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PREFERRED STOCK AGREEMENT
Between
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY
and
CITIBANK, N.A.
Dated as of November 29, 1994
Related to the Purchase of Series III Convertible Preferred Stock and the
Deposit Thereof in accordance with the Preferred Stock Deposit Agreement
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PREFERRED STOCK AGREEMENT
AGREEMENT dated as of November 29, 1994 between PHILIPPINE LONG
DISTANCE TELEPHONE COMPANY, a corporation organized under the laws of the
Republic of the Philippines (the "Company") and CITIBANK, N.A., a national
banking association organized under the laws of the United States of America
(the "Depositary").
W I T N E S S E T H:
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WHEREAS, pursuant to the Underwriting Agreement dated as of November
21, 1994 between the Company and the Underwriters named therein (the
"Underwriting Agreement"), the Company has agreed to sell, and each of such
Underwriters has severally agreed to purchase, shares of Series III Convertible
Preferred Stock, par value P10 per share of the Company (the "Shares");
WHEREAS, pursuant to the Underwriting Agreement it is contemplated that
such Underwriters will deposit with the Depositary the Shares in accordance with
the terms and conditions of the Preferred Stock Deposit Agreement (the "Deposit
Agreement") dated the date hereof between the Depositary and the Holders (as
such terms are defined in the Deposit Agreement) from time to time of Global
Depositary Receipts ("GDRs") issued thereunder, which GDRs shall evidence the
Global Depositary Shares ("GDSs") which shall represent the Shares to be so
deposited;
WHEREAS, the execution of this Agreement (including the indemnification
provisions contained herein) is a condition precedent to the obligations of the
Underwriters under the Underwriting Agreement.
NOW, THEREFORE, in consideration of the premises the parties hereto
agree as follows:
1. Ownership Restrictions. The Company may restrict transfers of the
Shares if such transfer might result in ownership of Shares exceeding limits
under any applicable law or the Company's Amended Articles of Incorporation. The
Company shall notify the Depositary and the Custodian in writing of any such
restrictions imposed on Shares constituting Deposited Securities.
2. Withholding. In the event that the Company or the Depositary, as
appropriate, shall be required to withhold and does withhold from any cash
dividend or other cash distribution in respect of any Shares or other securities
deposited under or received by the Depositary or its agent in accordance with
the Deposit Agreement ("Deposited Securities") an amount on account of taxes or
other governmental charges, the Company or its agent or the Depositary or its
agent, as appropriate, will remit to the appropriate governmental authority or
agency all amounts withheld and owing to such authority or agency. The
Depositary will forward to the Company or its agent such information from its
records as the Company may reasonably request to enable the Company or its agent
to file necessary reports with governmental authorities or agencies
or, at the request and expense of the Company, the Depositary or its agent may
file such reports if deemed lawful and reasonably feasible by the Depositary.
The Company will provide to the Depositary copies of official receipts
or other evidence of payment of such withholding tax paid by the Company to the
Philippine Bureau of Internal Revenue (on the appropriate governmental form, if
applicable) in respect of the Shares constituting Deposited Securities, such
evidence to include the amount of such taxes withheld, both in the aggregate and
on a per Share basis. The Depositary will, in turn, provide the Company with
such information from its records (on the appropriate governmental form, if
applicable) as will enable the Company to comply with its obligations under the
previous sentence and will distribute and otherwise make available to Holders
such information in accordance with paragraph 5 hereof.
Notwithstanding any other provision of this Agreement, before making
any distribution or other payment on any Deposited Securities, the Company shall
make such deductions (if any) which, by the laws or regulations of the
Philippines, the Company is required to make in respect of any income, capital
gains or other taxes and the Company may also deduct the amount of any tax or
governmental charges payable by the Company or for which the Company might be
made liable in respect of such distribution or other payment or any document
signed in connection therewith.
3. Obligations of the Company and the Depositary. The Company and the
Depositary shall act in good faith and use reasonable judgment in the
performance of their respective obligations set forth in this Agreement. The
Depositary and the Company undertake to perform such duties and only such duties
as are specifically set forth in this Agreement and no implied covenants or
obligations shall be read into this Agreement against the Depositary or the
Company.
4. Charges of Depositary. The fees, if any, of the Depositary and the
registrar under the Deposit Agreement (the "Registrar") which are specified in
Exhibit B to the Deposit Agreement, shall be paid as provided in such Exhibit.
Any charges and expenses of the Depositary and the Registrar, if any,
under the Deposit Agreement that are not paid by Holders of GDRs will be paid by
the Company in accordance with agreements in writing entered into between the
Depositary and the Company as to the nature and amount of such charges and
expenses. Unless otherwise agreed, the Depositary shall present its statement
for such expenses and fees or charges to the Company once every three months.
The charges and expenses of the Custodian, the nominee under the Deposit
Agreement or any other agent of the Depositary are for the sole account of the
Depositary.
The right of the Depositary to receive payment of fees, charges and
expenses as provided in this Agreement and the Deposit Agreement shall survive
the termination of this Agreement and the Deposit Agreement and the resignation
of the Depositary pursuant to this Agreement and the Deposit Agreement.
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5. Notices, Reports and Communications. On or before the first date on
which the Company gives notice, by publication or otherwise, of any meeting of
holders of Shares or other Deposited Securities, of any other meeting of holders
of the Company's securities at which holders of Shares or other Deposited
Securities are entitled to vote or of any adjourned meeting of such holders, or
of the taking of any action by such holders of Shares or other Deposited
Securities other than at a meeting, or of the taking of any action in respect of
any cash or other distributions or the offering of any rights in respect of
Deposited Securities, the Company agrees to transmit to the Depositary and the
Custodian a copy of the notice thereof in the English language but otherwise in
the form given or to be given to holders of Shares or other Deposited
Securities. The Company shall also furnish to the Custodian and the Depositary a
summary, in English, of any applicable provisions or proposed provisions of the
Amended Articles of Incorporation of the Company that may be relevant or pertain
to such notice of meeting or be the subject of a vote thereat.
The Company will provide to the Custodian and the Depositary will, at
the Company's expense, arrange for the prompt transmittal by the Custodian to
the Depositary, of sufficient copies of such notices and any other reports and
communications that are generally made available by the Company to holders of
Shares. The Depositary shall arrange at the Company's expense for prompt mailing
of copies thereof and copies of the withholding tax information provided to the
Depositary pursuant to Section 2 hereof to all Holders and, at the reasonable
request and at the expense of the Company, shall also make such notices, reports
and communications (including information in respect of dividends received by
the Depositary with regard to the Shares) available to all Holders in the same
manner as the Company makes them generally available to holders of Shares or on
such other basis as the Company may advise the Depositary is required by any law
or regulation or any requirement of any stock exchange to which the Company may
be subject, subject to any limitations imposed by U.S. law. The Company will
also provide to the Custodian or the Depositary an English language translation
of such reports or communications concurrently with the receipt by the Custodian
of such reports or communications. The Depositary may, but shall not be required
to, at the Company's expense, obtain English translations or adequate English
summaries of any notices, reports or communications which are generally provided
by the Company to its holders of Shares which are not initially furnished to the
Depositary in English text.
6. Issuance of Additional Shares, Etc. In the event of any issuance of
additional Shares or of other securities (including rights and convertible or
exchangeable securities) as a dividend or distribution with respect to the
Shares or other Deposited Securities, or future issuances to Holders for cash of
additional Shares or such other securities, the Depositary shall not distribute
any such additional Shares or other securities to the Holders unless the Company
shall have furnished to the Depositary a written opinion from counsel for the
Company in the United States, which counsel shall be reasonably satisfactory to
the Depositary, stating whether or not the circumstances of such issue are such
as to make it necessary for a registration statement under the Securities Act to
be in effect at or prior to making such dividend or distribution available to
the Holders entitled thereto and, if in the opinion of such counsel a
registration
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statement is required, stating that there is a registration statement in effect
which will cover the issuance of such securities. If, for any reason, the
Depositary reasonably deems such a distribution of Shares not to be practical,
lawful or feasible, the Depositary may after consultation with the Company (i)
to the extent permitted by applicable law, adopt such method as the Depositary
reasonably deems equitable or practicable for the purpose of obtaining such
distribution or effecting such distribution or (ii) if the Depositary reasonably
determines that no such method of distribution can be effected in a practicable
or equitable manner, the Depositary may refrain from effecting such distribution
altogether until such time as it reasonably determines that a practicable or
equitable distribution can be effected.
Any future issuances of (1) additional Shares, (2) rights, preferences
or privileges to subscribe for Shares, (3) securities convertible into or
exchangeable for Shares, or (4) rights, preferences or privileges to subscribe
for securities convertible into or exchangeable for Shares (other than as a
dividend or distribution or issuance for cash to Holders as described in the
immediately preceding paragraph), shall be effected by the Company in a manner
so as to not violate the Securities Act. If the Company determines that an
issuance of such securities is required to be registered under the Securities
Act, the Company will (x) register such issuance to the extent necessary, (y)
alter the terms of the issuance to avoid the registration requirements of the
Securities Act or (z) direct the Depositary to take such measures as are
provided in Sections 4.03 through 4.05 of the Deposit Agreement or other
specific measures with respect to the acceptance for deposit of Shares to
prevent such issuance from being made in violation of the registration
requirements of the Securities Act.
Neither the Company nor any company controlling, controlled by or under
common control with the Company will at any time deposit any Shares, either upon
original issuance or upon a sale of Shares previously issued and reacquired by
the Company or by any such controlled or controlling company, unless such
transaction is registered under the Securities Act or is exempt from
registration under the Securities Act as confirmed by a written opinion from
counsel for the Company in the United States, which counsel shall be reasonably
satisfactory to the Depositary.
7. Execution and Delivery of Additional GDRs. The Depositary may, and
shall, if the Company so requests, execute and deliver additional GDRs or call
for the surrender of outstanding GDRs to be exchanged for new GDRs upon any
change in par value, split-up, consolidation, or any other reclassification of
the Shares (other than as a result of a conversion of Shares into Common Stock
in accordance with the terms of the Shares), or upon recapitalization,
reorganization, merger or consolidation or sale of assets affecting the Company
or to which it is a party which results in securities being received by the
Depositary or the Custodian in exchange for, in conversion of or in respect of
Shares.
8. Further Obligations of the Depositary to Consult with the Company.
The Depositary shall consult with the Company under the following circumstances:
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(i) If the Custodian or the Depositary receives any distribution upon
any deposited Convertible Preferred Shares in property (other than cash or
rights upon any Deposited Securities) and, in the opinion of the
Depositary, such distribution can not be made proportionately among such
GDR Holders or if for any other reason the Depositary deems such
distribution to be impracticable, unlawful or unfeasible, the Depositary
shall consult with the Company and adopt such method as it deems equitable
or practicable following such consultation to effect such distribution.
(ii) The Depositary shall consult with the Company when fixing a record
date pursuant to the Deposit Agreement.
9. Further Obligations of the Depositary. The Depositary shall have the
following further obligations:
(i) The Depositary shall use reasonable efforts to comply with written
instructions of the Company not to accept for deposit under the Deposit
Agreement any Shares identified in such instructions at such times and
under such circumstances as may reasonably be specified in such
instructions in order to facilitate the Company's compliance with the
securities laws of the United States.
(ii) The Depositary shall take such additional actions and provide such
additional information as the Depositary shall from time to time agree with
the Company.
10. Resignation of the Depositary; Appointment of Successor Depositary.
The Depositary will not resign as Depositary under the Deposit Agreement and
terminate this Agreement unless it has given 30 days' written notice of its
election so to do to the Company, such resignation and termination to take
effect upon the appointment of a successor depositary and its acceptance of such
appointment as hereinafter provided.
In case at any time the Depositary acting under the Deposit Agreement
shall resign, the Company shall use its best efforts to name a successor
depositary, which shall be a bank or trust company having an office in the
Borough of Manhattan, The City of New York. Such successor depositary shall
execute and deliver to its immediate predecessor depositary and to the Company
an agreement substantially in the form hereof and an instrument in writing
accepting its appointment under the Deposit Agreement, and thereupon such
successor depositary, without any further act or deed, shall become fully vested
with all the rights, powers, duties and obligations of its immediate
predecessor; but such immediate predecessor, nevertheless, upon payment of all
sums due it and on the written request of the Company, shall execute and deliver
an instrument transferring to such successor depositary all rights and powers of
such immediate predecessor hereunder and under the Deposit Agreement, shall duly
assign, transfer and deliver all right, title and interest in the Deposited
Securities to such successor, and shall deliver to such successor a list of the
Holders of all outstanding GDRs and such other books and records maintained by
such predecessor and its agents with respect to its function as Depositary.
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Any such successor depositary shall promptly mail notice of its appointment to
the Holders.
Any corporation into or with which the Depositary may be merged or
consolidated shall be the successor of the Depositary without the execution or
filing of any document or any further act.
11. Termination. The Company may at any time direct the Depositary to
terminate the Deposit Agreement and the Deposit Agreement will be terminated by
the Depositary's mailing notice of such termination to the Holders of all GDRs
then outstanding at least 90 days prior to the date fixed in such notice for
such termination. The Depositary may likewise terminate the Deposit Agreement if
the Depositary shall have delivered to the Company a written notice of its
election to resign, and a qualified successor depositary shall not have been
appointed and accepted its appointment as provided in Section 10 within 90 days
after such delivery. Upon the termination of the Deposit Agreement, the
Depositary shall be discharged from all obligations under this Agreement, except
for its obligations under Section 12. Upon the termination of the Deposit
Agreement, the Company shall be discharged from all obligations under this
Agreement, except for its obligations under Sections 4 and 12.
12. Indemnification. The Company shall indemnify the Depositary, the
Custodian and any of their respective agents against, and hold each of them
harmless from, any loss, liability or expense of any kind whatsoever that may
arise (a) out of or in connection with any offer, issuance, sale, resale,
transfer, conversion, deposit or withdrawal of GDRs, GDSs, Shares, other
Deposited Securities, Common Stock or any offering documents in respect thereof
or (b) out of acts performed or omitted, including but not limited to any
delivery by the Depositary on behalf of the Company of information regarding the
Company, in connection with this Agreement, the Deposit Agreement, the GDRs and
the GDSs, as the same may be amended, modified or supplemented from time to
time, in any such case (i) by the Depositary, the Custodian or any of their
respective agents, except to the extent such loss, liability or expense is due
to negligence or bad faith of any of them, or (ii) by the Company or any of its
agents, except to the extent such loss, liability or expense arises out of
information relating to the Depositary, the Custodian or any of their respective
agents, as the case may be, furnished in a signed writing to the Company by the
Depositary expressly for use in an offering document pursuant to which GDRs,
GDSs, Shares or other Deposited Securities are offered or sold.
The Depositary shall indemnify the Company and hold it harmless from
any loss, liability or expense of any kind whatsoever which may arise out of
acts performed or omitted by the Depositary, the Custodian or any of their
respective agents due to the negligence or bad faith of either the Depositary or
the Custodian or any of their agents.
Any person seeking indemnification hereunder (an "indemnified person")
shall notify the person from whom it is seeking indemnification (the
"indemnifying person") of the commencement of any indemnifiable action or claim
promptly after such
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indemnified person becomes aware of such commencement and shall consult in good
faith with the indemnifying person as to the conduct of the defense of such
action or claim. No indemnified person shall compromise or settle any action or
claim without the consent of the indemnifying person.
The obligations set forth in this Section shall survive the termination
of this Agreement and the Deposit Agreement and the succession or substitution
of any indemnified person.
Nothing in this Agreement shall be construed as creating a relationship
of principal and agent between the Company and the Depositary.
13. Amendment. The form of the GDRs and any provisions of the Deposit
Agreement will not, without the consent of the Company, at any time and from
time to time be amended by the Depositary in any respect.
14. Notices. Any and all notices to be given to the Company under this
Agreement or the Deposit Agreement shall be deemed to have been duly given if
personally delivered, or sent by mail (if domestic, first class, if overseas,
first class airmail, postage prepaid) or air courier, or by cable, telex or
facsimile transmission confirmed by letter sent by mail or air courier,
addressed to Philippine Long Distance Telephone Company, ▇▇▇▇▇ Cojuangco
Building, Makati Avenue, Makati, Metro Manila, Republic of the Philippines,
Attention: Treasurer (facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇) or to any other address
which the Company may specify by notice.
Any and all notices to be given to the Depositary shall be deemed to
have been duly given if personally delivered, or sent by mail (if domestic,
first class, if overseas, first class airmail, postage prepaid) or air courier,
or by cable, telex or facsimile transmission confirmed by letter sent by mail or
air courier, addressed to Citibank, N.A., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ADR Department (telex number: ITT: 420392; RCA:
235530; facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇), or to any other address which the
Depositary may specify by notice.
Any and all notices to be given to the Custodian shall be deemed to
have been duly given if personally delivered, or sent by mail (if domestic,
first class, if overseas, first class airmail, postage prepaid) or air courier,
or by cable, telex or facsimile transmission confirmed by letter sent by mail or
air courier, addressed to Citibank, N.A., Manila, ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of the Philippines, Attention: Investment Services Unit
(telex number: CITIPHMMAISU; facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇), or to any other
address which the Custodian may specify by notice.
Delivery of a notice sent by mail or air courier shall be deemed to be
effective three days (in the case of domestic mail or air courier) or seven days
(in the case of overseas mail) after dispatch and any notice sent by cable,
telex or facsimile transmission as provided in this Section shall be deemed to
be effective 24 hours after dispatch. The Depositary, the Custodian or the
Company may, however, act upon any cable, telex or facsimile transmission
received by it from the other or from any Holder,
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notwithstanding that such cable, telex or facsimile transmission shall not
subsequently be confirmed as aforesaid.
15. Amended Articles, By-laws and Resolutions. Upon execution of this
Agreement, the Company agrees to promptly provide to the Depositary two copies
of the Company's Amended Articles of Incorporation and By-laws and the
Resolutions of the Board of Directors relating to the Shares. The Company agrees
that such Amended Articles, By-laws and Resolutions and this Agreement may be
made available for inspection by the Depositary at its Principal New York
Office.
16. Notice of Conversion. The Company agrees that the form of Notice of
Conversion attached as Exhibit C to the Deposit Agreement is acceptable in form
and substance for any conversion of Shares and shall direct any conversion or
transfer agent for the Shares appointed by the Company to accept such Notice of
Conversion in connection with the conversion of any Shares.
17. Notice of Mandatory Conversion Date. All notices of mandatory
conversion of any Shares registered in the name of Citicorp Trade Services
Limited (or any successor thereto shall promptly be sent to the Custodian in the
manner set out in this Agreement.
18. Defined Terms. Terms used herein but not otherwise defined shall
have the meanings ascribed to such terms in the Deposit Agreement.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of such
counterparts shall constitute one and the same instrument.
20. Benefit of this Agreement and the Deposit Agreement. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and the other persons specified herein as beneficiaries of one
or more provisions of this Agreement. The Depositary acknowledges that the
Company is the intended third-party beneficiary of the restrictions described in
Section 2.07 of the Deposit Agreement and any related documents relating to the
issuance of GDRs prior to the receipt of Shares attributable thereto and the
delivery of Shares prior to the receipt and cancellation of GDRs attributable
thereto. The Company and the Depositary acknowledge that the holders of Global
Depositary Receipts under the Deposit Agreement are intended third-party
beneficiaries of this Agreement.
21. Severability. In case any one or more of the provisions contained
in this Agreement should be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein or therein shall in no way be affected, prejudiced or disturbed
thereby.
22. Governing Law. This Agreement shall be interpreted and all rights
hereunder and thereunder and provisions hereof and thereof shall be governed by
the laws of the State of New York.
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IN WITNESS WHEREOF, PHILIPPINE LONG DISTANCE TELEPHONE COMPANY and
CITIBANK, N.A. have duly executed this Agreement as of the day and year first
above set forth.
PHILIPPINE LONG DISTANCE
TELEPHONE COMPANY
/s/ ▇▇▇▇▇▇▇ ▇. del ▇▇▇▇▇
________________________________________
Name: ▇▇▇▇▇▇▇ ▇. del Fonso
Title: Executive Vice President
CITIBANK, N.A.
/s/
________________________________________
Name:
Title:
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