Exhibit 2
SHAREHOLDERS AGREEMENT
BETWEEN
THE GOVERNMENT OF INDONESIA
AND
INDONESIA COMMUNICATIONS LIMITED
DATED AS OF DECEMBER 15, 2002
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS 1
1.1 DEFINITIONS 1
1.2 CONSTRUCTION 5
ARTICLE II REPRESENTATIONS AND WARRANTIES 5
2.1 REPRESENTATIONS AND WARRANTIES OF THE MSOE 5
2.2 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR 6
ARTICLE III CORPORATE GOVERNANCE 7
3.1 GENERAL 7
3.2 COMPOSITION OF THE BOARD OF COMMISSIONERS AND THE BOARD OF DIRECTORS 7
3.3 REMOVAL AND REPLACEMENT OF COMMISSIONERS AND DIRECTORS 8
3.4 BOARD MEETINGS 8
3.5 ACTION BY THE BOARD OF COMMISSIONERS AND THE BOARD OF DIRECTORS 8
ARTICLE IV RESTRICTIONS ON THE TRANSFER OF SHARES 9
4.1 GENERAL 9
4.2 NO CIRCUMVENTION OF SHARE TRANSFER RESTRICTIONS 9
4.3 OPEN MARKET ACQUISITIONS 10
ARTICLE V CERTAIN COVENANTS OF THE PARTIES 10
5.1 GOVERNMENT POLICIES 10
5.2 STRATEGIC PLAN 10
5.3 SALE OF ASSETS 10
5.4 EMPLOYEE RELATIONS 11
5.5 AFFILIATE TRANSACTIONS 13
5.6 TECHNOLOGY TRANSFER 13
5.7 NO DISCRIMINATION 13
ARTICLE VI COVENANTS RELATED TO CONFIDENTIALITY 14
6.1 CONFIDENTIALITY 14
ARTICLE VII TERM AND TERMINATION 14
7.1 TERM AND TERMINATION 14
7.2 EFFECT OF TERMINATION; SURVIVAL 15
ARTICLE VIII INDEMNITIES 15
8.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY INVESTOR 15
8.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE MSOE 15
ARTICLE IX GOVERNING LAW & RESOLUTION OF DISPUTES 16
9.1 GOVERNING LAW 16
9.2 DISPUTE RESOLUTION FORUM 16
9.3 WAIVER OF IMMUNITIES 17
9.4 PERFORMANCE PENDING DISPUTE RESOLUTION 17
ARTICLE X MISCELLANEOUS 17
10.1 NO PARTNERSHIP; AGENCY 17
10.2 ENTIRE AGREEMENT 17
10.3 BINDING EFFECT; BENEFIT 17
10.4 ASSIGNMENT 17
10.5 AMENDMENT; WAIVER 17
10.6 NOTICES 18
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10.7 COUNTERPARTS 19
10.8 SEVERABILITY 19
10.9 COSTS AND EXPENSES 19
10.10 FURTHER ACTS AND ASSURANCES 19
10.12 EFFECTIVE DATE 19
LIST OF EXHIBITS
EXHIBIT A: NUMBER AND PERCENTAGE OF SHARES HELD AFTER THE CLOSING
SCHEDULE 1: SPECIAL SEVERANCE AND COMPENSATION FORMULA
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SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (this "Agreement") dated as of December 15,
2002 is made by and between the Republic of Indonesia acting through the
Ministry of State Owned Enterprises in its capacity as a shareholder (including
any successor or replacement ministry or similar government body) (the "MSOE")
and Indonesia Communications Limited, a company incorporated in Mauritius (the
"Investor").
RECITALS
WHEREAS, the Investor and the MSOE have entered into a share purchase
agreement dated December 15, 2002 (the "Share Purchase Agreement") pursuant to
which, upon the completion of the transactions contemplated therein, the MSOE
and the Investor will hold the number and percentage of Shares of the Company
set forth next to each such Party's name on Exhibit A;
WHEREAS, the Parties wish to provide for certain of their rights and
obligations regarding the management of the Company and its Subsidiaries, the
transfer of the Shares of the Company and certain other rights and obligations
of the Parties as set forth herein; and
WHEREAS, it is a condition to the closing under the Share Purchase
Agreement (the "Closing") that the Parties shall have executed this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual promises,
covenants and agreements of the Parties contained herein, the Parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, the following terms
shall have the meanings specified or referred to in this Article I. Capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Share Purchase Agreement:
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person
(including any Subsidiary) and "Affiliates" and "Affiliated" shall have
correlative meanings. For the purposes of this definition, the term "control"
(including the correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
where the first Person (i) owns more than 50% of the total issued shares, or
(ii) directly or indirectly controls more than 50% of the voting rights
(including any Subsidiary).
"Agreement" has the meaning stated in the preamble.
"Arbitration Law" has the meaning set forth in Section 9.2.
"Articles of Incorporation" means the articles of incorporation, memorandum
and articles of association, by laws or other equivalent constitutional
documents of the Company as amended in accordance with this Agreement and as
amended from time to time.
"Bank" has the meaning set forth in Section 4.1.
"Board of Commissioners" means the board of commissioners of the Company.
"Board of Directors" means the board of directors of the Company.
"Business Day" means a day other than Saturday, Sunday or any day on which
banks located in Jakarta, Indonesia and Singapore are authorized or obligated to
close.
"Closing" has the meaning set forth in the Recitals.
"Closing Date" means the day on which Closing occurs.
"Commissioner" means a commissioner of the Company.
"Company" means Perusahaan Perseroan (Persero) PT Indonesian Satellite
Corporation Tbk.
"Core Assets" means the following businesses as run by Xxxxxxx, XX0 and
Satelindo: international telecommunications services, local telecommunications
services, long distance telecommunications services, backbone services and data
communications and Palapa satellite services and National GSM (900 and 1800)
services.
"Decree" means any law, ordinance, regulation, award, decision, injunction,
judgment, order, ruling, subpoena, decree or verdict entered, issued, made, or
rendered by any court, administrative agency or other Governmental Body or by
any arbitrator (whether or not in an adversarial proceeding) necessary for the
applicable Person or any of such Person's properties for the conduct of such
Person's business as it is now being conducted or the ownership or lease of such
Person's property.
"Defined Period" has the meaning set forth in Schedule 1.
"Director" means a director of the Company.
"Dispute" has the meaning set forth in Section 9.2.
"EGM" has the meaning given to that term under the Share Purchase
Agreement.
"Escrow Agreement" means the agreement among the MSOE, the Investor and
Citibank N.A., Jakarta Branch as escrow agent dated December 15, 2002 pursuant
to which the escrow agent will provide escrow services to the MSOE and the
Investor.
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"Governmental Body" means any authority, agency, commission, court,
tribunal, minister, ministry, official or other instrumentality or wholly-owned
enterprise of the Republic of Indonesia, any foreign country or any domestic or
foreign state, province, country, city or other political subdivision having
jurisdiction over the applicable Person or any of such Person's properties.
"IM2" means PT Indosat Mega Media.
"IM3" means PT Indosat Multimedia Mobile.
"Investor" has the meaning stated in the preamble and shall include any
Permitted Transferee.
"Investor Commissioner" has the meaning set forth in Section 3.2(a).
"Investor Director" has the meaning set forth in Section 3.2(b).
"Law" means any national, provincial, local, municipal or other law,
regulation, Decree, constitution, ordinance, binding government policy, statute
or treaty applicable to any Person or any of such Person's properties, necessary
for the conduct of such Person's business as it is now being conducted or the
ownership or lease of such Person's property.
"Lintasarta" means PT Aplikanusa Lintasarta.
"MSOE" has the meaning stated in the preamble and shall include any
Permitted Transferee.
"MSOE Commissioner" has the meaning set forth in Section 3.2(a).
"MSOE Director" has the meaning set forth in Section 3.2(b).
"Order" means any writ, judgement, decree, injunction, award or similar
order of any Governmental Body (in each case whether preliminary or final).
"Parties" means collectively the Investor, the MSOE and any Person who
becomes a party to this Agreement under Section 4.1(a). Each of the Parties
shall be referred to as a "Party."
"Permitted Transferee" means with respect to any Person, such Person's
Affiliates. A Permitted Transferee does not include (i) telecommunications
operators with legal domicile in the Republic of Indonesia, that are owned 25%
or more by the Republic of Indonesia; (ii) national cellular licence
subsidiaries of any entity described in (i) above; (iii) a Subsidiary of any
entity described in (i) or (ii) above; or (iv) a shareholder holding more than
25% of any entity described in (i) or (ii) above.
"Person" means an individual, firm, corporation, partnership, association,
limited
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liability company, trust or estate or any other entity or organization whether
or not having separate legal existence, including any Governmental Body.
"Residual Shares" means 84,496,800 Series B Shares.
"Rupiah" and "Rp." means Indonesian Rupiah, the lawful money of the
Republic of Indonesia.
"Sale Shares" means the Series B Shares to be purchased by the Investor
from the MSOE pursuant to the Share Purchase Agreement.
"Satelindo" means PT Satelit Palapa Indonesia.
"Series A Share" means the Series A ordinary share in the Company with
voting rights, par value Rp. 500.
"Series B Shares" means the Series B ordinary shares in the Company with
voting rights, par value Rp. 500 per share, including any subdivisions,
combinations, splits or reclassifications thereof.
"Shareholder" means each registered shareholder of the Company that is a
Party.
"Shareholders Meeting" has the meaning set forth in Section 3.1.
"Share Purchase Agreement" has the meaning set forth in the Recitals.
"Shares" means the Series A Share and the Series B Shares.
"Subsidiary" means, with respect to a Person, an entity of which more than
50% (fifty percent) of the share capital of which is held directly or indirectly
through one or more intermediaries owned by such Person.
"Third Party" means a bona fide prospective purchaser of Series B Shares in
an arm's-length transaction from a Shareholder where such purchaser is not a
Party or a Permitted Transferee of such Shareholder.
"Transaction Documents" means this Agreement, the Share Purchase Agreement
and the Escrow Agreement.
"Transfer" means to sell, exchange, assign pledge, charge, grant a security
interest, make a hypothecation, gift or other encumbrance, or enter into any
contract therefor, or into any voting trust or other agreement or arrangement
with respect to the transfer of voting rights or any other legal or beneficial
interest in any of the Shares, create any other claim thereto or make any other
transfer or disposition whatsoever, whether voluntary or involuntary, affecting
the right, title, interest or possession in, to or of such Shares, and
"Transfer", "Transfers" and "Transferred" shall have correlative meanings.
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1.2 CONSTRUCTION. Whenever used in this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, any noun or pronoun
shall be deemed to include the plural as well as the singular and to cover all
genders. Unless otherwise specified, words such as "herein," "hereof," "hereby,"
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular section or sub-section of this Agreement, and references
herein to "Articles" or "Sections" refer to articles or sections of this
Agreement. Unless otherwise specified, references herein to the word "including"
shall be deemed to be followed by words "without limitation" or "but not limited
to," as applicable, or words of similar import. The word "or" shall not be
interpreted to be exclusive. If any translated version of this Agreement differs
from the English version, the English version shall prevail. The table of
contents and headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement. Whenever this Agreement refers to a number of days, such number
shall refer to calendar days unless Business Days are specified.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE MSOE. The MSOE represents and
warrants to the Investor that as of the date of this Agreement and as of the
Closing Date, as though made on such date:
(a) the MSOE is a governmental agency validly existing under the Laws of
the Republic of Indonesia and has the full power and authority to enter into,
deliver and perform its obligations under this Agreement and to perform the
transactions contemplated hereby;
(b) the execution and delivery by the MSOE of this Agreement and the
performance by the MSOE of its obligations contemplated hereby have been duly
authorized by all necessary action of the MSOE;
(c) this Agreement has been duly and validly executed by the MSOE and
assuming the due execution and delivery hereof by the Investor constitutes a
legal, valid and binding obligation of the MSOE, enforceable against the MSOE in
accordance with its terms; and
(d) the execution, delivery and performance of this Agreement by the MSOE
and the consummation of the transactions contemplated hereby will not (i)
violate any provision of the organizational or governance documents of the MSOE,
(ii) require the MSOE to obtain any consent, approval or action of, or make any
filing with or give any notice to, any Governmental Body in Indonesia or any
other Person pursuant to any instrument, contract or other agreement to which
the MSOE is a party or by which the MSOE is bound, other than any such consent,
approval, action or filing that has already been duly obtained or made, (iii)
conflict with or result in any material breach or violation of any of the terms
and conditions of, or constitute (or with notice or lapse of time or both would
constitute) a default under any instrument, contract or other agreement to which
the MSOE is a party or by which the MSOE is
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bound, (iv) violate any Order against, or binding upon, the MSOE or upon its
respective securities, properties or businesses or (v) violate any Law of
Indonesia.
2.2 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor represents
and warrants to the MSOE that as of the date of this Agreement:
(a) the Investor has the full power and authority to enter into, deliver
and perform its obligations under this Agreement and to perform the transactions
contemplated hereby and is duly incorporated or organized and existing under the
laws of the jurisdiction of its incorporation or organization;
(b) the execution and delivery by the Investor of this Agreement and the
performance by the Investor of the transactions contemplated hereby have been
duly authorized by all necessary corporate or other action of the Investor;
(c) this Agreement has been duly and validly executed by the Investor and
assuming the due execution and delivery hereof by the MSOE constitutes a legal,
valid and binding obligation of the Investor, enforceable against the Investor
in accordance with its terms;
(d) the execution, delivery and performance of this Agreement by the
Investor and the consummation of the transactions contemplated hereby will not
(i) violate any provision of the organizational or governance documents of the
Investor; (ii) require the Investor to obtain any consent, approval or action
of, or make any filing with or give any notice to, any Governmental Body in the
Investor's country of organization or any other Person pursuant to any
instrument, contract or other agreement to which the Investor is a party or by
which the Investor is bound, other than any such consent, approval, action or
filing that has already been duly obtained or made; (iii) conflict with or
result in any material breach or violation of any of the terms and conditions
of, or constitute (or with notice or lapse of time or both would constitute) a
default under any instrument, contract or other agreement to which the Investor
is a party or by which the Investor is bound; (iv) violate any Order against, or
binding upon, the Investor or upon its respective securities, properties or
businesses; or (v) violate any Law of the Investor's country of organization or
any other country in which it maintains its principal office; and
(e) the Investor, the Investor's assets and the Investor's business and
record keeping practices are not in violation of any Law, the violation of which
would, at any time (including after the Closing) have a material adverse effect
upon (i) the Investor, (ii) the Investor's ability to perform its obligations
hereunder or (iii) any of the other Parties.
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ARTICLE III
CORPORATE GOVERNANCE
3.1 GENERAL.
(a) From and after the date hereof, each Shareholder shall vote its Shares
at any regular or special meeting of shareholders of the Company (a
"Shareholders Meeting"), and shall take, subject to applicable Law, all other
actions necessary or required to give effect to the provisions of this
Agreement. Each of the Shareholders also agrees to vote its Shares at a
Shareholders Meeting to ensure that the Articles of Incorporation (and any such
organizational documents of any Subsidiary of the Company) do not at any time
conflict with any provision of this Article III. Without limiting the previous
sentence, each Shareholder shall procure, subject to applicable Law, that each
Director nominated by such Shareholder shall, subject to his fiduciary duties,
vote and take all other action necessary or required to implement the provisions
of this Agreement. In all other respects, but subject to Section 3.1(b), each
Shareholder shall be entitled to vote in such Shareholder's own best interests
provided that, if requested by the Investor the MSOE agrees to discuss the
agenda of the Shareholders Meeting and how they are considering to vote in
respect of (i) private placements under article 4.5 of the Articles of
Incorporation and/or (ii) mergers, consolidations and acquisitions under article
25 of the Articles of Incorporation.
(b) The MSOE also agrees, for a period of one calendar year from the
Closing Date, to vote all of its Shares in accordance with the written
instructions of the Investor on the following matters: (i) the approval of the
distribution of dividends, (ii) the amendment of the Articles of Incorporation
(to the extent not contrary to the provisions of this Agreement) and (iii) to
approve mergers, consolidations and acquisitions by the Company (to the extent
not contrary to the provisions of this Agreement and where any such
consolidation does not affect the continuing business operations of the
Company).
3.2 COMPOSITION OF THE BOARD OF COMMISSIONERS AND THE BOARD OF DIRECTORS.
(a) Each Shareholder shall vote its Shares at any Shareholders Meeting
called for the purpose of electing Commissioners or in any written consent of
Shareholders executed for such purpose to elect, and shall take all other
actions necessary or required, subject always to applicable Law, to elect to the
Board of Commissioners, (i) the required numbers of nominees of the Investor
(each, an "Investor Commissioner") so that such Investor Commissioners
constitute a simple majority of the Board of Commissioners and (ii) two nominees
of the MSOE (each, a "MSOE Commissioner"); provided, however, if the MSOE holds
less than the Residual Shares but the MSOE remains the shareholder of the Series
A Share, the number of MSOE Commissioners shall be decreased to one.
(b) Each Shareholder shall vote its Shares at any Shareholders Meeting
called for the purpose of electing Directors or in any written consent of
Shareholders executed for such purpose to elect, and shall take all other
actions necessary or required, subject always to
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applicable Law, to elect to the Board of Directors, (i) the required number of
nominees of the Investor (each an "Investor Director") so that such Investor
Directors constitute a simple majority of the Board of Directors and (ii) two
nominees of the MSOE (each a "MSOE Director"); provided, however, if the MSOE
holds less than the Residual Shares but the MSOE remains the shareholder of the
Series A Share, the number of MSOE Directors shall be decreased to one.
(c) The MSOE acknowledges the intention of the Investor to appoint persons
to the respective boards of directors and commissioners of the subsidiaries of
the Company.
3.3 REMOVAL AND REPLACEMENT OF COMMISSIONERS AND DIRECTORS.
(a) Each Shareholder shall have the absolute right to remove any Director
or Commissioner nominated by it at any time at its sole discretion, and each of
the Shareholders shall vote its Shares at any Shareholders Meeting or in any
written consent of Shareholders so as to effectuate such right subject always to
applicable Law. Except as provided in the previous sentence and as agreed with
the MSOE to occur at the EGM, no Shareholder shall vote for the removal of an
Investor Commissioner or Investor Director or a MSOE Commissioner or MSOE
Director, other than for cause.
(b) If, as a result of death, resignation, removal or otherwise, there
shall exist or occur any vacancy on either the Board of Commissioners or the
Board of Directors, the Shareholder entitled under Section 3.2 to nominate the
Commissioner or the Director whose death, resignation, removal or other
departure resulted in such vacancy may nominate another individual to serve in
place of such Commissioner or Director and each of the Shareholders shall vote
its Shares at any Shareholders Meeting or in any written consent of Shareholders
so as to elect such individual to the applicable Board of Commissioners or the
Board of Directors as soon as practicable thereafter.
3.4 BOARD MEETINGS. Board of Commissioners' and Board of Directors'
meetings shall take place in accordance with the Articles of Incorporation.
3.5 ACTION BY THE BOARD OF COMMISSIONERS AND THE BOARD OF DIRECTORS. All
meetings of each of the Board of Commissioners and Board of Directors shall
require a quorum of at least a majority of the Commissioners or Directors which
shall include at least one Commissioner or Director nominated by each of the
Investor and the MSOE. If such a quorum is not present within 60 minutes after
the time appointed for the meeting, the Parties shall promptly reschedule the
meeting, and the Commissioners or Directors shall be obliged to participate in
such rescheduled meeting in good faith, at the same place and at the same day
and time the following week (or if such day is not a Business Day, at the same
time on the following Business Day), at which meeting the Commissioners or
Directors present shall constitute a valid quorum whether or not a Commissioner
or Director nominated by the Investor or the MSOE is present; provided, that
written notice of such adjourned meeting shall have been delivered to all
Commissioners or Directors at least two days prior to the date of such adjourned
meeting.
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ARTICLE IV
RESTRICTIONS ON THE TRANSFER OF SHARES
4.1 GENERAL.
(a) The Investor shall not Transfer any Sale Shares to any Third Party for
a period of three years from the Closing Date, provided that a Transfer will be
permitted:
(i) where the transferee(s) is an international financial
institution(s) (the "Bank") which receives a security interest in all or part of
the Sale Shares by way of pledge, charge or grant of security and the Bank
agrees in writing at the time it receives such security interest to be bound by
the terms of this Agreement in the event that it enforces such pledge, charge or
grant of security, such written agreement of the Bank to be provided to the MSOE
by the Investor not later than two Business Days after such pledge, charge or
grant of security has been granted to the Bank; or
(ii) to a Permitted Transferee, provided that (x) the Permitted
Transferee has agreed in writing to be bound by the terms and conditions of this
Agreement by signing a copy of this Agreement in which case such Permitted
Transferee shall be considered a Shareholder and a Party to this Agreement, (y)
the Transfer complies in all respects with all other applicable provisions of
this Agreement and (z) the Transfer complies in all respects with applicable
Laws.
(b) The MSOE shall not Transfer any Residual Shares to any Third Party for
a period of one year from the Closing Date.
4.2 NO CIRCUMVENTION OF SHARE TRANSFER RESTRICTIONS. Each Party agrees that
the Transfer restrictions in this Agreement may not be avoided by the holding of
Shares directly or indirectly through a Person that can itself be sold in order
to dispose of an interest in Shares free of such restrictions. Any Transfer of
any Shares (or other interest) resulting in any change in the control, directly
or indirectly, of a Shareholder or of any other Person having control, directly
or indirectly, over that Shareholder shall be treated as being a Transfer of the
Shares held by that Shareholder, and the provisions of this Agreement that apply
in respect of the Transfer of Shares shall thereupon apply in respect of the
Shares so held; provided that this Section 4.2 shall not apply:
(a) if STT Communications Limited at all times maintains direct control of
the Investor. STT Communications Limited may, subject to the limitations set
forth in the next sentence, transfer to one or more reputable co-investors
shares of the Investor owned by it. For the purposes of this Section 4.2, the
term "control" means ownership of and voting rights of more than 50.1% of the
total issued shares of the Investor, which control shall not be subject to any
unusual restrictions of any nature whatsoever (whether by contract or
otherwise); or
(b) in respect of any change in control, directly or indirectly, of STT
Communications Limited or provided that any Person having control of STT
Communication
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Limited is not (i) a telecommunications operator with a legal domicile in the
Republic of Indonesia, that is owned 25% or more by the Republic of Indonesia;
(ii) an Indonesian national cellular licence subsidiary of any entity described
in (i) above; (iii) a Subsidiary of any entity described in (i) or (ii) above;
or (iv) a shareholder holding more than 25% of any entity described in (i) or
(ii) above.
4.3 OPEN MARKET ACQUISITIONS. Nothing in this Agreement shall be construed
in any way as restricting the right of the Investor or its Affiliates or the
MSOE or its Affiliates, to acquire Shares from any Person.
ARTICLE V
CERTAIN COVENANTS OF THE PARTIES
5.1 GOVERNMENT POLICIES. The Investor confirms its commitment to being a
long term investor in the Company and, agrees, acting as a reasonable investor
(i) to maintain the Company as a going concern and (ii) to manage the Company
having regard to the Government of Indonesia's policies in the Indonesian
telecommunication industry including the Decree of Ministry of Communications
No. KM 72 of 1999 regarding the Blue Print for Government Policy on
Telecommunications in Indonesia.
5.2 STRATEGIC PLAN. The Parties acknowledge (i) the proposed merger of
Satelindo and IM3 into the Company and agree to support the implementation of
appropriate and feasible merger plans prepared by such companies and (ii) the
proposed expansion by the Company into the provision of fixed line services and
agree to support the implementation of appropriate and feasible plans for such
expansion.
5.3 SALE OF ASSETS. Subject to Section 5.2, the Parties shall not cause the
Company to transfer any part of any Core Asset for a period of three years from
the Closing Date other than parts of such Core Assets which the Board of
Directors has reasonably determined are no longer required for the operation of
the relevant Core Asset in the manner in which it was operated as at the Closing
Date. The Parties shall also seriously consider the commercial impact of any
divestment strategy involving Lintasarta (and its core businesses as the
provider of data communication, financial and banking VAS and internet services)
or IM2 (and its core businesses as the provider of internet services, national
cable television, e-commerce services and data communication services), with
specific consideration being given to the significant amounts that Lintasarta
and IM2 contribute to the Company's total annual revenue.
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5.4 EMPLOYEE RELATIONS. Subject to the terms of this Agreement the Investor
agrees that from the Closing Date it shall:
(a) not cause the Company to terminate the existing employees of the
Company as of the date hereof, for a minimum period of three years from the
Closing Date, and where any existing employee is terminated by the Company other
than for cause, the Investor acknowledges that such employee shall be entitled
to receive compensation from the Company in an amount not less than three times
the amount that such employee would be entitled to under prevailing Law and
Ministry of Manpower Decree No.KEP-150 dated June 20, 2000 (whether or not such
Decree is in force and effect when an employee is terminated);
(b) not take any steps to initiate any change of the rights of the
Company's employees as at the Closing Date, including, but not limited to,
salary levels, pension funds, labor contracts, leave entitlements, etc and
maintain Indosat's Collective Labour Agreement, provided that if there are any
material changes to the rights of the Company's employees between June 30, 2002
and the Closing Date outside the ordinary course of business of the Company, the
Investor through its representatives on the Board of Commissioners shall have
the right to ratify any such material changes and the Investor's obligations
hereunder shall be amended accordingly;
(c) maintain and promote the Company's employee compensation levels so that
they are at least equal to other companies in Indonesia in the same industry as
the Company (with regard to applicable comparative performance and valuation
criteria of such industry), and not make shareholder decisions which may result
in the downgrading of employees' seniority or a reduction in any aspect of the
remuneration, other than in accordance with prevailing Law;
(d) give priority to placing existing employees of the Company at all
levels of seniority and responsibility based on a merit system and ensure that
the secondment of the Investor's employees should be in line with the Company's
recruitment policy (subject to the engagement of certain senior managers by the
Company at the request of the Investor). For the purposes of this Section
5.4(d), "employees" of the Company shall be deemed not to include the
Commissioners or the Directors. Any secondment of employees from the Investor to
the Company shall not occur unless approved by the Board of Directors and in
accordance with Bapepam Regulation No. KEP-32/PM/2000 (Rule IX.E.1), such
approval to be determined on the basis that such secondment is reasonably likely
to provide long-term benefit to the Company;
(e) implement a fair policy of the Company pursuant to which employees
(whether local or employees seconded by the Investor) of similar seniority,
position and responsibility level will be remunerated by the Company
comparatively taking into consideration Indosat's Collective Labour Agreement,
any other remuneration and compensation policy applicable to the Company and
prevailing Law;
(f) maintain and promote the retired employees policy of the Company in
force as at the Closing Date, provided that if there are any material changes to
the rights of the Company's employees pursuant to such policy between June 30,
2002 and the Closing Date outside the ordinary course of business of the
Company, the Investor through its representatives
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on the Board of Commissioners shall have the right to ratify any such material
changes and the Investor's obligations hereunder shall be amended accordingly;
(g) with regard to the members of the Board of Commissioners and Board of
Directors as of the date hereof and subject to (x) there being no breach of the
provisions of Clause 5.2 of the Share Purchase Agreement by such Persons and (y)
removal for cause:
(i) retain, to the extent practicable, but subject to changes agreed
with the MSOE prior to the date hereof for the purposes of the EGM, as many of
such Commissioners as possible for the Defined Period;
(ii) retain, to the extent practicable, all such Directors for the
Defined Period;
(iii) for any such Director who ceases to be a director prior to the
conclusion of the Defined Period, (x) pay to each such Director special
compensation and severance in accordance with the formula set forth in Schedule
1, and (y) provide the relevant Director with the option to accept the position
of a Senior General Manager or a Commissioner (to the extent practicable where
such position exists and is available) of the Company over the remaining Defined
Period. The special compensation and severance payment described in (x) above
shall be payable where practicable by the Company (determined by the Company in
its sole discretion). Where the Company determines that it is not practicable to
make any or all such payments then such payments shall be paid by the Investor;
and
(iv) for any such Commissioner who ceases to be a Commissioner prior
to the conclusion of the Defined Period, pay to such Commissioners special
compensation and severance in accordance with the formula set forth in Schedule
1. The special compensation and severance payment shall be payable where
practicable by the Company (determined by the Company in its sole discretion).
Where the Company determines that it is not practicable to make any or all such
payments then such payments shall be paid by the Investor;
(h) vote its Shares in favour of the establishment of an employee stock
option plan in the Company, to be established at the next annual general meeting
of the shareholders of the Company, which employee stock option plan shall
comply with all prevailing Laws and regulations and which shall provide for the
issuance of up to five percent of the paid-up and issued capital of the Company
to participating employees on terms to be approved by the Board of
Commissioners; and
(i) vote its Shares in favour of the Company allocating not less than the
amount contributed to the employee training and development program in the
previous financial year,
provided that, but subject always to the Investor committing no acts with the
intention of avoiding or circumventing the covenants in paragraphs (a) to (i)
above:
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(i) the Investor shall not be in breach of this Section 5.4 if (i) the
MSOE Directors or MSOE Commissioners have taken any action which results in any
of the provisions of this Section being circumvented or (ii) all of the
Investor's nominated persons on the Board of Commissioners and/or Board of
Directors vote against any resolution which is in contravention of any of the
matters set forth in Sections 5.4(c) to 5.4(f); and
(ii) in respect of Sections 5.4(c) to 5.4(f), the Investor's
responsibility is limited to such performance as could be reasonably expected of
a shareholder holding not less than 42% of the issued and outstanding shares of
the Company (as may be increased from time to time) plus any Shares voted by the
MSOE at the direction of the Investor pursuant to 3.1(b); and
(iii) notwithstanding and in addition to anything else herein, the
Investor will be responsible for the actions of its nominated persons on the
Board Directors and/or Board of Commissioners if any such nominated persons act
in contravention of this Section 5.4; and
(iv) in respect of provisos (i) and (ii), the existing Commissioners
and Directors who are not nominated by the Investor and remain on the boards of
the Company will be considered nominees of the Investor after June 30, 2004.
5.5 AFFILIATE TRANSACTIONS. The Investor shall not implement any consulting
or similar kinds of agreements which require the Company to pay to the Investor
a fee in relation to any technical assistance or management assistance services
to the Company, except in accordance with Bapepam Regulation No. KEP-32/PM/2000
(Rule IX.E.1).
5.6 TECHNOLOGY TRANSFER. The Investor shall directly or through nominated
Affiliates promote technology, knowledge and skills transfer from the Investor
or its nominated Affiliates to the Company. Where practicable, the Investor
shall also in respect of the Company (i) provide opportunities and priority to
local existing employees and (ii) to the extent that it seconds any employees to
the Company replace at an appropriate time such employees with local existing
employees who have suitable skills and experience.
5.7 NO DISCRIMINATION. The Investor shall vote its Shares to support an
amendment to Indosat's Collective Labour Agreement to reduce any disparity
between the employment and remuneration terms and conditions of foreign and
local employees of the Company pursuant to the Company's remuneration policies
and procedures.
5.8 ONGOING ASSISTANCE FROM THE MSOE. The MSOE agrees to discuss with the
Investor matters relating to:
(a) employee issues of the Company or any of its subsidiaries;
(b) obtaining the MOJHR approval;
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(c) telecommunication licenses that the Company and its subsidiaries may
require from time to time to enable them to carry on their respective businesses
as currently carried on; and
(d) equal competition amongst all operators in the Indonesian
telecommunications industry (including in respect of universal service
obligations, interconnection agreements and any compensation payments in
relation to the ongoing restructuring of the Indonesian telecommunications
industry).
5.9 PROPOSED STTC OPTIONS. The Parties acknowledge the intention of the
Investor to have STT Communications Limited, its parent company, offer to the
Directors from time to time share options in STT Communications Limited on its
terms and subject to compliance with all prevailing Decrees and Laws and such
compliance being reasonably practicable.
ARTICLE VI
COVENANTS RELATED TO CONFIDENTIALITY
6.1 CONFIDENTIALITY. Except as provided in this Section 6.1, each Party
shall not issue any press release or make any public announcement relating to
the subject matter of this Agreement without the prior written consent of the
other Party; provided, however, a Party may make any public disclosure it
believes in good faith upon advice of counsel is required by applicable Law or
the rules of any applicable stock exchange, in which case such Party will advise
the other Party prior to making the disclosure. Except as provided in the
preceding sentence or otherwise by this Agreement each Party agrees that it
shall keep the contents of this Agreement confidential and shall not disclose
any part thereof without the prior written consent of the other Party, which
consent shall not be unreasonably withheld. The Parties acknowledge and agree
that this Agreement can be disclosed to the existing or prospective
shareholders, advisers and financiers of the Investor.
ARTICLE VII
TERM AND TERMINATION
7.1 TERM AND TERMINATION. This Agreement shall remain in effect until
the earliest to occur of:
(a) the Company has been dissolved, liquidated or wound up;
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(b) the Parties have agreed in writing to terminate this Agreement;
(c) the MSOE ceases to be the owner of the Series A Share, in which case
the Investor shall have the right, but not the obligation, to terminate this
Agreement by sending a written notice to such effect to the other Party;
(d) December 31, 2005; and
(e) the termination of the Share Purchase Agreement pursuant to section 9.1
thereof.
7.2 EFFECT OF TERMINATION; SURVIVAL. Following any termination of this
Agreement, this Agreement shall have no further force or effect provided that
termination of this Agreement shall not prejudice any accrued rights of any
Party. Termination of this Agreement in accordance with its terms shall occur
without the necessity of court action and to that end, each of the Parties
waives any provisions of applicable law that would require such action including
paragraphs 2 and 3 of Article 1266 of the Indonesian Civil Code.
ARTICLE VIII
INDEMNITIES
8.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY INVESTOR. The Investor shall
indemnify and hold harmless the MSOE and any third party intended to benefit
from this Agreement pursuant to Section 5.4 (including the Directors and
Commissioners of Indosat) (collectively, the "MSOE Indemnified Persons") for,
and will pay to the MSOE Indemnified Persons the amount of any loss, liability,
claim, damage, expense (including reasonable costs of investigation and defense
and reasonable attorneys' fees) arising directly from or in connection with (i)
any material breach of any representation or warranty made by the Investor in
this Agreement and (ii) any material breach by the Investor of any covenant or
obligation of the Investor in this Agreement. This indemnity is not provided in
relation to Articles 1316 and 1317 of the Indonesian Civil Code other than
pursuant to Section 5.4.
8.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE MSOE.
(a) The MSOE will indemnify and hold harmless the Investor and its
representatives (collectively, the "Investor Indemnified Persons") for, and will
pay to the Investor Indemnified Persons the amount of any loss, liability,
claim, damage, expense (including reasonable costs of investigation and defense
and reasonable attorneys' fees), arising directly from (a) any material breach
of any representation or warranty made by the MSOE in this Agreement and (b) any
material breach by the MSOE of any covenant or obligation of the MSOE in this
Agreement.
(b) The MSOE's aggregate liability for damages under Section 8.2 of
this
15
Agreement shall in no event exceed US$50 million.
(c) For the avoidance of doubt, the rights to indemnification of the
Investor set forth in this Section 8.2 shall be the sole remedy that the
Investor shall have against the MSOE for breach by the MSOE of its
representations, warranties, covenants and obligations under this Agreement and
except as set forth in this Section 8.2, the Investor hereby waives all rights
of recourse that the Investor might have against the MSOE for breach by the MSOE
of any of the MSOE's representations, warranties, covenants or obligations under
this Agreement, including without limitation any remedies or rights of recourse
set forth in the Indonesian Civil Code.
8.3 WAIVER OF CERTAIN DAMAGES. Each of the MSOE and the Investor waive any
right it has or may hereafter acquire, to receive any indirect, consequential or
punitive damages arising from, related to or in connection with this Agreement
or the breach, termination or invalidity thereof.
ARTICLE IX
GOVERNING LAW & RESOLUTION OF DISPUTES
9.1 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE REPUBLIC OF INDONESIA WITHOUT REGARD TO CHOICE
OF LAW OR CONFLICTS OF LAWS PRINCIPLES THEREOF.
9.2 DISPUTE RESOLUTION FORUM.
Any dispute, controversy or difference arising among the Parties out of, or
in relation to, this Agreement or for the breach thereof (a "Dispute") shall be
settled amicably by the Parties within 20 days after a Party notifies another
Party of any such Dispute whenever practicable. However, if such Dispute cannot
be settled amicably within such time period, such Dispute shall be referred to
and finally resolved by arbitration conducted in the English language in Hong
Kong under the rules of the United Nations Commission on International Trade
Law.
The award rendered by the arbitrators under this Section 9.2 shall be final
and binding on the Parties and shall be enforceable in any court of competent
jurisdiction. Each of the Parties hereby renounces any right it may otherwise
have to appeal or seek relief from the award or any decision of the arbitrators
and agrees that, in accordance with Article 60 of Law Xx. 00 xx 0000 xx xxx
Xxxxxxxx xx Xxxxxxxxx on Arbitration and Alternative Dispute Resolution (the
"Arbitration Law"), no Party shall appeal to any court from the award or
decision of the arbitrators.
The Parties agree that none of the Parties will be allowed to commence or
maintain any action in any court of law with respect to any Dispute, except for
the enforcement of arbitral award granted pursuant to proceedings commenced
pursuant to this Section 9.2.
Subject to the award of the arbitrators, the costs and expenses incurred in
connection with any Dispute referred to arbitration under this Agreement shall
be borne by the
16
unsuccessful Party in such arbitration proceedings.
Each of the Parties waives the applicability of Article 48 of the
Arbitration Law and agrees that an arbitration need not be completed within a
specific time.
9.3 WAIVER OF IMMUNITIES. To the extent that any Party may be or become
entitled to claim, for itself or its assets or properties, state or sovereign
immunity from suit or judgment, or to the extent that in any such jurisdiction
there may be attributed such a state or sovereign immunity (whether claimed or
not), each Party irrevocably agrees not to claim, and hereby irrevocably waives,
such state or sovereign immunity. The Parties unconditionally and irrevocably
agree that the execution and delivery of this Agreement constitute private and
commercial acts.
9.4 PERFORMANCE PENDING DISPUTE RESOLUTION. Unless otherwise terminated in
accordance with the terms hereof, this Agreement and the rights and obligations
of the Parties hereunder shall remain in full force and effect during the
pendency of any proceeding under Section 9.2.
ARTICLE X
MISCELLANEOUS
10.1 NO PARTNERSHIP; AGENCY. The Shareholders expressly do not intend
hereby to form an agency relationship or partnership either general or limited,
under any jurisdiction's agency, partnership or other similar law. The
Shareholders do not intend to be agents or partners of each other, or agents of
or partners to any third party, or to create any other fiduciary relationship
among themselves, solely by virtue of their status as Shareholders.
10.2 ENTIRE AGREEMENT. This Agreement constitutes the whole agreement among
the parties hereto relating to the subject matter hereof and supersedes all
prior agreements or understandings both oral and written among all of the
Parties relating to the subject matter hereof.
10.3 BINDING EFFECT; BENEFIT. This Agreement shall inure to the benefit of
and be binding upon the Parties and their respective heirs, successors, legal
representatives and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer on any Person other than the Parties, and their
respective heirs, successors, legal representatives and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
10.4 ASSIGNMENT. Except as provided for in this Agreement, no Party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the written consent of the other Parties.
10.5 AMENDMENT; WAIVER.
(a) This Agreement may not be amended, modified or supplemented except
17
by a written instrument executed by each of the Parties.
(b) No waiver of any provision of this Agreement shall be effective unless
set forth in a written instrument signed by the Party waiving such provision. No
failure or delay by a Party in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
the same preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. Without limiting the foregoing, no waiver by a
Party of any breach by any other Party of any provision hereof shall be deemed
to be a waiver of any subsequent breach of that or any other provision hereof.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights, powers or remedies provided at law or in equity.
10.6 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by facsimile (with written confirmation of receipt) or (c) when received by
the addressee, if sent by an internationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a Party may designate by notice to the other Parties:
If to the MSOE:
To: Ministry of State Owned Enterprises
Address: Gedung Baru Departmen Keuangan RI Lantai 9
Jl. Xx. Xxxxxxx Xx. 0 - 0
Xxxxxxx 00000
Xxxxxxxxx
Attention: Xxxxxxxxx Xxxxx
Deputy Minister for State-owned Enterprises
Telephone No.: 62-21-348-31751
Facsimile No.: 00-00-000-0000
If to the Investor:
To: Indonesia Communications Limited
Address: c/o Deutsche International Trust Corporation
(Mauritius) Limited,
4th Floor, Barkly Wharf East
Le Caudan Waterfront,
Port-Louis, Mauritius,
Attention: The Directors
Telephone No.: (000) 000 00 00
Facsimile No.: (000) 000 00 00
With a copy:
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To: Indonesia Communications Limited
Address: X/-00 Xxxxxxx Xxxx #00-00/00,
XxxxXxx Xxxxxx,
Xxxxxxxxx 000000
Attention: General Counsel
Telephone No.: (00) 0000 0000
Facsimile No.: (00) 0000 0000
10.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
10.8 SEVERABILITY. Any provisions of this Agreement that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. In the event that any
such provision of this Agreement is so held invalid, the Parties shall promptly
renegotiate in good faith new provisions to restore this Agreement as nearly as
possible to its original intent and effect. To the extent permitted by
applicable Law, the Parties hereby waive any provisions of such Law that renders
any provision hereof prohibited in any respect.
10.9 COSTS AND EXPENSES. All expenses of the Investor arising from, related
to or in connection with the preparation, execution, delivery and performance of
this Agreement and each other Transaction Document shall be paid by the
Investor. All expenses of the MSOE arising from, related to or in connection
with the preparation, execution, delivery and performance of this Agreement and
each of the Transaction Documents shall be paid by the MSOE.
10.10 FURTHER ACTS AND ASSURANCES. Each Party shall give such further
assurance, provide such further information, take such further actions and
execute and deliver such further documents and instruments as are, in each case,
within its power to give, provide and take so as to give full force and effect
to the provisions of this Agreement.
10.12 EFFECTIVE DATE. This Agreement shall only become effective on the
Closing Date.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, each of the Parties hereto have caused this Agreement
to be duly executed by its respective authorized officers:
MINISTRY OF STATE OWNED ENTERPRISES
By: /s/ Xxxxxxxxx Xxxxx
--------------------------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Deputy Minister for State-owned Enterprises
INDONESIA COMMUNICATIONS LIMITED
By: /s/ Xxx Xxxxx Kiat
--------------------------------------------------
Name: Xxx Xxxxx Kiat
Title: Director and Authorised Signatory
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EXHIBIT A
NUMBER AND PERCENTAGE OF SHARES HELD AFTER THE CLOSING
Class of Shares Owner Amount Owned Percentage of Class
--------------- -------- ------------ -------------------
Series A Share MSOE 1 100%
Series B Shares MSOE 155,324,999 15.00%
Series B Shares Investor 434,250,000 41.94%
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SCHEDULE 1
SPECIAL SEVERANCE AND COMPENSATION FORMULA
As provided in Article 5.4(g) of the Shareholders Agreement, any existing
Director or Commissioner as at the date hereof shall be entitled to a lump sum
severance payment (the "SEVERANCE PAYMENT" or "SP") if such person ceases to be
Director or Commissioner within the Defined Period (as defined below). Any
Severance Payment shall be made after such Person ceases to be a Director or
Commissioner during the Defined Period on the earlier of (i) 10 calendar days
after such person commences employment in a new position at Indosat and (ii) if
such person has not accepted a new position pursuant to paragraph (i) prior to
the end of the third month after such person ceases to be a Director or
Commissioner, 10 calendar days after the end of such third month.
The Severance Payment for any person who ceases to be a Director or Commissioner
prior to the conclusion of the Defined Period shall be calculated as follows:
SP = [[B x C] - [D x E]] + A
Where:
A = Lump Sum Special Payment;
B = Prior Monthly Remuneration;
C = Number of Months Remaining in the Defined Period;
D = New Monthly Remuneration; and
E = Overlapping Period.
CERTAIN DEFINITIONS:
"DEFINED PERIOD" means (a) in the case of Commissioners, the period between
January 1, 2003 and June 30, 2004 and (b) in the case of Directors, the period
between January 1, 2003 and June 30, 2005.
"LUMP SUM SPECIAL PAYMENT" means in the case of a Commissioner or Director, 10%
of the amount of [[B x C] - [D x E]] for such Commissioner or Director.
"MONTHLY REMUNERATION" means, with respect to any Director or Commissioner, such
Director's or Commissioner's monthly salary plus the following items (if
applicable), bonus, incentive payments, car allowance, electricity and appliance
allowances, housing and housing maintenance allowances, dress allowances and
holiday and vacation allowances; provided that if
22
such benefits are calculated on an annualized basis, for purposes of this
definition such benefits shall be divided by 12.
"MONTHS REMAINING IN THE DEFINED PERIOD" means (a) in the case of Commissioners,
the period between the last day such person ceases to be a Commissioner and June
30, 2004 and (b) in the case of Directors, the period between the last day such
person ceases to be a Director and June 30, 2005, with partial months being
rounded up to the next complete month.
"NEW MONTHLY REMUNERATION" means, with respect to any Director or Commissioner,
such Director's or Commissioner's Monthly Remuneration in his or her new
position at Indosat; provided that if such Director or Commissioner has not
accepted a new position at Indosat within three months from the last day such
person ceases to be a Director or Commissioner, as the case may be, the New
Monthly Remuneration shall be equal to zero.
"OVERLAPPING PERIOD" means (a) in the case of Commissioners, the period between
the first day of any Commissioner's employment in a new position at Indosat and
June 30, 2004 and (b) in the case of Directors the period between the first day
of any Director's employment in a new position at Indosat and June 30, 2005,
with partial months being rounded up to the next complete month.
"PRIOR MONTHLY REMUNERATION" means, with respect to any Director or
Commissioner, such Director's or Commissioner's Monthly Remuneration as a
Director or Commissioner, as the case may be.
********************
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