EXHIBIT 10.27C
RESTATED AND AMENDED
SHAREHOLDERS AGREEMENT
by and among
MOTOROLA INTERNATIONAL DEVELOPMENT CORPORATION
and
SAIF TELECOM (PVT) LTD
and
INTERNATIONAL WIRELESS COMMUNICATIONS PAKISTAN LIMITED
August ___, 1997
INDEX
Page
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. INCORPORATION OF THE COMPANY . . . . . . . . . . . . . . . . . . . . 5
3. CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. THE BUSINESS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . 6
5. DIRECTORS AND MANAGEMENT OF THE COMPANY. . . . . . . . . . . . . . . 6
6. SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7. ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
8. BUSINESS PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
9. CAPITAL REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . .11
10. DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . .14
11. EMPLOYMENT POLICES. . . . . . . . . . . . . . . . . . . . . . . . .14
12. TRANSFER AND ENCUMBRANCE OF SHARES. . . . . . . . . . . . . . . . .14
13. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . .18
14. NON COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . .19
15. PROTECTION OF NAME. . . . . . . . . . . . . . . . . . . . . . . . .21
16. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
17. GENERAL WARRANTIES REPRESENTATIONS AND UNDERTAKINGS . . . . . . . .22
18. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . .23
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RESTATED AND AMENDED SHAREHOLDERS AGREEMENT
This Restated and Amended Shareholders' Agreement is made as of the ____
day of _______, 1997 by and among INTERNATIONAL WIRELESS COMMUNICATIONS
PAKISTAN LIMITED, a company organized under the laws of Mauritius with its
registered office located at X.X. Xxx 0000, 0xx Xxxxx, 12 Xxxx Xxxxxx
Street, Port Louis, Mauritius ("IWCPL"); SAIF TELECOM (PVT) LIMITED, a
company organized under the laws of PAKISTAN with a place of business
located at 0xx Xxxxx, Xxxxxx Xxxxx, 00 Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxx
("SAIF"); and MOTOROLA INTERNATIONAL DEVELOPMENT CORPORATION, a company
organized under the laws of the State of Delaware, USA with its registered
office located at 1303 E. Algonquin Road, Schaumburg, Illinois, USA
("MOTOROLA"); (all of the above individually referred to herein as a
"Party" and collectively as the "Parties"). Capitalized terms, other than
proper nouns, if not defined in the text immediately where used, are
defined in DEFINITIONS in Article 1 hereof.
WHEREAS, Motorola and SAIF as shareholders of PAKISTAN MOBILE
COMMUNICATIONS (PVT) LIMITED, a company incorporated under the laws of
Pakistan (the "Company") as a private limited company which operates a
network of cellular mobile telephone systems in Pakistan known as Mobilink
pursuant to a license for the establishment and operation of cellular
mobile telephone systems in Pakistan granted by the Ministry of
Communications, Government of Pakistan, Islamabad pursuant to its letter No
7(30)/89-P&T dated 6 July 1992 (the "License"), had entered into a
Shareholders' Agreement on 3rd June, 1993 (the "Original Shareholders'
Agreement");
WHEREAS, IWCPL has as of July __, 1997 and July __, 1997 respectively
entered into separate Share Purchase Agreements with Motorola and
Continental Communications Limited ("CCL") (until today's date, also a
Shareholder of the Company), pursuant to which IWCPL has agreed to purchase
from Motorola and CCL a portion of the shareholding percentages of the
Company (collectively, the "Share Purchase Agreements"); and
WHEREAS, the Parties have agreed to restate and amend the Original
Shareholders' Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
undertakings contained herein and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. DEFINITIONS
"Affiliate" means an entity in which any of the Shareholders or their
shareholders hold at least twenty percent of the ownership interest of
such entity.
"Agreement" means this Restated and Amended Shareholders Agreement
entered into by and among the Parties.
"AIF" means the Asian Infrastructure Fund.
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"the Articles" means the Articles of Association of the Company to be
amended as provided in Clause 2.2.
"Associate" in relation to any company means any body corporate which is
for the time being a majority owned subsidiary of that company or the
holding company owning a majority of that company or the parent of that
holding company, using the terms "holding company" and "subsidiary" as
they are defined in Section 3 of the Ordinance.
"Board" means the Board of Directors of the Company from time to time.
"Competitor" means any entity (other than a Shareholder) operating a
wireless telecommunications business in Pakistan which the Board
reasonably determines is competitive with the business of the Company.
"Directors" means the members of the Board from time to time.
"Five Year Business Plan" means the business plan of the Company
containing the business and financial statements projected for the next
five calendar years from, time to time approved by the Directors.
"IWC" means International Wireless Communications, Limited, one of the
principal shareholders of IWCPL.
"Ordinance" means the Companies Ordinance 1984 of Pakistan or any
statutory modification or reenactment thereof for the time being in
force.
"Related Transaction" means any transaction, agreement or other
arrangement for any subject matter with a consideration or value of
US$10,000 or more (or the equivalent in Pakistan Rupees) or for a
duration of more than 12 months, between the Company, on the one hand,
and any Shareholder, Affiliate or Associate of a Shareholder or any
officer or director of any of the foregoing, or any officer or director
of the Company, on the other hand.
"Saifullah Family" means Xxxxx Xxxxxxxxx Khan and Xxxxx Xxxxxxxxx Khan,
their respective spouses and/or their direct descendants.
"SAIF Associate" means any company which has the same persons on its
board of directors as SAIF has (i.e., Xxxxx Xxxxxxxxx Khan and Xxxxx
Xxxxxxxxx Khan) and of which 51% or more of the shares are owned by
members of the Saifullah Family.
"Shares" means the ordinary shares of the Company's share capital of par
value Rs.10 each and in issue at any point in time.
"Shareholders" means, collectively, the Parties hereto, or, where Shares
are transferred to a Wholly-Owned Subsidiary or to a SAIF Associate or a
member of the Saifullah Family in the case of SAIF, the respective
Wholly-Owned Subsidiaries or SAIF Associate or a member of the Saifullah
Family holding Shares, or where Shares are transferred to an unrelated
third party in accordance with Clause 12 hereof, then with respect to
such transferee, when such transferee becomes a Party hereto in
accordance with Clause 12.1.3 hereof.
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"South Asia" means South Asia Wireless Communications (Mauritius)
Limited, one of the principal shareholders of IWCPL.
"Supermajority" means an affirmative vote (x) in the case of the
Shareholders, by Shareholders holding not less than eighty percent of
the total issued Shares and (y) in the case of the Board, by six
Directors of an eight member Board, or eight Directors of a ten member
Board.
"Surplus Cash" means the residue of revenues received by the Company in
the course of conducting its business, which remains after deduction of
Company expenses and other obligatory payments, provided there is no
need for additional cash infusions in the two succeeding years under the
then-current Five Year Business Plan, and which shall be computed
pursuant to the formula set forth in the attached Exhibit A.
"Wholly-Owned Subsidiary" in relation to any company means a wholly
owned subsidiary, of that company or of the holding company of that
company, or any wholly owned subsidiary of a wholly owned subsidiary of
such holding company, fas the terms "subsidiary" and "holding company"
are defined in the Ordinance.
2. INCORPORATION OF THE COMPANY
2.1 The Company has been incorporated as a private company limited by shares
under the Ordinance.
2.2 As soon as practicable after execution of this Agreement, the Articles
of the Company shall be amended to reflect the terms of this Agreement,
including, at least, the essence of Clauses 3.3, 5, 6 and 12, and shall
be substantially in the form attached hereto as Exhibit B.
3. CAPITALIZATION
3.1 The authorized share capital of the Company consists of 60,000,000
Shares of Rs.10 per share. As at the date hereof the issued and paid up
share capital of the Company is held as follows:
IWCPL: ___ Shares 46% shareholding
SAIF: ___ Shares 11.31% shareholding
Motorola: ___ Shares 42.69% shareholding
3.2 Any future allotment of Shares will be made pro rata to the Shareholders
in proportion to the then current ownership of the Shares already held
by each Shareholder, unless otherwise agreed by the Shareholders or
otherwise provided for in this Agreement.
3.3 As provided for in the Articles, each Share certificate of the Company
shall conspicuously bear the following legend:
"The shares represented by this certificate are subject
to restrictions, including but not limited to,
restrictions on transfer, under a Restated and Amended
Shareholders Agreement dated ____, 1997 among the
Shareholders of the Company."
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4. THE BUSINESS OF THE COMPANY
4.1 The Company shall continue to carry on the business of providing and
maintaining telecommunications services in Pakistan and the sale and/or
lease of subscriber equipment to its customers and the provision of
related services.
4.2 The business of the Company shall at all times be conducted honestly and
independently from the business of the Shareholders, but subject thereto
and the provisions of Clause 6.2(k), the Company may transact business
with any of the Shareholders and shall purchase products and services
supplied by its Shareholders provided that such products or services are
competitive in all material respects with third party suppliers
including but not limited to such items as price, quality, delivery and
terms of sale.
5. DIRECTORS AND MANAGEMENT OF THE COMPANY
5.1 The Board shall be responsible for the management and operation of the
Company and for determining the overall policies and objectives of the
Company. Meetings of the Board shall be held at least quarterly and at
least two Board meetings a year shall be held in Pakistan. At the
applicable annual meeting of Shareholders, the Shareholders shall elect
to the Board the Directors nominated by each of them to three year
terms. The Shareholders shall at all times exercise their respective
voting rights as shareholders of the Company and shall procure that the
Directors nominated or elected by each of them to the Board shall vote
so as to ensure the proper maintenance and observance of the terms of
this Agreement relating to the Board's management of the Company. The
Directors shall appoint one of their members to the Board to serve as
the Company's Chief Executive.
5.2 For so long as the shareholding percentages shall be as stated in Clause
3.1, the Company shall have a Board of eight Directors, composed as
follows:
IWCPL 4 Directors
MOTOROLA 3 Directors
SAIF 1 Director
The Parties anticipate that IWCPL may increase its shareholding
percentage of the Company up to 58.69% by purchasing additional Shares
from Motorola pursuant to the Share Purchase Agreement between Motorola
and IWCPL. In such event, IWCPL's membership on the Board shall increase
by two Directors, and the total number of Directors on the Board shall
be ten (10). If at any time thereafter either IWCPL's or Motorola's
shareholding percentages in the Company change such that their
representation on the Board no longer equitably reflects their ownership
of the Company, the Parties shall amend this Agreement so that the
composition of the Board shall reflect the Parties' then current
ownership of the Company. It is expressly understood that, for so long
as South Asia holds not less than 30 percent of the issued share capital
of IWCPL, AIF shall have the right to nominate to the Board initially
two of the Directors representing IWCPL, and if the number of Directors
is increased to ten (10), then it shall have the right to nominate to
the Board three of the Directors repersenting IWCPL, but if South Asia's
shareholding in IWCPL falls below 30 percent but is more than 15
percent, AIF shall have the right to nominate one Director from IWCPL to
the Board if the total number of Directors is eight (8) and two (2)
Directors representing IWCPL if the total number of Directors is ten
(10). Altemates may be
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designated by the Directors who reside outside Pakistan or residing in
Pakistan, leave Pakistan for three months or more, and the alternate
director may attend meetings and vote in the appointing Director's
absence.
5.3 No Director nominated by any Shareholder shall be removed by the
Shareholders without the consent of the Shareholder nominating such
Director; PROVIDED, however, if a Director is disqualified pursuant to
section 188 of the Ordinance, then the Board shall immediately appoint
another Director, nominated by the Shareholder who had nominated the
disqualified Director, to fill the vacancy caused by the
disqualification.
5.4 The quorum for any meeting of the Board shall be five (5), including at
least one Director or his alternate from each of SAIF, and MOTOROLA, and
at least two Directors from IWCPL, representing each of AIF and IWC. In
the event that a meeting is called and no quorum is present within 30
minutes of the time appointed for the meeting, the meeting shall stand
adjourned until the same time and place 48 hours from the time appointed
for the meeting (or if that day be a public holiday then to the next
business day following such holiday). If at such adjourned meeting a
quorum is not present within 30 minutes from the time appointed for such
adjourned meeting, then the presence in person of any five Directors, or
their alternates, shall constitute a quorum.
5.5 The Chairman of the Board shall be elected by Supermajority vote of the
Board, provided, however, that in recognition of his pioneering role in
obtaining the cellular license from the Government of Pakistan for the
Company and in view of the continued association of SAIF as an 11.31%
Shareholder in the Company, the first Chairman after the execution of
this Agreement shall be Xx. Xxxxx Xxxxxxxxx Xxxx, and his current term
as Chairman of the Board shall be extended through financial year 1998.
SAIF shall cause Xx. Xxxxx Xxxxxxxxx Xxxx to be available as Chairman of
the Board after fiscal year 1998, subject to such reappointment being
approved by the Supermajority vote of the Board.
5.6 The Directors shall not be entitled to be paid fees or be reimbursed for
their expenses in attending Board meetings, but shall receive such
remuneration for executive services performed for the Company as
approved by the Board.
5.7 The Chairman of the Board shall not be entitled to a second or casting
vote. In case of an equality of votes (tied vote) on a matter requiring
only a simple majority to pass, the resolution shall be deemed to have
been rejected.
6. SHAREHOLDERS
Annual Meetings, Quorum. An annual meeting of Shareholders shall be held
within the first six months of each financial year for the purpose of:
(a) if applicable, the election of new members of the Board,
(b) the election of auditors, and
(c) such other matters as may be properly brought before the
annual meeting.
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All other matters to be decided by the Shareholders shall be decided at
extraordinary meetings called as provided in the Articles. Notices of
Shareholder Meetings shall be given as provided in the Articles.
Requirements for a quorum for any general meeting shall be as provided
in the Articles.
6.2 VOTING. Except for the following designated matters, a vote of
Shareholders representing a majority of the total issued Shares shall be
required for approval by the Shareholders. The following matters shall
require approval by Shareholders holding a Superrnajority of total
issued Shares:
(a) the consolidation or merger of the Company or the sale, mortgage,
lease, license, charge, lien, pledge or encumbrance of any of its
assets, unless such assets are not a substantial portion of its
assets and such transaction is in the ordinary course of business
or the transaction is made in connection with the replacement of
any assets sold;
(b) the acquisition or formation of any subsidiary entity or joint
venture or the making of any investments in any other entity or
business, or the offering of the Shares to the public, or the
entering into of a new business segment of telecommunications
outside of mobile cellular services (it being understood that
mobile cellular services include PCS and long distance services);
(c) except as provided in Clause 9.1, the determination of and any
changes to the capital structure of the Company, including both
debt and equity, as appropriate from time to time including the
amount of issued and paid up share capital, and any increases
thereto, and the amount and timing of any call upon the
Shareholders for the contribution of equity, the provision of any
Shareholder loans, and Shareholder debt guarantees, and including
also the reduction of capital and the subdivision or consolidation
of Shares;
(d) the voluntary winding up or liquidation of the Company;
(e) contracts involving payments to or by the Company, or any
expenditures, commitments or capital dispositions in excess of US$
500,000 (or the equivalent thereof) for one item or a series of
related items;
(f) the entering into of any agreement for a term in excess of one year
with expenditures of more than US$500,000 (or the equivalent
thereof) over the full term;
(g) the incurring of any indebtedness in the ordinary course of
business (whether current or term) in excess of US$250,000 (or the
equivalent thereof);
(h) the borrowing of any sum (including the issuance of any debt
instruments) other than in the ordinary course of business;
(i) the settlement of any claims in excess of US$250,000 (or the
equivalent thereof);
(j) annual approval of the Company's Five Year Business Plan, as well
as annual budgets relating to income, capital expenditures,
operating expenses, cash flows,
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and dividends, and approval of any revisions of the current Five
Year Business Plan by an aggregate amount in excess of ten percent
( 10%) of the then current Five Year Business Plan;
(k) the entering into or modification or termination of any Related
Transaction;
(l) delegation of the Shareholders authority, including, but not
limited to, the granting of powers of attorney;
(m) establishment of personnel policies or practices of the Company or
any significant modifications thereof, which would be contrary to
the policy of Clause 1;
(n) the making of loans or advances (other than deposits with a banking
or financial institution) except in the ordinary course of business
for employee travel and expense purposes;
(o) any decision to enter into discussions or negotiations involving
labor relations issues and the entering into of any collective
bargaining agreements;
(p) setting the minimum and maximum number of Directors and increasing
or reducing such number or the number of directors of any
subsidiary of the Company;
(q) appointment of the President and the Executive Director, Finance,
of the Company, including the approval of, entering into or
amendment of employment contracts between the Company and such
officers, as well as the making of any changes in appointments
and/or in the powers, and any increase in excess of 10% in the
remuneration of, such officers of the Company;
(r) redemption and cancellation of any securities or offering shares or
equity securities or instruments exercisable for, or convertible
into, Shares;
(s) the declaration and payment of any dividends or distributions of
the Company;
(t) the granting of any guarantee or similar surety for the obligations
of any corporation, partnership, entity or person whether
controlled by the Company or not; and
(u) any amendment of the Articles.
6.3 If a resolution concerning any of the matters requiring a Superrmajority
vote pursuant to Clause 6.2 is proposed and not passed by a
Supermajority, the President of the Company shall be free to, and shall
have the responsibility to, continue to manage the day-to-day affairs of
the Company in the Company's sole best interest within the bounds of the
Company's then current Five Year Business Plan and the powers of
attorney of the President or others, as approved by the Shareholders.
6.4 In the event that the Shareholders are not able to resolve any dispute
relating to any resolution that is proposed but not adopted by the
requisite vote of the Shareholders by the end of a 30 working day period
following the holding of the relevant extraordinary
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general meeting of Shareholders, or if any Shareholder is not satisfied
with such resolution, the Shareholder(s) shall be free to pursue the
sale of all (but not less than all) of its/their Shares pursuant to
Clause 12.1; PROVIDED, however, that nothing in this Clause 6.4 shall be
deemed to be a restriction of any Shareholder's right to sell its Shares
as provided in Clause 12.1 at any time.
6.5 Except as provided for in Clause 6.2 (q), all officers of the Company
who report directly to the President shall be appointed by a simple
majority vote of the Shareholders.
7. ACCOUNTS
7.1 The Shareholders shall procure that the Company maintains accurate,
up-to-date and complete accounting records. All books and records of the
Company and all reports prepared by the management of the Company shall
be in such form as the Shareholders may prescribe from time to time,
provided that all such books and records shall be kept in accordance
with the Ordinance and generally accepted accounting principles of both
Pakistan and the United States. In addition, each of the Shareholders
shall procure, among other things, that the financial affairs of the
Company are managed properly and that the internal audits of the Company
are timely and properly performed.
7.2 The accounts of the Company shall be audited annually by the auditors
for the time being of the Company. Audits additional to the statutory
annual audit shall be made if requested by any Shareholder owning at
least 10% of the issued and paid up share capital of the Company, but in
such case shall be at the expense of the requesting Shareholder. Such
additional audits shall be conducted in accordance with principles and
procedures to be determined by the financial representatives of the
requesting Shareholder and conducted by such financial representatives
or such nominated auditors as shall be determined by the requesting
Shareholder.
7.3 The financial year of the Company shall commence on 1st July and end on
30th June.
7.4 The auditors of the Company shall be such firm as may from time to time
be proposed by the Board and approved by the Shareholders by simple
majority vote, which firm shall be one of the internationally recognized
"Big Six" firms or a correspondent firm thereof.
7.5 Each Director shall have the right to inspect and copy from time to time
the books and all other financial records and documents of the Company
at such Director's own expense.
7.6 The President shall prepare and submit to each member of the Board
monthly management reports, to be handed over personally or sent by
facsimile (to be followed by the original via courier) by the 15th day
of each following month, consisting of at least a profit and loss
statement, cash flow statement, and a balance sheet.
7.7 The Company shall furnish to the Shareholders and their auditors such
financial and other information relating to the business of the Company
as any of them may reasonabley require and shall comply with any other
reporting requirements of each Shareholder.
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8. BUSINESS PLAN
The following procedure shall be followed in preparing the Five Year
Business Plan: 60 days before the beginning of each calendar year of the
Company, a Five Year Business Plan commencing with such calendar year
shall be prepared by the President and presented to the Shareholders for
their approval. If, at the beginning of any calendar year, the
Shareholders have not approved an updated Five Year Business Plan for
that calendar year, the then-current Five Year Business Plan previously
approved shall continue in effect and shall be used as the Business Plan
for those calendar years until the Shareholders approve a new Five Year
Business Plan. Shareholder approvals specified by this Clause 8 shall
require the appropriate Supermajority vote in accordance with the terms
of Clause 6.2 hereof.
9. CAPITAL REQUIREMENTS
9.1 The Shareholders understand that increases in equity capital shall be
needed to carry on the business of the Company. In particular, for
financial years 1997 and 1998, the Shareholders hereby pledge to provide
the equity contributions (at par) and shareholder loans that shall be
necessary to support the capital investments called for under the 1997
and 1998 Five Year Business Plans (which shall not require Supermajority
vote for initial approval), but may be amended by the Shareholders from
time to time by Supermajority vote, provided, however, that there shall
be no amendment by the Shareholders of the capital investments as
initially approved.under such Business Plans. Failure to participate in
any equity call or request for shareholder loans, except as may be
separately agreed to by the Shareholders, made by the Board during 1997
and/or 1998 shall be treated as an Event of Default pursuant to Clause
16.3 (d) of this Agreement.
9.2 Where equity contributions are to be made pursuant to the then-currently
approved Five Year Business Plan, the Board shall determine the time and
size of any such contributions, which shall be made at the same time and
on the same terms for all Shareholders and the Shareholders shall
subscribe for Shares in cash, which (except for capital calls for fiscal
years 1997 and 1998, which shall be at par) shall be at a price
determined by the Board by Supermajority vote, and shall reflect the
fair market value per Share as allowed within the regulatory framework
of Pakistani law. All Shares issued in relation to such an increase of
share capital shall be offered to the Shareholders in proportion to the
number of Shares then held by them. Except for calls made during 1997
and/or 1998, for which provision has been made above, in the event a
Shareholder declines to subscribe and pay for the Shares offered to it
pursuant to the Board's call for capital within 30 business days of the
due date for responding to such capital call, as provided in this Clause
9.2, said refusing Shareholder shall be diluted in its share ownership
of the Company and the unsubscribed Shares shall be offered to the other
Shareholders at 90% of the issue price. If in the two weeks following
the capital call a Shareholder objects to the market price determined by
the Board, the market price shall be determined within thirty (30) days
thereafter, through the use of an independent third party appraiser
acceptable to a Supermajority of the Board, and the cost of the
appraisal shall be borne by the Company. If the Board cannot agree on an
appraiser, it shall rely on the procedure for choosing an appraiser set
forth in Clause 12.4. Notwithstanding the foregoing, if a third party
appraisal has been prepared within six months of any capital call, the
fair market price shall be the fair market price established by such
third party appraisal, unless a Shareholder objects to the use of such
appraisal, in which event a new
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appraisal shall be prepared at the objecting Shareholder's cost. The due
date for responding to any capital call shall be 30 business days
thereafter, unless a new appraisal is being prepared, in which event the
due date shall be 30 business days after completion of such appraisal.
Unsubscribed Shares shall be offered to the remaining Shareholders on a
pro-rata basis. To the extent any Shares remain unsubscribed, such
Shares shall be offered in subsequent rounds until all such Shares have
been subscribed for, or unless no remaining Shareholder desires to
purchase such Shares. Completion of the subscription of the unsubscribed
Shares shall take place within 30 days after the date on which such
Shares are offered to the Remaining Shareholders.
9.3 Where debt contributions are to be made pursuant to the then currently
approved Five Year Business Plan, the Board shall determine the time,
size and conditions of any such loans (which shall be on the same terms
for all Shareholders) and the Shareholders shall lend the funds in
proportion to the number of Shares then held by them, or as may be
otherwise agreed by the Shareholders. When all Shareholders provide
loans on a pro-rata basis, such loans shall be either interest free or
shall be simple interest-bearing loans, as determined by the Board by
simple majority vote. Any such debt contributions made to the Company
shall be repaid on a proportionate basis with respect to all loans
extended by the Shareholders to, or on behalf of, the Company. If a
Shareholder fails to provide any portion of its share of the
Shareholders' loans and the other Shareholders provide any Shareholder
loans to the Company, whether in a principal amount equal to or more or
less than their respective pro rata share of the Shareholders' loans,
then the entire principal amount of the loans made by such other
Shareholders will be convertible into such number of Shares as is
determined by the principal amount of each such loan divided by 90% of
the fair market value per Share at the time such loan is made. The
provisions on the determination of fair market value in Clause 9.2 shall
apply MUTATIS MUTANDIS to the determination of fair market value under
this Clause 9.3. The right to convert such loans into Shares may be
exercised at any time during the three year period from the date the
loan is made. It is expressly understood that any Shareholder shall have
the right, in lieu of providing a Shareholder loan, to arrange for a
third party loan which is supported by such Shareholder's guarantee, and
that such guaranteed loan shall, for purposes of convertibility into
equity and under Clause 10.1, be treated as a Shareholder loan.
9.4 Except for the third party debt existing as of the date hereof and
supported by a guarantee from Motorola (or its Associate), the
Shareholders do not anticipate the provision of Shareholder guarantees
to support third party debt. If, however, in order for the Company to
borrow money from bankers and others on terms acceptable to the Company,
it is necessary for such borrowings to be wholly or partially guaranteed
by the Shareholders, such obligation to guarantee shall be required only
upon approval of the Shareholders and, except as may be separately
agreed to by the Shareholders, each Shareholder shall provide such
guarantee in a form reasonably acceptable to such Shareholder on a
several basis in proportion to its pro-rata shareholding in the Company.
In the event a Shareholder provides a loan guarantee in excess of its
pro-rata shareholding in the Company, such Shareholder shall acquire an
option to purchase additional Shares at par. The number of additional
Shares shall be determined as follows: the cost of issuing such
guarantee (based on the average cost of what three banks would charge
for issuing a guarantee of like tenor), divided by the fair market value
per Share, such option being exercisable from the date the guarantee is
issued for a period of three years. The provisions on the determination
of fair market value in Clause 9.2 shall apply MUTATIS MUTANDIS to the
determination of fair market value under this
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Clause 9.4. In the event of the Company's default under any such
guaranteed loan and any Shareholder being called upon to pay out under
its supporting guarantee, the Shareholders shall cause the Board to
implement a capital call for the express purpose of providing funds to
enable the Company to repay such guaranteeing Shareholder's payment
under its supporting guarantee. Failure by any Shareholder to
participate in such capital call shall result in dilution of such
Shareholder's share ownership of the Company at 75 percent of the
subscription price determined by the Board, pursuant to Clause 9.2 above
(the guaranteeing Shareholder shall be deemed to have participated by
virtue of its payout under its guarantee).
9.5 The Parties acknowledge that at some point during the term of this
Agreement the Board may determine, after consultation with the Company's
financial advisers, that it may be in the best interest of the Company
to effect a listing of the Shares on the Pakistan Stock Exchange or
other stock exchange. Any such public offering shall be subject to the
requirements of the applicable laws governing public offerings and the
applicable stock exchange listing rules. The Shareholders shall use
their best endeavors to ensure that the Company complies with all such
laws and rules.
9.6 The Company will give prompt written notice to each Shareholder of its
intention to register any Shares under any applicable law or to list any
Shares on any stock exchange in Pakistan or other stock exchange or to
qualify any Shares for trading in any other market and will include in
any such registration, offering, listing or qualification, subject to
the next two succeeding sentences, upon the written request of any
Shareholder made within 30 days after the Company's notice has been
given, all Shares with respect to which the Company has received written
requests for inclusion therein. If the managing underwriters of an
underwritten offering advise the Company in writing that the number of
Shares requested to be included in any registration, offering, listing
or qualification exceeds the number which can be included therein
without having a material adverse effect on the price of the Shares, the
Company will include in such registration first, the Shares requested to
be included in such registration allocated, if necessary, pro rata among
the holders thereof requesting such inclusion on the basis of the number
of Shares requested to be included and second, any Shares the Company
proposes to sell. Provided that if such registration, offering, listing
or qualification relates solely to new Shares for the purpose of raising
additional share capital for the Company, Shareholders shall not be
entitled to have included therein any Shares held by them but each
Shareholder shall have a prior right to purchase such part of the new
Shares as shall maintain that Shareholder's percentage holding of the
outstanding share capital of the Company immediately after such
registration, offering, listing or qualification at the same level as it
was immediately before such registration, offering, listing or
qualification. All expenses incident to any such registration, offering,
listing or qualification will be borne by the Company. The Company will
reimburse each Shareholder for its out-of-pocket expenses incurred in
connection with any such registration, offering, listing or
qualification including, without limitation, the fees and disbursements
of counsel for such Shareholder. The Company will indemnify each
Shareholder selling Shares in such registration, offering, listing or
qualification and its respective officers, directors, agents and
employees against all losses, claims, damages and liabilities arising
out of any misrepresentation or violation of law by the Company in
connection with any such registration, offering, listing or
qualification. Except for this Clause 9.6, the Company will not grant to
any person the right to participate in any such registration, offering,
listing or qualification of its Shares.
13
10. DIVIDEND POLICY
10.1 Subject to any agreement or restriction binding the Company to the
contrary, and provided that the Company shall have first, paid down
any third party debt to the extent such third party debt is supported
by Shareholder guarantees not in proportion to any guaranteeing
Shareholder's equity interest in the Company, and second, repaid all
outstanding Shareholder loans, the Shareholders shall procure that for
each financial year the Company distributes all of the Surplus Cash
which the Board has, in accordance with the formula set forth in the
attached Exhibit A, recommended as available for distribution.
10.2 Distributions shall be made to the Shareholders on a pro-rata basis
when there is Surplus Cash and the Shareholders by Supermajority vote
determine that a distribution should be made.
11. EMPLOYMENT POLICES
11.1 The Shareholders shall procure that the management of the Company
deals directly with the employees of the Company, without any
intermediary parties, and will retain and/or cause the adoption of
such personnel policies and practices as appropriate in order
reasonably to achieve such results.
11.2 The Shareholders shall procure that the management of the Company
retains and/or develops personnel practices that fairly reward
employees for services rendered in a manner consistent with common
business practice in Pakistan.
12. TRANSFER AND ENCUMBRANCE OF SHARES
12.1 A transfer of Shares by any Shareholder following the date of this
Agreement shall be subject to the following restrictions:
12.1.1 A Shareholder may at any time transfer all (but not less than all) of
its Shares to a Wholly-Owned Subsidiary, provided that such
Shareholder remains responsible to the other Shareholders for the
actions of its Wholly-Owned Subsidiary and hereby guarantees to the
other Shareholders that it will procure that such Wholly-Owned
Subsidiary acts in relation to such Shares as it would be required to
do under the terms of this Agreement and the Articles as if it were
still the holder of such Shares and that such Wholly-Owned Subsidiary
remains associated to it in the terms of the definition of a
Wholly-Owned Subsidiary contained in Clause 1. SAIF may transfer all
(but not less than all) of its Shares to a SAIF Associate or Saifullah
Family member subject to the same terms, conditions and limitations
stated above, after SAIF has provided evidence that the SAIF Associate
is a SAIF Associate or the Saifullah Family member is a Saifullah
Family member as deemed in Clause 1.
12.1.2 A sale or transfer at any time of the shares of a Wholly-Owned
Subsidiary of SAIF, or a SAIF Associate to which Shares have been
transferred, or a transfer of an equity interest of 35% or more of
SAIF to persons other than the Saifullah family members named in
Clause 1, shall be deemed a transfer of Shares subject to the
provisions of Clauses 12.1.4 through 12.1.7.
14
12.1.3 The Shareholders shall procure that no transfer of any Shares to a
person other than a Wholly-Owned Subsidiary or a SAIF Associate or
Saifullah Family member shall be registered until the transferee has
agreed to be bound by the terms of this Agreement by executing a deed
of adherence substantially in the form set out in Exhibit C.
12.1.4 A Shareholder may transfer all of its Shares, or any portion thereof
equal to or greater than 10% of the total paid up share capital of the
Company, provided, however, that the transferring Shareholder retains
not less than 10% of the total paid up share capital after such
transfer, except for SAIF, who may transfer only all and not less than
all of its Shares, to a third party in accordance with the provisions
of Clauses 12.1.5 through 12.1.7. If any Shareholder ("Offering
Shareholder") desires to transfer all of its Shares, or any portion
thereof equal to or greater than 10% of the total paid up share
capital of the Company ("Offered Shares"), provided, however, that the
transferring Shareholder retains not less than 10% of the total paid
up share capital after such transfer, it shall so notify in writing
("Transfer Notice") the other Shareholders ("Remaining Shareholders")
and the Board of its desire to sell the Offered Shares at a specified
price ("Prescribed Price"). If the proposed transfer is to a third
party, then the Transfer Notice shall include a copy of the bona fide
offer for such Shares by the proposed third party transferee, which
copy shall include the identity of the third party, and its beneficial
owner (if applicable), and all of the terms and conditions of the
offer, including but not limited to the price per Share offered, all
guarantees of Company debt offered and/or loans to the Company, or
assumptions thereof, which would be undertaken. In the case of a bona
fide offer to purchase the Offered Shares by a third party, the
Prescribed Price shall be the price offered by the third party. If
there is no offer by a third party, the Prescribed Price shall be the
price stated in the Transfer Notice.
12.1.5(a) The Remaining Shareholders shall have a period of thirty (30) days
from the date of receipt of such Transfer Notice to notify the
Board and each of the other Remaining Shareholders in writing
whether they desire to purchase the Offered Shares from the
Offering Shareholder at the Prescribed Price and on the same terms
and conditions relating to all guarantees of Company debt offered
(with a demonstration that said guarantee is of equal validity
with that offered by the third party) and/or the provision of
loans to the Company or assumptions thereof which would be
undertaken. If each of the Remaining Shareholders indicates its
desire to purchase the number of Offered Shares which is pro rata
to its proportionate shareholding in the Company, the transfer of
the Offered Shares pursuant to this subparagraph (a) shall be
completed within 30 days of the expiry of the 30-day period within
which the Remaining Shareholders have to notify the Board and each
of the other Remaining Shareholders of their desire to purchase
the Offered Shares.
(b) If any of the Remaining Shareholders is interested in making an
offer, but disagrees with the Prescribed Price, it may call for an
appraisal of the Shares pursuant to Clause 12.4. Any third party
appraisal of the Company shall be concluded within 30 days of a
request for appraisal having been made. A Remaining Shareholder
may withdraw its offer to purchase within five days after the
Share price is determined by appraisal by notifying the other
Remaining Shareholders and the Board of such withdrawal. Those
Remaining Shareholders who approve of the appraised Share price
shall notify the other Remaining Shareholders and the Board of
their desire to purchase the Offered Shares at such price within
the said five days. The Offering Shareholder shall
15
not be obliged to sell the Offered Shares to the Remaining
Shareholders unless all (but not less than all) of the Offered
Shares shall be purchased by the Remaining Shareholders.
(c) In exercising any purchase right hereunder, a Shareholder may
purchase all, but not less than all, of the number of Offered
Shares, as applicable, in proportion to its then shareholding in
the Company (its first round pro rata share). If less than all of
the Remaining Shareholders exercise their purchase right, those
Shareholders that have exercised their right to purchase may,
within five days after the expiry of the 30-day period referred to
in subparagraph (a) above, or the five-day period referred to in
subparagraph (b) above, as the case may be, elect to purchase the
Offered Shares which are not taken up by the uninterested
Shareholders in the proportion that the number of Shares held by
each of them bears to the aggregate number of Shares held by the
Remaining Shareholders who have indicated their desire to purchase
the Offered Shares. This process shall be repeated until the
entire amount of Offered Shares are purchased. If all of the
Offered Shares are not elected for purchase by the Remaining
Shareholders, the right to purchase the Offered Shares shall
lapse. Subject thereto, the transfer of the Offered Shares
pursuant to this Clause shall be completed within thirty (30) days
of the Remaining Shareholders' election under this Clause, or
within thirty (30) days of completion of an appraisal, whichever
is later. Notwithstanding the result of any third party appraisal,
in the event there is no bona fide third party offer, but an
Offering Shareholder is interested in selling its Shares, such
Offering Shareholder and the Remaining Shareholders shall be free
to determine a mutually satisfactory price based on negotiation
between the buying and selling sides.
12.1.6 If no purchase of the Offered Shares is made by the Remaining
Shareholders within the thirty (30) day time limit provided for in
Clause 12.1.5, then the Offering Shareholder shall be free for a
period of three months from the expiry of the thirty day period,
to transfer or dispose of the Offered Shares to the third party
named In the Transfer Notice or, if there were none, to any entity
in a bona fide sale at any price not being less than the
Prescribed Price (after deductions, as appropriate, for any
dividends declared or made after the date of the Transfer Notice
and to be retained by the Offering Shareholder) and on terms no
more favorable than those offered in the Transfer Notice relating
to such Offered Shares; PROVIDED that the Offering Shareholder
shall not be entitled to transfer any of the Offered Shares to a
third party unless all of the Offered Shares are so transferred to
that third party.
12.1.7 In the event the Offering Shareholder is unable to find a third
party buyer (as provided in Clause 12.1.6 above) willing to
purchase the Offered Shares at the Prescribed Price but has
located a third party buyer willing to purchase the Offered Shares
at a price lower than the Prescribed Price and/or on terms more
favorable than those offered in the Transfer Notice ("Revised
Offer"), the Offering Shareholder shall notify the Remaining
Shareholders in writing of the Revised Offer and the Remaining
Shareholders shall have fourteen (14) days from the date of
receipt of the notice containing the terms of the Revised Offer to
agree to purchase and thirty (30) days to purchase the Offered
Shares at the price and on the same terms as those contained in
the Revised Offer in accordance with the procedure set forth in
Clause 12. 1.5. If the Remaining Shareholders fail to exercise
their option to purchase the Offered Shares as provided by this
Clause, then the Offering Shareholder shall be free to sell the
Offered Shares to the third party buyer
16
within three months of the date of the notice given by the
Offering Shareholder containing the terms of the Revised Offer, on
such terms.
12.1.8 If and when SAIF shall cease to hold any Shares, whether directly
or through any other Wholly-Owned Subsidiary, then any third party
to whom such Shares shall have been transferred, to the extent
such third party shall own less than one-ninth of the issued and
outstanding Shares, shall not be entitled to nominate a Director
to the Board or be protected by the provisions of this Agreement,
but shall be required to enter into an agreement acceptable to
IWCPL and MOTOROLA relating to payment of its share of the funding
requirements (i.e., equity calls, Shareholder loans and guarantees
of third-party debt) of the Company.
12.2 No Shareholder shall without the written consent of the other
Shareholders create or permit to arise any mortgage, charge,
pledge, lien or other encumbrance over any of its Shares.
12.3 Any Change of Legal Control, as hereafter defined, shall be deemed
a transfer subject to Clauses 12.1.3 through 12.1.7, whereby the
Shareholder whose legal control is changed shall be deemed an
Offering Shareholder, the other Shareholders shall be deemed the
Remaining Shareholders, the Transfer Notice shall be a written
notice from any Shareholder to the other Shareholders notifying
them that a Change of Legal Control has occurred and the
Prescribed Price shall be determined by appraisal pursuant to
Clause 12.4. With respect to MOTOROLA or an Associate of MOTOROLA,
a Change of Legal Control shall have occurred when the entity(ies)
ultimately controlling MOTOROLA or its Associate on the date it
becomes a party to this Agreement ceases to hold 65% or more of
the issued and outstanding common stock of MOTOROLA or of its
Associate. With respect to IWCPL, a Change of Legal Control shall
occur when AIF, IWC and the other shareholders of IWCPL on the
date of this Agreement, and/or their respective Associates, in the
aggregate, cease to hold more than half of the issued share
capital of IWCPL. This provision shall apply as well to any
Associate of a Shareholder to which Shares are transferred under
Clause 12.1 even if such Associate does not become a party to this
Agreement; provided, however, a change of control for an Associate
shall occur if it ceases to fit the definition of an Associate in
Clause 1.
12.4.1 Appraisers appointed in connection with the sale of Shares under
this Clause 12 shall in all instances be qualified in the
appraisals of businesses such as the Company. Appraisal shall be
made on the basis of the Company as an ongoing business, for a
transaction between a willing buyer and willing seller, and
subject to the conditions of the License.
12.4.2 In the event the parties cannot agree upon the selection of an
appraiser within 30 days of the call for an appraisal, the
Offering Shareholder shall select an appraiser and the RemainIng
Shareholders shall select an appraiser within 15 days thereafter.
The appraisers shall each determine a value for the Shares within
30 days after they are appointed. If the two appraisers do not
agree but their valuations are within ten percent of one another,
then their valuations shall be averaged and the average shall be
the valuation price. If their valuations are more than ten percent
apart, then the two appraisers shall appoint a third appraiser. If
the third appraiser's valuation is not the same as either of the
first two valuations, then the two closest appraised values shall
be averaged and the result shall be deemed the price established
by the appraisers.
17
12.4.3 The cost of one appraiser appointed jointly by the parties, or a
third appraiser appointed by the first two appraisers shall be
divided with the Offering Shareholder paying one half and the
Remaining Shareholders paying the other half, based on the
proportion that the number of Shares held by each of them bears to
the aggregate number of Shares held by all the Remaining
Shareholders who have indicated their desire to purchase Shares
(whether or not any such Remaining Shareholders may subsequently
withdraw their offers to purchase any Shares after the appraisal
has been completed). In the event the Offering Shareholder
appoints one appraiser and the Remaining Shareholders appoint one,
they each shall bear the cost of the one they appointed.
Notwithstanding the foregoing, in the event an Offering
Shareholder withdraws its offer to sell Shares after the
appointment of appraisers, such Shareholder shall bear the full
cost of all of the appraisers theretofore appointed.
12.5.1 Notwithstanding the provisions of this Clause 12, no transfer of
Shares shall be allowed:
(a) to any Competitor, unless this provision is expressly waived
in writing by all the other Shareholders, or
(b) to any person who is prohibited by law or regulation from
being a participant in the holder of the License or if the
transfer would result in grounds for revocation of the License.
12.5.2 Any transfer of Shares permitted by this Agreement shall be
subject to whatever government or regulatory approvals as may be
necessary to ensure the continued validity of the License. The
Directors shall be bound, upon transfer of Offered Shares in
accordance with this Clause 12 and upon payment in full for the
Offered Shares (whether by the Remaining Shareholders or by a
third party), to register such transfer.
12.6 Notwithstanding anything to the contrary contained in this
Agreement, IWCPL shall have the right (i) to freely transfer all
of its Shares to all of its individual shareholders upon the
occurrence of a deadlock among the shareholders of IWCPL, provided
that (;c) the board of IWCPL shall have notified the other
Shareholders in writing of the existence of the deadlock, and (y)
each of the individual shareholders of IWCPL shall agree to be
bound by the terms of this Agreement by executing a deed of
adherence substantially in the form set out in Exhibit C, and (ii)
as separately agreed to by the Parties, to freely transfer a
portion of its Shares to any of its shareholders which default in
making their pro rata share of any capital contributions or
shareholder loans to be made by IWCPL to the Company. In each
case, the rights of first refusal provisions of this Clause 12
shall not apply to any such transfer, and the parties shall cause
their Directors to register any such transfer and take all such
other actions as may be necessary or desirable to effect such
transfers.
13. CONFIDENTIALITY
13.1 All trade secrets, know-how and other confidential information of
the Company and !of the Shareholders shall be kept confidential
and, except to the extent that any such information shall be or
become part of the public domain (other than as a result of a
breach by a Shareholder of this Clause), such information shall
not be disclosed in whole or in part by any Shareholder to any
person other than:
18
(a) to the respective Associates of the Shareholders and their
representatives, directors, officers, employees and auditors
if required for the business of the Company; or
(b) as required by law, or as is reasonably necessary for the
proper carrying on of the business of the Company; or
(c) as is necessary in relation to a proposed sale of any Shares
by a Shareholder,
PROVIDED THAT any Shareholder proposing to disclose information to
any person (other than to an Associate) shall, prior to the
proposed disclosure, unless the other Shareholders agree in
writing to the contrary, procure a covenant from that person in
favor of the Shareholders, to the effect that the person will
comply with the provisions of this Clause 13.
13.2 This obligation shall survive the termination of this Agreement.
14. NON COMPETITION
14.1 Save as otherwise agreed among the Shareholders, until the
termination of this Agreement, the Shareholders shall not, and
shall procure that their Associates and shareholders, and the
Associates of their shareholders, shall not, and shall use
reasonable endeavors to procure that their directors, officers and
key employees and the directors, officers and employees of their
Associates, shareholders and Associates of shareholders shall not,
engage in any business in Pakistan which provides, or participates
in providing, telecommunications services directly competitive
with the businesses undertaken or agreed to be undertaken by the
Company, as set forth in Schedule 14.1 attached hereto.
Notwithstanding the foregoing, it is expressly agreed that AIF
shall not be bound by this Clause 14, provided the following is
adhered to:
(a) AIF shall promptly disclose to the Board that there is a
conflict of interest and shall thereafter in all instances
refrain from attending any relevant discussions, including any
meeting of the Board or of Shareholders where such matter
causing the conflict of interest is being considered.
(b) If AIF engages in a business that would breach the
non-competition provision if it were otherwise bound thereby,
then (i) AIF must notify the Company of its interest in the
competing business as soon as it is able to do so without
violating any confidentiality obligations, (ii) a fire wall
(or Chinese wall) will be created, for example, different
persons will serve as the AIF nominees on the board of the
Company and the board (or similar governing body) of the
competing business, and there will not be any exchange of
information between the AIF employees or officers that handle
AIF's investments in the Company and those engaged in the
competing business, (iii) the Board shall take such fair and
reasonable measures to ensure that no sensitive information
that it determines could give a competitive advantage to a
competitor is transmitted to AIF, including but not limited to
exclusion of AlF from any Shareholders' and/or Board meetings,
and (iv) AIF shall ensure that at all times its nominees on
the Board will exercise their voting rights in accordance with
their fiduciary duty to the Company.
19
Without limiting the generality of the foregoing, if (i) the Company and
the competing business are proposing to make independent bids for
licenses or other rights that are being offered by the Government of
Pakistan, (ii) AIF wishes to participate in both bids through its
investment in the Company and the competing business, and (iii) the
Shareholders deem that AIF's participation in both bids would be harmful
to the interests of the Company, then (x) the Board shall take such fair
and reasonable measures to ensure that no information regarding the
Company's efforts to formulate the bid is transmitted to AIF, and (y) if
MOTOROLA, SAIF and IWC think it necessary or desirable, then instead of
the Company formulating a bid, MOTOROLA, SAI and IWC shall be entitled
to form another consortium, with or without any third parties, to make a
bid for such license or rights.
(c) The provisions of paragraph (h) without prejudice to AIF's
obligations or the obligations of AIF's nominees on the Board to
disclose the existence of any conflict of interest with respect to
any matter involving the Company and to recuse themselves from any
Shareholders' or Board discussion or vote on such matter.
14.2 If any Shareholder or any of its Associates ceases to be a Shareholder
for any reason other than the liquidation of the Company, or any party
ceases to be a shareholder of the Shareholder, that Shareholder shall
not, and shall procure that its Associates (and former shareholders)
shall not, and shall use reasonable endeavors to procure that their
directors, officers, key employees (or the directors, officers or key
employees of such former shareholders), or in the case of SAIF,
Saifullah Family members shall not, for a period of two years from the
date of such cessation directly or indirectly carry on or be interested
in any business in Pakistan which provides or participates in providing,
telecommunications services directly competitive with the businesses
undertaken or agreed to be undertaken by the Company, including
specifically but not limited to PCS, long distance services related to
cellular telephony, and any other mobile telephony services, at the time
of such Shareholder's ceasing to hold Shares.
14.3 For purposes of this Clause 14, the supply of cellular, two-way radio
(conventional and trunking) and/or radio paging equipment (and related
engineering, installation and maintenance services), either
infrastructure or subscriber units shall not be considered competitive
to the business of the Company. Furthermore, it is expressly understood
that neither Motorola nor any of its Associates shall be prohibited from
participating, either directly or indirectly, in the provision of
services in Pakistan using the telecommunications system known as
Iridium.
14.4 Notwithstanding the foregoing, the Shareholders and their Associates and
shareholders and the Associates of their shareholders may engage in any
manner in the businesses set forth in Schedule 14.2 attached hereto.
14.5 A Shareholder or its Associates or shareholders or the Associates of its
shareholders (a "Related Party") may not, without the prior written
consent of the other Shareholders, engage in Pakistan in any of the
businesses set forth in Schedule 14.3 attached hereto. If such
Shareholder or any of its Related Parties wishes to engage in any such
business, the relevant Shareholder shall give notice to the other
Shareholders, indicating the nature of the business it or its Related
Party wishes to engage in, the other persons that it wishes to cooperate
with in such business, and a general description of the proposed form of
participation in such business. The other Shareholders shall give their
response within
20
90 days after the date of receipt of such notice. If any of the other
Shareholders fails to respond to such notice, it shall be deemed to have
given its consent to the requesting Shareholder's or its Related Party's
engaging in the business described in the notice.
15. PROTECTION OF NAME
15.1 In the event that a Shareholder or any of its Associates ceases to be a
Shareholder, the Remaining Shareholders shall take such steps within a
reasonable period of time as may be necessary to procure the Company to
remove any reference to the first mentioned party's name in the name or
business description of the Company.
15.2 For so long as Motorola or any of its Associates is a Shareholder, the
Company may use the tradenarne or xxxx "Motorola" in the phrase "A
Motorola Network" in conjunction with the Company's tradename,
"Mobilink". The Company may not use the "Motorola" name or xxxx in any
other manner without the express consent of Motorola.
16. TERMINATION
16.1 Save as otherwise provided, this Agreement shall continue indefinitely.
16.2 This Agreement shall terminate with respect to any Shareholder upon such
Shareholder or any of its Wholly-Owned Subsidiaries or, in the case of
SAIF, a SAIF Associate or a member of the Salfullah Family, ceasing to
be a Shareholder by reason of a transfer of Shares pursuant to Clause
12.1 or by reason of an Event of Default occurring as set forth below in
Clause 16.3, and shall terminate with respect to all the Shareholders
upon the Company being wound up or otherwise dissolved. Unless the
Shareholders determine otherwise, this Agreement shall terminate and the
Company shall be dissolved in the event the License to operate the
cellular telephone business in Pakistan is terminated or the Company
otherwise loses the right to effectively use the License.
16.3 Each of the following events shall constitute an Event of Default
hereunder with respect to a Shareholder:
(a) the voluntary filing of a petition in bankruptcy, winding up, or
insolvency or the like by a Shareholder, or the making of an
arrangement with the Shareholders' creditors, the liquidation,
dissolution or winding up of the Shareholder otherwise than
pursuant to an internal reorganization of the Shareholder, the
appointment of a receiver over its assets or the incurrence of some
analogous action as a consequence of the Shareholders' debt;
(b) the purported sale, pledge, encumbrance or other disposition by a
Shareholder of any of its Shares (including the purported transfer
of a controlling interest in the ownership of the entity ultimately
controlling the Shareholder which is a Party hereto or a
Wholly-Owned Subsidiary of said Shareholder to which Shares have
been transferred, pursuant to Clause 12.1.1) other than in
accordance with the terms of this Agreement, unless agreed to by
all the other Parties;
(c) the breach by a Shareholder of any of its obligations under Clauses
13 and 14, or breach of any representation or warranty under this
Agreement which (if capable of remedy) is not remedied within 60
days after receipt of notice of breach from a non breaching
Shareholder requiring it to remedy the breach; or
21
(d) the failure by a Shareholder promptly on the due date, or within
a reasonable time thereafter not to exceed sixty (60) days from the
due date, to provide capital contributions or Shareholder loans which
it has agreed to provide pursuant to Clause 9.1 of this Agreement.
16.4 Any such termination under this Clause shall be without prejudice to
the accrued rights of the Parties under this Agreement against each
other.
16.5(a) Upon the occurrence of an Event of Default by a defaulting
Shareholder, the non defaulting Shareholders may terminate, at the
end of any cure period (or earlier if there is no specified cure
period), this Agreement with respect to a defaulting Shareholder by
notice to the defaulting Shareholder, and the non-defaulting
Shareholders shall have the right by notice to the defaulting
Shareholder to purchase within 60 days of the date of said notice all
of the Shares of such Shareholder at a price equal to fifty percent
of the fair market value of the Shares (as established by an
independent appraiser acceptable to all Shareholders), minus the cost
of such independent appraisal in the proportion that the number of
Shares held by each nondefaulting Shareholder bears to the total
number of Shares held by all the nondefaulting Shareholders. If the
Shareholders cannot agree on a single appraiser, the non-defaulting
Shareholders shall appoint one appraiser, the defaulting Shareholder
shall appoint one appraiser, each side being responsible for the cost
thereof and, in the case of the non-defaulting Shareholders, they
shall bear the costs of their appointed appraiser equally. If the two
appraisals are within 10 percent of each other, then the fair market
value shall be the average of the two appraisals. If the two
appraisals are apart by more then 10 percent, then the two appraisers
shall appoint a third appraiser. The fair market value shall be the
valuation price of the independent third appraiser averaged with the
price closest to his of the other two appraisers. The cost of the
third appraisal shall be deducted from the purchase price to be paid
to the defaulting Shareholder.
(b) The Board is hereby appointed as the agent of any defaulting
Shareholder for administration of the sale and purchase of the
Shares, and any Director is hereby irrevocably authorized by
such Shareholder to sign any document and take any action
required to effect such sale and purchase. Upon such purchase,
the defaulting Shareholder's interest in the Company shall
terminate; however, such termination shall be without prejudice
to the rights of the other Shareholders pursuant to any and all
remedies available for damages caused by the defaulting
Shareholder by reason of an Event of Default as defined in
Clause 16.3.
17. GENERAL WARRANTIES REPRESENTATIONS AND UNDERTAKINGS
Each Shareholder represents and warrants to the others that:
17.1 It is a corporation duly incorporated, validly existing and in good
standing in its country of incorporation; and has the corporate power
and authority to enter into and perform this Agreement.
17.2 The execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate or other action and the
persons signing this Agreement are duly authorized to do so on its
behalf.
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17.3 No governmental authorization, license, consent or the like is
required for the execution and performance of this Agreement, except
such as have been obtained.
17.4 This Agreement and the performance hereof by the Shareholder does not
conflict with any provisions of its charter, bylaws or any material
contract or agreement to which it is a party or by which it or its
properties are bound, and does not violate any law or any rule or
regulation of any administrative agency or governmental body or any
order, writ, injunction or decree of any court, administrative agency
or governmental body applicable to it or its properties.
18. MISCELLANEOUS
18.1 Assignment
This Agreement shall be binding upon and shall inure to the benefit
of the parties, their successors and assigns, provided that the
rights and obligations of this Agreement may not be assigned or
transferred in whole or in part by any Shareholder without the
consent of the other Shareholders (except as provided in Clause
12.1), provided however, that IWCPL shall have the right to transfer
Shares held by it to a company which is held in the same proportions
as IWCPL by AIF and IWC and that IWCPL shall be further entitled to
assign all of its rights and obligations hereunder to such company
without the consent of any other Shareholder.
18.2 Implementation of Agreement Each Shareholder agrees that it will at
all times:
(a) use all means reasonably available to it (including its voting
power direct or indirect in relation to the Company) so as to
ensure that the Company and any Director of the Company
nominated by it (and any alternate of such Director) shall
implement the provisions of this Agreement relating to the
Company;
(b) cooperate in good faith and execute such documents and take such
action as may be reasonably required to give full effect to the
provisions and intent of this Agreement; and
(c) use its best endeavors to develop and expand the business of the
Company.
18.3 No Agency or Partnership
Nothing contained in or relating to this Agreement shall or shall be
deemed to constitute a partnership or agency relationship between any
of the Parties.
18.4 Arbitration
18.4.1 All disputes which arise out of or in connection with this Agreement
shall be submitted for final and binding arbitration in Paris, France
to be conducted by the International Chamber of Commerce ("ICC"), in
accordance with the UNCITRAL Arbitration Rules, and in accordance
with its procedural rules, PROVIDED, however, that the following
shall apply:
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(a) all proceedings shall be conducted in English and a daily
transcript in English shall be prepared;
(b) each side to the dispute shall select one arbitrator, and these
arbitrators shall jointly select an additional arbitrator, who
shall concurrently serve as Chairman of the arbitration panel,
provided however, that if the arbitrators chosen by the parties
to the dispute cannot agree on the additional arbitrator, such
additional arbitrator shall be selected by the ICC (in the event
there are multiple parties on a particular side of the dispute,
they shall agree within 15 days from the demand for arbitration
on a single arbitrator to be appointed for their side of the
dispute, and if the parties fail to agree on the appointment of
the arbitrator for their side, the ICC shall appoint the
arbitrator for their side);
(c) the arbitrators shall be fluent in the English language; and
(d) the English-language text of this Agreement shall be used in the
arbitration proceedings.
18.4.2 The arbitration award shall be final and binding on the Parties. The
costs of arbitration and the party(ies) who should pay such costs
shall be determined by the arbitration panel. Any award of the
arbitrators shall be enforceable by any court having jurisdiction
over the Party or Parties against which the award has been rendered,
or wherever the assets of the Party or Parties against which the
award has been rendered are located.
18.5 COMPLIANCE WITH LAWS
The Shareholders shall ensure that the Company shall at all times
conduct its business in compliance with all applicable laws,
regulations, and authorizations of all relevant governmental
authorities, including those of Pakistan and the United States, to
the extent that such are applicable because of the participation of
MOTOROLA and via IWCPL, of IWC, provided that the Company is advised
of such laws in writing and provided further that such laws do not
conflict with any of the laws of Pakistan. In particular, the
Shareholders shall ensure that the Company and each of its officers,
Board members, employees, agents and distributors comply with all
applicable laws prohibiting corrupt practices in obtaining any
consents, licenses, approvals, authorizations, rights, privileges or
benefits in respect of the Company's business, shall ensure the
integrity and accuracy of the recordkeeping practices of the Company,
and that the Company's business is otherwise conducted in compliance
with all applicable laws. The Company will not do business with any
distributor, agent, customer or other person where the Company knows
or suspects that payoffs or similar practices are or will be involved
in doing such business.
18.6 Notices
All notices, requests, demands, claims, and other communications
hereunder shall be in writing, sent by registered or certified mail,
return receipt requested, postage prepaid, addressed to the intended
recipient as set forth below and shall be deemed duly given upon
actual receipt:
if to Motorola:
24
J. Xxxxxxx Xxxxxx
Vice President
Motorola International Development Corporation
000 Xxxxxxxxxx Xx.
Xxxxxxxxxx, XX, 00000
Facsimile Number: (000) 000-0000
if to IWCPL:
Xxxx XxXxxxx, Vice President
International Wireless Communications Pakistan Limited
x/x 0 0/X Xxx Xxxx Xxx Xxxxxx
00 Xxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Xxxx Xxxx
Executive Director
Asian Infrastructure Fund Advisors Limited
Xxxxx 0000-00, Xxxx Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
with a copy to Antonio Y.P.Xxxxx
(same address as for Xxxx Xxxx)
if to SAIF:
Xxxxx Xxxxxxxxx Xxxx
XXXX Telecom (PVT) Limited 4th F1., Xxxxxx Xxxxx
00 Xxxx Xxxx,
Xxxxxxxxx, Xxxxxxxx
Facsimile number:
Any Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address or
number set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been fully duly
given unless and until it actually is received by the intended
recipient. Any Party may change the address or number to which any
communication hereunder is delivered by giving the other Parties notice
in the manner set forth herein.
18.7 Severability
If any term or provision of this Agreement shall be found to be invalid
or unenforceable for any reason, the other terms or provisions shall not
be affected and such invalid or unenforceable term shall be deemed to be
deleted.
18.8 Inconsistency
In the event of any conflict or inconsistency between the Articles and
any - provisions of this Agreement the provisions of this Agreement
shall prevail.
18.9 Counterparts
25
This Agreement may be executed in multiple counterparts, each of which
when fully executed shall be deemed an original for all purposes.
18.10 Integration
This Agreement, and the Exhibits and Schedules attached hereto,
constitute the entire agreement of the Parties relating to the subject
matter hereof and any prior negotiations and/or other agreements among
the Parties relating to this subject matter, including but not limited
to the original Shareholders Agreement dated June 3rd, 1993, are
hereby superseded by and integrated into this Agreement. This
Agreement shall not be released, discharged or modified in any manner
except by an instrument in writing signed by the duly authorized
officers or representatives of the Parties hereto.
18.11 Governing Law
This Agreement shall be governed by and construed in accordance with the
law of Pakistan.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above-written.
SIGNED by:
for and on behalf of for and on behalf of
SAIF TELECOM INTERNATIONAL WIRELESS
(PVT) LIMITED COMMUNICATIONS PAKISTAN
LIFTED
Witnessed by:
------------------------------
------------------------------
for and on behalf of
MOTOROLA INTERNATIONAL DEVELOPMENT CORPORATION
Witnessed by:
------------------------------
------------------------------
26
EXHIBIT A TO RESTATED AND AMENDED SHAREHOLDERS AGREEMENT
Formula using generally accepted accounting principles in effect in the
United States and Pakistan, for computing surplus cash:
Profit before interest and taxes
- depreciation
- amortization
- interest paid
- taxes paid
+/- changes in working capital
- capital purchases under the Business Plan
- cash needs in future years (computed under the same formula)
- any mandatory legal reserves and prudent reserves
- current portion of long term debt
---------------------------------------------------------------------
= Surplus Cash, if any, available for distribution
27
SCHEDULE 14.1
DIRECTLY COMPETITIVE BUSINESSES
GSM, PCN, PCS, COMA, AMPS and other forms of cellular wireless
technology, long distance services related to mobile telephony and any other
mobile telephony services.
SCHEDULE 14.2
NON-COMPETITIVE BUSINESSES
The provision of paging, trunking, two-way radio, mobile data
services, fixed wire local loop, and Iridium -TM- or any other
satellite-based telecommunication services.
Any business that is not within the scope of telecommunications services.
SCHEDULE 14.3
POTENTIALLY COMPETITIVE BUSINESSES
International Gateway.
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