of Shares. Holdco shall pay, on such date
for twenty per cent (20%) of the subscription price for each Series A
Share issued and subscribed by Holdco and twenty per cent (20%) of the
subscription price for each Series N Share subscribed by Holdco on the
Second Subscription Date. The Corporation shall maintain in custody
eighty per cent (80%) of the Series A Shares subscribed by Holdco and
deliver the twenty per cent (20%) balance to Holdco. The Series N
Shares shall be dealt with in accordance with Clause 3.3.9.
Furthermore, the Corporation shall promptly deliver to each Shareholder
upon further partial payments of the subscription price that number of
Shares which represents the additional percentage of the unpaid
subscription price for each of the Shares paid by such Shareholder. For
instance, when a Shareholder pays an additional ten per cent (10%) of
the original subscription price of each Share subscribed, the
Corporation shall deliver such number of Shares that represent ten per
cent (10%) of each Series of Shares originally subscribed for."
"On the Third Subscription Date, Holdco shall ensure that all Series N
Shares subscribed by it and transferred to the Trust in accordance with
Clause 3.3.9 are fully paid. Accordingly, Holdco shall apply the
subscription price to be paid by it on the Third Subscription Date to
pay (i) eighty per cent (80%) of the subscription price of each of the
Series N Shares issued and subscribed by it on the Second Subscription
Date and (ii) one hundred per cent (100%) of the subscription price of
each of the Series N Shares subscribed by it on the Third Subscription
Date."
2.4. Clause 3.3.6 c) of the USA is amended as follows:
"3.3.6. c). a legal opinion shall be delivered on the Second Subscription Date
and on the Third Subscription Date to each Shareholder from counsel to
the Corporation and in form acceptable to each Shareholder confirming
with respect to the Second Subscription Date and the Third Subscription
Date the items described in Clause 3.2.4 e) to i)."
2.5. Clause 3.3.9 of the USA is amended as follows:
"3.3.9. To permit the possible Re-allocation to WorldTel of interests in the
Series N Shares issued to Holdco, eight million five hundred and
ninety-eight thousand six hundred and ninety (8,598,690) Series N
Shares shall be contributed by Holdco, on the Second Subscription Date
to a trust or other limited liability vehicle (the "Trust") pursuant to
the Trust Agreement. An additional eight hundred and sixty-nine
thousand five hundred and thirty (869,530) Series N Shares shall be
contributed by Holdco on the Third Subscription Date to the Trust.
These nine million four hundred and sixty-eight thousand two hundred
and twenty (9,468,220) Series N Shares contributed to the Trust shall
hereinafter be referred to as the "Allocable Shares". Schedule "C"
hereto illustrates the shareholdings of the Corporation upon giving
effect to such Re-allocation on the assumption that the Project IRR, as
defined in the Trust Agreement, is less than or equal to forty five per
cent (45%)."
2.6. Clause 10.6 of the USA is amended as follows:
Fifth Amendment Agreement
May 28, 1998
Page 5
"The terms `Second Subscription Date' in lines 7 and 8 of Clause 10.6
are replaced by the terms `Third Subscription Date'".
2.7. The last sentence of Clause 10.3.7 of the USA is replaced as follows:
"The Corporation shall pay all LC Fees to each of the Providing
Shareholders on the Third Subscription Date".
2.8. The Shareholders agree that the Second Subscription Conditions have
been satisfied and that the notices issued and dated as of May 13 and
May 21, 1998 by the Corporate Secretary of the Corporation meet the
notice requirements of the USA for the Second Subscription Date.
2.9. The Shareholders agree that the payment made by Bell Canada
International Inc. for the subscription of the 6,291,907 Series B
Shares through the capitalization of the loan (and accrued interest
thereon) of US$8,899,730 owed by the Corporation to Bell Canada
International Inc. releases BCI of any payment obligations with respect
to such amount of the subscription price, and that BCI shall remain as
the sole obligor for the outstanding balance of the subscription price.
3. Call Option Powers of Attorney
The Shareholders hereby waive the requirement of Section 2. of the Fourth
Amendment in respect to the delivery of the Call Option Powers of Attorney, and
replace it with the requirement that each Shareholder receives same, with the
Corporation hereby undertaking to deliver same, on or before the Third
Subscription Date.
The Shareholders which have not yet done so shall also deliver on or before the
Third Subscription Date, the resolutions authorizing the execution and delivery
of the Call Option Powers of Attorney, which shall be reasonably satisfactory to
the Shareholders,.
4. Continued Effect
The present Agreement constitutes an amendment and partial waiver of some of the
conditions of the USA as previously amended in accordance with Clause 17.5 of
the USA, and except as amended herein, all of the other terms and conditions of
the USA shall remain in full force and effect.
IN WITNESS WHEREOF, this Agreement was signed as of the date first above
mentioned.
BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED
per: _/S/ Anthony Lynton
Name: Anthony Lynton
Title: Secretary
Fifth Amendment Agreement
May 28, 1998
Page 6
TELINOR TELEFONIA, S.A. DE C.V.
per: _/S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title: Sole Director
WORLDTEL MEXICO TELECOM, LTD.
per: _/S/ Robert Rice Jenks
Name: Robert Rice Jenks
Title: Attorney-in-Fact
TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V.
per: _/S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title: Chief Executive Officer
Sixth Amendment Agreement
August 13, 1998
Page 2
THIS SIXTH AMENDMENT AGREEMENT dated as of August 13th, 1998
AMONG: BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED, a corporation duly
incorporated under the laws of the British Virgin Islands, with its
registered office at Arawak, Chambers, Road Town, Tortola, British Virgin
Islands ("BCI");
AND: TELINOR TELEFONIA, S.A. DE C.V., a corporation duly incorporated under the
laws of the United Mexican States with its registered office at Vasconcelos
210 Ote, Piso 9, Residencial San Agustin, San Pedro Garza Garcia, N.L.,
Mexico ("Holdco");
AND; WORLDTEL MEXICO TELECOM, LTD., a corporation duly incorporated under the
laws of Bermuda with its registered office at 11 Cedar Avenue, Hamilton,
HM12, Bermuda ("WorldTel");
AND: TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V., a corporation duly
incorporated under the laws of the United Mexican States with its
registered office at Vasconcelos 210 Ote., Piso 12, Residencial San
Agustin, San Pedro Garza Garcia, N.L., Mexico (the "Corporation");
WITNESSETH
WHEREAS the Parties hereto have entered into a Unanimous Shareholders Agreement
dated October 6, 1997 (the "USA") regarding the regulation of the affairs of the
Corporation and the interests of the Shareholders therein;
WHEREAS the Parties hereto have entered into an Agreement dated as of November
14, 1997 (the "First Amendment") regarding the modification and amendment of
certain conditions of the USA;
WHEREAS the Parties hereto have entered into an Agreement dated as of December
12, 1997 (the "Second Amendment") regarding the modification and amendment of
certain conditions of the USA as amended by the First Amendment;
WHEREAS the Parties hereto have entered into an Agreement dated as of January
23, 1998 (the "Third Amendment") regarding the modification and amendment of
certain conditions of the USA as amended by the First and Second Amendment;
WHEREAS the Parties hereto have entered into an Agreement dated as of February
27, 1998 (the "Fourth Amendment') regarding the modification and amendment of
certain provisions of the USA, as amended by the First, Second and Third
Amendment;
WHEREAS the Parties hereto have entered into an Agreement dated as of May 28,
1998 (the "Fifth Amendment') regarding the modification and amendment of certain
provisions of the USA, as amended by the First, Second, Third and Fourth
Amendment;
WHEREAS the Parties wish to evidence their agreement with respect to the
modification and postponement of certain conditions with respect to the Third
Subscription Date;
WHEREAS the Parties wish to amend Section 3.3.9. of the USA, and waive the
requirements of Section 3.3.10. of the USA.
Sixth Amendment Agreement
August 13, 1998
Page 2
WHEREAS the Parties hereto have not yet delivered the Call Option Powers of
Attorney, and wish to amend Clause 3 of the Fifth Amendment;
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Definitions
Capitalized expressions not specifically defined herein shall have the meaning
ascribed to them in the USA, as amended.
2. First Stage Equity. Third Subscription Date
2.1. Clause 3.3.9 of the USA is amended as follows:
"3.3.9. To permit the possible Re-allocation to WorldTel of interests in the
Series N Shares issued to Holdco, eight million five hundred and
ninety-eight thousand six hundred and ninety (8,598,690) Series N
Shares shall be contributed by Holdco, on the Second Subscription Date
to a trust or other limited liability vehicle (the "Trust") pursuant to
the Trust Agreement. An additional eight hundred and sixty-nine
thousand five hundred and thirty (869,530) Series N Shares shall be
contributed by Holdco on or before March 30, 1999 to the Trust. These
nine million four hundred and sixty-eight thousand two hundred and
twenty (9,468,220) Series N Shares contributed to the Trust shall
hereinafter be referred to as the "Allocable Shares". Schedule "C"
hereto illustrates the shareholdings of the Corporation upon giving
effect to such Re-allocation on the assumption that the Project IRR, as
defined in the Trust Agreement, is less than or equal to forty five per
cent (45%)."
2.2. The Shareholders hereby waive the requirements of Section 3.3.10 of the
USA in respect to the notice to be delivered by the Corporate Secretary
to the Shareholders of the Corporation and to each shareholders of such
Shareholders for the capital call to take place on the Third
Subscription Date.
3. Call Option Powers of Attorney
The Shareholders hereby waive the requirement of Section 3 of the Fifth
Amendment in respect to the delivery of the Call Option Powers of Attorney, and
replace it with the requirement that each Shareholder receives same on or before
March 30, 1999.
The Shareholders which have not yet done so shall also deliver on or before
March 30, 1999, their resolutions authorizing the execution and delivery of the
Call Option Powers of Attorney, which shall be reasonably satisfactory to the
Shareholders and the Corporation.
4. Continued Effect
The present Agreement constitutes an amendment and partial waiver of some of the
conditions of the USA as previously amended in accordance with Clause 17.5 of
the USA, and except as amended herein, all of the other terms and conditions of
the USA shall remain in full force and effect.
Sixth Amendment Agreement
August 13, 1998
Page 3
IN WITNESS WHEREOF, this Agreement was signed as of the date first above
mentioned.
BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED
per: _/S/ Monique Mercier
Name: Monique Mercier
Title: Authorized Signatory
TELINOR TELEFONIA, S.A. DE C.V.
per: _/S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title: Sole Director
WORLDTEL MEXICO TELECOM, LTD.
per: _/S/ Robert Rice Jenks
Name: Robert Rice Jenks
Title: Attorney-in-Fact
TELEFONIA INALAMBRICA DEL NORTE, S.A. DE C.V.
per: __/S/ Tomas Milmo Santos
Name: Tomas Milmo Santos
Title: Chief Executive Officer
Waiver Agreement
May 30, 2003
Page 5
THIS WAIVER AND AMENDMENT AGREEMENT dated as of May 30, 2003.
AMONG: BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED, a corporation duly
incorporated under the laws of the British Virgin Islands, with its
registered office at Arawak Chambers, Road Town, Tortola, British Virgin
Islands ("BCI-Limited");
AND: BELL CANADA INTERNATIONAL INC. a corporation duly incorporated under the
laws of Canada, with its registered office at 1000 de la Gauchetiere St.
West Suite 1100 Montreal, Quebec, Canada H3B 4Y8 ("BCI-Canada");
AND: TELINOR TELEFONIA, S. DE R.L. DE C.V., (formerly known as TELINOR TELEFONIA
S.A. DE C.V.) a corporation duly incorporated under the laws of Mexico with
its registered office at Vasconcelos 210 Ote., Piso 12, Residencial San
Agustin, San Pedro, Garza Garcia, N.L., Mexico ("Holdco");
AND: AXTEL, S.A. DE C.V., (formerly known as TELEFONIA INALAMBRICA DEL NORTE
S.A. DE C.V.), a corporation duly incorporated under the laws of the United
Mexican States with its registered office at Boulevard Diaz Ordaz Km 3.33
L-1, Colonia Unidad San Pedro, Garza Garcia, N.L., Mexico (the
"Corporation").
WITNESSETH
WHEREAS, the Corporation, BCI-Limited, BCI Canada, Holdco and Worldtel Mexico
Telecom Ltd. have entered into a Unanimous Shareholders Agreement dated as of
October 6, 1997 as amended, modified or supplemented through the date hereof
(the "USA") for the participation in the capital stock and conduct of business
of the Corporation;
WHEREAS, simultaneously with the execution of this Waiver and Amendment
Agreement, BCI-Canada, BCI-Limited and the Corporation will enter into a
Termination Agreement (the "Termination Agreement");
WHEREAS, the shareholders of Axtel held an Extraordinary Meeting on February 28,
2003 and resolved, among other items, the approval of an amendment of the
by-laws of Axtel (the "Extraordinary Meeting"); and
WHEREAS, BCI-Limited and BCI-Canada hereby have accepted to waive and amend
certain provisions of the USA in order to reflect the intention of the parties
to the Termination Agreement, and to reflect the amendment of the by-laws of the
Corporation, and to conform the provisions of the USA to the resolutions of the
Extraordinary Meeting.
NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Definitions
Capitalized expressions not specifically defined herein shall have the meanings
ascribed to them in the USA.
Waiver Agreement
May 30, 2003
Page 2
2. Waiver to certain provisions of the USA
(i) Clause 3.6.14 of the USA.
Notwithstanding Section 17.5 of the USA, BCI-Limited and BCI-Canada each hereby
expressly and irrevocably waives all of the rights that it may now or hereafter
have pursuant to Section 3.6.14 of the USA with respect to the previous approval
of the purchase or subscription of Shares by any third-party and, without
limitation of the foregoing hereby agrees to be bound by the provisions and
by-laws approved under the Extraordinary Meeting for such purposes.
(ii) Clause 4.4.12 and 4.5 of the USA.
Notwithstanding Section 17.5 of the USA, BCI-Limited and BCI-Canada each hereby
irrevocably waives all of the rights that it may now or hereafter have pursuant
to Section 4.4.12 and 4.5 of the USA with respect to the approval of the
purchase or subscription of Shares by any third party and, without limitation of
the foregoing hereby agrees to be bound by the provisions and by-laws approved
under the Extraordinary Meeting for such purposes.
(iii) Clause 7.3 and 7.5 of the USA.
Notwithstanding Section 17.5 of the USA, BCI-Limited and BCI-Canada each hereby
irrevocably waives all of the rights that it may now or hereafter have pursuant
to Sections 7.3 and 7.5 of the USA with respect to the nomination of Directors
and the appointment of the Chairman of the Board of Directors, respectively,
and, without limitation of the foregoing hereby agrees to be bound by the
provisions and by-laws approved under the Extraordinary Meeting for such
purposes.
(iv) Clause 8.1 and 8.2 of the USA.
Notwithstanding Section 17.5 of the USA, BCI-Limited and BCI-Canada each hereby
irrevocably waives all of the rights that it may now or hereafter have pursuant
to Sections 8.1 and 8.2 of the USA with respect to the previous approval of any
appointment of officers of the Corporation, as well as the right to appoint any
officers in the Corporation and, without limitation of the foregoing hereby
agrees to be bound by the provisions and by-laws approved under the
Extraordinary Meeting for such purposes.
(v) Clause 16.3 of the USA
Notwithstanding Section 17.5 of the USA, BCI-Limited, BCI-Canada and Holdco each
hereby irrevocably waives all of the rights that it may now or hereafter have
pursuant to Section 16.3 of the USA with respect to the provisions related to
Other Opportunities. Furthermore, BCI-Limited and BCI-Canada each hereby
irrevocably releases Holdco and the Corporation, and Holdco hereby irrevocably
releases each of BCI-Limited, BCI-Canada and the Corporation from any and all of
their obligations pursuant to such Section 16.3 of the USA.
3. Amendment to certain provisions of the USA
(i) Amendment to Sections waived under Section 2 above
Waiver Agreement
May 30, 2003
Page 3
In accordance with Section 17.4 of the USA, BCI-Limited and BCI-Canada each
hereby irrevocably acknowledges and agrees that Sections 3.6.14, 4.4.12, 4.5,
7.3, 7.5, 8.1, 8.2 and 16.3 of the USA are effectively amended accordingly to
conform all such Sections to the agreement of the parties set forth in Section 2
above with respect to BCI-Limited and BCI-Canada.
(ii) Definition of Affiliate.
In accordance with Section 17.4 of the USA, BCI-Limited, BCI-Canada, Holdco and
the Corporation each hereby irrevocably acknowledges and agrees that Section 1.2
of the USA is effectively amended with respect to BCI-Limited and BCI-Canada to
read as follows:
"1.2 "Affiliate" with respect to any Person, means any Person, now
existing or hereafter created, which directly or indirectly Controls, is
Controlled by or is under direct or indirect common Control."
(iii) Clause 17.12 of the USA.
In accordance with Section 17.4 of the USA, BCI-Limited, BCI-Canada, Holdco and
the Corporation each hereby irrevocably acknowledges and agrees that Section
17.12 of the USA is effectively amended with respect to BCI-Limited and
BCI-Canada to read as follows:
"17.12 Language
This Agreement is executed in the English language only. For purposes of
clarifying the intent of the Shareholders with respect to this Agreement,
in the event of a conflict or inconsistency between the English and
Spanish versions of the By-laws, the Spanish version of the By-laws shall
prevail."
(iv) Clause 17.19 of the USA.
In accordance with Section 17.4 of the USA, BCI-Limited, BCI-Canada, Holdco and
the Corporation each hereby irrevocably acknowledges and agrees that Section
17.19 of the USA is effectively amended with respect to BCI-Limited and
BCI-Canada to read as follows:
"17.19 Agreement Provisions
The Parties agree to cause this Agreement to be registered at the
corporate domicile of the Corporation and recorded in its appropriate
corporate books in accordance with the Company Act.
(v) Clause 17.23 of the USA.
In accordance with Section 17.4 of the USA, BCI-Limited, BCI-Canada, Holdco and
the Corporation each hereby irrevocably acknowledges and agrees that the USA is
effectively amended with respect to BCI-Limited and BCI-Canada to include a new
Section 17.23 that will read as follows:
"17.23 By-laws Precedence
In the event of any conflict or inconsistency between the provisions of
this Agreement and the By-laws, the By-laws shall prevail and take
precedence over this Agreement."
Waiver Agreement
May 30, 2003
Page 4
(vi) General Amendment.
BCI-Limited, BCI-Canada, Holdco and the Corporation each hereby irrevocably
acknowledges and agrees that any and all provisions of the USA that may be
contrary or inconsistent with the By-laws or the resolutions adopted by the
Extraordinary Meeting are effectively amended with respect to BCI-Limited and
BCI-Canada and hereby agrees that at all times the By-laws and the resolutions
of the Extraordinary Shareholders Meeting shall prevail and take precedence over
the provisions of the USA."
4. Survival of Certain Registrations Rights
Notwithstanding the fact BCI-Limited and BCI-Canada shall no longer hold any
shares Series "B" of the Corporation, nor hold more than 5% of the capital stock
of the Corporation, Holdco and the Corporation hereby confirm the Tag-Along
Registration rights of BCI-Limited and BCI-Canada established under Section 4.9
of the USA, and Section 2.2 of Schedule "D" of the USA.
5. Release of Directors nominated by BCI-Limited and BCI-Canada
5.1. Holdco agrees to cause the call and the holding as promptly as possible
of a General Ordinary Shareholders' Meeting of the Corporation to: (i)
consider the acceptance of the resignations submitted by the Directors
heretofore nominated by BCI-Canada and BCI-Limited (the "BCI
Directors"), (ii) to consider the approval of the performance of the
BCI Directors; and (iii) to consider the release of such directors from
any liability in which they may have incurred during the performance of
their duties. Holdco shall vote in favor of each such resolutions.
5.2. Holdco and the Corporation each agrees not to seek liability whatsoever
from the BCI Directors prior to the adoption of the resolutions
pursuant to the preceding paragraph.
5.3. Holdco and the Corporation each expressly confirms the terms of Section
7.11 of the USA.
6. Financial Information
Notwithstanding the fact that BCI-Limited and BCI-Canada shall not hold the
majority of any series of shares of the Corporation, the Corporation agrees to
provide BCI-Limited and BCI-Canada with the financial information contemplated
under Article 44, section (2) of the By-laws of the Corporation.
7. Further Assurances
BCI-Limited, BCI-Canada, Holdco and the Corporation each hereby irrevocably
agrees, at request of any of the other parties executing this Waiver and
Amendment Agreement, to promptly take such actions, as reasonably requested or
deemed, necessary or desirable, to carry out the intent of this Waiver and
Amendment Agreement and to execute and deliver any other document or agreement
which may be necessary or desirable to carry out the intent of this Waiver and
Amendment Agreement. In addition, BCI-Limited, BCI-Canada, Holdco and the
Corporation each hereby agrees not to take any action contrary or inconsistent
with any provisions of this Waiver and Amendment Agreement.
8. Continued Effect
Waiver Agreement
May 30, 2003
Page 5
This Waiver Agreement constitutes a partial waiver of some of the provisions of
the USA in accordance with Section 17.5 of the USA, and except as amended
herein, all of the other terms and conditions of the USA shall remain in full
force and effect, including but not limited to Sections 17.1.2 and 17.2 of the
USA.
IN WITNESS WHEREOF, this Waiver and Amendment Agreement was signed as of the
date first above mentioned.
BELL CANADA INTERNATIONAL (MEXICO TELECOM) LIMITED
per: /S/ Keith Flowell
Name: Keith Flowell
Title: Alternate Director
BELL CANADA INTERNATIONAL INC.
per: /S/ Howard Hendrick
Name: Howard Hendrick
Title: Executive Vice-President and
Chief Financial Officer
TELINOR TELEFONIA, S.DE R.L. DE C.V.
per: /S/ Patricio Jimenez
Name: Patricio Jimenez
Title:
AXTEL, S.A. DE C.V.
per: /S/ Patricio Jimenez
Name: Patricio Jimenez
Title: Chief Financial Officer
Dates Referenced Herein and Documents Incorporated by Reference
↑Top
Filing Submission 0000950162-04-000450 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Sun., Apr. 28, 8:45:49.5pm ET 
