<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------------ --------------------
Commission file number 0-______
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 94-3248701
---------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
400 SOUTH EL CAMINO REAL, SUITE 1275
SAN MATEO, CALIFORNIA 94402
--------------------------------------
(Address of principal executive offices)
(650) 548-0808
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check /x/ whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days
(1) Yes x No
---------- ----------
(2) Yes x No
---------- ----------
As of June 30, 1997, there were 816,720 shares of the Registrant's
common stock, par value $0.01 per share ("Common Stock") outstanding and
16,915,076 shares of the Registrant's preferred stock, par value $0.01 per
share ("Preferred Stock") outstanding. Each such share of Preferred Stock is
currently convertible into one share of Common Stock.
This document (excluding Exhibits) contains 36 pages.
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<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC.
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets as of December 31, 1996
(audited) and June 30, 1997 (unaudited) . . . . . . . . . . . 4
Consolidated Statements of Operations for the three
and six month periods ended June 30, 1996 and
1997 (unaudited) . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1997 (unaudited). . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . 17
PART II. OTHER INFORMATION
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . 32
Item 4. Submission of Matters to a Vote of Security Holders. . . . . 32
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 33
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
3.
<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND SHARE DATA)
ASSETS
DECEMBER 31, JUNE 30,
1996 1997
----------- -----------
(AUDITED) (UNAUDITED)
Current assets:
Cash and cash equivalents $ 41,657 $ 14,571
Notes receivable from affiliates 813 5,094
Notes receivable 1,431 1,304
License deposit 5,255 --
Investments in affiliates held for sale 2,062 3,444
Other current assets 3,190 10,249
----------- -----------
Total current assets 54,408 34,662
Property and equipment, net 18,426 21,838
Investments in affiliates 68,394 66,529
Telecommunication licenses and other intangibles, net 18,484 17,893
License deposit 3,042 1,004
Debt issuance costs, net 6,431 5,921
Other assets 173 365
----------- -----------
Total assets $ 169,358 $ 148,212
----------- -----------
----------- -----------
LIABILITIES, MINORITY INTERESTS, REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 7,313 $ 8,737
----------- -----------
Total current liabilities 7,313 8,737
Long-term debt, net 75,466 83,640
----------- -----------
Total liabilities 82,779 92,377
Minority interests in consolidated subsidiaries 5,685 5,080
Redeemable convertible Preferred Stock, $.01 par value
per share; 21,541,480 shares designated; 15,973,200
and 15,981,876 shares issued and outstanding in 1996
and 1997, respectively; net of note receivable from
stockholder of $26 in 1996 and 1997; liquidation and
minimum redemption value of $107,459 103,021 104,176
Commitments and contingencies (Note 11)
Stockholders' deficit:
Preferred Stock, $.01 par value per share;
1,538,520 shares designated; 933,200 shares issued
and outstanding in 1996 and 1997; liquidation value
of $793 9 9
Common Stock, $.01 par value per share; 26,000,000
shares authorized; 636,720 and 816,720 shares
issued and outstanding in 1996 and 1997, respectively 6 8
Additional paid-in capital 31,060 33,303
Note receivable from stockholder (152) (152)
Unrealized gain on investments 68 --
Cumulative translation adjustment 271 (249)
Accumulated deficit (53,389) (86,340)
----------- -----------
Total stockholders' deficit (22,127) (53,421)
----------- -----------
Total liabilities, minority interests,
redeemable convertible Preferred Stock and
stockholders' deficit $ 169,358 $ 148,212
----------- -----------
----------- -----------
See accompanying notes to Consolidated Financial Statements.
4.
<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED, SIX MONTHS ENDED
JUNE 30 JUNE 30,
------------------- ------------------
1996 1997 1996 1997
-------- -------- ------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Operating revenues $ 183 $ 498 $ 183 $ 1,017
Cost of revenues 180 659 180 1,248
-------- -------- ------- --------
3 (161) 3 (231)
Operating expenses:
Selling, general and administrative expenses 4,068 9,480 6,353 15,734
Equity in losses of affiliates 1,567 5,193 2,986 9,865
Minority interest in losses of consolidated
subsidiaries -- (244) -- (463)
-------- -------- ------- --------
Loss from operations (5,632) (14,590) (9,336) (25,367)
Other income (expense):
Interest income 182 574 424 1,101
Interest expense (82) (4,515) (201) (8,751)
Other (14) 1,133 (13) 1,140
-------- -------- ------- --------
Net loss $(5,546) $ (17,398) $(9,126) $(31,877)
-------- -------- ------- --------
-------- -------- ------- --------
</TABLE>
See accompanying notes to Consolidated Financial Statements.
5.
<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1996 1997
--------- --------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (9,126) $(31,877)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation 111 506
Amortization of telecommunication licenses and other intangibles 284 591
Amortization of debt issuance costs -- 510
Amortization of long-term debt discount -- 8,174
Equity in losses of affiliates 2,986 9,865
Gain on sale of Mobilcom Mexico -- (1,156)
Minority interests in losses of consolidated subsidiaries -- (605)
Issuance of Common Stock Warrants -- 2,281
Unrealized gain on investments -- (68)
Changes in operating assets and liabilities:
Other current assets (631) (7,407)
Accounts payable and accrued expenses (113) 1,424
--------- --------
Net cash used in operating activities (6,489) (17,762)
--------- --------
Cash flows from investing activities:
Issuance of notes receivable from affiliates (1,095) (4,916)
Repayment of notes receivable from affiliates -- 635
Issuance of notes receivable (3,106) (773)
Repayment of notes receivable -- 900
Advances to affiliate (1,822) --
Investments in affiliates held for sale -- (1,382)
Proceeds from sale of Mobilcom Mexico -- 3,218
Purchases of property and equipment (660) (3,918)
Investments in affiliates. (215) (10,062)
Purchase of subsidiary (3,198) --
License deposit (3,042) 7,293
Other assets (569) 156
--------- --------
Net cash used in investing activities (13,707) (8,849)
Cash flows from financing activities:
Exercise of stock options -- 45
--------- --------
Net cash provided by financing activities -- 45
--------- --------
Effect of foreign currency exchange rates on cash and cash equivalents 47 (520)
--------- --------
Net decrease in cash and cash equivalents (20,149) (27,086)
Cash and cash equivalents at beginning of period 25,398 41,657
--------- --------
Cash and cash equivalents at end of period $ 5,249 $ 14,571
--------- --------
--------- --------
Supplemental cash flow information
Cash paid for interest $ 4 $ --
--------- --------
--------- --------
Non-cash financing and investing activities:
Conversion of notes payable to related party and interest
to redeemable convertible Preferred Stock $ 2,052 $ --
--------- --------
--------- --------
Net warrant exercises of redeemable convertible Preferred Stock $ -- $ 81
--------- --------
--------- --------
Issuance of Common Stock Warrants $ -- $ 2,281
--------- --------
--------- --------
</TABLE>
See accompanying notes to Consolidated Financial Statements.
6.
<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
International Wireless Communications Holdings, Inc. ("IWC Holdings") was
incorporated in Delaware in July 1996 as a holding company whose primary
assets are all of the issued and outstanding capital stock of
International Wireless Communications, Inc. ("IWC") and a note receivable
from IWC in a principal amount equal to the net proceeds from the Debt
Offering (as defined below). (IWC Holdings and IWC are collectively
referred to herein as the "Company.") IWC was incorporated in Delaware in
January 1992 and develops, owns and operates wireless communications
companies in emerging markets in Asia and Latin America. These local
wireless businesses ("LWBs") provide a variety of communication services,
including cellular, wireless local loop ("WLL"), enhanced capacity
trunked radio ("ECTR") and paging. Together with its strategic partners,
the Company has interests in Brazil, China, India, Indonesia, Malaysia,
New Zealand, Pakistan, Peru, and the Philippines.
To date, the Company has invested principally in LWB's that are in their
early developmental stages. In addition, the Company intends to pursue
additional investment opportunities. The Company believes that its
existing cash balance is sufficient to meet its operating and contractual
obligations through fiscal 1997 . It is not sufficient, however, to meet
the Company's business objective of participation in additional equity
rounds to finance the infrastructure buildout of its operating and
nonoperating LWBs. The ability of the Company to make additional
investments is dependent on the availability of external financing. In
the event the Company is unable to obtain external financing it may
ultimately be unable to either maintain its existing ownership interests
or fully realize the underlying potential value of the LWBs.
In August 1996, IWC Holdings issued and sold 196,720 units, each
consisting of a $1,000 principal amount 14% Senior Discount Note due 2001
(an "Original Note," and, collectively, the "Original Notes") and one
nominally priced warrant now exercisable for 14.283 shares of Common Stock
(a "Warrant," and, collectively, the "Warrants"), for total gross proceeds
of approximately $100 million (the "Debt Offering"). In November 1996,
pursuant to the indenture agreement that governs the Original Notes (the
"Indenture"), IWC Holdings exchanged new 14% Senior Secured Discount
Notes due 2001 (the "Exchange Notes") which were registered under the
Securities Act of 1933, as amended (the "1933 Act"), for the Original
Notes. The terms of the Exchange Notes are substantially identical
(including principal amount, interest rate, maturity, security and
ranking) to the terms of the Original Notes. (The Exchange Notes and the
Original Notes are referred to collectively herein as the "Notes.")
In connection with the Debt Offering, IWC Holdings and IWC completed a
reorganization in which IWC became a wholly owned subsidiary of IWC
Holdings through the conversion of each share of the then-outstanding
capital stock of IWC into 40 shares of the corresponding class and series
of stock of IWC Holdings (the "Stock Conversion"). All data related to
shares and per share amounts for all periods presented have been adjusted
to reflect the effect of the reorganization and the Stock Conversion.
In the opinion of management, the accompanying unaudited financial
statements of IWC Holdings and its subsidiary, IWC, reflect all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation of the Company's financial condition,
results of operation and cash flows for the periods presented. These
financial statements should be read in conjunction with the Company's
audited consolidated financial statements as of December 31, 1995 and
1996, and for each of the years in the three-year period ended December
31, 1996, including the notes thereto. The results of operations for the
three and the six months ended June 30, 1997 are not necessarily
indicative of results that may be expected for the year ended December
31, 1997.
7.
<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF CONSOLIDATION
The accompanying consolidated financial statements of the Company include
the accounts of IWC, its wholly owned subsidiaries, SRC Servicos de Radio
Comunicacoes Ltda. ("SRC"), TeamTalk Limited ("TeamTalk"), New Zealand
Wireless Limited ("New Zealand Wireless"), together with offshore holding
companies, and its four majority-owned subsidiaries, M/S Mobilcom (Pte) Ltd.
("Mobilcom Pakistan"), PeruTel S.A. ("PeruTel"), Star Telecom Overseas
(Cayman Islands) Limited ("STOL"), and Promociones Telefonicas S.A.
("Protelsa"). Wireless Data Services, Ltd. ("WDS"), although 50% owned
by the Company, has also been consolidated in the accompanying
consolidated financial statements as the Company has the ability to
exercise control over WDS. All significant intercompany accounts and
transactions have been eliminated in consolidation.
(2) BALANCE SHEET COMPONENTS
Balance sheet components are as follows (in thousands):
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------
Other current assets
Other receivables $ 1,373 $ 3,701
Refund of license deposit -- 3,967
Prepaid expenses and other 1,817 2,581
------------ ----------
$ 3,190 $ 10,249
------------ ----------
------------ ----------
Property and equipment
Furniture and fixtures $ 320 $ 425
Computer and office equipment 935 1,705
Automobiles 197 266
Leasehold improvements 276 510
Telecommunication equipment 9,930 11,282
Construction in process 7,620 9,008
------------ ----------
19,278 23,196
Less accumulated depreciation 852 1,358
------------ ----------
Property and equipment, net $18,426 $ 21,838
------------ ----------
------------ ----------
Telecommunication licenses and other intangibles
SRC/Via 1 $ 6,680 $ 6,680
Mobilcom Pakistan 5,439 5,439
TeamTalk 1,760 1,760
STOL 3,965 3,965
Protelsa 1,557 1,557
WDS 221 221
Other 200 200
------------ ----------
19,822 19,822
Less accumulated amortization 1,338 1,929
------------ ----------
Telecommunication licenses and other
intangibles, net $18,484 $ 17,893
------------ ----------
------------ ----------
Accounts payable and accrued expenses
Accounts payable $ 5,163 $ 3,125
Professional services 718 458
Employee compensation and benefits 619 577
Equipment purchases 27 3,775
Other 786 802
------------ ----------
$ 7,313 $ 8,737
------------ ----------
------------ ----------
8.
<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(3) CASH AND CASH EQUIVALENTS
As of June 30, 1997, available-for-sale securities consisted of the
following (in thousands):
Unrealized Estimated
Cost gains/(losses) fair value
---------- -------------- ----------
U.S government securities $ 50 $ -- $ 50
Corporate debt securities 1,700 -- 1,700
---------- -------------- ----------
$ 1,750 $ -- $ 1,750
---------- -------------- ----------
---------- -------------- ----------
As of June 30, 1997, cash, cash equivalents and available-for-sale
securities were classified as follows (in thousands):
Cash $ 4,735
Cash equivalents 9,836
----------
$ 14,571
----------
Cash and cash equivalents includes $3,218,000 representing the proceeds
of disposition of the Company's interest in Mobilcom Mexico, which sale
was consummated on June 27, 1997. Pursuant to the Indenture, these proceeds
may only be used for a Permitted Investment (as defined in the Indenture),
which includes investments in cash equivalents, investments in LWBs
classified as Restricted Subsidiaries or Restricted Affiliates under the
Indenture and, subject to certain limitations, investments in LWBs
classified as Unrestricted Subsidiaries or Unrestricted Affiliates under
the Indenture. If all or a portion of such proceeds are not used for a
Permitted Investment within 270 days after June 27, 1997, then the Company
may only invest such unused proceeds in cash equivalents pending the making
of an offer by the Company, under certain circumstances, to the then
holders of the Notes to repurchase such Notes. For a more detailed
description of the restrictions on the use of the proceeds from the
Company's sale of its interest in Mobilcom Mexico, see "Description of
Exchange Notes" in the Company's Registration Statement on Form S-1,
declared effective by the Securities and Exchange Commission on November
21, 1996 (Reg. No. 333-11987).
(4) INVESTMENTS IN AFFILIATES HELD FOR SALE
In June 1997, the Company sold its 1.56% equity interest in Corporacion
Mobilcom, S.A. de C.V. ("Mobilcom Mexico") for $3,218,000 to a third party
affiliated with an existing shareholder in Mobilcom Mexico. The Company
carried this investment in Mobilcom Mexico at its historical cost basis
of $2,062,000. As a result, the Company reported a gain of $1,156,000
(pre-tax and after-tax) in other income as of June 30, 1997.
In addition to the above, the Company has recently initiated the
disposition of three additional ECTR investments as the Company re-aligns
its investment strategy and re-distributes its resources to its larger
cellular and WLL investments. The investments held for sale include
TeamTalk, the Company's wholly owned New Zealand subsidiary; Universal
Telecommunications Service, Inc. ("UTS") in the Philippines and PT Mobilkom
Telekomindo ("Mobilkom") in Indonesia. The Company anticipates that the
sale of all three investments will occur within the next 12 months. These
investments are carried at their historical cost and the Company
anticipates that the proceeds from disposition of the three investments
will exceed the Company's historical cost basis.
Investments in affiliates held for sale are as follows as of December 31,
1996 and June 30, 1997 (in thousands):
1996 1997
-------- -------
Mobilcom Mexico $ 2,062 $ --
UTS -- 1,944
Mobilkom -- 1,500
-------- -------
$ 2,062 $ 3,444
-------- -------
-------- -------
The Company has not changed the basis of accounting for the three
investments held for sale. The Company continues to consolidate TeamTalk
and has not reclassified this investment as an asset held for sale. The
Company's investment in, and advances to, TeamTalk amounted to
$15,103,000 as of June 30, 1997.
9.
<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) INVESTMENTS IN AFFILIATES
The Company's investments in affiliates represent interests in various
LWBs in several developing countries. These investments are accounted for
under the equity or cost methods of accounting.
EQUITY INVESTMENTS
For those investments in companies in which the Company's voting interest
is 20% to 50%, or for investments in companies in which the Company
exerts significant influence through board representation and management
authority even if its ownership is less than 20%, the equity method of
accounting is used. Under this method, the investment, originally
recorded at cost, is adjusted to recognize the Company's share in losses
of affiliates, limited to the extent of the Company's investment in and
advances to affiliates, including any debt guarantees or other
contractual funding commitments. All affiliated companies have fiscal
years ended December 31. Investments in affiliated companies are as
follows as of December 31, 1996 and June 30, 1997 (in thousands):
10.
<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1996
<TABLE>
<CAPTION>
MALAYSIA INDONESIA CHINA PHILIPPINES VARIOUS
--------- --------- ------- ------------ --------
SYARIKAT
TELEFON UNIVERSAL
WIRELESS PT RAJASA STAR TELECOMMUN-
(M) SDN HAZANAH DIGITEL ICATIONS
BHD PERKASA LIMITED SERVICE, INC. OTHER
Affiliated company ("STW") ("RHP") ("SDL") ("UTS") COMPANIES TOTALS
--------- --------- -------- ------------ --------- -------
<S> <C> <C> <C> <C> <C> <C>
Percentage of ownership 30% 28% 40% 19% Various
Investments in affiliated
companies as of December 31, 1995 $20,241 $24,220 $ -- $ -- $ 2,785 $47,246
Additional investment 1,201 8,556 20,000 1,906 (1,658) 30,005
Amortization 969 1,278 347 51 525 3,170
Losses (gains) 3,563 3,468 1,000 (20) 602 8,613
--------- --------- -------- ------------ --------- -------
Equity in losses of affiliates 4,532 4,746 1,347 31 1,127 11,783
--------- --------- -------- ------------ --------- -------
Investments in affiliated
companies as of December 31, 1996 $16,910 $28,030 $18,653 $1,875 $ -- $65,468
--------- --------- -------- ------------ --------- -------
--------- --------- -------- ------------ --------- -------
Portion of investment
exceeding the Company's
share of the underlying
historical net assets as of
December 31, 1996 $15,852 $28,030 $10,653 $ 882 $ -- $55,417
--------- --------- -------- ------------ --------- -------
--------- --------- -------- ------------ --------- -------
1997
MALAYSIA INDONESIA CHINA PHILIPPINES
-------- --------- -------- -----------
Affiliated company STW RHP SDL UTS (1) TOTALS
-------- --------- -------- ----------- ---------
Percentage of ownership 30% 28% 40% 19%
Investments in affiliated
companies as of
December 31, 1996 $16,910 $28,030 $18,653 $1,875 $65,468
Additional investment -- -- 9,000 (1,662) 7,338
Amortization 442 838 271 23 1,574
Losses 1,583 3,773 2,745 190 8,291
-------- --------- -------- ----------- ---------
Equity in losses of affiliates 2,025 4,611 3,016 213 9,865
-------- --------- -------- ----------- ---------
Investments in affiliated
companies as of June 30, 1997 $14,885 $23,419 $24,637 $ -- $62,941
-------- --------- -------- ----------- ---------
-------- --------- -------- ----------- ---------
Portion of investment exceeding
the Company's share of the
underlying historical net assets
as of June 30, 1997 $14,885 $23,419 $19,382 $859 $58,545
-------- --------- -------- ----------- ---------
-------- --------- -------- ----------- ---------
</TABLE>
__________________________________
(1) During 1997, the Company decided to offer UTS for sale and has
reclassified this investment as a current asset (see Note 4).
11.
<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On September 23, 1996, the Company entered into a subscription agreement
(the "Subscription Agreement") between Star Telecom Holding Limited
("STHL"), the Company's partner in STOL, and SDL to purchase a 40%
interest in SDL. Under the Subscription Agreement, the Company invested
$20,000,000 during 1996. The Company, including the Designated Assignee
of IWC, IWC China Limited, amended the Subscription Agreement, dated as
of September 23, 1996, among SDL and STHL. The Amendment to Subscription
Agreement and Waiver, dated as of June 18, 1997, ("Amendment and
Waiver") modified certain provisions in the Subscription Agreement,
including waiving the fulfillment of the conditions precedent to its
obligations to enter into and complete a second subscription of SDL
shares for an aggregate subscription price of $19,000,000 and pay and
deliver to STHL the second $9,000,000 premium on June 18, 1997. The
Company funded the $9,000,000 premium on June 18, 1997.
Financial information for affiliated companies accounted for under the
equity method of accounting is as follows (in thousands):
AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1996
----------------------------------
STW RHP SDL
-------- -------- ---------
Current assets $ 820 $ 13,354 $ 11,215
Noncurrent assets 41,686 64,556 55,617
Current liabilities 6,909 23,341 12,460
Noncurrent liabilities 33,526 63,834 47,817
Net revenues 1,858 10,268 436
Net loss (11,873) (12,072) (2,618)
AS OF AND FOR THE SIX MONTHS ENDED
JUNE 30, 1997
----------------------------------
STW RHP SDL
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
Current assets $ 8,285 $ 25,827 $ 16,289
Noncurrent assets 36,995 75,979 95,508
Current liabilities 7,274 56,710 25,205
Noncurrent liabilities 36,707 60,525 65,648
Net revenues 1,439 7,895 642
Net loss (5,277) (13,398) (6,869)
COST INVESTMENTS
The Company uses the cost method of accounting for two other investments as
of June 30, 1997. These are RPG Paging Services Limited ("RPSL") and
Telecomunicaciones Globales, S.A. de C.V. ("Global Telecom"). The Company
owns its holding in RPSL indirectly through its interest in STOL. STOL
purchased an additional 9% of RPSL in January 1997 for $2,100,000 which
increased the Company's indirect interest from 7% to 13.3%. The
Company acquired its interest in Global Telecom, a Mexican long distance
company in January 1997 for $62,000. The Company considers the RPSL and
Global Telecom investments to be long-term in nature and are not held
for trading purposes. As of June 30, 1997, the Company's ownership
interests in these entities were 13.3% and 1.56%, respectively.
12.
<PAGE>
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following represents the Company's carrying value of these
cost investments (in thousands):
DECEMBER 31, JUNE 30,
1996 1997
------------ --------
Mobilkom $ 1,500 $ --
RPSL 1,426 3,526
Global Telecom -- 62
------------ --------
$ 2,926 $ 3,588
------------ --------
------------ --------
During 1997, the Company reclassified Mobilkom as an investment in
affiliates held for sale (see Note 4).
PRO FORMA SUMMARY
The following pro forma summary combines the consolidated results of
operations of the Company as if (i) TeamTalk had been a wholly owned
consolidated subsidiary as of January 1, 1996, (ii) ownership in RHP had
been 28.3% as of January 1, 1996, (iii) the acquisition of STOL had
occurred as of January 1, 1996, (iv) the acquisition of SDL had occurred
as of January 1, 1996 and (v) the acquisition of Protelsa had occurred
as of January 1, 1996. This pro forma summary does not necessarily
reflect the results of operations as they would have been if the Company
had acquired the entities as of January 1, 1996.
Unaudited pro forma consolidated results of operations for the various
acquisitions as described above are as follows (in thousands):
SIX MONTHS ENDED
JUNE 30,
-------------------
1996 1997
-------- --------
Revenues $ 481 $ 1,017
Net loss (14,439) (29,816)
(6) NOTES RECEIVABLE FROM AFFILIATES
In March 1997, the Company loaned $3,500,000 to SDL. This loan, which
is evidenced by a promissory note, accrues interest at 9% per annum and
is due upon written demand by the Company. The Company anticipates
repayment within the next 12 months.
In June 1997, STOL loaned $1,500,000 to SDL. This loan accrues interest
at 8.75% per annum and is due upon written demand by STOL. The Company
anticipates repayment within the next 12 months.
(7) NOTES RECEIVABLE
In March 1997, the Company loaned $500,000 to an unrelated third party.
This loan, which has a one year term, accrues interest at the rate of
15% per annum and is guaranteed by another unrelated third party. At
the sole discretion of the Company, the loan may be converted at any
time during its one year term into 51% of the outstanding capital stock
of Nexbeep S.A., formerly named Clasbeep S.A., an Ecuadorian paging
corporation that is wholly owned by the borrower.
In April 1997, the Company collected $900,000 on a loan the Company had
extended to a co-shareholder of Mobilcom Mexico. The balance of the
loan, which is in the form of a promissory note, plus accrued interest,
was repaid in July 1997 (see Note 12).
13.
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INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(8) LICENSE DEPOSIT
In August 1996, STOL and the Company deposited $3,005,000 and $2,250,000,
respectively, for a 30% equity interest in a Taiwan paging project. In
early February 1997, it was announced that the respective bid
applications were unsuccessful and the Company reclassified the deposits as
a current asset. In June 1997, STOL received a refund of $1,669,000 of its
deposit, net of its pro rata share of application expenses of $347,000.
The remaining balance of $989,000 has been classified on the accompanying
balance sheet as other current assets and was received by STOL in July
1997. In June 1997, the Company received a refund of $1,029,000, net of
its pro rata share of application expenses of $220,000. The remaining
balance of $1,001,000 has been classified on the accompanying balance
sheet as other current assets and was received by the Company in August
1997.
In June 1996, the Company deposited $3,042,000 for a 20% interest in a
consortium pursuing ECTR licenses in Taiwan. The consortium was successful
in winning four of twelve license applications. The Company is awaiting a
refund of $1,977,000, which represents its pro rata portion of the deposit
applied to the unsuccessful applications, net of the Company's pro rata
share of application expenses of $61,000. This amount has been classified
on the accompanying balance sheet as other current assets. The remaining
deposit of $1,004,000 will represent the Company's initial capital
contribution to the ECTR venture to be formed.
(9) REDEEMABLE CONVERTIBLE PREFERRED STOCK AND RETAINED DEFICIT
On May 5, 1997, the Company entered into an agreement with Vanguard
Cellular Financial Corp. (together with its wholly owned subsidiary,
Vanguard Cellular Operating Corp., "Vanguard"), pursuant to which
Vanguard surrendered then-outstanding warrants to purchase 323,880
shares of Series C Preferred Stock, 416,720 shares of Series D Preferred
Stock and 64,120 shares of Series F Preferred Stock in exchange for the
issuance by the Company of a warrant to acquire 249,970 shares of Common
Stock at a purchase price of $0.25 per share and a second warrant to
purchase 554,750 shares of Common Stock at an exercise price of $9.375
per share. This second warrant was subsequently surrendered by Vanguard
in exchange for the issuance to certain officers and employees of
Vanguard of an option to purchase 53,330 shares of Common Stock at an
exercise price of $9.375 per share under International Wireless
Communications Holdings, Inc. 1996 Stock Option/Stock Issuance Plan (the
"1996 SO/SIP") and options to purchase an aggregate of 501,420 shares of
Common Stock at a purchase price of $9.375 per share outside the 1996
SO/SIP. (The foregoing transaction is hereinafter referred to as the
"Vanguard Warrant/Option Exchange.") Such transaction and the issuance
of such options and warrants by the Company were approved by the Board
of Directors of the Company on February 28, 1997, and by the
stockholders of the Company on May 5, 1997. The Company recognized an
expense of $2.3 million from the first warrant based on the difference
between its fair value and the $0.25 exercise price of each share.
On or prior to June 12, 1997 holders of warrants to purchase an
aggregate of 28,800 shares of Series D Preferred Stock exercised such
warrants pursuant to the cashless "net-exercise" provisions thereof.
Upon such exercises, such warrantholders received an aggregate of 8,676
shares of Series D Preferred Stock.
The holders of the Warrants issued in connection with the Debt Offering
were initially entitled to purchase 11.638 shares of Common Stock per
Warrant, representing in the aggregate approximately 10.0% of the
outstanding stock of the Company on a fully-diluted basis as of August
15, 1996. Because the Company did not complete a qualifying initial
public offering of Common Stock in which the Company raised at least $50
million in net cash proceeds on or prior to May 15, 1997, pursuant to
the terms of the Warrants, on May 15, 1997, each unexercised Warrant
entitled the holder thereof to purchase an additional 2.645 shares of
Common Stock or an aggregate of 14.283 shares of Common Stock.
14.
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INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(10) STOCK OPTION/STOCK ISSUANCE PLAN
On May 5, 1997, the stockholders of the Company approved an amendment to
the 1996 SO/SIP increasing the aggregate number of shares of Common Stock
available for issuance over the term of the plan by 411,526 shares to a
total of 2,811,526 shares. Such amendment was approved by the Board of
Directors of the Company on February 28, 1997.
On May 5, 1997, the Option Committee of the Board of Directors of the
Company granted options to purchase an aggregate of 342,000 shares of
Common Stock at an exercise price of $9.375 per share under the 1996
SO/SIP to certain officers and service providers of the Company.
Also on May 5, 1997, as part of the Vanguard Warrant/Option Exchange,
the Company issued an option to purchase 53,330 shares at an exercise
price of $9.375 per share under the 1996 SO/SIP to a director of the
Company.
On May 15, 1997, the Company issued and sold 180,000 shares of Common
Stock to a former officer of the Company for an aggregate purchase price
of $45,000 upon the exercise by such officer of an option to purchase such
shares granted under the 1996 SO/SIP.
(11) COMMITMENTS AND CONTINGENCIES
CAPITAL CONTRIBUTIONS
In order to protect IWC's investments in affiliates from ownership
dilution, IWC anticipates making additional capital contributions to the
LWBs as approved.
GUARANTEE OF DEBT OF EQUITY INVESTEE
In connection with a Malaysian Ringgit 91,000,000 (approximately
$36.1 million as translated using effective exchange rates at June 30,
1997) senior credit facility through a syndicate of Malaysian banks
obtained by the Company's 30% equity investee, STW, the Company along
with other STW shareholders, executed a financial "keep well" covenant
pursuant to which they have agreed (i) to ensure that STW will remain
solvent and be able to meet its financial liabilities when due and (ii)
to ensure that the project is completed in a timely manner and to make
additional debt and equity as and investments in STW, as necessary to
meet cost overruns. The loan is repayable by STW in eleven semi-annual
installments beginning October 8, 1997. The Company and other STW
shareholders have separately executed an agreement, whereby each
shareholder has agreed to share in the liability on a pro rata basis in
relation to their interest in STW. In the event that the bank were to
seek repayment from the STW shareholders and the other shareholders were
unable to honor their pro rata share in the liability, the Company might
be liable for the full amount of the outstanding amount of the loan. As
of June 30, 1997, this credit facility was fully drawn down.
The Company does not believe it is practicable to estimate the fair
value of the guarantee and does not believe exposure to loss is likely.
Accordingly, no provision has been made in the accompanying consolidated
financial statements.
The Company, indirectly through its affiliate, New Zealand Wireless,
owns 15% of Mobilkom. Mobilkom expects to fund the continued buildout of
its network and the acquisition of subscriber terminals primarily through a
seven-year $50 million revolving/reducing credit facility which it has
obtained from a syndicate of Thai banks. Borrowings under the credit
facility bear interest at a floating rate based on LIBOR and are secured by
substantially all of Mobilkom's assets and a pledge of all the capital
stock held by the Company and Mobilkom's other shareholders. Another
Mobilkom shareholder has guaranteed borrowings of up to $25 million under
the credit facility. As of June 30, 1997, borrowings of approximately
$22,637,000 were outstanding under this facility.
The Company indirectly owns a 19.8% equity interest in Mobisel, a
provider of cellular services in Indonesia through its 28.3% ownership
in RHP. Mobisel has obtained a six-year $60 million credit facility from
Nissho Iwai International (Singapore) Pte. Ltd. ("Nissho Iwai") to
finance the construction of its network. Borrowings under the
15.
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INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
credit facility bear interest at a floating rate based on LIBOR and are
secured by all of Mobisel's assets and a pledge of all the capital stock
held by RHP and Mobisel's other shareholders. RHP has also guaranteed
the credit facility. As of June 30, 1997, this credit facility was fully
drawn down.
The Company, indirectly through its wholly owned subsidiary, IWC China
Limited, owns a 40% equity interest in SDL. The Company, including the
Designated Assignee of IWC, IWC China Limited, amended the Subscription
Agreement, dated as of September 23, 1996, among SDL and STHL. The
Amendment and Waiver modified certain provisions in the SDL Subscription
Agreement, including waiving the fulfillment of the conditions precedent
to its obligations to enter into and complete a second subscription of
SDL shares for an aggregate subscription price of $19,000,000. Pursuant
to the Amendment and Waiver, IWC China Limited is required to fund the
second subscription of SDL shares no later than June 17, 1998.
(12) SUBSEQUENT EVENTS
In July 1997, the Company, STOL and STHL entered into an agreement with
a third party providing for the issuance and sale to such third party of
new shares equivalent to up to a 20% equity interest in STOL subject to
the achievement by STOL of certain performance milestones. As of August
1, 1997, no new shares in STOL had been issued to such third party.
In July 1997, the Company collected the remainder of the note
receivable, including accrued interest in the amount of $608,000 from
its former co-shareholder in Mobilcom Mexico.
In July 1997, International Wireless Communications Limited ("IWCL"), a
wholly owned indirect subsidiary of the Company, entered into various
agreements relating to the purchase by IWCL of a 26% indirect equity
interest in Pakistan Mobile Communications (Pvt) Ltd. ("PMCL"), a
Pakistan cellular operating company, from Motorola International
Development Corporation ("MIDC") and Continental Communications Limited
("CCL"), two current shareholders of PMCL, for an aggregate purchase
price of $28.6 million to be paid in a combination of cash and shares of
the Company's Common Stock (the "PMCL Purchase"). The Company
anticipates that Vanguard will co-invest with IWCL in the PMCL Purchase
by purchasing from MIDC and CCL an approximately 6% indirect equity
interest in PMCL, thereby reducing the indirect equity interest IWCL
purchases from MIDC and CCL to approximately 20%.
Pursuant to the terms of the agreements entered into in connection with
the PMCL Purchase, the PMCL Purchase will be consummated on or after
August 13, 1997, subject to the satisfaction of certain closing
conditions. The Company is currently negotiating a bridge financing
facility with Toronto Dominion Investments, Inc. and Vanguard Cellular
Financial Corp. and has received written commitments from certain other
shareholders of the Company to provide an aggregate of $29 million in
exchangeable bridge loans to the Company and to an indirect wholly owned
subsidiary of the Company in order to finance the purchase of an
interest in PMCL, meet certain funding requirements of PMCL and for
general corporate purposes of the Company (the "Pakistan Bridge
Facility"). The closing of the Pakistan Bridge Facility is subject to
various conditions precedent, including receipt of requisite approvals
from the Board of Directors and stockholders of the Company and the
satisfaction of all conditions precedent (other than funding of purchase
price) to the closing of the PMCL Purchase. There can be no assurance
that such conditions precedent shall be satisfied or waived on or after
August 13, 1997, or that the PMCL Purchase or the Pakistan Bridge
Facility will be consummated as currently anticipated or at all.
16.
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INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THE DISCUSSION IN THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS
THAT MAY AFFECT FUTURE RESULTS" AS WELL AS THOSE DISCUSSED IN THIS SECTION AND
ELSEWHERE IN THIS REPORT, AND THE RISKS DISCUSSED IN THE "RISK FACTORS" SECTION
INCLUDED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1996, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1997.
OVERVIEW
The Company develops, owns and operates LWBs in emerging markets in Asia
and Latin America. These LWBs provide a variety of communication services,
including cellular, WLL, ECTR and paging. Together with its strategic
partners, the Company has interests in LWBs in Brazil, China, India,
Indonesia, Malaysia, New Zealand, Pakistan, Peru, and the Philippines.
The Company has recently undertaken a realignment of its investment strategy
and has initiated the redistribution of its resources away from its smaller
ECTR investments to its larger cellular and WLL investments. As part of this
realignment, in June 1997, the Company sold its 1.56% equity interest in
Mobilcom Mexico to an affiliate of a co-shareholder in Mobilcom Mexico for
$3.2 million. In addition, the Company proposes to sell all or a portion of
its interests in TeamTalk, Mobilkom and UTS. The Company anticipates that the
sale of these three investments will occur within the next 12 months.
However, in part because there exists no public market for the Company's
ownership interests in these LWBs, there can be no assurance that any of
these LWBs will be sold upon terms acceptable to the Company within such
time period or at all.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 AND 1997
For the three month period ended June 30, 1996, the Company's net loss
was $5.5 million compared to $17.4 million for the corresponding period in
1997, an increase of 214%. This increase was due primarily to higher selling,
general and administrative expenses, an increase in interest expense and
increases in equity in losses of affiliates, as more fully described below.
In addition, the Company recognized an expense of $2.3 million pursuant to
the Vanguard Warrant/Option Exchange. The net loss was partially offset by
the gain on sale of an investment held for sale.
For the three month period ended June 30, 1996, the Company's selling,
general and administrative expenses were $4.1 million as compared to $9.5
million for the corresponding period in 1997. This increase was primarily due
to an increase in the selling, general and administrative expenses associated
with the Company's consolidation of the SRC operations. SRC's selling,
general and administrative costs increased from $666,000 for the three months
ended June 30, 1996 to $1.8 million for the corresponding period in 1997, an
increase of 167%, as the Brazilian ECTR venture expanded its coverage area and
network operations. In addition, the Company's selling, general and
administrative expenses were affected by the consolidated results of the
Company's four developmental stage subsidiaries as their selling, general and
administrative expenses increased from $56,000 for the three month period
ended June 30, 1996 to $1.3 million for the corresponding period in 1997 as
these entities continued to develop their network operations and commence the
deployment of their wireless operations.
For the three month period ended June 30, 1996, the equity in losses of
affiliates was $1.6 million compared to $5.2 million for the corresponding
period in 1997, an increase of 231%. For the three month period ended June
30, 1996, the equity in losses in affiliates was attributable to $1.0 million
of operating losses and $520,000 of expense relating to the amortization of
telecommunication licenses. For the corresponding period in 1997, the equity
in losses of affiliates was attributable to $4.5 million of operating losses
and $732,000 of expense relating to the amortization of telecommunication
licenses.
The Company's equity in losses of affiliates attributable to RHP was
$274,000 for the three month period ended June 30, 1996 as compared to $2.9
million for the corresponding period in 1997. Mobisel continued to expand
its operations and build out its nationwide cellular network. During this
expansion phase, Mobisel's gross profit temporarily declined due primarily to
greater pulse sharing and airtime costs and an increase in depreciation
expense due to the Phase I build-out of Mobisel's nationwide cellular
network. In addition, as part of its expansion effort, Mobisel experienced
growth in its selling, general and administrative expense base in order to
meet the anticipated growth in its operations. Also, interest expense
increased for the three month period ended June 30, 1997.
The Company's equity in losses of affiliates attributable to SDL for the
three month period ended June 30, 1997 was $1.1 million, including expense
attributable to the amortization of telecommunication licenses of $80,000.
For the three month period ended June 30, 1996 the Company's interest
expense was $82,000 as compared to $4.5 million for the corresponding period
in 1997. The increase in interest expense was primarily due to interest
expense associated with the Debt Offering.
The Company's other income and expense improved from an expense of
$14,000 for the three month period ended June 30, 1996 to other income of
$1.1 million for the corresponding period in 1997. This increase resulted
from the gain on sale of the Company's investment in Mobilcom Mexico in June
1997.
SIX MONTHS ENDED JUNE 30, 1996 AND 1997
The Company's net loss increased from $9.1 million for the six month
period ended June 30, 1996 to $31.9 million for the corresponding period in
1997, an increase of 249%. This increase was due primarily to an increase in
interest expense, higher selling, general and administrative expenses and
increases in equity losses of affiliates, as more fully described below. In
addition, the Company recognized an expense of $2.3 million pursuant to the
Vanguard Warrant/Option Exchange. The net loss was partially offset by the
gain on sale of an investment held for sale.
The Company's operating revenue increased from $183,000 for the six month
period ended June 30, 1996 to $1.0 million for the corresponding period in
1997, an increase of 456%. The operating revenue, was offset by an increase
in the cost of revenues from $180,000 for the six month period ended June 30,
1996 to $1.2 million for the corresponding period in 1997, an increase of
593% as the company's wholly owned subsidiary, TeamTalk, continued to expand
its ECTR operations. The Company anticipates that operating revenues and
costs of revenues will continue to increase as the Company's consolidated
subsidiaries shift from the development of their networks to the provision of
their wireless services.
The Company's selling, general and administrative expenses increased from
$6.4 million for the six month period ended June 30, 1996 to $15.7 million
for the corresponding period in 1997, an increase of 148%. This increase was
primarily due to an increase in selling, general and administrative expenses
associated with the Company's two operational consolidated subsidiaries,
TeamTalk and SRC as their selling, general and administrative expenses
increased from $1.2 million for the six month period ended June 30, 1996 to
$5.0 million for the corresponding period in 1997, an increase of 307%.
These two entities continued to develop their ECTR operations and expand
their services resulting in the increase in selling, general and
administrative expenses. The Company believes that the consolidated selling,
general and administrative expenses of its operational subsidiaries will
stabilize, as future growth of expenses increases consistent with the growth
in its operating revenues. In addition, the Company's selling, general and
administrative expenses were affected by the consolidated results of the
Company's four developmental stage subsidiaries as their selling, general and
administrative expenses increased from $54,000 for the six month period ended
June 30, 1996 to $2.1 million for the corresponding period in 1997 as these
entities continued to develop their network operations and commenced
deployment of their wireless operations. In addition to the consolidated
subsidiaries, the Company experienced continued growth in its own general and
administrative expenses, including salaries and benefits expense,
professional fees and all other general and administrative expenses as the
Company increased its corporate and regional operations to meet the needs of
the local wireless businesses. The Company's own general and administrative
expenses increased from $5.0 million for the six months ended June 30, 1996
to $8.6 million for the corresponding period in 1997, an increase of 71%.
17.
<PAGE>
The Company's equity in losses of affiliates increased from $3.0 million
for the six month period ended June 30, 1996 to $9.9 million for the
corresponding period in 1997, an increase of 230%. For the six month period
ended June 30, 1996, the equity in losses of affiliates was attributable to
$1.9 million of operating losses and $1.0 million of expense relating to the
amortization of telecommunication licenses. For the corresponding period in
1997, equity in losses of affiliates consisted of $8.3 million of operating
losses and $1.6 million of expense relating to amortization of
telecommunication licenses. The increase in the equity in losses of
affiliates is attributable primarily to the increase in the underlying
operating losses of RHP and SDL.
The Company's equity in losses of affiliate attributable to RHP increased
from $648,000 for the six month period ended June 30, 1996 to $4.6 million
for the corresponding period in 1997 as RHP's 70% owned consolidated
subsidiary, Mobisel, continued to expand its operations and build-out its
nationwide cellular network. During this expansion phase, Mobisel's gross
profit temporarily declined due primarily to greater pulse sharing and
airtime costs and an increase in depreciation expense due to the Phase I
build-out of Mobisel's nationwide cellular network. In addition, as part of
its expansion effort, Mobisel experienced growth in its selling, general and
administrative expense base in order to meet the anticipated growth in its
operations. Interest expense increased for the six month period ended June
30, 1997 as Mobisel had fully drawn down the $60.0 million construction
facility, arranged in October 1996, to finance the construction of its
nationwide network. As part of this expansion effort, Mobisel entered into
and utilized the majority of a syndicated short-term notes facility arranged
in January 1997. These funds enabled Mobisel to continue the build-out of
its nationwide cellular network, and were utilized for general corporate
purposes.
The Company's equity in losses of affiliates attributable to its 40%
interest in SDL, which the Company acquired in November 1996, was $3.0
million for the six month period ended June 30, 1997, including the Company's
amortization of telecommunication license expense attributable to SDL of
$271,000 for the six month period ended June 30, 1997. SDL operating losses
are anticipated to increase throughout the foreseeable future as SDL
continues to expand its regional operations in the Peoples Republic of China.
The Company's interest income increased from $424,000 for the six month
period ended June 30, 1996 to $1.1 million for the corresponding period in
1997, an increase of 160%. This increase was due primarily to interest
earned on the proceeds from the Debt Offering in August 1996, which were
invested in short-term interest-bearing securities.
The Company's interest expense increased from $201,000 for the six month
period ended June 30, 1996 to $8.8 million for the corresponding period in
1997. The increase in interest expense was primarily due to interest expense
associated with the Debt Offering.
The Company's other income and expense improved from an expense of $13,000
for the six month period ended June 30, 1996 to other income of $1.1 million
for the corresponding period in 1997. This increase resulted from the gain
on sale of the Company's investment in Mobilcom Mexico in June 1997.
18.
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LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has funded its cash requirements primarily through
the use of the net proceeds of a series of Preferred Stock private
placements, bridge loans and the Debt Offering. The bridge loans have
generally been converted into Preferred Stock. The proceeds from these
financings were mainly used to fund the Company's investments in operating
companies and developmental stage projects, to provide working capital and
for general corporate purposes, including the expenses incurred in seeking
and evaluating new investment opportunities. As of December 31, 1996 and June
30, 1997, the Company had cash and cash equivalents balances of $41.6 million
and $14.6 million, respectively.
The Company has generated negative cash flow from operations since
inception, and its operating companies and developmental stage projects are
not expected to provide any cash to the Company in the foreseeable future. As
a result, the Company is and will remain dependent upon raising funds from
outside sources to fund its working capital needs, investments in operating
companies and developmental stage projects, other cash requirements and to
repay the Notes and any other indebtedness it may incur when it becomes due
and payable.
The Company believes that its existing cash balance is sufficient to meet
its minimum operating and contractual obligations through the end of fiscal
1997. However, the Company will require additional financing prior to
December 31, 1997 to meet its business objective of participating in
additional equity rounds of financing on the operating company and
developmental stage project level to finance the expansion of the operations
of such operating companies and developmental stage projects. There can be no
assurance that such additional financing will be available to the Company on
acceptable terms when required by the Company or at all. The Company's
inability to obtain such additional financing on acceptable terms would have
a material adverse effect on the Company. In addition, the Company intends to
pursue additional investment opportunities for wireless communications
projects and will require additional sources of financing in order to pursue
those investments. However, there can be no assurance that such additional
financing will be available on favorable terms or at all. See "--Additional
Factors That May Affect Future Results--Company Level Risks--Negative
Operating Cash Flow; Dependence on Additional Financing; No Commitments for
Additional Financing."
The Company is currently negotiating the Pakistan Bridge Facility with
Toronto Dominion Investments, Inc. and Vanguard Cellular Financial Corp. and
has received written commitments from these and certain other stockholders of
the Company for an aggregate of $29 million in exchangeable bridge loans as
part of the Pakistan Bridge Facility. The Pakistan Bridge Facility is
structured as a two-tier facility, with $7 million proposed to be loaned to
IWC Holdings for general corporate and other purposes and $22 million
proposed to be loaned to Pakistan Wireless Holdings Limited ("PWH"), a newly
formed indirect wholly owned subsidiary of the Company, for the specific
purpose of financing the cash portion of the purchase price of the Company's
investment in PMCL and the Company's pro rata share of shareholder capital
calls and shareholder loans required to finance the operations of PMCL. The
closing of the Pakistan Bridge Facility is subject to various conditions
precedent, including receipt of requisite approvals from the Board of
Directors and stockholders of the Company and the satisfaction of all
conditions precedent (other than funding of purchase price) to the closing of
the PMCL Purchase. There can be no assurance that such conditions precedent
shall be satisfied or waived or that the PMCL Purchase or the Pakistan Bridge
Facility will be consummated as currently contemplated or at all. Further,
the Pakistan Bridge Facility, as currently contemplated, contains significant
restrictions on the Company's ability to raise additional debt or equity
financing until all amounts outstanding under the Pakistan Bridge Facility
are repaid in full.
The Company has recently undertaken a realignment of its investment
strategy and has initiated the redistribution of its resources away from its
smaller ECTR investments to its larger cellular and WLL investments. As part
of this realignment and in order to raise additional capital, the Company
proposes to sell all or a portion of its interests in TeamTalk, Mobilkom and
UTS. The Company anticipates that the sale of these three investments will
occur within the next 12 months. However, in part because there exists no
public market for the Company's ownership interests in these investments,
there can be no assurance that any of these investments will be sold upon
terms acceptable to the Company within such time period or at all.
At the project level, IWC and its partners typically fund initial project
investments using capital contributions either in the form of equity or
shareholder loans. When projects become operational, IWC seeks to fund
ongoing development of the project using third-party financing, preferably on
a non-recourse basis to the Company.
Mobilkom, IWC's national ECTR operating company in Indonesia, arranged a
$50.0 million credit facility through a syndicate of Thai banks. This
facility is secured by all of the assets and capital stock of Mobilkom, and
$25.0 million of the facility has been guaranteed by Jasmine International
Public Company Limited ("Jasmine"), a 56.25% owner of Mobilkom. As of June
30, 1997, approximately $22.6 million was outstanding under this facility.
The Company anticipates that the current $50.0 million facility will be
sufficient for Mobilkom to meet all of its
19.
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currently anticipated expenditures through 1997. Borrowings outstanding under
this credit facility must be repaid in 16 quarterly installments commencing
in 2000.
Mobisel, IWC's national cellular operating company in Indonesia, in which
the Company held an indirect 19.8% interest as of June 30, 1997 through IWC's
investment in RHP, has obtained a $60.0 million credit facility from Nissho
Iwai. This facility is secured by all of Mobisel's assets and a pledge of
all of the capital stock of Mobisel held by RHP, which has also guaranteed
the credit facility. The use of borrowings under the credit facility with
Nissho Iwai is limited to expenditures necessary for the implementation and
construction of Mobisel's network. Borrowings outstanding under this credit
facility must be repaid in six equal semi-annual installments beginning in
late 1998. As part of this initiative and to meet its short term needs
Mobisel will require substantial additional financing to complete its planned
capital expenditures through 1997 and for other purposes. Accordingly,
Mobisel has commenced discussions with a number of potential financing
sources in order to obtain additional financing. Mobisel entered into a
syndicated short-term notes facility agreement in January 1997 with PT Bank
Umum Servitia, as arranger, whereby the banks agreed to purchase Indonesian
Rupiah("Rp")60,000,000,000 of short-term notes and interest notes of
Rp15,000,000,000 (in aggregate approximately $30.8 million as at June 30,
1997). These short-term notes would have repayment priority to the existing
loans outstanding. Mobisel is continuing to pursue various other long-term
financing solutions to enable it to meet its business plan objectives.
STW, IWC's national WLL operating company in Malaysia, has arranged a
Malaysian Ringgit 91.0 million (approximately $36.1 million as of June 30,
1997) credit facility through a syndicate of Malaysian banks. This facility
is secured by substantially all of STW's assets and a pledge of all of the
capital stock of STW held by IWC and STW's other shareholders, and has been
guaranteed by Shubila Holding Sdn Bhd, the 60% owner of STW, and certain
officers of STW (including a former officer of IWC). In addition, STW has
agreed to assign to and deposit with the banks all of its cash, including
revenues, loan drawings and shareholder advances. In addition to pledging
their capital stock in STW, IWC and the other STW shareholders have entered
into a "keep well" covenant pursuant to which they have agreed (i) to insure
that STW remains solvent and able to meet its financial liabilities when due,
and (ii) to insure the timely completion of its WLL project and to make
additional debt or equity investments in STW necessary to meet any cost
overruns. The Company and other STW shareholders have also separately
executed an agreement, whereby each shareholder has agreed to share in the
liability on a pro rata basis in relation to their interest in STW. In the
event that the banks were to seek repayment from the STW shareholders and the
other shareholders were unable to honor their pro rata share of the
liability, the Company might be liable for the full amount of the outstanding
amount of the loan. Borrowings outstanding under this credit facility must be
repaid in eleven semi-annual installments beginning October 8, 1997.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
THE COMPANY OPERATES IN A RAPIDLY CHANGING ENVIRONMENT THAT INVOLVES A
NUMBER OF RISKS, SOME OF WHICH ARE BEYOND THE COMPANY'S CONTROL. THE
FOLLOWING DISCUSSION HIGHLIGHTS SOME OF THESE RISKS. THESE RISKS SHOULD BE
READ IN CONJUNCTION WITH THE "RISK FACTORS" SECTION INCLUDED IN THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996, AS FILED
WITH THE COMMISSION ON APRIL 15, 1997.
COMPANY LEVEL RISKS
CONTINUING LOSSES; LIMITED OPERATING HISTORY
The Company has incurred net losses since its inception and had an accumulated
stockholders' deficit of approximately $53.4 million as of June 30, 1997. The
Company anticipates that its net losses will increase significantly in the
foreseeable future, and there can be no assurance as to whether or when the
Company's operations will become profitable. See "--Results of Operations." The
Company has a limited operating history. Since its inception in January 1992,
the Company's activities have been concentrated primarily in the early stage
development of its wireless projects, including the selection of local partners,
the formation of operating companies and the pursuit of operating licenses.
NEGATIVE OPERATING CASH FLOW; DEPENDENCE ON ADDITIONAL FINANCING; NO COMMITMENTS
FOR ADDITIONAL FINANCING
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The Company used cash in operations and investing activities of $73.2
million for the year ended December 31, 1996, and $26.6 million for the six
months ended June 30, 1997, and expects such negative cash flows to continue
and likely increase in the foreseeable future. Because of such negative cash
flow and negative working capital and the capital intensive nature of the
Company's business, the Company will require continuing sources of outside
debt and equity financing to fund its working capital needs, investments and
other cash requirements.
In particular, the Company will require additional financing prior to
December 31, 1997, to meet currently anticipated requirements for working
capital and investments in its operating companies and developmental stage
projects. In addition, the Company intends to pursue additional investment
opportunities for wireless projects and anticipates that it will require
additional sources of financing in order to fund those investments. However,
the Company has neither received commitments nor completed arrangements for
additional financing, and there can be no assurance that any additional debt
or equity financing will be available to the Company on acceptable terms when
required by the Company or at all. If adequate sources of additional
financing are not available, the Company may be forced (i) to delay, scale
back or eliminate one or more of its projects, (ii) to suffer a significant
dilution of its equity interest or loss of value in one or more of its
investments, or (iii) to liquidate one or more of its investments. In
addition, the Company may be unable to repay its liabilities (including the
Notes) as they become due, and may be unable to meet its working capital and
other cash requirements. The Indenture contains certain restrictions on the
ability of the Company to make investments in, or guarantee the indebtedness
of, the operating companies and developmental stage projects. Accordingly,
the Company's inability to obtain such additional financing would have a
material adverse effect on the Company and could result in its insolvency or
liquidation.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged and has indebtedness that is substantial
in relation to its stockholders' equity, including its redeemable convertible
Preferred Stock. As of June 30, 1997, the Company's long term debt was $83.6
million, and its stockholders' deficit and redeemable convertible Preferred
Stock was $50.8 million. The high level of the Company's indebtedness will
have important consequences, including (i) limitations on the Company's
ability to obtain additional debt financing in the future and (ii)
limitations on the Company's flexibility in reacting to changes in the
industry and economic conditions generally. In addition, most of the
existing operating companies and developmental stage projects will not be
subject to any limitations restricting the incurrence of additional
indebtedness, and, to the extent that the Company is successful in its
strategy of obtaining additional financing at the operating company or
developmental stage project level, the amount of such indebtedness could
increase substantially, which may have consequences similar to those
described in clauses (i) and (ii) above with respect to the Company.
RISK OF INABILITY TO REPAY NOTES AT MATURITY
The Company has had net losses and has generated negative cash flow from
operations since inception. Further, as discussed below under "--Holding
Company Structure; Limitations on Access to Cash Flow of Operating
Companies," the Company does not expect that it will generate positive cash
flow through dividends or other distributions from its operating companies
for the foreseeable future. Accordingly, the Company's ability to repay the
Notes and any other indebtedness which it may incur from time to time at
maturity will be dependent on developing one or more sources of financing
prior to the maturity of such indebtedness. The Company may, among other
things, (i) seek to refinance all or a portion of such indebtedness at
maturity through sales of additional debt or equity securities of the Company
or other borrowings, (ii) seek to sell all or a portion of its interests in
one or more of its operating companies or developmental stage projects
(subject to the restrictions described below under "--Company Level
Risks--Restrictions on Transfer of Ownership Interests") or (iii) negotiate
with its financial and strategic partners to permit the cash, if any,
produced by the operating companies to be distributed to equity holders.
There can be no assurance that (i) the Company will be able to obtain debt or
equity refinancing on acceptable terms, or at all, in the future, (ii) the
Company will be able to sell assets in a timely manner or on commercially
acceptable terms or in an amount that will be sufficient to repay its
indebtedness when due, (iii) the Company will be able to obtain the consents
and approvals required in order to sell its interests in, or to receive
dividends from, its operating companies or developmental stage projects or
(iv) that the operating companies or developmental stage projects will in
fact generate positive cash flow or that any such cash flow will be
distributed to equity holders (particularly since the Company expects that
its operating companies will generally reinvest all of their cash flow in
development opportunities for the foreseeable future). In addition, a default
under the Notes or such other indebtedness as the Company may incur in the
future, for example, could in turn permit lenders under STW's Malaysian
Ringgit 91 million (approximately $36.1 million as translated using
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effective exchange rates at June 30, 1997) senior credit facility, and
possibly under other debt instruments of the operating companies, to declare
borrowings outstanding thereunder to be due and payable pursuant to
cross-default clauses, permitting the lenders under such debt instruments to
proceed against any collateral pledged as security therefor. Any failure by
the Company to repay the Notes when due would have a material adverse effect
on the Company.
RISK OF GOVERNMENTAL ACTIONS RESULTING IN VIOLATION OF INDENTURE
The Indenture pursuant to which the Notes were issued, contains covenants
that impose certain requirements with respect to sales or other dispositions
of assets with a fair market value in excess of $500,000 (including capital
stock in operating companies and in developmental stage projects) by the
Company and certain subsidiaries of the Company ("Asset Sales"). Among other
things, the Indenture requires that at least 85% of the consideration for an
Asset Sale be in cash and that the Company receive consideration equal to the
fair market value of the assets in question. However, if an Asset Sale occurs
because of governmental action (for example, by expropriation or
confiscation), or in certain other circumstances including, among other
things, a sale of the Company's investment in certain operating companies
compelled by other stockholders of such operating company or pursuant to
rights granted to certain bank lenders of certain operating companies, the
requirement that the Company receive fair market value for the assets shall
be deemed to have been satisfied to the extent that the difference between
the fair market value of such assets and the actual consideration received in
such Asset Sale (and all other Asset Sales subject to this exception) is less
than 10% of the "total market value of equity" of the Company. However, if an
Asset Sale is compelled by governmental action, the Indenture still requires
that at least 85% of the consideration be in cash.
In certain of the countries in which the Company has made investments,
there is a risk that the Company's investments may be confiscated or
expropriated by governmental authorities. In particular, in early 1996, the
Malaysian government initiated efforts to consolidate the Malaysian
telecommunications industry, which, if completed would have forced a sale or
merger of STW, the Company's Malaysian operating company, to or with one of a
limited number of surviving telecommunications companies. There can be no
assurance that the Malaysian government will not seek to take similar actions
in the future. Likewise, other countries may seek to expropriate or
confiscate assets of the Company. To the extent that the consideration, if
any, received by the Company in connection with these expropriations or
confiscations failed to satisfy the covenants under the Indenture, such a
violation will be deemed an event of default under the Indenture entitling
the holders of the Notes to demand immediate repayment thereof and to proceed
against their collateral, which would have a material adverse effect on the
Company. See "--Project Level Risks--Risks Inherent in Foreign Investment."
HOLDING COMPANY STRUCTURE; LIMITATIONS ON ACCESS TO CASH FLOW OF OPERATING
COMPANIES
The Company is a holding company with no business operations of its own.
All of the operations of the Company are conducted through its wholly owned
subsidiary, IWC, and its affiliated companies, which are separate and
distinct legal entities and have no obligation, contingent or otherwise to
make any funds available to the Company to enable it to make investments in
operating companies or developmental stage projects, meet working capital
needs or other liabilities of the Company (including liabilities under the
Notes), or for any other reason. In addition, most of the operating companies
have generated negative cash flow from operations, and the Company expects
that most operating companies will continue to generate negative cash flow
from operations for the foreseeable future. Further, to the extent that any
of the operating companies generates positive cash flow, the Company may be
unable to access such cash flow because (i) it owns 50% or less of the equity
of most of such entities and, therefore, does not have the requisite control
to cause such entities to pay dividends to their equity holders; (ii) certain
of such entities are currently or may become parties to credit or other
borrowing agreements that restrict or prohibit the payment of dividends, and
such entities are likely to continue to be subject to such restrictions and
prohibitions for the foreseeable future; (iii) the Company expects that its
operating companies will generally reinvest all of their cash flow in
development opportunities for the foreseeable future; and/or (iv) some of the
countries in which such entities conduct business, tax the payment and
repatriation of dividends or otherwise restrict the repatriation of funds. As
a result, the Company does not expect that it will be able to generate any
significant cash flow through dividends or other distributions from the
operating companies in the foreseeable future, and there can be no assurance
that the Company will be able to generate any significant cash flow from the
operating companies at any time in the future.
RESTRICTIONS ON TRANSFER OF OWNERSHIP INTERESTS
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The Company's ability to sell or transfer its ownership interests in its
operating companies and developmental stage projects is generally subject to
(i) limitations contained in the agreements between the Company and its local
partners including, in certain cases, complete prohibitions on sales or
transfers for a period of years, co-sale rights and/or rights of first
refusal and (ii) provisions in local operating licenses and local
governmental regulations that, in certain cases, prohibit or restrict the
transfer of the Company's ownership interests in such operating companies and
developmental stage projects. Moreover, the Company and its local partners
have in the past been required to pledge their capital stock in certain
operating companies to secure credit facilities obtained by those operating
companies, and the Company may be prohibited from transferring or otherwise
disposing of such capital stock so long as it is pledged as collateral for
those credit facilities. In addition, none of the operating companies or
developmental stage projects currently has any publicly traded securities and
there can be no assurance that in the future there will be either a public or
private market for the securities of the Company's operating companies or
developmental stage projects. As a result, the Company's ability to liquidate
any or all of its investments may be substantially limited and there can be
no assurance that the Company will be able to do so in a timely manner, or at
all in the event that the Company is required to do so in order to satisfy
its cash needs, including providing funds for investments and repayment of
indebtedness. Moreover, even if any sales are completed, the prices realized
on those sales could be less than the Company's investment, and there may be
substantial local taxes imposed on the Company in the case of any such sales
and, in any event, there can be no assurance that there will not be
substantial taxes or other restrictions on the ability of the Company to
repatriate any amounts realized upon the sale of any such investments. In
addition, certain of the operating companies and developmental stage projects
are or may be parties to credit agreements that restrict their ability to pay
dividends or make other distributions to their equity investors, and the
Company's local partners, by virtue of their majority ownership interest in
the operating companies and developmental stage projects, generally have the
right to determine the timing and amount of any such dividends or
distributions.
LACK OF CONTROL OF OPERATING COMPANIES AND DEVELOPMENTAL STAGE PROJECTS
The Company anticipates that it will often have a minority interest in its
operating companies and developmental stage projects, in part because
applicable laws often limit foreign investors to minority equity positions.
Although the Company is actively involved in the management of most of the
operating companies and developmental stage projects in which it has an
ownership interest and intends to invest in the future in operating companies
and developmental stage projects in which it can participate in management,
its minority voting positions may preclude it from controlling such entities
and implementing strategies that it favors, including strategies involving
the expansion or development of projects or the pursuit of certain financing
alternatives. Moreover, even where the Company has majority control of a
project, the exercise of such control may be subject to contractual,
regulatory or other restrictions. In addition, the Company may be unable to
access the cash flow, if any, of its operating companies. See "--Company
Level Risks--Holding Company Structure; Limitations on Access to Cash Flow of
Operating Companies."
RISKS INHERENT IN GROWTH STRATEGY
The Company has grown rapidly since inception, and as of June 30, 1997,
had operating companies or developmental stage projects in 13 foreign countries.
Subject to the availability of additional financing, the Company anticipates
that it will make additional investments in wireless projects in other foreign
countries and is actively seeking and evaluating new investment opportunities in
foreign countries where it currently has operating companies or developmental
stage projects. This strategy presents the risks inherent in assessing the
value, strengths and weaknesses of development opportunities, in evaluating the
costs and uncertain returns of building and expanding the facilities for
operating systems and in integrating and managing the operations of additional
operating systems. The Company's growth strategy will place significant demands
on the Company's operational, financial and marketing resources and on its
management. Any failure to manage the Company effectively could have a material
adverse effect on the Company.
RISK OF REGISTRATION UNDER INVESTMENT COMPANY ACT OF 1940
Because the Company often acquires minority ownership positions in
operating companies and development stage projects, there is a risk that these
ownership positions could be deemed to be investment securities and that the
Company could be characterized as an investment company under the Investment
Company Act of 1940 (the "Investment Company Act"). Due to the Company's active
role in developing and managing the operating companies and its contractual
rights as an equity holder, the Company believes that a substantial majority of
its interests in the operating companies are the equivalent of joint venture
interests rather than investment securities. Therefore, the
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Company believes that it is not an investment company and intends to continue
its business and conduct its operations so as not to become subject to the
Investment Company Act. If the Commission or its staff were to take the
position, or if it were otherwise asserted, that the Company is an investment
company, the Company could be required either (i) to liquidate its
investments in one or more operating companies or developmental stage
projects and change the manner in which it conducts its operations to avoid
being required to register as an investment company or (ii) to register as an
investment company. If the Company were required to register under the
Investment Company Act, it would be subject to substantive regulations with
respect to capital structure, operations, transactions with affiliates and
other matters. In addition, a determination that the Company is subject to
the Investment Company Act would constitute an event of default under the
Indenture and permit acceleration of the Notes. If the Company were found to
be an investment company but was not registered under the Investment Company
Act, the Company would be prohibited from, among other things, conducting
public offerings in the U.S. or engaging in interstate commerce in the U.S.,
the Company would be subject to monetary penalties and injunctive relief in
an action brought by the Commission, and certain contracts to which the
Company is a party (including the Indenture and the Notes) might be rendered
unenforceable or subject to rescission by any party thereto. As a result, any
determination that the Company is an investment company would have a material
adverse effect on the Company and would likely require that the Company cease
operations.
CONTROL OF THE COMPANY
At June 30, 1997, Vanguard beneficially owned approximately 27.4% of the
Company's equity. Vanguard has provided and continues to provide a number of
services to the Company relating to the formation, development and operation of
wireless communications services, including identification and evaluation of
wireless communications opportunities, review of business and technical plans
and assistance in training operating company personnel. Vanguard has the right
to elect three directors to the Company's Board of Directors and currently has
three representatives on such Board, including Haynes G. Griffin, Chairman of
the Board of Directors. As a result, Vanguard may have the ability to
effectively control the Company and direct its business and affairs.
CONFLICTS OF INTEREST
Vanguard is not precluded from competing with the Company by itself or
through affiliates by developing, owning and/or operating international
wireless communications businesses, including businesses that use the same or
similar technologies or provide the same services as the Company's existing
and future operating companies. This is true even though the Company acquired
substantially all of Vanguard's interests in certain of its international
wireless projects in December 1995. Further, although many of the agreements
governing the relationship between the Company and its local partners contain
preemptive rights, rights of first refusal and/or rights of co-sale with
respect to the sale of shares in the Company's joint ventures, Vanguard is
not precluded from co-investing with the Company in such joint ventures. For
example, in April 1997, Vanguard purchased a 7% equity interest in SDL
directly from STHL, the Company's local partner in SDL. Also, it is currently
anticipated that Vanguard will co-invest with the Company in PMCL and acquire
a 6% indirect interest in PMCL.
In addition, in May 1995, the Company and Vanguard consummated the
Vanguard Warrant/Option Exchange, pursuant to which Vanguard surrendered
warrants to purchase shares of Preferred Stock of the Company in exchange for
the issuance of a warrant to purchase Common Stock of the Company at $0.25
per share issued to Vanguard and options to purchase Common Stock of the
Company at $9.375 per share issued to various members of the management of
Vanguard, including two individuals who currently serve as directors of the
Company. The Company recognized an expense of $2.3 million in connection with
the issuance of the warrant to Vanguard, which amount represents the
difference between the fair value of the shares underlying such warrant and
its $0.25 exercise price. Although the directors designated by Vanguard may
abstain from voting on matters in which the interests of the Company and
Vanguard are in conflict, they are not obligated to do so, and the Company
has not adopted any formal policies or procedures designed to prevent actual
conflicts of interest from occurring. As a result, the presence of potential
or actual conflicts could affect the process or outcome of Board
deliberations. There can be no assurance that such conflicts of interest will
not materially adversely affect the Company.
INFORMATION RELATING TO DEMOGRAPHIC, ECONOMIC, MARKET AND RELATED INFORMATION
The information contained herein includes certain demographic and economic
information, as well as information regarding cellular service, installation and
penetration in the countries in which the Company has operating companies or
developmental stage projects. This information was obtained from a number of
sources and the Company has not independently verified any such information and
there can be no assurance as to its accuracy. In addition, much of the
information related to POPs are estimates and reflect data that may be incorrect
or imprecise and such estimates and data have been obtained from a number of
sources and the Company has not independently verified any such information.
DEPENDENCE ON KEY PERSONNEL
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The success of the Company and its growth strategy depends in large part on
the ability of the Company to attract and retain key management, marketing and
operating personnel at each of the Company, operating company and developmental
stage project levels. There can be no assurance the Company will be able to
attract and retain the qualified personnel needed for its business, particularly
because of the amount of international travel required of the Company's managers
and because experienced local managers are often unavailable. In addition, the
loss of the services of one or more members of its senior management team,
particularly John D. Lockton or Hugh B. L. McClung, could have a material
adverse effect on the Company.
CLASSIFICATION OF NOTES AS DEBT; ORIGINAL ISSUE DISCOUNT
Although the Company intends to treat the Notes as debt for all purposes,
there can be no assurance that the Internal Revenue Service will agree that the
Notes qualify as debt for federal income tax purposes. If the Notes are not
respected as debt for such purposes, they would likely be recharacterized as an
equity interest in the Company and the interest that accretes on the Notes would
not be deductible by the Company when accrued or paid. Loss of such interest
deductions would increase income taxes ultimately payable by the Company, and
thus, reduce cash flow otherwise available to repay the Notes, which would have
a material adverse effect on the Company. Recharacterization of the Notes as
equity could also adversely affect non-corporate holders as well as non-United
States holders of the Notes.
Assuming the Notes are respected as debt for federal income tax purposes,
they will be subject to the original issue discount provisions of the Code
because they will have been issued at a non-de minimis discount from their
principal amount. Consequently, the holders of the Notes generally will be
required to include amounts in gross income for federal income tax purposes in
advance of receipt of the cash payments to which the income is attributable.
If a bankruptcy case is commenced by or against the Company under the
United States Bankruptcy Code after the issuance of the Notes, the claim of a
holder of any of the Notes with respect to the principal amount thereof may be
limited to an amount equal to the sum of (i) the initial offering price
allocable to the Notes and (ii) that portion of the original issued discount
which is not deemed to constitute "unmatured interest" for purposes of the
Bankruptcy Code. Any original issued discount that was not amortized as of any
such bankruptcy filing would constitute "unmatured interest."
REPORTING STANDARDS; FINANCIAL STATEMENTS OF OPERATING COMPANIES; TIMELY
COMPLIANCE WITH INFORMATIONAL AND FILING REQUIREMENTS
Companies in developing countries are subject to accounting, auditing and
financial standards and requirements that differ, in some cases significantly,
from those applicable to U.S. companies. In addition, there may be substantially
less publicly available information about companies in a developing country than
there is about U.S. companies. The Company's ability to comply with the
informational and filing requirements of the Indenture and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to which it is or will be
subject will depend on the timely receipt of accurate and complete financial and
other information from the Company's operating companies and developmental stage
projects. The failure to receive such information on a timely basis could have a
material adverse effect on the Company, including preventing it from satisfying
the informational and filing requirements of the Indenture and the Exchange Act.
RISK OF INABILITY TO FINANCE A CHANGE OF CONTROL OFFER
Upon the occurrence of a Change of Control (as defined in the Indenture to
include (i) a sale or transfer by the Company or a Restricted Subsidiary (as
defined in the Indenture) of all or substantially all of its assets; (ii) the
adoption of a plan of liquidation; (iii) the acquisition of greater than 50% of
the voting power by an entity other than Vanguard or (iv) upon the change of a
majority of the Board of Directors), the Company will be required to make an
offer to purchase all of the outstanding Notes at the price set forth in the
Indenture. The Company's failure to purchase the Notes would result in a default
under the Indenture. In the event of a Change of Control, there can be no
assurance that the Company would have sufficient assets to satisfy all of its
obligations under the Indenture. Future debt of the Company may also contain
prohibitions of certain events or transactions which would constitute a Change
of Control or require the obligations thereunder to be retired upon a Change of
Control.
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NO CASH DIVIDENDS ON COMMON STOCK
The Company is prohibited under the terms of the Indenture from paying
dividends or making other distributions with respect to the Company's capital
stock, including the Common Stock while the Notes are outstanding. The Company
anticipates that all earnings, if any, will be retained for the operation and
expansion of the Company's business.
PROJECT LEVEL RISKS
OPERATING LOSSES AND NEGATIVE CASH FLOW; DEPENDENCE ON ADDITIONAL
FINANCING/CAPITAL
Most of the operating companies have generated operating losses and
negative cash flow from operations, and the Company expects that most of its
operating companies will continue to generate operating losses and negative cash
flow from operations for the foreseeable future. The business of the operating
companies and developmental stage projects, particularly WLL projects, is
capital intensive and, in light of such anticipated negative cash flow from
operations, will require continuing sources of outside financing to fund working
capital needs, capital expenditures and other cash requirements. The Company's
strategy is to seek such additional financing at the operating companies
primarily from third parties and not from the Company or its partners. However,
there can be no assurance that the operating companies and developmental stage
projects will be able to obtain the financing required to make planned capital
expenditures, provide working capital or meet other cash needs. Failure to
obtain such financing could have a material adverse effect on the Company and,
among other things, could result in the loss or revocation of licenses held by
the operating companies or developmental stage projects or require that certain
planned projects be delayed or abandoned. In particular, at June 30, 1997 a
significant portion of the Company's investments had been made in three
operating companies (namely STW, which is developing a national WLL system in
Malaysia; Mobisel, which is developing a national cellular system in Indonesia;
and SDL, which is developing various regional cellular systems in China), and
each of these operating companies will be required to obtain substantial
additional financing in order to complete planned capital expenditures.
In most cases, under agreements with its local partners, the Company and
its partners may be required to make additional equity investments in operating
companies or developmental stage projects, and the Company's or such partners'
inability or unwillingness to do so could result in the dilution of such party's
equity interest or a significant impairment or loss of the value of the
Company's investment. Moreover, the Company and its other strategic partners
have in the past been required, and in the future likely will be required, to
guarantee and/or pledge their respective equity interests to secure certain
indebtedness of the operating companies and developmental stage projects and
otherwise to provide certain assurances to lenders. See "--Liquidity and Capital
Resources." The Indenture contains certain restrictions on the ability of the
Company to make investments in, or guarantee the indebtedness of, the operating
companies and developmental stage projects.
In addition, there can be no assurance that the operating companies or
developmental stage projects will be able to pay their indebtedness or other
liabilities when due. Any failure to pay such indebtedness or other liabilities
when due could have a material adverse effect on the Company. See "--Company
Level Risks--Negative Operating Cash Flow; Dependence on Additional Financing;
No Commitments For Additional Financing" below.
To date, most of the debt financing obtained by the operating companies has
been secured by assets of the respective operating companies, and it is likely
that any debt financing the operating companies or developmental stage projects
obtain in the foreseeable future will also be similarly secured. The pledge of
assets to secure debt financing may limit the operations of the operating
companies and make it substantially more difficult to obtain additional
financing from other sources.
EARLY STAGE OF DEVELOPMENT OF WIRELESS PROJECTS
Most of the Company's wireless projects are in the early stages of
development. Only the eight operating companies, Via 1, SDL, RPSL, Mobisel,
Mobilkom, STW, TeamTalk and UTS, currently provide wireless communications
services on a commercial basis, and many of these operating companies have only
recently initiated such commercial service and have a limited number of
subscribers. Although MOUs have been signed with local partners in the operating
companies and developmental stage projects, in many cases definitive joint
venture and
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shareholder agreements have not been prepared or signed, definitive legal
entities have not been formed and/or required equity and debt financing has
not been secured. Even where an MOU or definitive joint venture or
shareholder agreement has been signed, there can be no assurance that the
terms of the Company's participation in an operating company or developmental
stage project will not be modified in a manner that is materially adverse to
the Company, particularly because the Company usually holds a minority
interest. The successful development and commercialization of these projects
will depend on a number of significant financial, logistical, technical,
marketing, legal and other factors, the outcome of which cannot be predicted.
Virtually all of the operating companies are, and in the future will be,
newly-formed entities that have a limited operating history and that operate
at a loss for a substantial period of time. These operating companies will
require significant amounts of additional financing to fund capital
expenditures, working capital requirements and other cash needs, including
the costs of obtaining additional licenses. In addition, there can be no
assurance that these projects will not encounter engineering, design or other
operational problems. For example, STW, the Company's Malaysian WLL operating
company, has experienced significant delays in network deployment and its
marketing plans primarily as a result of adverse effects on STW of an attempt
during the first half of 1996 by the Malaysian government to consolidate the
Malaysian telecommunications industry. See "--Risks Inherent in Foreign
Investment." As a result, in late 1996, IWC and its principal strategic
partner in STW extensively reviewed and revised STW's business plan and
strategy. There can be no assurance that the Company can successfully develop
any of its existing or planned developmental stage projects or that any of
these projects or any of its operating companies will achieve commercial
success. Further, the Company's current and anticipated ownership interests
in the operating companies and developmental stage projects are subject to
modification and may even be eliminated completely due to the occurrence of
certain events such as the re-negotiation of existing MOUs and/or agreements,
changes in foreign laws or regulations affecting foreign ownership,
government expropriation, financing contingencies and other factors.
Likewise, the Company may voluntarily withdraw from one or more operating
companies and/or developmental stage projects.
RISKS INHERENT IN FOREIGN INVESTMENT
The Company has invested substantial resources outside of the United States
and plans to continue to do so in the future. Governments of many developing
countries have exercised and continue to exercise substantial influence over
many aspects of the private sector. For example, foreign ownership of
telecommunications ventures is prohibited in China. In addition, in some cases,
the government owns or controls (i) companies that are or may in the future
become competitors of the Company or (ii) companies (such as national telephone
companies) upon which the operating companies and developmental stage projects
may depend for required interconnections to land-line telephone networks and
other services. Similarly, government actions in the future could have a
significant adverse effect on economic conditions in a developing country or may
otherwise have a material adverse effect on the Company and its operating
companies and developmental stage projects. Expropriation, confiscatory
taxation, nationalization, political, economic or social instability or other
developments could materially adversely affect the value of the Company's
interests in operating companies and developmental stage projects in particular
developing countries.
For example, in early 1996 the Malaysian government announced a program
designed to consolidate the Malaysian telecommunications industry which, if
completed, would have forced the sale or merger of STW, the Company's Malaysian
operating company, to one of a limited number of surviving telecommunications
companies. Although the Malaysian government announced in July 1996 that it did
not intend to proceed with this program, the activities of the Malaysian
government in connection with such program resulted in significant delays in
STW's network deployment and marketing plans thereby contributing to a 37%
decrease in STW's subscribers during the quarter ended September 30, 1996. There
can be no assurance that the Malaysian government will not initiate similar
programs in the future. There can also be no assurance that the Malaysian
national telephone company will not otherwise impose restrictions on STW,
including restrictions on the ability of STW to interconnect its wireless
network with the national telephone company's system, which could have a
material adverse effect on the Company. Moreover, there can be no assurance
that other countries where the Company has operating companies or developmental
stage projects will not initiate similar programs or impose other restrictions,
which could have a material adverse effect on the Company.
The Company also may be adversely affected by political or social unrest or
instability in foreign countries. Such unrest or instability resulting from
political, economic, social or other conditions in foreign countries could have
a material adverse effect on the Company. For example, in China, because foreign
ownership of telecommunications operators is prohibited, the Company, through
its ownership interest in SDL, has interests in China telecommunications
projects through certain "cooperative agreements" with Chinese cellular
operators. Pursuant to the terms of the
27.
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cooperative agreements, SDL provides equipment and technical and engineering
services to the cellular operators and, in return, is allocated a portion of
the revenues or profits from the cellular operations. There can be no
assurance that the Chinese government will not prohibit or otherwise impose
restrictions on these types of arrangements, which could have a material
adverse effect on the Company.
The Company does not have political risk insurance in the countries in
which it currently conducts business. Moreover, applicable agreements relating
to the Company's interests in its operating companies are frequently governed by
foreign law. As a result, in the event of a dispute, it may be difficult for the
Company to enforce its rights. Accordingly, the Company may have little or no
recourse upon the occurrence of any of these developments or if any of its
partners seek to re-negotiate existing or future MOUs and/or other agreements.
To the extent that any of the operating companies seeks to make a dividend or
other distribution to the Company, or to the extent that the Company seeks to
liquidate its investment in an operating company or developmental stage project
and repatriate monies from a relevant country, local taxes, foreign exchange
controls or other restrictions may effectively prevent the transfer of funds to
the Company or the exchange of local currency for U.S. dollars.
TECHNOLOGICAL RISK; RISK OF OBSOLESCENCE
The Company's operating companies and developmental stage projects
generally use new and emerging technologies. For example, SDL, the Company's
China Regional Cellular project, is required by the Chinese government to
migrate to CDMA, a cellular technology that is not widely deployed on a
commercial basis at the present time. Additionally, the MPT 1327 ECTR technology
selected by a number of the Company's ECTR operating companies is currently
operational in many countries but has had limited deployment for public use in
developing countries. Although many of the technologies currently in use and to
be used in the future by the Company have been developed by international
telecommunications companies such as Nokia, Philips, Motorola, Ericsson, Lucent
Technologies and Nortel, most are generally advanced technologies which have
only recently been developed and commercially introduced. There can be no
assurance that the operating companies and developmental stage projects will not
experience technical problems in the commercial deployment of these
technologies, particularly because they are being introduced in developing
countries. In addition, the technology used in wireless communications is
evolving rapidly and one or more of the technologies currently utilized or
planned by the Company to be utilized may be unpopular with its customers or may
become obsolete, which in either case would likely have a material adverse
effect on the Company. There can be no assurance that the Company will be able
to keep pace with ongoing technological changes in the wireless
telecommunications industry.
RISK OF MODIFICATION OR LOSS OF LICENSES; UNCERTAINTY AS TO THE AVAILABILITY,
COST AND TERMS OF LICENSES; RESTRICTIONS ON LICENSES
The Company's ability to retain and exploit the existing telecommunications
licenses held by its operating companies and developmental stage projects, to
renew such licenses when they expire, and to obtain new licenses in the future,
are essential to the Company's operations. However, these licenses are typically
granted by governmental agencies in developing countries, and there can be no
assurance that these governmental agencies will not seek to unilaterally limit,
revoke or otherwise adversely modify the terms of these licenses in the future,
any of which could have a material adverse effect on the Company, and the
Company may have limited or no legal recourse if any of these events were to
occur. In addition, there can be no assurance that renewals to these licenses
will be granted or, if renewed, that the renewal terms will not be substantially
less favorable to the holders of the licenses than the original license terms,
any of which could have a material adverse effect on the Company. Likewise, many
of the Company's operating companies and developmental stage projects have not
yet obtained all of the licenses necessary for their proposed operations, and no
assurance can be given that any such licenses will be obtained. For example, the
Brazilian government has not approved the transfer to Via 1, the Company's
Brazilian ECTR operating company, of the licenses contributed or to be
contributed to it by its current and proposed shareholders, and there can be no
assurance that such approval will be obtained. The failure to obtain such
approval or to obtain other licenses would have a material adverse effect on the
Company.
The Company believes that the opportunity to acquire substantial new
wireless licenses in developing countries will exist only for a limited time.
Further, although the Company's operating companies and developmental stage
projects have, to date, obtained many of their operating licenses through
private negotiations without having to participate in competitive bidding
processes, the Company anticipates that governments of developing countries will
28.
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increasingly discover the value of new wireless technologies and may require
bidding for licenses, which would likely increase the cost of these licenses,
perhaps substantially. In addition, the operating companies and developmental
stage projects may be required to purchase licenses from other license
holders in certain circumstances, for example, to gain network capacity or to
increase geographic coverage. Furthermore, relevant governmental authorities
may grant additional telecommunications licenses covering the same
geographical areas as the operating companies' and developmental stage
projects' licenses or otherwise grant licenses which allow other companies to
compete directly with such operating companies and developmental stage
projects for wireless subscribers. Although the inherent limitation on
suitable frequency bands may provide some protection against the issuance of
competing licenses, there can be no assurance that such competitive licenses
will not be granted or, if granted, that they will not have a material
adverse effect on the Company. In addition, licenses may be subject to
significant operating restrictions or conditions, including restrictions on
interconnection to the public telephone system or requirements that the
operating companies or developmental stage projects complete construction or
commence commercial operation of the networks by specified deadlines, which
conditions, if not satisfied, may result in loss or revocation of the
license. Accordingly, even if an operating company or developmental stage
project is able to obtain a required license, there can be no assurance that
such operating requirements will be satisfied and, as a result, there can be
no assurance that such license will not be lost or revoked or that the
restrictions imposed upon such license will prevent the commercial
exploitation of such license, which could have a material adverse effect on
the Company.
DEPENDENCE ON OTHER TELECOMMUNICATIONS PROVIDERS
The success of the Company's wireless systems will in many cases depend
upon services provided by other telecommunications providers, some of which
are competitors of the Company, the operating companies and/or the
developmental stage projects. For example, the Company's operating companies
and developmental stage projects generally require interconnection agreements
with national or regional telephone companies in order for its wireless
systems to connect with land-line telephone systems, and may require the use
of microwave or fiber optic networks belonging to other parties to link its
wireless systems. Although a number of operating companies have entered into
required interconnection and/or linking agreements or have interconnection
and/or linking arrangements in place, the revocation, loss or modification of
any of these existing agreements or arrangements or the failure to obtain
necessary agreements and/or arrangements in the future could have a material
adverse effect on the Company. Specifically, STW, the Company's Malaysian WLL
project, has in the past had difficulties obtaining interconnect services
from its interconnect provider, which is a competitor of STW, despite the
existence of a formal interconnection agreement with such provider.
DEPENDENCE ON PARTNERS
The Company will generally continue to depend on its local partners to
obtain required licenses in all of its wireless projects. In addition, the
Company may become dependent on strategic partners with resources beyond
those of the Company to pursue larger scale projects, including certain WLL
projects. In WLL projects, the Company may require the participation of a
larger telecommunications company possessing the substantial capital and
operating resources required to finance and deploy a WLL system. The failure
of the Company to identify and enter into relationships with strong partners,
or the failure of those partners to provide these resources, may have a
material adverse effect on the Company.
CONSTRUCTION RISKS
The operating companies and developmental stage projects in which the
Company invests typically require substantial construction of new wireless
networks and additions to existing wireless networks. Construction activity
will require the operating companies and developmental stage projects to
obtain qualified subcontractors and necessary equipment on a timely basis,
the availability of which varies significantly from country to country.
Construction projects are subject to cost overruns and delays not within the
control of the operating company or the developmental stage project or its
subcontractors, such as those caused by acts of governmental entities,
financing delays and catastrophic occurrences. Delays also can arise from
design changes and material or equipment shortages or delays in delivery.
Accordingly, there can be no assurance that the operating companies or
developmental stage projects will be able to complete current or future
construction projects for the amount budgeted or within the time periods
projected, or at all. Failure to complete construction for the amount
budgeted or on a timely basis could jeopardize subscriber contracts,
franchises or licenses and could have a material adverse effect on the
Company. In particular, telecommunications
29.
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licenses often are granted on the condition that network construction be
completed or commercial operations be commenced by a specified date. Failure
to comply with these deadlines could result in the loss or revocation of the
licenses. In that regard, certain operating companies have failed to meet
such deadlines in the past. Specifically, UTS, which provides ECTR services
in the Visayas and Mindanao regions of the Philippines, failed to comply with
the service date requirement contained in its provisional authority but
subsequently cured such failure and expects to receive a final operating
authority from the Philippine government by the end of 1997. Similarly, in
the Via 1 Project, because the Company and its proposed partners were unable
to comply with operations commencement deadlines with respect to their
licenses, they had to apply for, and have received, extensions of such
deadlines. Although such failures have not to date led to the loss of any
licenses, there can be no assurance that the relevant governmental
authorities will not seek to revoke licenses as a result of these past
defaults or refuse to grant deadline extensions to similar defaults occurring
in the future, which could have a material adverse effect on the Company.
SUBSTANTIAL LEVERAGE
As discussed above, the operating companies and developmental stage
projects will require continuing sources of additional financing. Certain of the
operating companies have substantial indebtedness and, to the extent that
additional debt financing is available, such operating companies may incur
additional indebtedness, and other operating companies or developmental stage
projects may in the future incur substantial indebtedness, in relation to their
respective base of equity capital. To the extent that any of the operating
companies or developmental stage projects now has or in the future incurs a high
level of indebtedness, such indebtedness will have important consequences to the
Company, including (i) a possible restriction on such entity's ability to pay
dividends or make other distributions to the Company, (ii) a possible limitation
on such entity's ability to obtain additional debt financing and (iii) a
possible impairment of such entity's ability to react to changes in the industry
and economic conditions generally.
COMPETITION
Although the implementation of advanced wireless technologies is in the
early stages of deployment in most developing countries, the Company believes
that its business will become increasingly competitive, particularly as
businesses and foreign governments realize the market potential of these
wireless technologies. A number of large American, Japanese and European
companies, including U.S.-based regional Bell operating companies ("RBOCs") and
large international telecommunications companies, are actively engaged in
programs to develop and commercialize wireless technologies in developing
counties. In many cases, the Company will also compete against local land-line
carriers, including government-owned telephone companies. Most of these
companies have substantially greater financial and other resources, including
research and development staffs and technical and marketing capabilities than
the Company. The Company anticipates that there will be increasing competition
for additional licenses and increased competition to the extent such licenses
are obtained by others. Although the Company intends to employ relatively new
technologies, there will be a continuing competitive threat from even newer
technologies which may render the technologies employed by the Company obsolete.
REGULATION
The wireless services of the Company's operating companies and
developmental stage projects are subject to governmental regulation, which may
change from time to time. There can be no assurance that material and adverse
changes in the regulation of the Company's existing or future operating
companies or developmental stage projects will not occur in the future. To date,
certain operating companies and developmental stage projects have been subject
to foreign ownership restrictions, service requirements, restrictions on
interconnection of wireless systems to government-owned or private telephone
networks, subscriber rate-setting, technology and construction requirements,
among others. These regulations may be difficult to comply with, particularly
given demographic, geographic or other issues in a particular market. Further,
changes in the regulatory framework may limit the ability to add subscribers to
developing systems. An operating company's or developmental stage project's
failure to comply with applicable governmental regulations or operating
requirements could result in the loss of licenses or otherwise could have a
material adverse effect on the Company.
FOREIGN CORRUPT PRACTICES ACT
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The Company is subject to the Foreign Corrupt Practices Act ("FCPA"), which
generally prohibits U.S. companies and their intermediaries from bribing foreign
officials for the purpose of obtaining or keeping business or licenses or
otherwise obtaining favorable treatment. Although the Company has taken
precautions to comply with the FCPA, there can be no assurance that such
precautions will protect the Company against liability under the FCPA,
particularly as a result of actions which may in the past have been taken or
which may be taken in the future by agents and other intermediaries for whose
actions the Company may be held liable under the FCPA. In particular, the
Company may be held responsible for actions taken by its strategic or local
partners even though such strategic or local partners are themselves typically
foreign companies which are not subject to the FCPA; and the Company has no
ability to control such strategic or local partners. Any determination that the
Company has violated the FCPA could have a material adverse effect on the
Company.
TAX RISKS
Distributions of earnings and other payments received from the Company's
operating subsidiaries and affiliates are likely to be subject to withholding
taxes imposed by the jurisdictions in which such entities are formed or
operating. In general, a U.S. corporation may claim a foreign tax credit against
its federal income tax expense for such foreign withholding taxes and foreign
taxes paid directly by corporate entities in which the Company owns 10% or more
of the voting stock. The ability to claim such foreign tax credits and to
utilize net foreign losses is, however, subject to numerous limitations, and the
Company may incur incremental tax costs as a result of these limitations or
because the Company is not in a tax paying position in the U.S.
Special U.S. tax rules apply to U.S. taxpayers that own stock in a "passive
foreign investment company" (a "PFIC") that could also increase the Company's
effective rate of taxation. In general, a non-U.S. corporation will be treated
as a PFIC if at least 75 percent of its income is "passive income" or if at
least 50 percent of its assets are held for the production of "passive income."
A non-U.S. corporation that owns 25 percent or more of the stock of a non-U.S.
subsidiary is treated as receiving a proportionate share of the income of, and
as owning a proportionate share of the assets of, such subsidiary.
It is possible that certain operating companies in which the Company owns
an equity interest are PFICs. Generally, except to the extent the Company makes
an election to treat a PFIC in which it owns stock as a "qualified electing
fund" (a "QEF") in the first taxable year in which the Company owns the PFIC's
stock, (i) the Company would be required to allocate gain recognized upon the
disposition of stock in the PFIC and income recognized upon receiving certain
dividends ratably over the Company's holding period for the stock in the PFIC,
(ii) the amount allocated to each year other than the year of the disposition or
dividend payment would be taxable at the highest U.S. tax rate applicable to
corporations, and an interest charge for the deemed deferral benefit would be
imposed with respect to the tax attributable to each year, and (iii) gain
recognized upon disposition of PFIC shares would be taxable as ordinary income.
If the Company were to make the QEF election, as described above, the
Company would be required in each year that the PFIC qualification tests are met
to include its pro rata share of the QEF's earnings as ordinary income and its
pro rata share of the QEF's net capital gain as long-term capital gain, whether
or not such amounts are actually distributed. The Company has not made any QEF
elections with respect to any non-U.S. corporation in which it holds stock.
The Company may also be required to include in its income for U.S. income
tax purposes its proportionate share of the earnings of those foreign corporate
subsidiaries that are classified as "controlled" foreign corporations without
regard to whether distributions have been received from such companies.
31.
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
SALES OF UNREGISTERED SECURITIES DURING THE THREE MONTHS ENDED JUNE 30, 1997
Between April 1997 and June 1997, the Company issued an aggregate of 8,676
shares of Series D Preferred Stock to certain holders of warrants to purchase
Series D Preferred Stock upon the exercise of such warrants pursuant to the
cashless "net exercise" provisions thereof.
On May 5, 1997, the Company issued options to purchase an aggregate of 342,000
shares of Common Stock at an exercise price of $9.375 per share under the 1996
SO/SIP to certain officers and service providers of the Company.
Also on May 5, 1997, as part of the Vanguard Warrant/Option Exchange, the
Company issued to Vanguard, an affiliate of the Company, a warrant to acquire
249,970 shares of Common Stock at a purchase price of $0.25 per share and a
second warrant to purchase 554,750 shares of Common Stock at an exercise price
of $9.375 per share. This second warrant was subsequently surrendered by
Vanguard in exchange for the issuance to certain officers and employees of
Vanguard of an option to purchase 53,330 shares of Common Stock at an exercise
price of $9.375 per share under the 1996 SO/SIP and options to purchase an
aggregate of 501,420 shares of Common Stock at a purchase price of $9.375 per
share outside the 1996 SO/SIP .
On May 15, 1997, the Company issued and sold 180,000 shares of Common Stock to a
former officer of the Company for an aggregate purchase price of $45,000
pursuant to the exercise of an option to purchase such shares granted under the
1996 SO/SIP.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 5, 1997, holders of the requisite number of shares of the Company's
capital stock approved the following matters by written consent in lieu of a
meeting:
(a) The Vanguard Warrant/Option Exchange, including the issuance of warrants
and options to purchase shares of the Company's Common Stock pursuant
thereto;
(b) An amendment to the 1996 SO/SIP increasing by 411,526 the number of shares
of Common Stock authorized for issuance pursuant to the 1996 SO/SIP,
thereby increasing the total number of shares of Common Stock available for
issuance over the term of the 1996 SO/SIP to 2,811,526 shares (the "Option
Plan Increase");
(c) A waiver of certain anti-dilution and other rights under the Company's
Amended and Restated Certificate of Incorporation in connection with the
transactions effected as part of the Vanguard Warrant/Option Exchange and
in connection with the Option Plan Increase; and
(d) Certain amendments to the Series F Redeemable Convertible Preferred Stock
Securities Purchase Agreement, dated December 6, 1996, the Registration
Rights Agreement, dated December 18, 1996, and the Fifth Amended and
Restated Investor Rights Agreement in connection with the Vanguard
Warrant/Option Exchange and the Option Plan Increase.
Holders of 594,800 shares of the Company's Common Stock, representing 93% of the
then-outstanding shares of Common Stock; 753,200 shares of the Company's Series
A Preferred Stock, representing 81% of the then-outstanding shares of Series A
Preferred Stock; 820,440 shares of the Company's Series B Preferred Stock,
representing 67% of the then-outstanding shares of Series B Preferred Stock;
1,550,160 shares of the Company's Series C Preferred Stock, representing 88% of
the then-outstanding shares of Series C Preferred Stock; 3,278,840 shares of the
Company's Series D Preferred Stock, representing 90% of the then-outstanding
shares of Series D Preferred Stock; 3,972,240 shares of the Company's Series E
Preferred Stock, representing 100% of the then-outstanding shares of Series E
Preferred Stock; and 4,496,600 shares of the Company's Series F Preferred Stock,
32.
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representing 84% of the then-outstanding shares of Series F Preferred Stock
voted in favor of the foregoing matters. No holders of shares of the then-
outstanding capital stock of the Company voted against the foregoing matters.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
EXHIBIT
NO. DESCRIPTION
- ------ ------------
10.15A Deed of Adherence among Star Telecom Overseas (Cayman Islands)
Limited, International Wireless Communications, Inc. ("IWC"), Star
Telecom Holding Limited ("STHL") and Baring Communications Equity
(Asia Pacific) Limited, dated July 18, 1997
10.16D Amendment to Subscription Agreement and Waiver among Star Digitel
Limited ("SDL"), STHL, IWC and IWC China Limited, dated June 18, 1997
10.16E Side Letter regarding Indemnification between IWC China Limited and
SDL, dated June 18, 1997
10.24E* Interconnection Agreement between Telekom Malaysia Berhad and
Syarikat Telefon Wireless (M) Sdn Bhd, dated April 9, 1997
10.26A Side Letter regarding Guaranty between Vanguard Cellular Financial
Corp. and the Registrant, dated May 29, 1997
10.27A Share Purchase Agreement between Motorola International Development
Corporation ("MIDC") and International Wireless Communications
Pakistan Limited ("IWCPL"), dated July 17, 1997
10.27B Share Purchase Agreement between Continental Communications Limited
("CCL") and IWCPL, dated July 17, 1997
10.27C Form of Restated and Amended Shareholders Agreement among MIDC, Saif
Telecom (Pvt) Ltd ("Saif") and IWCPL
10.27D Form of Side Letter regarding Shareholder Obligations among IWCPL,
Saif, MIDC and Saif
10.27E Shareholders' Agreement among IWCPL, International Wireless
Communications Limited ("IWCL") and South Asia Wireless
Communications (Mauritius) Limited ("SAWC"), dated July 17, 1997
10.27F Letter Supplemental to Shareholders Agreement Relating to
International Wireless Communications Pakistan Limited between IWCL
and SAWC, dated July 17, 1997
10.27G License granted to Pakistan Mobile Communications Limited by the
Government of Pakistan, Ministry of Communications, dated July 6,
1992
27.1 Financial Data Schedule
__________________________
* Confidential treatment has been requested as to certain portions of this
agreement.
33.
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(B) REPORTS ON FORM 8-K
No Current Reports on Form 8-K were filed during the quarter ended
June 30, 1997.
34.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 11, 1997 INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
(Registrant)
By: /s/ Douglas S. Sinclair
-----------------------
Douglas S. Sinclair
Vice President and Chief Financial Officer
By: /s/ Keith D. Taylor
-----------------------
Keith D. Taylor
Controller and Chief Accounting Officer
35.
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EXHIBIT INDEX
EXHIBIT EDGAR
NO. DESCRIPTION DOCUMENT NO.
- -------- ------------ -----------
10.15A Deed of Adherence among Star Telecom Overseas (Cayman 2
Islands) Limited, International Wireless Communications,
Inc. ("IWC"), Star Telecom Holding Limited ("STHL") and
Baring Communications Equity (Asia Pacific) Limited, dated
July 18, 1997
10.16D Amendment to Subscription Agreement and Waiver among Star 3
Digitel Limited ("SDL"), STHL, IWC and IWC China Limited,
dated June 18, 1997
10.16E Side Letter regarding Indemnification between IWC China 4
Limited and SDL, dated June 18, 1997
10.24E* Interconnection Agreement between Telekom Malaysia Berhad 5
and Syarikat Telefon Wireless (M) Sdn Bhd, dated April 9,
1997
10.26A Side Letter regarding Guaranty between Vanguard Cellular 6
Financial Corp. and the Registrant, dated May 29, 1997
10.27A Share Purchase Agreement between Motorola International 7
Development Corporation ("MIDC") and International
Wireless Communications Pakistan Limited ("IWCPL"), dated
July 17, 1997
10.27B Share Purchase Agreement between Continental Communications 8
Limited ("CCL") and IWCPL, dated July 17, 1997
10.27C Form of Restated and Amended Shareholders Agreement among 9
MIDC, Saif Telecom (Pvt) Ltd ("Saif") and IWCPL
10.27D Form of Side Letter regarding Shareholder Obligations 10
among IWCPL, Saif, MIDC and Saif
10.27E Shareholders' Agreement among IWCPL, International 11
Wireless Communications Limited ("IWCL") and South Asia
Wireless Communications (Mauritius) Limited ("SAWC"),
dated July 17, 1997
10.27F Letter Supplemental to Shareholders Agreement Relating to 12
International Wireless Communications Pakistan Limited
between IWCL and SAWC, dated July 17, 1997
10.27G License granted to Pakistan Mobile Communications Limited 13
by the Government of Pakistan, Ministry of Communications,
dated July 6, 1992
27.1 Financial Data Schedule 14
_____________________
* Confidential treatment has been requested as to certain portions of this
agreement.
36.
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EXHIBIT 10.15A
THIS DEED OF ADHERENCE (this "Deed") is made on July 18, 1997
BETWEEN:
(1) Star Telecom Overseas (Cayman Islands) Limited (formerly known as
Mainstream Limited) of Room 1201-1220, 12th floor, Sun Hung Kai Centre,
30 Harbour Road, Wanchai, Hong Kong, an exempted company incorporated in
the Cayman Islands (the "Company");
(2) International Wireless Communications, Inc., a Delaware corporation with
its registered office at 400 South El Camino Real, San Mateo, California
94402, U.S.A. ("IWC");
(3) Star Telecom Holding Limited, a Hong Kong corporation with its registered
office at 6th floor, Star Telecom Tower, 414 Kwun Tong Road, Kwun Tong,
Kowloon, Hong Kong ("STHL"); (IWC and STHL are hereinafter referred to as
the "Existing Shareholders"), and
(4) Baring Communications Equity (Asia Pacific) Limited of 20, Raffles Place,
#17-00 Ocean Tower, Singapore 048620 (the "New Shareholder").
WHEREAS:
(A) On August 30, 1996, The Company and the Existing Shareholders entered
into a Shareholders' Agreement (the "Shareholders' Agreement") to which a
form of a Deed of Adherence is attached as Exhibit B.
(B) As at the date hereof, IWC is the legal and beneficial owner of 12,600
ordinary shares of par value US$1.00 each representing 70% of the share
capital of the Company and STHL is the legal and beneficial owner of
5,400 ordinary shares of par value US$1.00 each representing 30% of the
share capital of the Company.
(C) Subject to the terms and conditions contained in this Deed, the New
Shareholder wishes to subscribe for up to 4,500 ordinary shares of par
value US$1.00 each in the share capital of the Company for a total
consideration of up to US$4,160,000.00, and in accordance with the
Shareholder's Agreement has entered into this Deed.
(D) The New Shareholder agrees to be bound by all the terms and conditions
contained in the Shareholder's Agreement as amended by this Deed.
NOW THIS DEED WITNESSES as follows:
INTERPRETATION
1. In this Deed all words and expressions defined in the Shareholders'
Agreement shall have the same meanings when used herein.
1
<PAGE>
CONDITIONS PRECEDENT
2.1 The obligations of the New Shareholder under this Deed to subscribe for
ordinary shares of the Company, par value US$1.00 per share (the
"Shares") as contemplated in Clause 3.1 are conditional upon the
satisfaction or waiver by the New Shareholder of the following
conditions:
(i) an investment audit on the Company, the Subsidiaries of the
Company and the Company projects by a reputable firm of
accountants appointed by the New Shareholder, at its expense to
be completed before the Initial Date to the reasonable
satisfaction of the New Shareholder;
(ii) the Existing Shareholders have certified that all governmental
and corporate approvals and consents and any third party
consents, if necessary, for the transactions contemplated under
this Deed have been obtained, and have not been withdrawn or
amended, and if any of such governmental, corporate and/or third
party consents are given subject to conditions, then provided
such conditions are reasonably acceptable to the New Shareholder;
(iii) the New Shareholder is satisfied upon its due diligence
investigation at its expense to be completed before the Initial
Date that the business of the Company, its Subsidiaries and the
Company Projects have been carried on in a satisfactory manner
and that, from the date hereof until the Initial Date (as defined
below) none of the Company, its Subsidiaries or the Company
Projects have disposed of any material assets or incurred or
assumed any material liabilities (including contingent
liabilities) other than those disposed or incurred in the
ordinary course of business;
(iv) the New Shareholder is reasonably satisfied with its due
diligence investigation into the business operations and affairs
of the Company to be completed before the Initial Date at the
expenses of the New Shareholder, its Subsidiaries and the Company
Projects and their management;
(v) all representations, and warranties under this Deed (including
the Schedules) are true, accurate and correct in all material
respects as if made on and as of the Initial Date and all
undertakings to be performed on or as of the Initial Date by the
Company have been so performed in all material respects; and
(vi) approval of the transactions contemplated by this Deed by
shareholders of Star Telecom International Holding Limited
("STIHL", the holding company of STHL) in general meeting in
accordance with the Rules Governing the Listing of Securities on
the Stock Exchange of Hong Kong Limited (the "Listing Rules") and
the Listing Agreement between STIHL and The Stock Exchange of
Hong Kong Limited, if necessary.
If any of the above conditions is not satisfied or waived by the New
Shareholder on or before December 31, 1997 or the date the approval
referred to in Clause 2.1(vi) above is obtained, whichever is earlier,
provided that the Initial Date shall not be earlier than August 18, 1997
(the "Initial Date"), this Deed shall IPSO FACTO cease and determine and
none of the parties shall have any claim against the others for costs,
damages, compensation or otherwise. However, the Existing Shareholders
and the Company reserve the right to claim against the New Shareholder
for any damages resulting from breach of the confidentiality agreement
dated July 18, 1997, between the Company and the New Shareholder.
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2.2 Each party hereto shall use its reasonable good faith endeavours to
ensure that the conditions specified in clause 2.1 are satisfied as soon
as possible, and in any event not later than the Initial Date.
SUBSCRIPTION OF SHARES
3.1 The New Shareholder agrees to subscribe for up to 4,500 Shares in the
share capital of the Company at a price or US$924.44 per share for a
total consideration of up to US$4,160,000.00 on the terms and conditions
set forth in this clause.
(a) The New Shareholder will within 14 business days from the date
all the conditions precedent listed in clause 2.1 have been
satisfied or waived by the New Shareholder, subscribe and pay for
764 Shares for a consideration of US$706,272, and the Company
shall issue and deliver to the New Shareholder share
certificate(s) in the name of the New Shareholder (or its
nominee) for 764 Shares.
(b) Upon the Company entering into a valid and binding investment
agreement in respect of Worldpage Company Limited ("Worldpage")
as evidenced by the shareholders agreement signed between the
Company and Worldpage in which the Company is purchasing at least
20% shareholding of Worldpage at a total price not exceeding
US$4.5 million (the "UCOM Project Agreement") and upon the
Company being required under the UCOM Project Agreement to make
any capital contribution or payment under the UCOM Project
Agreement or such earlier time as may be required by the Company
(provided it is not before the date of execution of the UCOM
Project Agreement), the New Shareholder shall within 7 business
days after notice from the Company pay for 1000 Shares for a
consideration of US$924,440.00 and in return for which the
Company shall issue and deliver to the New Shareholder share
certificate(s) in the name of the New Shareholder (or its
nominee) for 1000 Shares. The New Shareholder's obligation to
pay for the 1000 Shares under this paragraph (b) is subject to
clause 3.3 and conditional upon:
(i) the Company having the necessary matching funds available
to pay the remaining amount of capital contributions or
payment then required under the UCOM Project Agreement;
and
(ii) the Company and the Existing Shareholders not having
breached any provisions of this Deed or the Shareholders'
Agreement.
(c) Upon the Company entering into a valid and binding investment
agreement in respect of First International Paging Service Co.,
Ltd. ("FIP") as evidenced by the Shareholder Agreement signed
between the Company and FIP in which the Company is purchasing at
least 12% shareholding of FIP at a total price not exceeding
US$6.1 million (the "Taiwan Project Agreement") and upon the
Company being required under the Taiwan Project Agreement to
make any capital contribution or payment under the Taiwan Project
Agreement or such earlier time as may be required by the Company
(provided it is not before the date of execution of the Taiwan
Project Agreement), the New Shareholder shall within 7 business
days after notice from the Company pay for 2736 Shares for a
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consideration of US$2,529,288.00 and in return for which the
Company shall issue and deliver to the New Shareholder share
certificate(s) in the name of the New Shareholder (or its
nominee) for 2736 Shares. The New Shareholder's obligation to
pay for the 2736 Shares under this paragraph (c) is subject to
clause 3.3 and conditional upon:
(i) the Company having the necessary matching funds available
to pay the remaining amount of capital contributions or
payment then required under the Taiwan Project Agreement;
and
(ii) the Company and the Existing Shareholders not having
breached any provisions of this Deed or the Shareholders'
Agreement.
(d) The parties hereto agree that with the agreement of the Existing
Shareholders the New Shareholder may decide to subscribe for
Shares in the Company in respect of other project or projects in
lieu of the projects referred to in paragraph (b) or (c) above,
provided that the conditions for the New Shareholder's
subscription of Shares in respect of the other projects shall be
on terms to be agreed between the parties hereto or on terms
similar to the terms spelt out in paragraph (b) (i), (b) (ii),
(c) (i), (c) (ii) above.
3.2 The parties hereto agree that upon the New Shareholder having paid the
total subscription price of US$4,160,000.00 to the Company, the Company
shall have issued to the New Shareholder 4,500 Shares, which will
represent 20% of the Company's issued and paid up capital at that point
in time (not taking into account the exercise of the options granted in
Section 9 of the Shareholders Agreement). Promptly after the New
Shareholder has acquired 3,500 Shares,
(i) the Existing Shareholders and the Company shall procure
that the necessary resolutions are passed to appoint a
person nominated by the New Shareholder to be a Director
of the Company;
(ii) the Existing Shareholders and the Company shall procure
that the necessary resolutions are passed to amend the
Charter Documents to give effect to the terms of this Deed
(in particular clauses 6.1, and 7.1 below).
3.3 If for any reasons whatsoever, the Company has not entered into the UCOM
Project Agreement or the Taiwan Project Agreement or the conditions
stated in subparagraphs (i), or (ii) of clause 3.1(b) or (c) above have
not been satisfied or waived or the New Shareholder shall not have
subscribed for Shares as contemplated in clause 3.1(d) in each case on or
before the date which is six (6) months from the date of this Deed or
such later date that is mutually agreed to by the parties hereto, (the
"Final Date") the New Shareholder will not be obliged to make the
payments referred to in clause 3.1(b) or (c) and the New Shareholder
shall not have any rights, title, benefits, interests, obligations or
liabilities in respect of the Shares referred to in clause 3.1(b) or (c)
whatsoever, and the Company shall have no obligation to issue or allot
such Shares to the New Shareholder.
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3.4 Notwithstanding what is provided in clause 3.1, the parties hereto agree
that the New Shareholder may, at the discretion of the New Shareholder,
at any time before the Final Date waive clauses 2.1, 2.2, 3.1(a), 3.1(b),
3.1(c) and 3.1(d) and pay for up to 4,500 Shares in the Company at a
price of US$924.44 per Share for a total consideration of up to
US$4,160,000.00 whereupon the Company shall issue and deliver to the New
Shareholder up to 4,500 Shares, which 4,500 Shares will represent 20% of
the Company's issued and paid up capital at that point in time (not
taking into account the exercise of the options granted in Section 9 of
the Shareholders Agreement) and, so long as the New Shareholder shall
have acquired at least 3,500 Shares, the Company shall pass the
resolutions referred to in clauses 3.2(i) and (ii).
3.5 The Existing Shareholders agree to and hereby waive their Right of First
Offer under Section 4 of the Shareholders' Agreement in respect of the
issuance of New Securities to the New Shareholder pursuant to this
clause.
3.6 The Existing Shareholders and the Company will ensure and procure that
the authorised share capital of the Company is increased to such an
amount that there will at all relevant times be sufficient unissued
Shares in its authorised share capital to allow for the issuance and
allotment of 4,500 Shares to the New Shareholder pursuant to this Deed.
3.7 If by the Final Date the New Shareholder had not exercised its rights
under clause 3.1 or 3.4 to subscribe for all the 4,500 Shares and pay to
the Company the total consideration of US$4,160,000.00, the Existing
Shareholders shall use their reasonable endeavours to procure that a
third party shall purchase from the New Shareholder all the Shares which
have been issued and allotted to the New Shareholder and which have been
paid for by the New Shareholder, at a consideration which shall not be
lower than the price at which the Shares had been paid for by the New
Shareholder, provided that, the Existing Shareholders shall not be
required to make any payments to such third party purchaser in connection
therewith and if the Existing Shareholders are unable to find such a
third party purchaser, they shall have no liability to the New
Shareholder with respect thereto. Alternatively, either one or both of
the Existing Shareholders may purchase the Shares of the New Shareholder
on such terms as the purchasing Shareholders and the New Shareholder may
agree upon.
3.8 All payments of the subscription price for the Shares by the New
Shareholder shall be made in United States dollars by wire transfer of
immediately available funds to the Company's bank account designated in
writing by the Company.
COVENANT
4. The New Shareholder hereby covenants to the Company and the Existing
Shareholders and to any other Person who may hereafter become bound by
the Shareholders' Agreement that it will adhere to and be bound by all
the duties, burdens and obligations of a shareholder holding the same
class of share capital as the Shares imposed pursuant to the charter
documents of the Company and the provisions of the Shareholders'
Agreement and all documents expressed in writing to be supplemental or
ancillary thereto as if the New Shareholder had been an original party to
the Shareholders' Agreement since the date thereof save as amended or
provided by this Deed.
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ENFORCEABILITY
5. Save as amended or provided by this Deed, each Existing Shareholder and
the Company shall be entitled to enforce the Shareholders' Agreement
against the New Shareholder, and the New Shareholder shall be entitled to
all rights and benefits of a Shareholder under the Shareholders'
Agreement in each case as if the New Shareholder had been an original
party to the Shareholders' Agreement since the date thereof.
BOARD OF DIRECTORS
6.1 Provided that the New Shareholder shall have subscribed for and paid in
full the consideration of US$3,235,560 for 3,500 Shares, the parties
hereto agree that:
(a) Section 5.2.2 of the Shareholders' Agreement shall be amended by
deleting the words: "five members" in line 2 and inserting
instead the words "seven members" and by adding the words "and
(iii) one nominee of the New Shareholder" at the end of that
Section, and increasing the nominees of IWC from three to four;
(b) lines 2 and 3 of Section 5.3.2 of the Shareholders' Agreement
shall be amended by deleting the words: "including at least one
Director nominated by IWC and at least one Director nominated by
STHL" and inserting instead the following words: "including one
Director nominated by IWC, one Director nominated by STHL and one
Director nominated by the New Shareholder", and
(c) lines 4 and 5 of Section 5.3.6 of the Shareholders' Agreement
shall be amended by deleting the words: "Including at least one
Director nominated by IWC and one Director nominated by STHL" and
inserting instead the following words: "Including one Director
nominated by IWC, one Director nominated by STHL and one Director
nominated by the New Shareholder".
MATTERS REQUIRING UNANIMOUS APPROVAL
7.1 Provided that the New Shareholder shall have subscribed for and paid in
full the consideration of US$3,235,560 for the 3,500 Shares, the parties
hereto agree that Section 5.4 of the Shareholders' Agreement shall be
amended by adding after paragraph (l) the following paragraphs:
(m) any capital expenditure of the Company or a Subsidiary in excess
of US$250,000.00;
(n) any disbursements or withdrawal from the bank accounts of the
Company or a Subsidiary in excess of US$250,000.00 (but not
including any internal transfer from or between bank accounts in
the name of the Company or a Subsidiary);
(o) the granting of loans to any other Person;
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(p) the creation, allotment or issuance of any Securities in the
Company (other than as provided in clause 3 of the Deed of
Adherence dated July 18, 1997, of the New Shareholder);
(q) the establishment or approval of the Company's operating and
capital budgets;
(r) change in the dividend policy of the Company;
(s) any change with regard to the Managing Director or Financial
Controller of the Company other than any change constituting
summary dismissal resulting from a breach by the employee of his
or her employment contract;
(t) any amendment to the Non-Competition Agreement and the Licence
Agreement.
7.2 Provided that the New Shareholder shall have subscribed for and paid in
full the consideration of US$3,235,560 for the 3,500 Shares, the parties
hereto agree that the second sentence of Section 5.5 of the Shareholders'
Agreement shall be amended by adding the words "and the New Shareholder"
after "the consent of STHL".
STHL OPTION
8. (a) The parties hereto agree that Section 8 of the Shareholders'
Agreement shall be deleted in its entirety and replaced by the following:
"8. STHL RIGHTS. The parties agree that for the period of 12
months commencing from the date of execution of the Deed of
Adherence, dated July 18, 1997, among the Company, IWC, STHL, and
the New Shareholder, STHL shall have the right to directly
subscribe for and hold up to 10% of the equity interest of any
Subsidiary (in addition to any equity interest in STHL in the
Company) that is established or invested in by the Company in the
People's Republic of China ("PRC") and Japan and IWC (through its
majority interest in the Company) and the Company shall procure
that STHL shall have such right. The New Shareholder, IWC and
the Company shall further procure that unless STHL has otherwise
given its prior written consent, all investments, businesses or
operations of the Company in the PRC and Japan shall be made or
conducted only through Subsidiaries set up or to be set up by the
Company exclusively for the purpose of such investments, or the
carrying on of the businesses and operations of the Company in
the PRC and Japan. The consideration or, where applicable, the
subscription price per share to be paid by STHL for such
shareholding or equity interest in any such Subsidiary, shall be
the pro rata consideration or, where applicable, average of the
price per share paid for the Company for the acquisition of its
equity interest or, where applicable, for all its shares in such
Subsidiary, up to and including the date of and immediately
before the acquisition of such equity interest or shares by STHL.
(b) The proviso in Section 9 of the Shareholders' Agreement shall be
deleted in its entirety.
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OTHER AMENDMENTS TO THE SHAREHOLDERS' AGREEMENT
9. The parties hereto agree that the following provisions of the
Shareholders' Agreement shall be amended and shall become effective upon
the New Shareholder's having subscribed for and paid in full the
consideration of US$3,235,560.00 for the 3,500 Shares:
(a) the reference to "25%" in line 4 of Section 3.5 shall be amended
to "20%";
(b) Section 10.3 shall be amended by adding to the end of the first
sentence in line 4 the following:
"provided that if the Shareholder is the New Shareholder and the
investment opportunity is not in a country where the Company
already has an investment or is considering making an investment,
the New Shareholder shall not be required to offer such
investment opportunity to the Company if the other Person is not
prepared or is unwilling to be involved with the Company"
(c) Section 16.6 shall be amended by adding after the words: "at
least 30% of the Shares in issue on a fully diluted basis" the
following:
"(or such other percentage of Shares as the parties shall agree
to)";
(d) Section 16.11 shall be amended by changing the place of
arbitration from Hong Kong to London.
NEW SHAREHOLDER'S RESPONSIBILITY
10.1 The New Shareholder shall undertake the leading role in assisting the
Company in its Initial Public Offer ("IPO") of its Shares. In
particular, it will assist the Company in selecting the appropriate
merchant bank and other advisors, in the preparation of investment
research materials, write-ups, information memorandum and briefing of
analysts in connection with the IPO and in the organisation and
management of road shows to promote the Company's IPO.
10.2 The New Shareholder shall undertake the leading role in sourcing loans on
behalf of the Company. The New Shareholder will use its best endeavours
to structure appropriate loans and undertake a debt raising exercise and
will commit resources to lead the assignment and provide the Company with
whatever assistance which it may require in connection therewith.
10.3 The New Shareholder shall assist the Company in the evaluation of the
Company Projects and to work together with the Company to determine the
financial feasibility of these Company Projects.
10.4 As compensation for the performance of the New Shareholder's obligations
referred to in clauses 10.1, 10.2 and 10.3 (the "New Shareholder's
Obligations") the Company shall pay to the New Shareholder an amount (the
"Financial Services Fee") equal to the sum of (a) the New Shareholder's
reasonable out-of-pocket costs and expenses incurred in performing the
New Shareholder's Obligations, (b) the reasonable compensation of the New
Shareholder's personnel seconded to the Company in connection with the
performance of the New Shareholder's Obligations and (c) an amount (the
"Premium") equal to 15% of the out-of-pocket costs and expenses and
compensation amounts referred to in clauses (a) and (b) of this clause
10.4.
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PUBLIC LISTING
11.1 Each of the parties hereto agree with the others that it will use its
best endeavors to procure that at least 30% of the Shares in the Company
(or whatever minimum percentage as may be allowed by the rules and
regulations of the relevant stock exchange) are listed on an
internationally recognized stock exchange acceptable to all the parties
hereto within 3 years from the date hereof or on such later date as the
Company's Board of Directors may in its absolute discretion determine
that it is in the best interest of the Company to do so. Each of the
parties hereto will support the application for such listing and they
will exercise their votes at any meeting of the Company called for such
purpose. Each of the parties hereto undertake not to do or permit to be
done or omit or permit to be omitted or otherwise undertake, agree or
propose any act, deed, transaction or proposal prejudicial to or which
may affect the ability of the Company to achieve such listing.
11.2 In order to ensure that at least 30% of the Shares in the Company (or
whatever minimum percentage as may be allowed by the rules and
regulations of the relevant stock exchange) can be listed on an
internationally recognised stock exchange acceptable to the parties
hereto, the parties hereto will ensure that the Company and its
Subsidiaries are managed in a professional and business like manner and
that the account of the Company and its Subsidiaries are maintained in
accordance with accounting principles generally accepted in Hong Kong and
adopted by the Hong Kong Society of Accountants.
NON IPO PREMIUM
12. If in the opinion of an independent merchant bank of international
standing (the "Merchant Bank") appointed by the Company with unanimous
approval of the Board of Directors which has been working with the
Company to assist the Company in its IPO the Company can achieve a
listing on an internationally recognized stock exchange, but the
Shareholders or any one of them (the "Offending Shareholder"):
(a) refuses or fails to execute or sign any document which is
required by the relevant authority and which is required in respect of
the IPO without any valid reason that is reasonably acceptable by the
Company (for the purpose of this paragraph (a), a shareholder shall be
deemed to have valid reason if, among other things, an event or situation
that is beyond the control of such Shareholder occurs and is the reason
for its refusal or failure to execute or sign any such document);
(b) refuses or fails without valid reason that is reasonably
acceptable by the Company to attend any meeting which is required in
respect of the IPO, the non attendance of which will prevent the IPO from
proceeding (for the purposes of this paragraph (b), a Shareholder shall
be deemed to have valid reason if, among other things, an event or
situation that is beyond the control of such Shareholder occurs and is
the reason for its refusal or failure to attend any such meeting);
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(c) does any action that is within the control of the Offending
Shareholder which directly results in a relevant authority not agreeing
to the IPO being proceeded with and WHICH is the primary reason for the
relevant authority's not agreeing to the IPO being proceeded with, then
the shareholder(s) other than the Offending Shareholder (the "Non-
Offending Shareholders") shall summon a meeting of the Board and bring
this to the attention of all the Shareholders. If the offending
Shareholder does not, within 30 days of its being required to do so,
rectify the situation to enable the Company to achieve a listing, the
Non-Offending Shareholders shall be entitled to a Non IPO premium ("Non
IPO Premium") in addition to any other amounts payable to them under this
Deed. The Non IPO Premium shall be payable within 5 days from the date of
demand notice sent by the Non-Offending Shareholders to the Offending
Shareholder. The Non IPO Premium payable by the Offending Shareholder to
the Non-Offending Shareholders shall be paid in United States dollars by
wire transfer of immediately available funds to the Non-Offending
Shareholders' bank accounts designated in writing by the Non-Offending
Shareholders and shall be an amount equal to the difference between the
listing value of the Shares owned by a Shareholder had the Company
proceeded to listing as determined by the Merchant Bank and the value of
the unlisted Shares in the Company owned by that Shareholder as
determined by the independent merchant bank. The expenses of the Merchant
Bank shall be borne by the Offending Shareholder.
NON IPO
13. In the event the Shares in the Company are not listed on an
internationally recognized stock exchange acceptable to all the parties
hereto within 3 years from the date of this Agreement, the New
Shareholder shall be entitled to any of the following courses of action:
(a) The New Shareholder shall be entitled to sell all or any of its
Shares in the Company to any other Person and in doing so:
(i) the New Shareholder shall only be bound by the Right of
First Refusal as stated in Section 3.4 of the
Shareholders' Agreement but not by the Right of Co-Sale as
stated in the said Section 3.4. If a Third Party Purchaser
is only willing to buy all and not less than all of the
New Shareholder's Shares in the Company, the Right of
First Refusal as stated in Section 3.4 shall not be
applicable to such proposed sale unless the Existing
Shareholders agree to purchase all of the New
Shareholder's Shares on the same terms and conditions as
that offered by the Third Party Purchaser;
(ii) Section 3.5 of the Shareholders' Agreement shall not apply
except in a case where the New Shareholder is selling its
Shares to a Third Party Purchaser who has or has entered
into a valid agreement including a letter of intent, to
acquire, a direct or indirect substantial interest in a
paging business that is directly in competition with the
Company's business. For the purposes of this clause, a
substantial interest means a 25% or more equity or
ownership interest or profit sharing interest or financial
instruments that can be converted into equity interest;
and
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(iii) In the event the Third Party Purchaser is prepared to buy
Shares in the Company only if it will become a majority
shareholder of the Company, and the New Shareholder is
selling all and not less than all of its Shares in the
Company, each of the Existing Shareholders severally
agrees to consider selling to the Third Party Purchaser
(at the price and on other terms and conditions that are
customary and standard for transactions of such nature
which are acceptable to the Existing Shareholder who is
selling the Shares) such number of Shares as is mutually
agreed by the Third Party Purchaser and the Existing
Shareholder who is selling the Shares so that upon
completion of the purchase, the Third Party Purchaser will
be a majority shareholder of the Company. If both of the
Existing Shareholders choose to sell their Shares, then
they shall do so on a pro-rata basis based on their
shareholding in the Company (not taking into account the
shareholding of the New Shareholder).
(b) If despite the good faith effort of the New Shareholder it is
unable to sell its Shares to a Third Party Purchaser as
contemplated in clause 13 (a), then each of IWC and STHL may
independently elect to exchange shares in their respective share
capital for the New Shareholder's Shares subject to IWC or STHL
having obtained all the necessary consents and approvals. Neither
IWC nor STHL is under any obligation to make such election. If
such election is made, it shall be made by each of IWC and STHL
separately at its own discretion, provided that if they both
elect an exchange of shares, such exchange shall be done with
respect to the Shares of the New Shareholder on a pro-rata basis
based on IWC's and STHL's shareholdings in the Company (not
taking into account the shareholding of the New Shareholder).
Upon any such election, the New Shareholder at its option, may
exchange all its Shares in the Company for shares in either IWC
or STHL on a pro-rata basis at a ratio ("Conversion Ratio") to be
determined based on the mutually agreed upon price of the shares
in the share capital of the Existing Shareholders (which shall be
made with reference to the respective market prices of the shares
of the share capital of the Existing Shareholders) and the value
of the New Shareholder's Shares, provided that in this regard the
value to be placed on the New Shareholder's Shares shall not be
less than the amount which the New Shareholder has paid to the
Company for its Shares as set forth in clause 3. IWC and/or STHL
(as the case may be) shall cause shares in its/their respective
share capital to be issued in exchange for the New Shareholder's
Shares in the Company within 60 days from the date that IWC
and/or STHL receive the written notice of acceptance from the New
Shareholder indicating its acceptance of the Conversion Ratio.
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WARRANTIES
14.1 Save and except as disclosed in this Deed, the Company and the Existing
Shareholders severally, insofar as it relates to the relevant parties,
represent and warrant to the New Shareholder as follows:
a. Authority to Execute and Perform Deed. It is duly organized, validly
existing and in good standing under the laws of its country of
incorporation. It has the full power and authority to enter into,
execute and deliver this Deed and to incur and perform fully its
obligations provided for herein, all of which have been duly authorized
by all necessary corporate action. This Deed has been duly executed and
delivered by it and is the valid and binding obligation of it enforceable
in accordance with its terms and conditions.
b. No Breach. The execution, delivery and performance of this Deed by
such party and the consummation of the transactions contemplated hereby
(collectively, the "Contemplated Transactions") will not (i) violate any
provision of the Articles of Incorporation or Bylaws of such party, (ii)
require it to obtain any consent, approval, authorization or action (that
has not already been obtained) of, or make any filing with or give any
notice to, any government or political subdivision thereof or any agency
or instrumentality of any such government or political subdivision, or
any court or arbitrator (collectively "Government bodies") or any other
person (other than the filing of amendments to the Memorandum and
Articles of Association of the Company, as applicable, to conform to the
Shareholders Agreement as amended by this Deed), (iii) violate any
applicable order, judgement, injunction, award, decree or writ
(collectively "Orders") against or binding on it or (iv) violate any
applicable law, statute, code, ordinance, regulation or other requirement
of any Government bodies (collectively "Laws") applicable to it.
14.2 The Company and IWC make the warranties set out in the Schedule hereto to
the New Shareholder (the Warranties").
14.3 The Warranties are subject to the matters expressly disclosed in a
Disclosure Letter given to the New Shareholder before the date of this
Deed.
14.4 The rights and remedies of the New Shareholder in respect of the
Warranties shall not be affected by the subscription of the Shares,
subject to Clause 14.6, by any investigation made by or on behalf of the
New Shareholder in to the affairs of the Company or its Subsidiaries or
the Company Projects, by the New Shareholder terminating or rescinding,
or failing to terminate or rescind, this Deed or by any other event or
matter whatsoever, except as specific and duly authorised written waiver
or release by the New Shareholder.
14.5 The Warranties shall be deemed to be repeated immediately before each
payment of Shares under clause 3.1 (b) with reference to the facts then
existing.
14.6 If at any time on or prior to, or after the Initial Date, any of the
parties hereto acquires any knowledge of any event or matter (whether
occurring or existing before the signing of this Deed or not) which
makes, or might make, any of the Warranties untrue, or which renders, or
might render, any of the Warranties misleading, it shall at once disclose
in writing to the other parties all that it knows about the event or
matter in question and the Company shall make any investigations
concerning the event or matter which the New Shareholder may require. If
the New Shareholder acquires any such knowledge, it shall no longer be
under an obligation to subscribe for any Shares and may terminate this
Agreement however, should the New Shareholder proceed to subscribe for
shares not withstanding that is has been notified that any of the
Warranties is untrue or misleading, then it shall not be entitled to make
any claim for compensation of indemnification for any breach of the
Warranty in question in connection with the Shares that it shall have
subscribed for.
12
<PAGE>
14.7 From the date hereof through to the Final date, the Company and the
Existing Shareholders shall ensure that the New Shareholder and its
directors and other officers and advisers are given all facilities which
they may request in order to establish the accuracy of the Warranties
and, in particular, shall allow them full access to all accounting,
management and other records of the Company, the Subsidiaries and the
Company Projects.
14.8 The New Shareholder represents and warrants to the Company and the
Existing Shareholders as follows:
a. Authority to Execute and Perform Deed. The New Shareholder is a
company duly organized, validly existing, and in good standing under the
laws of Singapore. The New Shareholder has the full power and authority
to enter into, execute and deliver this Deed and to incur and perform
fully its obligations provided for herein, all of which have been duly
authorized by all necessary corporate action. This Deed has been duly
executed and delivered by the New Shareholder and is the valid and
binding obligation of the New Shareholder enforceable in accordance with
its terms and conditions.
b. No Breach. The execution, delivery and performance of this deed by
the New Shareholder and the Contemplated Transactions will not (i)
violate any provision of the Articles of Incorporation or Bylaws of the
New Shareholder, (ii) require the New Shareholder to obtain any consent,
approval, authorization or action (that has not already been obtained)
of, or make any filing with or give any notice to, any Government Bodies,
or any other person, (iii) violate any applicable Order against or
binding on the New Shareholder or any of its Affiliates, or (iv) violate
any applicable Law applicable to the New Shareholder.
INDEMNITY
15. The Existing Shareholders severally covenant with the New Shareholder to
indemnify and hold the New Shareholder harmless against any losses,
damages, expenses or costs which the New Shareholder may suffer or incur
as a result of or in connection with the Existing Shareholders' breach of
its obligations or liabilities under this Deed or the Shareholders'
Agreement. The New Shareholder covenants with the Existing Shareholders
to indemnify and hold the Existing Shareholders harmless against any
losses, damages, expenses or costs which either of the Existing
Shareholders may suffer or incur as a result of or in connection with the
New Shareholder's breach of its obligations or liabilities under this
Deed or the Shareholder's Agreement.
13
<PAGE>
DIVIDEND POLICY
16. If in respect of any accounting period the Company has profits legally
available for distribution, the Shareholders shall procure that in the
absence of agreement to the contrary, all of the profits (less such
amount which the holders of a majority of the Shares in their absolute
discretion deem necessary to be retained for the Company's immediate
working capital requirements) are distributed either by way of cash
dividends or otherwise by the Company within three (3) months after the
end of such period to the Shareholders in the proportion of their
respective shareholdings in the Company.
INSOLVENCY OR CHANGE OF OWNERSHIP OF A SHAREHOLDER
17.1 If a Shareholder shall become insolvent, is wound up or has a trustee,
administrative or other receiver and/or manager or judicial manager or
similar officer appointed in respect of any part of its assets (each such
Shareholder a "Defaulting Shareholder"), then the entire shareholding of
the Defaulting Shareholder in the Company shall be offered or deemed to
be offered for sale to the other Shareholders on a pro-rata basis at a
valuation to be determined by the Company's auditors. Each Shareholder
is obliged to inform the other Shareholders on the occurrence of any of
the foregoing events in respect itself.
17.2 In the case of IWC, if management of IWC ceases to own at least 12% of
the total issued share capital of IWC, IWC shall notify the other
shareholders as soon as practicable after such event.
17.3 In the case of a Shareholder other than IWC, if any Person that is not a
shareholder of such Shareholder as of the date hereof, acquires 50% or
more of the total issued share capital of such Shareholder after the date
hereof (other than pursuant to an IPO), then such shareholder shall
notify the other Shareholders as soon as practicable after such event.
NOTICES
18. Upon the consummation of the subscription of Shares set forth in clause
3.1(a), Section 16.2 of the Shareholder's Agreement shall be amended by
adding after paragraph (c) the following:
"(d) if to the New Shareholder, to:
Baring Communications Equity (Asia Pacific) Limited
9 Raffles Place
#19-03 Republic Plaza
Singapore 048619
Fax No.: (65) 532-2002
GOVERNING LAW
19. This Deed of Adherence shall be governed by and construed in accordance
with the laws of England and Wales.
14
<PAGE>
20. SUBSTITUTION
This Deed, together with the Shareholders' Agreement (as so amended
hereby), reflects the entire agreement among the parties and supersedes
all prior agreements and communications, either oral or in writing, among
the parties hereto or any of them, with respect to the subject matter
hereof.
REQUIRED DISCLOSURE
21. STHL and or STIHL may disclose any information as contained herein or
relating to this Deed and the Contemplated Transactions if required under
and in accordance with the Listing Rules and/or Listing Agreement.
IN WITNESS WHEREOF, this Deed of Adherence has been executed as a deed on the
date first above written.
Signed, Sealed and Delivered by )
Wei Yuan, Director )
for and on behalf of )
Star Telecom Overseas ) /s/ Wei Yuan
(Cayman Islands) Limited )
in the presence of: )
Signed, Sealed and Delivered by )
Hugh McClung, Vice Chairman )
for and on behalf of )
International Wireless ) /s/ Hugh B.L. McClung
Communications, Inc. )
in the presence of: )
Signed, Sealed and Delivered by )
Shao Kwok Keung, Director )
for and on behalf of ) /s/ Shao Kwok Keung
Star Telecom Holding Limited )
in the presence of: )
Signed, Sealed and Delivered by )
Yong Thlan Sze, Investment Partner )
for and on behalf of ) /s/ Yong Thian Sze
Baring Communications Equity )
(Asia Pacific) Limited )
in the presence of: )
15
<PAGE>
EXHIBIT 10.16D
AMENDMENT TO SUBSCRIPTION AGREEMENT AND WAIVER
AMENDMENT TO SUBSCRIPTION AGREEMENT AND WAIVER, dated as of June 18, 1997
(this "Amendment and Waiver"), among STAR DIGITEL LIMITED, a Hong Kong
corporation with its principal offices at 12/F Sun Hung Kai Centre, 30 Harbour
Road, Wanchai, Hong Kong (the "Company"), STAR TELECOM HOLDING LIMITED, a Hong
Kong corporation with its registered offices at 6th Floor, Star Telecom Tower,
414 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong ("STHL"), INTERNATIONAL
WIRELESS COMMUNICATIONS, INC., a Delaware corporation with its principal offices
at 400 South El Camino Real, San Mateo, CA 94402, U.S.A. ("IWC"), and IWC CHINA
LIMITED, a Mauritius corporation with its principal offices at 400 South El
Camino Real, San Mateo, CA 94402, U.S.A. ("IWC China"). Capitalized terms used
but not defined herein shall have the respective meanings assigned to them in
the Subscription Agreement among the Company, STHL and IWC, dated as of
September 23, 1996 (the "Subscription Agreement").
The Subscription Agreement sets forth, among other things, the terms and
conditions under which STHL and IWC will subscribe for the Second STHL Shares
and the Second IWC Shares, respectively.
Pursuant to Section 1.1 of the Subscription Agreement, IWC has, pursuant to
an Assignment and Assumption Agreement of even date herewith, between IWC and
IWC China, assigned its rights under Section 1.2 (c) of the Subscription
Agreement to subscribe for the Second IWC Shares to IWC China.
The parties wish to amend the Subscription Agreement as provided herein, and to
waive certain conditions precedent relating to IWC China's subscription of the
Second IWC Shares, STHL's subscription of the Second STHL Shares and IWC China's
payment of the Hebei Premium.
NOW, THEREFORE, the parties hereto agree as follows:
1. AMENDMENT OF SUBSCRIPTION AGREEMENT.
(a) Section 1.3 of the Subscription Agreement is hereby amended by
deleting the last sentence, and deleting clause (b) in its entirety and
replacing it with the following:
"(b) on June 18, 1997, pay and deliver to STHL, or cause its Designated
Assignee to pay or deliver, cash in the amount of US$9,000,000 by wire
transfer of immediately available funds to the bank account designated in
writing by STHL."
(b) Section 3.2 of the Subscription Agreement is hereby amended by
deleting the last two sentences thereto and replacing them with the following:
<PAGE>
"The Second Closing shall take place on a date designated by IWC which
shall not be later than June 17, 1998. The Company and STHL shall have no
obligation to complete the Second Closing unless the amount of US$9,000,000
has been paid by IWC or its Designated Assignee to STHL pursuant to Section
1.3(b)."
(c) Section 5.4 of the Subscription Agreement is hereby amended by
deleting the word "PRC" and replacing it with the words "People's Republic of
China ("PRC").
(d) Section 10.1 of the Subscription Agreement is hereby amended by
deleting the last sentence thereof and replacing it with the following:
"Each of the Company and STHL shall have delivered to IWC a certificate,
dated the Second Closing Date, and signed by each party, to the effect set
forth in the preceding sentence."
(e) Section 11.1 of the Subscription Agreement is hereby amended by
deleting the last sentence thereof and replacing it with the following:
"IWC shall have delivered to the Company a certificate, dated the Second
Closing Date and signed by IWC, to the effect set forth in the preceding
sentence."
(f) Clauses (a) and (b) of the Section 13.2 of the Subscription
Agreement are hereby amended by deleting the phrase "the first anniversary of
the First Closing Date" and replacing it with "June 17, 1998."
(g) Clause (f) of Section 15.1 of the Subscription Agreement is
hereby amended by changing the section reference for the defined term "PRC" from
"1.3" to "5.4" and deleting the references to "Deadline Date" and "Hebei
Restructuring."
2. WAIVERS OF CONDITIONS PRECEDENT AND RIGHTS.
(a) IWC China, as Designated Assignee of IWC, hereby waives the
fulfillment of the conditions precedent to its obligations to enter into and
complete the Second Closing set forth in the first sentence of Section 10.1 and
in Sections 10.3 and 10.4 of the Subscription Agreement.
(b) IWC hereby waives its rights under Section 12 and Section 13.2(c)
of the Subscription Agreement.
<PAGE>
(c) The Company hereby waives the fulfillment of the conditions
precedent to its obligations to enter into and complete the Second Closing set
forth in the first sentence of Section 11.1 and Section 11.3 of the Subscription
Agreement.
3. CONTINUING EFFECT OF THE SUBSCRIPTION AGREEMENT.
Except as otherwise expressly provided herein, all of the terms and
conditions of the Subscription Agreement are hereby ratified and shall remain
unchanged and shall continue in full force and effect.
4. FURTHER ASSURANCES.
Each of the parties shall execute such documents and other papers and take
such further actions as may be reasonably required or desirable to give effect
to the provisions of this Amendment and Waiver.
5. MISCELLANEOUS.
(a) This Amendment and Waiver shall be governed by and construed in
accordance with the laws of England and Wales.
(b) This Amendment and Waiver may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment and
Waiver, as of the date first above written.
STAR DIGITEL LIMITED
By: /s/ Wei Yuan
---------------------------------------
Name: Mr. Wei Yuan
Title: President and Chief
Executive Officer
STAR TELECOM HOLDING LIMITED
By: /s/ Mico Chung
---------------------------------------
Name: Mr. Mico Chung
Title: Authorized Representative<PAGE>
<PAGE>
INTERNATIONAL WIRELESS
COMMUNICATIONS, INC.
By: /s/ Hugh B.L. McClung
---------------------------------------
Name: Mr. Hugh B.L. McClung
Title: Vice Chairman and Managing
Director, Asia
IWC CHINA LIMITED
By: /s/ Hugh B.L. McClung
---------------------------------------
Name: Mr. Hugh B.L. McClung
Title: Chairman
<PAGE>
EXHIBIT 10.16E
June 18, 1996
Mr. Wei Yuan
President and Chief Executive Officer
Star Digitel Limited
6th Floor, Star Telecom Tower
414 Kwun Tong Road
Kwun Tong, Kowloon, Hong Kong
Dear Wei:
In consideration of the agreement of IWC China Limited ("IWC China") to waive
the fulfillment of the condition precedent to its obligations to enter into and
complete the "Second Closing" set forth in Section 10.3 of the Subscription
Agreement, dated as of September 23, 1996, among Star Telecom Holding Limited
("STHL"), Star Digitel Limited ("Digitel") and International Wireless
Communications, Inc. ("IWC"), we would like to obtain the following assurances
from Digitel:
Digitel shall indemnify, defend and hold harmless IWC China and its directors,
officers, employees, affiliates, successors and assigns (each, an "Indemnified
Party") from and against all claims, losses, liabilities, damages, deficiencies,
judgments, assessments, fines, settlements, costs or expenses (including
interest, penalties and fees, expenses and disbursements of attorneys, experts,
personnel and consultants incurred by any Indemnified Party in any action or
proceeding between Digitel and any Indemnified Party or between any Indemnified
Party and any third party, or otherwise) based upon, arising out of, relating to
or otherwise in respect of any claims which shall be pending or, to the
knowledge of IWC China, STHL or Digitel, threatened before any Governmental Body
to restrain or prohibit, or to obtain damages or a discovery order in respect
of, the Subscription Agreement or the consummation of the Contemplated
Transactions or that has had or may have, in the reasonable judgment of IWC
China, a materially adverse effect on the Condition of the Companies.
Capitalized terms used but not defined herein shall have the respective meanings
specified in the Subscription Agreement.
Please acknowledge your acceptance by counter-signing below.
Sincerely,
STAR DIGITEL LIMITED IWC CHINA LIMITED
By: /s/ Wei Yuan By: /s/ Hugh B.L. McClung
------------------------------ ---------------------------------
Wei Yuan Hugh B. L. McClung
President and Chief Vice-Chairman and
Executive Officer Managing Director, Asia
<PAGE>
EXHIBIT 10.24E
CONFIDENTIAL TREATMENT REQUESTED
The Company has requested confidential treatment of certain portions of
this exhibit on pages 16, 19, 24, 32, Schedule 1, Schedule 2, Schedule 3 and
Schedule 4.
Dated this 09 day of April 1997
INTERCONNECTION AGREEEMNT
Between
TELEKOM MALAYSIA BERHAD
And
SYARIKAT TELEFON WIRELESS (M) SDN BHD
Albar Zulkifly & Yap
Advocates & Solicitors
Kuala Lumpur
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
1
INTERCONNECTION AGREEMENT
THIS AGREEMENT is made this 09 day of April 1997.
BETWEEN: (1) TELEKOM MALAYSIA BERHAD (COMPANY NO. 128740-P), a company
incorporated under the laws of Malaysia and having its registered
office at Ibu Pejabat Telekom Malaysia, Jalan Pantai Baharu,
59200 Kuala Lumpur (hereinafter referred as "TELEKOM MALAYSIA")
of the one part;
AND: (2) SYARIKAT TELEFON WIRELESS (M) SDN BHD (COMPANY NO. 257906-T), a
company incorporated under the laws of Malaysia and having its
place of business at Wisma Segar, Jalan Tun Sambanthan, 50470
Kuala Lumpur (hereinafter referred as "STW") of the other part;
RECITALS:
A. Telekom Malaysia is a licensed carrier which provides telecommunications
services within Malaysia and external telecommunications services between
Malaysia and places outside Malaysia.
B. STW has been licensed for telecommunications under the Telecommunications
Act 1950 as amended, in accordance with which it may offer fixed
telecommunications network services using wireless local loop technology
within Malaysia.
C. By an Access and Interconnect Agreement entered into between Telekom
Malaysia and STW on the 16th day of August 1994, a frame work for the
provision of access and interconnection service between Telekom Malaysia
and STW and such other services as may be required by STW upon terms and
conditions and in the manner provided for in that agreement (hereinafter
referred to as "the Existing Agreement") was established.
D. The parties are desirous of entering into a new interconnection agreement
to provide a more comprehensive framework and upon the execution of this
Agreement the Existing Agreement shall cease to have any further force or
effect unless otherwise provided in this Agreement.
E. This Agreement sets out the terms and conditions on which each party agrees
to provide services to the other party by:
(i) interconnecting its network to the network facilities of the other
party;
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
2
(ii) supplying requested telecommunications services to the other party;
and
(iii) making available to the other party the services, facilities and
information as required by law or as specified in their respective
Licences subject to what is reasonable and practicable.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. INTERPRETATION
1.1 The following words have these meanings in this Agreement unless the
contrary intention appears:
"ACCESS CARRIER" means the Carrier which provides or is to provide a
service to the Interconnecting Carrier or the Carrier that will be
terminating the Call Communication.
"ACCESS CHARGE" means a charge paid by the Interconnecting Carrier to the
Access Carrier for accessing the facilities and services for all types of
traffic derived from that Interconnection.
"ACCESS SERVICE" means a service for the carriage of agreed Communications
between:
(a) a POI and a called number/party (including calls for Special Services
and Directory Assistance Service calls); or
(b) a calling party and a POI; or
(c) two POIs.
"ATUR NUMBER" means customer numbers that are able to use Telekom
Malaysia's ATUR 450 cellular network
"BILLING PERIOD" means:
(a) in the case of Carrier to Carrier billing, on a monthly calendar
basis; and
(b) in the case of customer billing, the billing period ordinarily used by
the Carrier in respect of the customer or as otherwise agreed.
"BUSINESS DAY" means a day on which banks are open for general banking
business in Kuala Lumpur, other than Saturday or Sunday or a public
holiday.
"CALL COMMUNICATION" means Communication from or to or involving a number
as allocated to STW or to Telekom Malaysia for use in the operation of each
Network
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
3
and as allocated by the Director-General of Telecommunications in
accordance with STW or Telekom Malaysia's Licence respectively and in
accordance with the Telecommunications Act.
"CARRIER" means:
(a) STW, or
(b) Telekom Malaysia
and a reference to "Carriers" includes both of them.
"CLI" or "CALLING LINE IDENTIFICATION" means the information generated by
the Network capability which identifies and forwards through the Network
the Interconnecting Carrier's Network calling number.
"COMMENCEMENT DATE" means lst April 1997.
"COMMUNICATION" includes a communication between persons or things (or a
combination of both) and whether in the form of speech, music, sound, data,
text, visual images, or signals, or a combination of those forms and, where
the context permits, includes an attempt to establish a communication.
"COMMUNICATION ATTEMPT" meaning the activity associated with setting up a
Communication which may or may not be successful provided that in the case
of Emergency Service Calls and Operator Assistance Services, communication
attempt shall mean a call (whether complete or not) which is registered by
a line counting device positioned as close as practicable to the automatic
call distribution equipment used for handling such calls.
"COMMUNICATION INFORMATION" means information in respect of Communications
made during the relevant Billing Period which may include but not be
limited to:
(a) the calling number and, if it is different, the billing number; and
(b) the called number; and
(c) the day on which the Communication was made; and
(d) the time of commencement of the Communication; and
(e) the duration of the chargeable Communication (including chargeable
Communication Attempt) time and, in the case of non-PSTN
communications, all other applicable charging parameters; and
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
4
(f) the fee charged by the Access Carrier for use of its Network to
accommodate the Communication, separately identifying each of the
charge elements specified in the Schedule; and
(g) the routing information relating to the POI at which Communications
from the Carrier's Network entered or left the Other Carrier's
Network; and
(h) the customer service address; and
(i) whether the Communication was successfully completed,
or, if any such information technically is unavailable to a Carrier pending
implementation of appropriate information recording systems, such other
relevant available information reasonably requested by the Other Carrier.
"CONFIDENTIAL INFORMATION" of a party means all information know-how,
ideas, concepts, technology, manufacturing processes, industrial, marketing
and commercial knowledge of a confidential nature (whether in tangible or
intangible form) relating to or developed in connection with or in support
of the business of the party and includes the contents of the Schedules
(and any matter concerned with or arising out of this Agreement) but does
not include:
(i) information which is or becomes part of the public domain (other than
through any breach of this Agreement); or
(ii) information rightfully received by another party from a third person
without a duty of confidentiality being owed by the other party to
the third person, except where the other party has knowledge that the
third person has obtained that information either directly or
indirectly as a result of a breach of any duty of confidence owed to
the first mentioned party; or
(iii) information which has been independently developed by another
party; or
(iv) information required by law or the business rules of any stock
exchange to be disclosed.
Provided that:
(1) the party required to disclose such information referred to in
paragraph (iv) above, immediately notifies the other party of the
particulars of the required disclosure; and
(2) provides the other party with all assistance reasonably required by
the other party (at the other party's cost) to enable the other party
to take any steps available to it to prevent that disclosure or to
ensure that it occurs subject to a reasonable obligation of
confidence.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
5
"CORRESPONDENT" is an international telecommunications operator with whom
Telekom Malaysia has an international correspondent relationship.
"COS" means a central office switch in the STW Network.
"DIRECTOR-GENERAL OF TELECOMMUNICATIONS" means the office created by
Section 3A of the Telecommunications Act 1950.
"DIRECTORY ASSISTANCE SERVICE" is the directory assistance service provided
on the Telekom Malaysia network.
"DIRECTORY ASSISTANCE SERVICE CALL" is a call:
(a) originated on the network of STW and made to a Directory Assistance
Service provided on the network of Telekom Malaysia by dialling the
Directory Assistance Service Number for that Directory Assistance
Service; and
(b) routed to and handed over to Telekom Malaysia at the POI in accordance
with the applicable routing arrangements agreed between the Carriers
for such calls.
"DIRECTORY ASSISTANCE SERVICE NUMBER" is, in relation to a Directory
Assistance Service, provided on the network of the Carrier, the dial code
or dial code and number by which that Directory Assistance Service may be
accessed from the network of the Other Carrier.
"DTS" means a digital trunk switch or group or trunk switch installed
Telekom Malaysia's Public Switched Telephone Network, such group or trunk
switch shall be agreed between the parties to fulfil the function for a
limited period of time.
"EMERGENCY SERVICE CALLS" means Communication Attempts to `999' Police and
Ambulance, `991' Civil Defence, `994' Fire (Bomba), `995' Petronas Gas
Utilisation (PGU) and such other emergency services as agreed between the
parties.
"FACILITIES" means any part of the infrastructure of the telecommunications
network or telecommunication plant as defined in Section 2 of the
Telecommunications Act.
"FACILITIES ACCESS" means a service for the provision of access to
Facilities commercially agreed between the parties and/or reasonably
required to be provided under the Carriers' respective Licence conditions.
"FAR END HANDOVER" refers to the handing over of calls to the Other Carrier
by STW or Telekom Malaysia as the case may be, at a POI within the State
where the call should be terminated based on the location of STW's PSTN
Number or Telekom Malaysia's:
(i) PSTN Number; or
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
6
(ii) registered location of the ATUR Number;
as the case may be.
"FORCE MAJEURE" means any cause which is not reasonably within the control
of the Carrier affected including, but not limited to, act of God,
industrial disputes of any kind, war declared or undeclared, blockade,
disturbance, lightning, fire, earthquake, storm, flood, explosion of
meteor, governmental restraint and expropriation.
"GATEWAY" is a designated DTS or COS (in respect of Telekom Malaysia and
STW respectively) which:
(a) provides operational interwording between STW's Network and Telekom
Malaysia's Network, and
(b) provides an agreed interface between the signalling, switching,
transmission and operations systems of each Carrier, and
(c) is defined by a unique name or code; and
(d) supports one or more POIs.
"INFORMATION SUPPORT" means the information provided by one Carrier to the
Other Carrier under CLAUSE 9.
"INTELLECTUAL PROPERTY" means all rights conferred under statute, common
law and equity and in relation to trade marks, trade names, logos and get
up, inventions, patents, designs, copyright, circuit layouts, Confidential
Information, know-how and trade secrets and all rights and interests in
them or licences to use any of them.
"INTERCONNECTING CARRIER" means the Carrier to which a service is or is to
be provided or the Carrier originating the Call Communication.
"INTERCONNECT CAPACITY" means the capacity measured in 2 Mbit/s or other
agreed units between a Gateway and a POI for use in the provision of one or
more Access Services.
"INTERCONNECT CONDITIONING" means the conditioning, equipping and
installation of facilities at the Access Carrier's Gateway to enable
provision of one or more Access Services.
"INTERCONNECT SUPPORT" is the maintenance and operation of Interconnect
Capacity, Network Capacity and the equipment and facilities in an Access
Carrier's Network (including, but not limited to, its Gateways) to support
the provision of one or more Interconnection Services.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
7
"INTERCONNECT TRAFFIC" means Call Communication traffic between the
directly connected customers of STW Network and the Telekom Malaysia
Network.
"INTERCONNECTION" is interconnection:
(a) of STW's Network Facilities to the Telekom Malaysia Network, for the
purpose of Telekom Malaysia supplying Access Services to STW in
relation to Call Communication; and
(b) of Telekom Malaysia's Network Facilities to the STW Network, for the
purpose of STW supplying Access Services to Telekom Malaysia in
relation to Call Communication;
via a POI and using agreed interfaces and signalling system.
"INTERCONNECTION SERVICE" is the provision by a Carrier of Interconnect
Conditioning, Interconnect Capacity, Network Conditioning and Network
Capacity to enable, or for use in the carriage of Interconnect Traffic to
and from a POI.
"INTERCONNECT STEERING GROUP" or "ISG" means the inter-carrier relations
group established by the Carriers.
"ITU-T" means the Telecommunications Standardisation sector of the
International Telecommunications Union (previously known as CCITT).
"LICENCE" means a licence issued by the Minister pursuant to the
Telecommunications Act.
"MANUALS" means the Technical and Implementation Manual, the Operations and
Maintenance Manual and other Manuals which the parties establish pursuant
to this Agreement.
"MINISTER" means the Minister of Energy, Telecommunications and Post or, if
different, the Minister administering the Telecommunications Act.
"NEAR END HANDOVER" refers to the handing over of calls to the Other
Carrier by STW or Telekom Malaysia as the case may be, other than on a Far
end Handover basis.
"NETWORK" means a telecommunications network within Malaysia to supply
domestic and/or international services and, in relation to a Carrier, means
so much of such a network as is operated by the Carrier (even if owned or
maintained by another person) or is owned and maintained by the Carrier
(even if operated by another person).
"NETWORK CAPACITY" means equipment and facilities required to be installed
in the Access Carrier's Network for use in the provision of one or more
Access Services but does not include Interconnect Capacity.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
8
"NETWORK CONDITIONING" means the conditioning, equipping and installation
of facilities at the Access Carrier's Network to enable the provision of
one or more Access Services.
"NETWORK FACILITIES" means the facilities that the Carrier operates or
uses, or intends to operate or use, as part of, in, or in connection with a
network of the Carrier, even if another person also operates or uses, or
intends to operate or use, some or all of the facilities.
"OPERATIONS AND MAINTENANCE MANUAL" is the manual to be agreed between the
parties pursuant to clause 13.1(a) in relation to the following:
(a) network information;
(b) commissioning, de-commissioning and re-arrangement practices;
(c) maintenance practices;
(d) fault handling procedures;
(e) complaint handling;
(f) network management;
(g) network monitoring;
(h) access to POI sites;
(i) contact lists; and
(j) such other matters as are agreed between the parties from time to time
and set out in the Operations and Maintenance Manual.
"OPERATIONS AND MAINTENANCE SUPPORT" means the establishment and operation
of operations practices, systems and procedures by the Access Carrier
reasonably required for the provision of Interconnection Services and
Access Services (which practices, systems and procedures will be agreed by
the ISG).
"OPERATOR ASSISTANCE SERVICE" is the operator assistance service provided
on the Telekom Malaysia Network and is more particularly specified in
Paragraphs 1.1 to 1.6 of the Schedule for Special Services.
"OTHER CARRIER" means either
(a) Telekom Malaysia; or
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(b) STW
as the context requires.
"POINT OF INTERCONNECTION" or "POI" means an agreed location which:
(a) constitutes a point of demarcation between the Network of STW and the
Network of Telekom Malaysia; and
(b) is at the point at which a Call Communication is transferred from one
Carrier's Network to the other Carrier's Network by an agreed method.
"PROFESSIONAL ADVISER" means a lawyer, accountant, auditor, financial
adviser, bank and other professional adviser or other technical adviser
(including, where necessary, relevant senior technical personnel of a
supplier to either party) and their employees and contractors retained to
provide advice for purposes of the negotiating, finalising, implementing
and the fulfilling of this Interconnection Agreement.
"PSTN NUMBER OR PUBLIC SWITCH TELEPHONE NETWORK NUMBER" means customer
numbers directly connected to the exchanges of Telekom Malaysia (but does
not include cellular mobile numbers) or public switch wireless numbers
directly connected to exchanges of STW, as the case may be.
"QOS" means quality of service.
"QOS STANDARDS" means the agreed QOS standards in respect of certain
services set out in the appropriate Manual.
"REVERSE CHARGE CALL" is a call:
(a) originated on the network of STW or Telekom Malaysia, and made to an
Operator Assistance Service by dialling the Reverse Charge Call
Service Number; and
(b) routed to and handed over to Telekom Malaysia or STW, as the case may
be, at the POI in accordance with the applicable routing arrangements
agreed between the Carriers for such calls.
"REVERSE CHARGE CALL SERVICE NUMBER" is, in relation to an Operator
Assistance Service, provided on the network of the Carrier, the dial code
`101' or `108' by which that Operator Assistance Service may be accessed
from the network of the Other Carrier.
"RM" means Ringgit Malaysia which shall be the monetary currency used in
this Agreement.
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"SERVICE ORDERING PROCEDURES" means the procedures governing the
forecasting planning and ordering of relevant services set out in the
appropriate Manual.
"SPECIAL SERVICES" means those Telecommunications Services provided by a
Carrier to its customers which the Carriers agree from time to time are to
be designated as Special Services for the purposes of Interconnection
pursuant to this Agreement.
"SUCCESSFUL CALL" means a complete call whereby the originating exchange
receives the B answer charge or no charge signal from the terminating
exchange. The chargeable duration is the period from the receipt of B
answer charge or no charge signal to the receipt of the clear forward or
forced release signal.
"SUPPLEMENTARY SERVICES" mean the provision of:
(a) in the case of each party, agreed Facilities Access and Information
Support; and
(b) in the case of the provision by Telekom Malaysia to STW, Directory
Assistance Service to STW customers; and
(c) any other right, interest, good or service which a party is obliged to
provide to the other party, and Telekom Malaysia and STW agree will be
provided, under the relevant Carrier's Licences.
"STATE" has the meaning given to it by the Interpretation Acts 1948 and
1967 except that for the purposes of this Agreement:
(a) the Federal Territory of Kuala Lumpur is part of the State of
Selangor;
(b) the Federal Territory of Labuan is part of the State of Sabah; and
(c) the States of Perlis and Kedah are treated as one State.
"TECHNICAL AND IMPLEMENTATION MANUAL" is the manual to be agreed between
the parties pursuant to CLAUSE 13.1(a) in relation to the following:
(a) principles for network configuration;
(b) forecasting procedures;
(c) ordering procedures;
(d) provisioning procedures;
(e) routing and numbering principles;
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(f) routing of Emergency Service Calls;
(g) signalling specifications;
(h) commissioning procedures;
(i) transfer of charge band data;
(j) billing procedures;
(k) call processing;
(l) call forwarding procedures;
(m) POI establishment procedures;
(n) relocation and removal procedures for POI equipment; and
(o) such other matters as are agreed between the parties from time to time
and set out in the Technical and Implementation Manual.
"TECHNICAL SPECIFICATIONS" means any technical parameters, specifications
and procedures agreed between the Carriers applicable to Interconnection of
the Carriers' Networks and provision of Access Services documented in the
Manuals.
"TELECOMMUNICATIONS ACT" means the Telecommunications Act 1950 as amended.
"TELECOMMUNICATIONS SERVICE" has the meaning given to it under the
respective Licences.
"TELEPHONE AREAS" are those attached in graphical and tabular form as
Schedule 4 to this Agreement.
"TOLL FREE NUMBERS" mean numbers currently denoted by the number range
commencing `800' and `1-300' but also including such other number ranges
agreed to or directed by the Director-General of Telecommunications where
the terminating party (the B party) is charged for the call, save for the
local call charge levied on the originating PSTN Number.
"TRANSMISSION CAPACITY SERVICE" is a service for the supply by Telekom
Malaysia to STW, pursuant to an agreement between the Carriers, of
transmission capacity (other than Interconnect Capacity) for operation and
use as part of, in or in connection with STW's Network.
1.2 In this Agreement except where the contrary intention appears;
(a) the singular includes the plural and vice versa; and
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(b) a reference to an agreement or another instrument includes any
variation or replacement of either of them; and
(c) a reference to an annexure or Manual or schedule is a reference to an
annexure or Manual or schedule to this Agreement and a reference to
this Agreement includes a recital, annexure or Manual or schedule; and
(d) a reference to a clause is a reference to a clause of this document
and a reference to a paragraph is a reference to a paragraph of the
schedule; and
(e) a reference to a statute, ordinance, code or other law includes
regulations and other instruments under it and consolidations,
amendments, re-enactments or replacements of any of them; and
(f) a reference to a person includes a firm, body corporate,
unincorporated association or an authority; and
(g) a reference to a person includes the person's executors,
administrators, successors, substitutes (including, without
limitation, persons taking by innovation), and assigns; and
(h) if the day on which the payment of money falls due is not a Business
Day, the due date shall be deemed to be the next Business Day; and
(i) a reference to a related body corporate of a party has the same
meaning as in the Companies Act 1965; and
(j) a reference to a party is a reference to a party to this Agreement;
and
(k) a reference to a third person is a reference to a person who is not a
party to this Agreement; and
(l) in relation to an Access Service for the carriage of a call from a POI
to a called number a reference to a direct dialled call includes a
Call Communication where the called number is directly dialled:
(I) from the calling number, or
(II) by the Interconnecting Carrier's operator or an overseas
operator,
but does not include a Call Communication for which the Access Service
is provided with the assistance (call dialling, handling or
completion) of the Access Carrier's operator or an overseas operator;
and
(m) headings are included for convenience and do not affect the
interpretation of this Agreement.
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2. SCOPE OF AGREEMENT
2.1 The scope of this Agreement shall be limited to the provision of Access
Services and Interconnection Services by either party to the other party
in respect of Interconnect Traffic.
2.2 Except where this Agreement provides to the contrary, the rights and
obligations conferred by this Agreement apply reciprocally as between
Telekom Malaysia and STW. For the purposes of clarification, where this
Agreement expressly states that a service is only to be provided by one
named Carrier to the other named Carrier, (for example, the provision of
Directory Assistance Service by Telekom Malaysia to STW customers) the
obligations in respect of that service are not regarded as reciprocal.
2.3 The parties agree and acknowledge that the governing principle of this
Agreement is that Telekom Malaysia and STW are in respect of
Interconnection and Access Services in a Carrier-to-Carrier relationship.
Accordingly, the parties will treat each other on a non-discriminatory
basis ("the requirement of non-discrimination").
2.4 The parties agree and acknowledge that, unless otherwise specifically
agreed and identified in this Agreement, the requirement of
non-discrimination also means that:
(a) to the extent technically feasible, a Carrier will treat the Other
Carrier and its own operations on a non-discriminatory basis in
relation to the technical and operational quality of the services;
(b) a Carrier will treat its own customers and customers of the Other
Carrier who are similarly situated on a non-discriminatory basis as
regards:
(i) to the extent technically feasible, the transparency, from the
customers' perspective, of Call Communication and other services
carried across the Access Carrier's Network; and
(ii) the standard and quality of services which the Access Carrier supplies
to customers of the Interconnecting Carrier, whenever those services
are associated with or incidental to the supply of Telecommunications
Services by the Interconnecting Carrier.
2.5.1 This Agreement establishes a framework for the provision of
Interconnection Service and Access Service between the respective parties'
networks relating to Call Communication. Accordingly the parties have
agreed on terms and conditions in respect of the provision of certain kinds
of Interconnection Service and certain kinds of Access Service in relation
to certain types of Call Communication as set out in the Schedules to this
Agreement. The parties acknowledge that additional kinds of
Interconnection Service and Access Service in relation to other types of
Call Communication may be requested by a party for the provision of
Telecommunications Services by it. If a party wishes to extend the range
of the kinds or types of
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Interconnection Service and Access Service relating to Call Communication
provided by another party under this Agreement:
(a) it shall notify the other party in writing at least three (3) months
prior to its request to extend the range of kinds or types of
Interconnection Service and Access Service; and
(b) the parties shall promptly consult with each other with a view to
determining if the other party is able to supply the requested
Interconnection Service and Access Service, or other available
Interconnection Service and Access Service which would meet the
party's requirements, and the terms and conditions on which the
Interconnection Service and Access Service are to be included.
2.5.2In the event both Carriers agree to provide any additional kinds of
Interconnection Service or Access Service then the agreed terms and
conditions in respect thereof shall be supplemental to this Agreement.
2.6 The parties agree that this Agreement is not intended to govern the
provision of any services not specified in this Agreement or subsequently
agreed to by the parties pursuant to Clause 2.5.2 except to the extent that
the supply of the service is incidental to the functionality required for:
(a) the Interconnection of the Network Facilities of one Carrier with the
Network of the Other Carrier; or
(b) the carriage of a Call Communication across the Other Carrier's
Network.
2.7 The obligation of a party to agree to the extension of this Agreement to
cover the provision of a Telecommunications Service to another party under
clauses 2.5.1 and 2.5.2 is first subject to the party being so obliged by
virtue of its Licence or by applicable regulations, directives,
determinations and/or directives issued by the Director-General of
Telecommunications.
2.8 (a) Whenever the provisions of this Agreement state that matters are to be
agreed between the parties, those matters shall be determined by the
ISG in accordance with procedures agreed between the parties.
(b) Any matter agreed by the parties by determination of the ISG must be
included in either the Operations and Maintenance Manual, the
Technical and Implementation Manual or any other appropriate Manuals,
as the parties may agree.
(c) A matter agreed or purportedly agreed between the parties shall not be
legally binding on the parties unless such matter is included or
reflected in the appropriate Manuals or is made in writing and
expressed to be a variation or amendment to this Agreement.
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2.9 (a) Notwithstanding anything to the contrary the Access Carrier is not
required to provide a service to the Interconnecting Carrier until the
parties have agreed on all the remaining terms and conditions relevant
to the supply of that service which are not already specified in this
Agreement or in the Manuals as being applicable to that service ("THE
OUTSTANDING SUPPLY TERMS").
(b) The Access Carrier may at its choice and in exceptional circumstances
agree to supply a service prior to final and full agreement on any
outstanding supply terms relating to that service subject to such
period and conditions as may be agreed by the Carriers but without
prejudice to any of the rights and remedies of the Access Carrier.
(c) STW hereby undertakes to finalise and agree to the outstanding supply
terms in the manuals with Telekom Malaysia within three (3) months
from the Commencement Date or such further period as may be agreed by
Telekom Malaysia and STW. Failing which, STW irrevocably and
unconditionally agrees that Telekom Malaysia shall be entitled (but
not obligated) at Telekom Malaysia's discretion:
(i) to terminate the Access Service, Facilities, Facilities Access,
Interconnect Conditioning, Interconnect Support or Interconnection
Service, Network Capacity, Network Conditioning, Network Facilities,
Operations and Maintenance Support, Supplementary Services,
Transmission Service or any other service support or capacity or part
thereof; and/or
(ii) to decline to provide any further Access Service, Facilities,
Facilities Access, Interconnect Conditioning, Interconnect Support or
Interconnection Service, Network Capacity, Network Conditioning,
Network Facilities, Operations and Maintenance Support, Supplementary
Services, Transmission Service or any other service support or
capacity or part thereof,
without any notice to STW notwithstanding anything to the contrary.
2.10 For the avoidance of doubt, this Agreement is intended to apply only to the
provision of services by one Carrier to the other and to related matters
concerning the parties and may not be construed as conferring benefits on
third persons.
3. INTERCONNECTION CAPACITY
3.1 Subject to clauses 2.5.1 and 2.5.2 and the Interconnecting Carrier's
compliance with the relevant Service Ordering Procedures, the Access
Carrier will provide agreed Interconnection Service in accordance with the
relevant provisions of the Manuals.
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3.2 Each Carrier must ensure that its Network Facilities delivered at each POI
conform to QOS Standards and Technical Specifications agreed between the
Carriers.
3.3 Each Carrier must provide, install, test, make operational and maintain all
Network Facilities on its side of the POI unless otherwise agreed.
3.4 Interconnection Services and related Operations and Maintenance Support,
and the relevant technical, operational and other procedures relating to
those services shall be negotiated and agreed between the parties and
recorded in the appropriate Manual prior to the Access Carrier providing
those services subject to clause 2.9.
3.4A Each party shall give a discount on their charges for Interconnect Capacity
connected to the POI and the Gateway from the Commencement Date. This
discount shall be [*] off the published leased circuit charges.
3.5 The rates as stated in the Schedule will be reviewed two (2) years from the
date of this Agreement unless otherwise stated in the Schedule and pending
agreement both parties shall pay the rates in the Schedule. The parties
agree to adjust the payments upon reaching an agreement on the revised
rates. If the amounts paid to date for the period pending agreement ("the
Period") are higher than the amounts payable under the revised rates then
the other party will credit such difference (free of any interest) within
fourteen (14) Business Days from the date of agreement to the invoiced
party. If the amounts paid to date for the Period are less than the
amounts payable under the revised rates then the invoiced party will pay in
full such difference (free of interest) within fourteen (14) Business Days
from the date of agreement to the other party. With respect to additional
Interconnection Services and Interconnect Support and Operations and
Maintenance Support provided to and provided by the relevant Carrier, upon
request from either Carrier, the Carriers will meet, negotiate and agree
and document as a schedule to this Agreement all relevant terms and
conditions (including the applicable charges, amounts and rates payable and
the period for which they are to apply).
3.6 Each Carrier will provide its own Interconnect Capacity to the POI unless
it is agreed by the Carriers that the Interconnect Capacity is to use CCS7
signalling in which case the charges for the provision of such circuits for
both incoming and outgoing traffic (two way Interconnect Capacity) is to be
based on the utilisation. Utilisation shall be agreed upon by the parties
and documented in the Technical and Implementation Manual.
4. ACCESS SERVICE
4.1 Subject to clauses 2.5.1 and 2.5.2 and Interconnection Service being
provided in accordance with clause 3 and the Interconnecting Carrier's
compliance with a Service Ordering Procedure, the Access Carrier will
provide the agreed Access Service in accordance with the agreed
provisioning procedure, as set out in the relevant Manual.
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4.2 Each Carrier must ensure that the carriage of a Call Communication by it
conforms to the QOS Standards for the carriage in respect of which the
Carrier has control.
4.3 The Interconnecting Carrier will pay to the Access Carrier for Access
Services provided by the Access Carrier, charges in accordance with the
applicable provisions set out in the Schedules to this Agreement.
4.4 The routing and call handover principles to apply to a Call Communication
will be agreed by the parties prior to the provision of the Access Service
for that type of Call Communication and will be recorded in the appropriate
Manual.
4.5 In the event that a Call Communication to a number (the 'B' party number)
which is allocated to either party to this Agreement is "forwarded" to
either party's PSTN Number, or ATUR Number, the forwarded portion of the
call shall be considered in all respects to be a second and separate call
for the purposes of this Agreement (including but not limited to the
calculation of any Access Charges). Any Access charges incurred in
forwarding the call from the original 'B' party number to another PSTN
Number or ATUR number or to another network, shall be to the account of the
'B' party and the Carrier to which the 'B' party is connected.
4.6 Notwithstanding anything to the contrary, each party shall be entitled to
its revenue share if it carries traffic to the Other Carrier's PSTN Number
or ATUR Number irrespective of the location of Other Carrier's customer at
the time the Call Communication is made.
5. SPECIAL SERVICES
5.1 The parties will agree to the terms and conditions (including Access
Charges) for each type of Special Service as that type is agreed to be
added to the category of Special Services covered by this Agreement. The
Interconnecting Carrier will pay to the Access Carrier in relation to each
Special Service those charges which are payable in accordance with the
terms and conditions applicable to that Special Service and as set out in
Schedule 3.
5.2 The parties hereby agree that the minimum period for which STW will be
provided each of the Special Services in Schedule 3 is eighteen (18) months
from the Commencement Date and thereafter STW may terminate their
requirement for any one or more of such Special Services provided it serves
Telekom Malaysia with at least a six (6) months written notice.
6. DIRECTORY ASSISTANCE SERVICE
6.1 Subject to the terms of this Agreement, Telekom Malaysia agrees to provide
to STW in respect of Directory Assistance Service Calls, a Directory
Assistance Service accessed by callers dialling '103' on the STW Network.
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6.2 Directory Assistance Service provided by Telekom Malaysia to callers from
the STW Network will be in accordance with Telekom Malaysia's standard
operating practices and procedures for Directory Assistance Service.
6.2A In order to supply STW with a Directory Assistance Service, STW shall
supply Telekom Malaysia its new customers and amended customer information
as required to support the Directory Assistance Service ("Customer
Information"). Such Customer Information shall be supplied by STW in an
agreed electronic format on a weekly basis, or such longer period of time
as agreed between the parties.
6.2B The supply of Customer Information by STW to Telekom Malaysia and the
inclusion of such information within the Directory Assistance Service does
not confer any rights to STW in Telekom Malaysia's Directory Assistance
Service database or other related databases or otherwise in whatever form.
STW is fully authorised to supply and utilise the Customer Information and
expressly grants an irrevocable free licence to Telekom Malaysia to use
STW's information for the provision of the Directory Assistance Service and
Telekom Malaysia shall not be under any confidentiality obligations under
Clause 15 in respect thereof.
6.3 STW will pay to Telekom Malaysia in relation to Call Communications from
the STW numbers to the Directory Assistance Service, charges in accordance
with Schedule 2 to this Agreement. The rates in the Schedule may be
reviewed two (2) years from the date of this Agreement unless otherwise
stated in the Schedule and pending agreement both parties shall pay the
rates in the Schedule. The parties agree to adjust the payments upon
reaching an agreement on the revised rates. If the amounts paid to date
for the period pending agreement ('said Period") are higher than the
amounts payable under the revised rates then the other party will credit
such difference (free of interest) within fourteen (14) Business Days from
the date of agreement to the invoiced party. If the amounts paid to date
for the said Period are less than the amounts payable under the revised
rates then the invoiced party will pay in full such difference (free of
interest) within fourteen (14) Business Days from the date of agreement to
the other party
6.4 The parties hereby agree that the minimum period for the Directory
Assistance Service is eighteen (18) months and thereafter STW may terminate
its requirement for such service provided it serves Telekom Malaysia with
at least six (6) month's written notice.
6A. PRINTED DIRECTORIES
6A.1 Telekom Malaysia agrees to make available, at Kedai Telekom or as otherwise
determined by Telekom Malaysia, for the distribution of its printed
directory of subscriber and other numbers (typically known as the 'white
pages' directory) which it prepares for its own customers to STW's
customers contained in the Directory Assistance Service database in
accordance with Telekom Malaysia's standard operating procedures.
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6A.2 STW shall pay Telekom Malaysia or if directed by Telekom Malaysia, to the
relevant party, [*] only per number entry for each of STW's customers
listed in the white pages directory. This charge shall entitle each of
STW's customers to:
(i) a single standard entry in the white pages directory; and
(ii) one (1) copy of the white pages directory and yellow pages directory
applicable to the customer's Telephone Area.
Should STW require the entries to be in a form other than a standard entry,
the charges shall be at such rates as may be agreed by the Carriers. STW
acknowledges that it is fully aware of the type of print of the standard
entry in the white pages. For the avoidance of doubt, the bold entry shall
not be construed as a standard entry.
STW shall pay these charges to Telekom Malaysia or if directed in writing
by Telekom Malaysia, to the relevant party, within 30 days from the invoice
date.
6A.3 At STW's request, Telekom Malaysia shall make available to it at the
Kedai Telekom or as otherwise determined by Telekom Malaysia a
reasonable quantity of additional copies of both the white pages
directory and yellow pages directory to STW at the retail price for
such directories. Such a request shall be for a minimum of five
thousand (5,000) copies for each directory with increments in
multiples of one thousand (1,000) unless otherwise agreed between the
parties. All requests shall be made at least two (2) months prior to
the intended date of printing of the new directory. Any requests not
made within this time will be subject to stock availability.
Additional procedures applying to the supply and distribution of the
white pages directory and yellow pages directory shall be agreed in
the Technical and Implementation Manuals.
6A.4 The supply of Customer Information by STW to Telekom Malaysia and the
inclusion of such information in one or more printed directories does
not confer any rights to STW in Telekom Malaysia's printed directories
or related databases or otherwise in whatever form. STW is fully
authorised to supply and utilise the Customer Information and
expressly grants an irrevocable free licence to Telekom Malaysia to
use and reproduce the Customer Information for the preparation and
distribution of the printed directories and Telekom Malaysia shall not
be under any confidentiality obligation under Clause 15 in respect
thereof.
6A.5 Notwithstanding anything to the contrary in this Agreement the above
mentioned charges in Clause 6A.2 shall be subject to an increase of
[*] per annum.
7. TRANSMISSION CAPACITY SERVICES
7.1 Subject to either Carrier complying with the Service Ordering Procedures,
and
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* Confidential portion has been omitted and filed separately with the
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agreement being reached pursuant to clause 7.3, Telekom Malaysia will provide in
accordance with the provisioning procedures in the relevant Manual, Transmission
Capacity Services agreed by both Carriers.
7.2 Each Carrier will ensure that Transmission Capacity Services conform to the
QOS Standards and Technical Specifications, subject to Other Carrier's use
of those Transmission Capacity Services in accordance with the Technical
Specifications and other agreed requirements.
7.3 Upon request from either Carrier, the Carriers will meet, negotiate and
agree and document as a schedule to this Agreement all relevant terms and
conditions (including the applicable charges, amounts and rates payable and
the period for which they are to apply) in respect of the provision by,
either Carrier to the Other Carrier of Transmission Capacity Services.
8. FACILITIES ACCESS
8.1 Unless otherwise agreed by the Carriers, each POI will be physically
installed and housed at the locations listed in the relevant Manual. It is
agreed that where a Carrier ("First Carrier") leases Interconnect Capacity
from the Other Carrier to trunk its Interconnect Traffic to and from the
POI to its Gateway, the Other Carrier's equipment can be co-located in the
First Carrier's premises in accordance with the terms of the relevant
Manual for the required space in the Other Carrier's premises. STW shall
provide Telekom Malaysia access to its premises when Telekom Malaysia,
reasonably requires it for the purpose of installing, maintaining,
modifying or removing Telekom Malaysia equipment required at the POI.
8.2 The Carriers will negotiate and agree and document all relevant terms and
conditions in respect of the provision of Facilities Access to Facilities
in addition to those provided for in clause 8.1, if and when the same is
required.
9. PROVISION OF INFORMATION
9.1 The obligations of each Carrier to provide information to the Other Carrier
are as set out in this clause or as otherwise agreed between the parties
and are subject to the requirements of confidentiality imposed by this
Agreement.
9.2 The ISG will negotiate methods and procedures governing the provision of
information by each Carrier to the Other Carrier under this Agreement.
9.3 A Carrier must provide the Other Carrier on a timely basis with all agreed
information reasonably required to determine rates and charges to be billed
by each Carrier to the Other Carrier or by each Carrier to its customers.
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9.4 Each Carrier will charge and bill its own customers for a Call
Communication. The Carriers will agree on the Communication Information
which is to be exchanged for the purposes of charging and billing and such
Communication Information will be deemed to be included in the Manuals for
the purposes of call and billing verification. For the purpose of inter
carrier billing reconciliation the Carriers will provide CLI to each other,
subject to:
(a) the ability of the relevant exchange to provide CLI; and
(b) CLI being forwarded to it from another network with which its Network
is interconnected.
9.5 To the extent permitted by Malaysian law and any relevant guidelines or
customer service standards in force pursuant to the Carrier's respective
Licence conditions, the Carriers will exchange information and otherwise
cooperate in relation to the prevention and investigation of fraudulent use
or misuse of the Carriers' respective Telecommunications Services and the
theft of Carrier provided terminal equipment.
9.6 Information provided under this Agreement may only be used for the purpose
for which it was given. Personal information about a customer's credit
worthiness, credit standing, credit history or credit capacity may only be
used for the purposes permitted by, and in compliance with, Malaysian law.
9.7 Information required to be provided under this Agreement need not be
provided if the recipient Carrier has not established security measures
agreed by the ISG to be adequate to protect the confidentiality of the
information. If the recipient Carrier does not observe such security
measures or any of the information is used by it for any purpose other than
the purpose for which it was given, the providing Carrier may deny the
recipient Carrier further access to the information for the period during
which the non observance or nonconforming use continues on notice
specifying the nonobservance or nonconforming use. The Carriers will
cooperate to resolve the providing Carrier's reasonable concerns so that
information exchange can be resumed as soon as possible.
9.8 The parties acknowledge that when information (including for the purposes
of this clause any updated information) required to be provided under this
clause is held on a database the party entitled to receive the information
will not be entitled to obtain direct access to the database. The precise
method by which information is to be made available will be determined by
the ISG having regard to the reasonable cost, convenience and security
concerns of the parties.
9.9 (a) Subject to the Telecommunications Act and any subordinate legislation,
nothing in this Agreement may be construed as requiring a Carrier at
any time to disclose to the Other Carrier information which is at the
date when this Agreement comes into force, the subject of a
confidentiality obligation owed to a third person unless the third
person consents to such disclosure. Where the
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consent of a third person is required, the Carrier holding the
information must use its reasonable endeavours to obtain the consent
of that third person.
(b) After this Agreement comes into force a Carrier must use its best
endeavours not to enter into any contract which would prevent it
from making information available to the Other Carrier unless the
contract includes a term which permits the contracting Carrier to
make the information available if directed to do so by the
Director General of Telecommunications.
9.10 All communication information, call and such other relevant information
in relation to Call Communication must be kept by both Carriers for a
period of two (2) years unless otherwise agreed in writing.
10. BILLING AND SETTLEMENT
10.1.1 In this clause:
"DISPUTE NOTIFICATION PERIOD" means the period of thirty (30) days
after the invoice date; and
"DUE DATE" means the date which is thirty (30) days after the relevant
invoice date; and
"INVOICE CARRIER" means the Access Carrier which issues an invoice; and
"INVOICE DATE" means the date on which an invoice is dispatched.
10.1.2 In respect of any charge due from a Carrier or invoice to be sent to a
customer the Invoice Carrier shall raise the invoice. The Invoice
Carrier shall invoice within the next calendar month substantiated by
an interconnect usage report relating to each Call Communication for
the last preceding month in of call charges except for charges
incurred for agreed numbers used for testing purposes prior to
commissioning of the respective POI. In addition, the Carrier shall
also be entitled to invoice the Other Carrier for any Access Charges
and other charges in relation to the provision of Access Services,
and Interconnection Services and any other facilities or services.
10.1.3 The Invoice Carrier is responsible for obtaining information upon
which the invoice is based and if the Invoice Carrier does not normally
collect that information and it is not reasonably practicable for the
Invoice Carrier to do so but the Other Carrier is able to collect the
information, that Carrier shall supply such information and the Invoice
Carrier may use that information. The Invoice Carrier shall bear all
expenses in checking any information so supplied.
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10.1.4 If a Carrier is unable to submit a monthly statement of interconnect
usage by the end of the next month then the monthly adjustment and
payment (if any) will be made against the last invoice (save and
except for the first month) within fourteen (14) Business Days of the
end of that particular month and the parties agree to pay each other
the sum not less than the amount invoiced in the last preceding month's
invoice (save and except for the first month) ("Provisional Amount").
Monthly payments will be provisionally adjusted in the next invoice or
as soon as practicable but not later than ninety (90) Business Days
after the date the charges were incurred. In respect of the first
month both parties will send an estimated invoice if they are unable
to send an interconnect usage report not later than one hundred and
twenty (120) days from the Commencement Date and this shall not in
any way prevent the Other Carrier from issuing its invoice at any time
earlier and neither does it affect such Carrier from being paid in
accordance with this Agreement.
10.1.5 (a) If the invoiced amount for that month is higher than the
Provisional Amount for the same month, then the Other Carrier will
pay in full such difference within fourteen (14) Business Days from
the invoice date to the Invoice Carrier.
(b) If the invoiced amount for that month is lower than the Provisional
Amount for the same month, the Invoice Carrier will reimburse in
full such difference free of interest within fourteen (14)
Business Days from the invoice date to the Other Carrier. Such
payment must be forwarded to the Other Carrier together with the
relevant monthly statement of the actual interconnect usage.
10.1.6. Where appropriate, any taxes shall be added to all or any charges
under this Agreement and be paid by the party responsible for making
such payment.
TERMS OF PAYMENT
10.2 (a) A Carrier must pay any amount due and owing to the Other Carrier
on the due date unless otherwise agreed in writing by both parties.
(b) A Carrier to whom any service is provided under this Agreement
must pay the Carrier providing the service the applicable rates
and charges, and on the terms and conditions set out or referred
to, as the case may be, in this Agreement.
10.3 Subject to clauses 10.1.4, 10.9 and 10.10, each Carrier agrees to
provide the Other Carrier with an invoice for all amounts due under
clause 10.2 in respect of each Billing Period.
10.4 All payments under this Agreement must be:
(a) paid by electronic transfer to the Invoice Carrier or exceptionally
by cheque to the nominated account(s) of the Invoice Carrier if
agreed by the Invoice Carrier; and
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(b) subject to clause 10.10, paid without set off or counterclaim and
free and clear of any withholding or deduction.
10.5 Unless otherwise agreed, all invoices shall be stated in RM and payment
must be made in RM.
10.6 Interest on due and unpaid amounts is payable (as well before judgment
and after judgement) at the rate of [*] Malayan Banking Bhd's base
lending rate ("BLR") calculated daily from the due date until the date
of actual payment. Payments which are overdue by more than sixty (60)
days will bear additional interest at the rate of [*] per annum (as
well as before judgment and after judgement) calculated from the due
date until the date of receipt by the Invoice Carruer if full payment.
10.7 Where interest in respect of any due and unpaid amount is due to an
Invoice Carrier under clause 10.6, that Carrier may add the amount of
such interest to its next invoice.
10.8 If a Carrier discovers an error in an invoice given by the Other
Carrier under this clause 10, it must notify the Other Carrier. The
Carrier which made the error must make the adjustment necessary to
correct that error in its next invoice.
10.9 If a Carrier has omitted charges from an invoice, that Carrier may
include those charges in a later invoice which may not be submitted
after ninety (90) Business Days after the date the charges were
incurred provided that omitted charges may be included in any invoice
issued within the first one hundred and twenty (120) Business Days
after the Commencement Date.
10.10 Unless the parties otherwise agree, there will be no setting-off (ie
netting) of inter Carrier invoices except where a Carrier goes into
liquidation in which case the Other Carrier may set off. However,
in order to minimise the administration and financial costs of the
settlement process, the parties will consider set off proceeds for
Carrier invoices which may require the alignment of each Carrier's
invoice date and other procedures to allow set off to occur
efficiently.
BILLING DISPUTES
10.11 If a Carrier ("DISPUTING CARRIER") disputes in good faith an invoice
prepared by the Invoice Carrier, the Disputing Carrier must notify the
Invoice Carrier in writing within the dispute notification period.
10.12 A notice given under clause 10.11 must specify:
(a) the reasons why the Disputing Carrier disputes the invoice; and
(b) the amount in dispute.
- -------------------------
* Confidential portion has been omitted and filed separately with the
Commission.
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10.13 Subject to clause 10.14, the Carriers must use their reasonable
endeavours to promptly resolve any dispute notified under clause 10.11
through the ISG and, if it is unable to do so within thirty (30) days
after the expiry of the dispute notification period, either Carrier may
refer the dispute for resolution in accordance with the dispute
resolution procedures set out in clause 19.
10.14 To the extent that a dispute notified under clause 10.11 involves a
dispute with a Correspondent of the Invoice Carrier, the procedures
set out in clause 10.13 are suspended for a reasonable period of time
pending resolution of the dispute with the Correspondent. As a
general rule, the period of suspension will not exceed ninety (90)
days. However, the Carriers recognise that disputes with some
Correspondents may take longer than ninety (90) days to resolve, in
which case the Invoice Carrier must promptly inform the Disputing
Carrier in writing of the likely period required for resolution.
10.15 Notwithstanding anything to the contrary , the Carrier is obligated to
pay the amount stated in the invoice by the due date even if it
disputes the amount of the invoice or claim. If the amounts paid to
date for the period pending the settlement of the dispute is higher
than the amounts payable then the Invoice Carrier will credit such
difference (free of any interest) within fourteen (14) Business Days
from the date of settlement of the dispute to the Carrier. If the
amounts paid to date under the invoice in dispute are less than the
amounts payable then the Carrier will pay in fun such difference
within fourteen (14) Business Days from the date of settlement of the
dispute to the Invoice Carrier.
CUSTOMER BILLING
10.16 The parties will also comply with the arrangements for the billing of
customers agreed and documented by the ISG in the relevant Manual.
11. AUDITS
11.1 Either Carrier may request an audit of the Other Carrier's call data,
and the Other Carrier will facilitate and provide access upon
reasonable notice for such audit to be carried out by independent
auditors agreed upon by the parties and an audit certificate provided.
The costs of such an audit will be equally shared by Telekom Malaysia
and STW. Audits cannot be conducted more frequently than at six (6)
month intervals unless the requesting Carrier pays the entire costs of
the audit
The independent auditor shall be appointed within thirty (30) days
from the date of the request of the audit. Failing agreement on the
independent auditor above mentioned, another auditor will be appointed
by an independent third party (the President of the Malaysia Institute
of Accountants) within thirty (30) days from the date of notification
by the Carrier requiring the audit. The costs of the audit shall be
borne by the Carriers equally and the results of the audit shall be
final and binding.
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12. NETWORK PROTECTION AND RELATED NETWORK MATTERS
12.1 Each Carrier is responsible for the safe operation of its Network and
must reasonable and necessary steps to ensure that its Network, its
Network operations and implementation of this Agreement:
(a) do not endanger the safety or health of the officers, employees,
contractors, agents or customers of the Other Carrier; and
(b) do not damage, interfere with or cause any deterioration in the
operation of the Other Carrier's Network
12.2 A Carrier must not modify, or take any action which would have the
effect of modifying the operation of the Network of the Other Carrier
or take any action with respect to the Other Carrier's Network which
is without the Other Carrier's permission.
12.3 A Carrier must not interfere with the use of the Telecommunications
Services provided by the Other Carrier, but this clause will not be
taken as excusing a Carrier from the performance of any of its
obligations under this Agreement.
12.4 The parties will cooperate to enable each other to meet the terms of
their respective Licences and to fulfill their obligations under this
Agreement and to provide Telecommunications Services to their
customers. The parties will manage their Networks to minimise
disruption to services and, in the event of interruption or failure
of any service, will restore those services as soon as is reasonably
practical. Each Carrier must manage, notify and correct faults arising
in its Network which affect the provision of any Telecommunications
Service by the Other Carrier:
(a) as it would in the ordinary course for similar faults affecting
the provision of Telecommunications Services by it; and
(b) in accordance with the fault notification procedures and the
principles of priority of repair of faults agreed by the ISG and
documented in the relevant Manual.
12.5 STW agrees that Interconnect Traffic bound for Telekom Malaysia's PSTN
Numbers and ATUR Numbers shall be routed directly to Telekom Malaysia
via the agreed POIs and shall not be routed via the Network and the POI
of another operator with a Licence in Malaysia
12A. NUMBERING
12A.1 Both the Carries agree to comply with the obligations, operations
and procedures in relation to the PSTN Numbers determined by the
Numbering Plan promulgated by the Director General of
Telecommunications.
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12A.2 Both Carriers shall have full discretion in allocating to its customers
the PSTN Numbers which have been allocated for its use by the Director
General of Telecommunications subject to the following conditions:
(a) Every 10,000 block of numbers must be capable of reference to and
restricted to one Telephone Area; and
(b) Any allocation of PSTN Numbers facilitates access to and routing over
the Telekom Malaysia's Network or STW's Network in accordance with
the procedures laid down in the Technical and Implementation Manuals.
13. NETWORK PROVISION AND OPERATIONAL LIAISON
13.1 The parties will:
(a) use their best efforts to negotiate and agree and document as soon as
reasonably practicable the provisions of the Technical and
Implementation Manual and the Operations and Maintenance Manual and
any other Manuals which the parties deem necessary to establish;
(b) comply with the operational procedures and methods set out in the
Manuals; and
(c) where such procedures and methods have not been agreed, negotiate
operational procedures and methods;
in relation to:
(1) the planning, ordering, provisioning and delivery of services;
(2) the management of services including:
(i) QOS indicators, reporting on performance in terms of those
indicators and determining the appropriate action to be taken in
the event that service quality falls below the agreed indicator
levels;
(ii) network operations in the event of Network failure, congestion
and blockage; and
(iii) ensuring that the parties Networks are adequately protected
from harm;
(3) test procedures and other technical and operational matters relating
to the provision of services by one Carrier to the Other Carrier;
(4) the handling of customer operations; and
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(5) such other matters as the parties determine.
13.1A It is agreed that the Technical and Implementation Manual will
contain a requirement for STW to, inter alia:
(a) provide a forecast for its required Interconnect Capacity on a
monthly basis for the first eighteen (18) months including an
undertaking that STW will pay the agreed rates for the first six
(6) months of Interconnect Capacity (that Telekom Malaysia
supplied or has offered to supply) irrespective of STW's actual
use of that Interconnect Capacity; and
(b) provide a five (5) year rolling forecast of the required
Interconnect Capacity, updated on a six (6) monthly basis. This
forecast will include Interconnect Capacity requirements on a
quarterly basis for the first and second years and annually for
years three to five.
13.1B In addition to the requirements under the Technical and
Implementation Manuals, each Carrier agrees to:
(a) designate in writing the POI or POIs for the handover of
Interconnect Traffic for every State and if different, for any
Telephone Area; and
(b) provide at least two (2) months prior written notice of its
intention to designate a POI as the point for the handover of
particular Interconnect Traffic that would affect the
interconnect charges payable by a Carrier to the Other Carrier on
any particular route. This notice period can be shortened by,
agreement between the parties.
13.2 The co-ordination of the on-going inter carrier relationship will be
undertaken by the ISG.
13.3 It is hereby expressly agreed that nothing in clause 13.1A or this
Agreement obliges Telekom Malaysia in any way to provide any additional
Network Capacity, Interconnect Capacity, Facilities, Services or otherwise
unless it is in accordance with the terms of the Manuals. Pending
finalisation of the Manuals, Telekom Malaysia may in its absolute
discretion provide the same upon such terms and conditions as both parties
may agree.
14. INTELLECTUAL PROPERTY RIGHTS
14.1 All right, title and interest in and to any:
(a) Intellectual Property (in relation to matters the subject of this
Agreement) developed after the Commencement Date vests in the party
who developed that Intellectual Property or for whom that Intellectual
Property was developed by a third person; and
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(b) improvements to or adaptations, versions or modifications of
Intellectual Property (in relation to matters the subject of this
Agreement) vest in the party who developed that Intellectual Property
or on behalf of whom that Intellectual Property was developed.
14.2 The parties will negotiate arrangements (including in respect of title)
concerning Intellectual Property jointly developed in the course of
performing or otherwise in connection with this Agreement.
14.3 The owner of Intellectual Property ("Owner") may take such steps and
proceedings as it considers necessary or desirable to protect its rights in
respect of the Intellectual Property and the rights of any other party to
which the Intellectual Property has been disclosed or licensed ("User") and
each User must render all reasonable assistance in connection with those
steps or proceedings at the request and expense of the Owner.
14.4 A party must not use a trade mark belonging to another party as a trade
mark without the prior written consent of that other party.
14.5 Each party ("INDEMNIFYING PARTY") indemnifies the other party ("INNOCENT
PARTY") against all liability or loss arising directly or indirectly from,
and all reasonable costs, charges and expenses incurred in connection with
any claim, action, suit or demand alleging infringement by the Innocent
Party of the rights of a third party arising from use by the Innocent Party
of Intellectual Property disclosed or licensed by the Indemnifying Party
under this Agreement. This indemnification will represent the only remedy
and form of compensation available to the Innocent Party in relation to the
infringement by the Innocent Party of the rights of a third party in
relation to Intellectual Property licensed or disclosed by the Indemnifying
Party under this Agreement.
15. CONFIDENTIALITY
15.1 Subject to clause 15.3 each party must keep confidential all Confidential
Information of another party which:
(a) is disclosed, communicated or delivered to it by a party pursuant to
this Agreement; or
(b) comes to its knowledge or into its possession in connection with this
Agreement,
and must not:
(c) use or copy such Confidential Information except for the purposes of
this Agreement or as required by the Director General of
Telecommunications; or
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(d) disclose or communicate, cause to be disclosed or communicated or
otherwise make available such Confidential Information to any third
person other than its directors, officers, employees and/or
Professional Adviser to whom disclosure is necessary for the
purposes of this Agreement.
15.2 Each party much establish and observe procedures adequate to protect the
Confidential Information of another party and, without limiting the
generality of the foregoing, must ensure that each of its directors,
officers, employees and/or Professional Adviser to whom that
Confidential Information is disclosed for the purposes of this Agreement
is subject to and maintains the confidentiality obligations set out
herein.
15.3 Except as otherwise provided in this Agreement, a party ("DISCLOSING
PARTY") may only disclose the Confidential Information of another party
only in accordance with a lawful and binding directive issued by the
Director General of Telecommunications and provided that in each case
the disclosing party:
(i) has given twenty four (24) hours notice to the other party that it
is required to disclose the Confidential Information so that the
other party has an opportunity to protect the confidentiality of
its Confidential Information; and
(ii) provides the other party with a copy of the Confidential
Information of that other party so disclosed.
15.4 Each party must co-operate in any action taken by another party to:
(a) protect the confidentiality of the other party's Confidential
Information; or
(b) enforce the rights in relation to its Confidential Information.
15.5 Confidential Information provided by one party to another party is
provided for the benefit of that other party only. Each party
acknowledges that no warranty is given by the disclosing party that
the Confidential Information is or will be correct. However, the
parties will use their best endeavors to ensure such information is
correct.
15.6 Each party acknowledges that a breach of this clause 15 by one party may
cause another party irreparable damage for which monetary damages would
not be an adequate remedy. Accordingly, in addition to other remedies
that may be available (including but not limited to recovery of monetary
damages), a party may seek injunctive relief against such a breach or
threatened breach.
15.7 A party may use CLI disclosed to it only for the purpose of providing
inter carrier billing services provided that such use does not violate
the Director General of Telecommunication's directive. The parties
will co operate in the barring of CLI where required under law, by the
Director-General's directive or as otherwise agreed.
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16. LIABILITY AND INDEMNITY
GENERAL PRINCIPLE
16.1 Save to the extent that another provision of this Agreement expressly
provides for (or expressly excludes or limits) a remedy, a liability or a
form of compensation in relation to an act, omission or event, this
clause shall regulate the liability (whether arising in contract,
in tort, under statute or in any other way and whether due to
negligence, willful or deliberate breach or any other cause) of
a party to each other party under and in relation to this Agreement
and in relation to any act, omission or event relating to or arising
out of this Agreement.
INSURANCE
16.2 Without limiting or reducing STW's liability and responsibility as
contained elsewhere in this Agreement, STW shall procure and maintain
the following insurance applicable to its operations with respect to
and for the duration of this Agreement:
(a) Worker's Compensation and/or Social Security Insurance and/or
Employer's Liability Insurance and/or other insurance with
statutory limits as required by the laws of Malaysia to provide
for payment to its employees employed on or in connection with
the work covered by this Agreement and/or their dependents.
(b) Comprehensive General Liability Insurance in the amount of Ringgit
Malaysia Ten Million (RM10,000,000.00) for any one claim or series
of claims arising out of an accident or occurrence in connection
with this Agreement resulting in bodily injury and/or personal
injury including death and property damage of Telekom Malaysia
which shall arise out of or in consequence of any acts or omission
of STW. Such policy shall include contractual liability.
DAMAGE TO PROPERTY
16.3 Either party ("DEFAULTING PARTY") shall indemnify and hold the other
party safe and harmless from and against all damage to or destruction
or loss of all or any property beneficially and/or absolutely owned
by the other party arising out of any act or omission of either party,
its servants or agent in so far as such damage, destruction or loss
arises out of or in the course of or by reason of the carrying out
any works for or in relation to the Interconnection or providing the
Telecommunications Services.
DEATH AND PERSONAL INJURY
16.4 Subject to Clause 16.6.3, the defaulting party shall be absolutely
liable for, and hereby indemnifies the other party from and against all
claims in respect of all injuries to, including the death of any and all
employees of the other party arising out of any act or omission of either
party, its servants or agent.
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THIRD PERSON INDEMNITY
16.5 Subject to clause 16.6.3, the defaulting party shall indemnify and
hold the other party safe and harmless from and against:
(a) all injuries to, including death of; and/or
(b) loss of or damage to property of;
third parties arising out of or in connection with or in the course of
or by reason of either party's breach or when due to any acts omission
or default of either party, its servants and/or agents in the carrying
out of any works for or in relation to the Interconnection or providing
the Telecommunications Services.
LIABILITY
16.6.1 Neither party excludes liability for death or personal injury
attributable to its own negligence or the negligence of its servants
and agents.
16.6.2 Subject to Clause 16.5, either party shall not be liable to the other
party or any other third party and shall not indemnify the other party
for any claims, proceedings or actions brought or made by a third party
against the other party howsoever arising including but not limited to:
(a) the lack of or loss or interruption or any delays to access,
interconnection transmission or otherwise; and
(b) any claims, proceedings or actions brought or made against the
other party by any person pursuant to a contractual relationship
with the other party.
16.6.3 In no event will either Carrier's liability under this Agreement exceed
in aggregate, [*] only.
EXCLUSION OF WARRANTIES
16.7 Except as expressly set out in this Agreement all representations,
conditions and warranties (whether express or implied, statutory or
otherwise) including but not limited to any implied warranty of
merchantability, implied warranty of fitness for a particular purpose,
implied warranty of non infringement and implied warranty arising out of
the course of dealing custom or usage of trade with respect to any
service provided by Telekom Malaysia are expressly negatived and
excluded. The warranties set forth in this Agreement are the only
warranties made by Telekom Malaysia and will not be enlarged or
diminished without Telekom Malaysia's approval
16.8 In no event will Telekom Malaysia be liable to STW or any other person
for loss of profits, business, use of data or special, exemplary,
indirect, incidental, consequential or punitive damages of any kind
for any reason, including, without limitation, the
_________________________________
* Confidential portion has been omitted and filed separately with the
Commission.
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breach of this Agreement or any termination of this Agreement, whether
such liability is asserted on the basis of contract, tort (including
negligence and strict liability) or otherwise, even if Telekom Malaysia
has been advised of the possibility of such damages. The essential
purpose of this provision is to limit the potential liability of
Telekom Malaysia arising out of this Agreement.
REMEDIES FOR WARRANTIES IMPLIED BY LAW
16.9 If a party breaches any condition or warranty implied by any applicable
law rules or other regulations which cannot lawfully be excluded, to the
extent permitted by applicable law the liability of the party is limited
to:
(a) in the case of services constituting or included in a service, the
resupply of, or payment of the cost of resupplying, the service;
and
(b) in the case of goods constituting or included in a service:
(i) the replacement of the goods or the supply of equivalent
goods; or
(ii) the repair of the goods; or
(iii) the payment of the cost of replacing the goods or of
acquiring equivalent goods; or
(iv) the payment of the cost of having the goods repaired, at the
election of the party.
17. COMMENCEMENT, DURATION AND CONSEQUENCES OF BREACH
17.1 This Agreement takes effect on the Commencement Date, except the
obligations to provide a service which is a Telecommunications Service
which will take effect when all the material obligations in this
Agreement have been fulfilled.
17.2 This Agreement shall remain in force until the earlier of:
(a) the termination of Telekom Malaysia's Licence where Telekom
Malaysia is not immediately granted another Licence; or
(b) the termination of STW's Licence where STW is not immediately
granted another Licence of that type; or
(c) the termination of this Agreement pursuant to CLAUSE 17.4 or 17.6.
17.3 Subject to CLAUSES 17.4 and 17.6, where either Carrier's Licence or part
thereof is terminated and such Carrier is not immediately granted
another licence of that type, the obligations under this Agreement shall
terminate insofar as it affects or relates to
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CONFIDENTIAL TREATMENT REQUESTED
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that part of the licence that has been terminated and the other
obligations under this Agreement shall remain in force.
17.4 If either party breaches a material obligation in the opinion of the
other party under this Agreement relating to, or arising out of a
service, and:
(a) after becoming aware of the breach, the affected party ("INJURED
PARTY") gives notice in writing ("BREACH NOTICE") to the party in
breach ("PARTY IN BREACH"):
(i) citing this CLAUSE 17.4; and
(ii) specifying the breach and the service in respect of which the
breach has occurred; and
(iii) requiring the Party in Breach to institute remedial action
in respect of that breach; and
(b) the Party in Breach:
(i) fails to institute remedial action in respect of the breach
within fourteen (14) days after receiving the Breach Notice;
or
(ii) having instituted remedial action in respect of the breach,
fails to remedy the breach within thirty (30) days after
receiving the Breach Notice,
the Injured Party may at its discretion,
(A) by written notice ("SUSPENSION NOTICE") given to the Party in
Breach within thirty (30) days after the expiry of the fourteen
(14) day or thirty (30) day period, as the case may be:
(1) (aa) refuse to continue to provide the party in breach. with
the service:
(i) of the kind in respect of which the breach has
occurred;
(ii) a request for which is made after the date of the
breach; and
(bb) refuse to provide any further Access Service,
Facilities, Facilities Access, Interconnect
Conditioning, Interconnect Support or Interconnection
Service, Network Capacity, Network Conditioning,
Network Facilities, Operations and Maintenance Support,
Supplementary Services, Transmission Service or any
other service support or capacity or part thereof,
whether a request for the same has been agreed to or
not by Telekom Malaysia; or
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(2) suspend the provision of any service of the kind in
respect of which the breach has occurred, until the
breach is remedied in full.
OR
(B) terminate this Agreement forthwith by notice in writing to
the Party in Breach ("TERMINATION NOTICE").
17.5 The issuance of a suspension notice shall not in any way prejudice or
prevent the Injured Party from exercising its right to issue a
termination notice under CLAUSE 17.4 provided the Injured Party has
given the Party in Breach seven (7) days notice of its intention to
terminate this Agreement if the suspension notice has been issued.
17.6 A party ("TERMINATING PARTY") may terminate this Agreement on fourteen
(14) days notice in writing if:
(a) an order is made or an effective resolution is passed for winding
up or dissolution (otherwise than for the purposes of
reconstruction or amalgamation) of the other party and the order
or resolution remains in effect for a continuous period of sixty
(60) days; or
(b) a receiver, receiver and manager, official manager, provisional
liquidator, liquidator, or like official is appointed over the
whole or a substantial part of the undertaking and property of
the other party and the appointment remains in effect for a
continuous period of sixty (60) days; or
(c) a holder of an encumbrance takes possession of the whole or any
substantial part of the undertaking and property of the other
party; or
(d) a Force Majeure, substantially and adversely affecting the ability
of a party to perform its obligations to the other party under this
Agreement, continues for a period of ninety (90) days provided that
the terminating party may not give notice under this clause unless
the terminating party has negotiated or endeavoured to negotiate
in good faith with the other party to remedy the Force Majeure and
amend the terms of this Agreement to enable this Agreement to
remain in full force and effect notwithstanding such inability to
so perform but has failed to reach any agreement within thirty (30)
days from the commencement of negotiations.
17.7 If, after the termination or expiry of this Agreement in whole or in
part:
(a) a Carrier ("NOTIFYING CARRIER") gives the Other Carrier notice
requesting the Other Carrier to carry out necessary disconnection
works and to return any equipment or facilities of the notifying
Carrier or a third person installed by or for the notifying
Carrier; and
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(b) the Other Carrier has failed to comply with the request, the
notifying Carrier may enter the premises of the Other Carrier
on reasonable notice for the purposes of carrying out any
necessary disconnection works and repossessing such equipment
and facilities. The Other Carrier on whose premises such equipment
or facilities were installed is responsible for compensating the
notifying Carrier for any such equipment or facility which is not
delivered up in good condition (fair wear and tear excepted) and
for making good all the damage to the notifying Carrier's premises,
if the equipment or facilities of the Other Carrier are in the
notifying Carrier's premises or under the notifying Carrier's care.
The Other Carrier shall indemnify the other party in respect of any
damage thereby caused to the premises, equipment and facilities of
or under the care of the notifying Carrier.
17.8 Termination or expiry of this Agreement in whole or in part does not
operate as a waiver of any breach by a party of any of its provisions
and is without prejudice to any rights, liabilities or obligations of
any party which have accrued up to the date of the termination or
expiry, including a right of indemnity.
18. REVIEW
18.1 If:
(a) the Telecommunications Act (as in force at the Commencement Date)
is amended or there is an introduction of a new law; or
(b) a condition of a party's Licence (as at the Commencement Date) is
amended or deleted or a new condition is imposed; or
(c) a lawful directive is made by the Director General of
Telecommunications,
and such amendment, deletion, new condition or directive affects the
rights or obligations of any of the parties under this Agreement, the
parties agree to negotiate in good faith such amendments to this
Agreement as are necessary or appropriate to ensure consistency between
this Agreement and the Telecommunications Act or the new law, and the
parties' respective Licences or the directive, as the case may be.
18.2 The obligation to negotiate set out in CLAUSE 18.1 commences promptly
after delivery of a notice from one party to the other party setting
out in reasonable detail the amendments sought.
18.3 For the avoidance of doubt, the provisions of this Agreement remain in
full force and effect during any negotiations conducted under this
CLAUSE 18 until commencement of an agreement replacing or amending this
Agreement.
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19. DISPUTE RESOLUTION
19.1.1 Each party shall use all reasonable endeavors to resolve any disputes
arising from, as a result of or in connection with this Agreement.
19.1.2 Subject to CLAUSE 10.13, if any dispute or difference of any kind
whatsoever shall arise between the parties in connection with or arising
out of this Agreement (whether before or after the determination
abandonment or breach of this Agreement) it shall be referred to and
settled by the ISG comprising of a representative of Telekom Malaysia
and STW and such respective representatives being headed by a person who
holds a position not lower than general manager. The ISG shall state
its decision in writing and give notice of the same to Telekom Malaysia
and STW.
19.1.3 Such decision in respect of every matter so referred to the ISG shall
be final and binding upon Telekom Malaysia and STW unless and until the
same shall be revised as hereinafter provided in an amicable settlement
or arbitral award and shall forthwith be given effect to by the parties
who shall proceed with the provision of the Interconnection Services
with all due diligence whether notice of dissatisfaction is given by
either party as hereinafter provided or not.
19.1.4 If the ISG shall fail to give such decision for a period of ninety
(90) days after being referred to the ISG or if either Telekom Malaysia
or STW be dissatisfied with any such decision of the ISG then either
Telekom Malaysia or STW may either within ninety (90) days after
receiving notice of such decision or within ninety (90) days after the
expiration of the first mentioned period of ninety (90) days (as the
case may be) give notice to the other party of his intention to commence
arbitration.
19.1.5 Any dispute in respect of which amicable settlement has not been reached
as aforesaid shall be referred to an arbitrator to be agreed upon
between the parties or failing agreement to be nominated on the
application of either party by the Director for the time being of
the Regional Centre for Arbitration in Kuala Lumpur and any such
reference shall be deemed to be a submission to arbitration within
the meaning of the Arbitration Act. No. 93 (Revised 1972) of Malaysia
or any other law amending or replacing this Act.
19.1.6 If the ISG has given a decision and given notice thereof within a period
of ninety (90) days as aforesaid and no notice of dissatisfaction
has been given either by Telekom Malaysia or STW within a period of
ninety (90) days from receipt of such notice thereof the said decision
of the ISG shall remain final and binding upon Telekom Malaysia and STW.
19.1.7 Such arbitrator shall have full power to open up review and revise any
decision, opinion, direction, certificate or valuation of the ISG and
neither party shall be limited in the proceedings before such arbitrator
to the evidence or arguments put before the ISG for the purpose of
obtaining his decision above referred to.
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19.1.8 The award of the arbitrator shall be final and binding on the parties
Provided Always that no decision given by the ISG shall disqualify any
of them from being called as a witness and giving evidence before the
arbitrator on any matter whatsoever relevant to the dispute or
difference so referred to the arbitrator as aforesaid.
19.1.9 The arbitration shall be held at the Regional Centre for Arbitration
at Kuala Lumpur using the facilities and assistance available.
19.2 Except as otherwise provided in the dispute resolution procedures in the
Manuals, a party must continue to fulfill its obligations under this
Agreement during the period of the dispute and any dispute resolution
process invoked under this CLAUSE 19.
19.3 A party must not use any information obtained from another party solely
during the course of any dispute resolution process invoked under this
clause or the dispute resolution procedures in the Manuals for any
purpose other than to resolve the dispute, by whatever means.
19.4 CLAUSE 19.1 may not be construed to preclude:
(a) the right of a party under the Telecommunications Act to seek the
Director General's involvement in the resolution of a dispute the
subject of CLAUSE 19.1; or
(b) the involvement of the Director-General of Telecommunications in
the resolution of such a dispute where that involvement is within
Director-General's functions and powers under the
Telecommunications Act.
20. INTERCONNECT STEERING GROUP
20.1 The parties will establish a body to be known as the "Interconnect
Steering Group" or ISG which will be responsible for coordinating the
activities of the Carriers, the operation of this Agreement and any
matters specifically referred to the ISG under this Agreement. The
ISO may establish such working groups as it thinks fit to report to it
on particular issues.
20.2 Telekom Malaysia and STW will be equally represented on the ISG and such
representatives shall fully represent and shall be authorised to bind
the parties in regard to decisions made by the ISG.
21. GENERAL PROVISIONS
FORCE MAJEURE
21.1 If a party is unable to perform any obligation (other than an obligation
to pay money) under this Agreement by reason of Force Majeure and that
party:
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(a) gives the other party to which the obligation is owed prompt notice
of the Force Majeure with reasonably full particulars thereof and
an estimate of the extent and duration of its inability to perform;
and
(b) shall continue to take all actions within its power to comply as
fully as possible with the said terms and conditions,
that obligation is suspended insofar as it is affected by, and during the
continuance of the Force Majeure.
21.2 If the Force Majeure continues beyond fourteen."(14) days after the
notice given under CLAUSE 21.1, the parties shall meet to discuss in
good faith a mutually satisfactory resolution to the problem.
21.3 The requirement that a Force Majeure be removed with all possible
diligence does not require the settlement of strikes, lockouts or other
labour disputes or claims or demands on unreasonable terms. If a
strike, lockout or other labour dispute or claim or demand principally
concerns any matter the subject of this Agreement, the party affected
must so notify and consult with the other party.
GOVERNING LAW
21.4 This Agreement and the transactions contemplated by it are governed
by the laws of Malaysia.
21.5 In the event of:
(a) a party seeking urgent interlocutory relief in respect of any
matter; or
(b) a party seeking relief in respect of another party failing to
comply with the dispute resolution process set out in CLAUSE 19;
or
(c) a party seeking relief in respect of a manifest error or mistake of
law of an expert committee, established by the parties pursuant to
any dispute resolution procedures of the Manuals, each party
irrevocably and unconditionally submits to the non exclusive
jurisdiction of the Courts of Malaysia for such relief.
PARTIES TO ACT IN GOOD FAITH
21.6 Each party agrees that it will act in good faith in relation to each
other party with respect to all matters relating to or contemplated
by this Agreement.
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COSTS
21.7 The parties agree to bear their own legal and other costs incurred in
relation to the preparation, negotiation and execution of this
Agreement and all documents contemplated by it (except where this
Agreement or those other documents expressly provides to the
contrary). The stamp duty in respect of this Agreement shall be
borne by STW.
RELATIONSHIP OF THE PARTIES
21.8 The relationship of the parties to this Agreement is one of
independent contractors only. Nothing in this Agreement is to be
construed as creating an agency, partnership, association, trust or
joint venture between the parties. Each party is responsible only
for its obligations as set out in this Agreement.
SURVIVING OBLIGATIONS
21.9 Termination or expiration in whole or in part of this Agreement does
not affect those clauses (including. without limitation, CLAUSES 14,
15, 16, 17.7, 17.8 AND 19) which by their nature survive termination
or expiry.
RELATIONSHIP WITH THIRD PERSONS
21.10 Neither a party nor any of its employees, agents, representatives or
contractors is to be deemed an employee, agent, contractor or
representative of another party which is not a related body corporate
of the first mentioned party.
21.11 Subject to this Agreement, no party has any authority to bind or
oblige or incur any liability on behalf of another party and no such
authority is to be implied.
21.12 CLAUSES 21.10 AND 21.11 have neither the effect nor imply:
(a) that a party or any of its employees, agents, representatives
or contractors is the employee agent contractor or representative
of another party, or
(b) that a party has the authority to bind or oblige or incur a
liability on behalf of another party.
21.13 The Interconnecting Carrier may advise its customers that certain
services are provided by the Access Carrier, but the Interconnecting
Carrier must not represent that the Access Carrier jointly
participates in the Interconnecting Carrier's services.
VARIATION
21.14 (a) Subject to paragraphs (b) and (c) a variation of any part of this
Agreement is valid if, and only if, made between and in writing
subscribed by the parties.
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(b) Insofar as this Agreement sets forth the terms and conditions
(including without limitation terms and conditions about charges)
upon which each of the Carriers agrees to
(i) interconnect its Network to the Network Facilities of the
Other Carrier, and
(ii) supply requested Telecommunications Services to the Other
Carrier, and
(iii) make available to the Other Carrier services facilities and
information specified in the supplementary access
conditions to which their relevant respective Licences are
subject,
a variation of those terms and conditions and of any part of this
Agreement relating thereto is valid if made between and in
writing subscribed by the Carriers provided it is in accordance
with any applicable determination by the Director General of
Telecommunications.
(c) In this Agreement, a reference to this Agreement includes a
reference to. this Agreement as varied from time to time by
variations of the kinds referred to in paragraphs (a) and (b).
(d) In the foregoing provisions of this clause 21.14 a reference to a
variation includes a reference to an addition deletion amendment
modification alteration or other variation.
ASSIGNMENT
21.15 No rights, benefits or obligations under this Agreement may be
assigned by a party without the prior written consent of the other
party.
REMEDIES CUMULATIVE
21.16 Subject to any clause or provision of this Agreement which provides
for a remedy or form of compensation to the exclusion of any other
remedy or form of compensation, the rights, powers and remedies
provided in this Agreement are:
(a) cumulative; and
(b) not exclusive of the rights, powers or remedies provided by law
independent of this Agreement.
NOTICES
21.17 A notice, approval, consent, request or other communication in
connection with this Agreement.
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(a) must be in writing; and
(b) must be left at the address of the addressee, or sent by prepaid
ordinary post to the address of the addressee or sent by
facsimile (to be followed by post) to the facsimile number of the
addressee which is set out below or if the addressee notifies
another address or facsimile number then to that address or
facsimile number.
The address and facsimile number of each party is:
TELEKOM MALAYSIA:
Attention: Vice President, Corporate Strategy
Address: Ibu Pejabat Telekom Malaysia, Jalan Pantai Baharu,
59200 Kuala Lumpur
Facsimile: 03 232 1100
STW:
Attention: Chief Financier Officer
Address: Wisma Segar, Jalan Tun Sambathan
50470 Kuala Lumpur
Facsimile: 03 2735955
21.18 A notice, approval, consent, request or other communication takes
effect from the time it is received unless a later time is specified
in it.
21.19 A notice, approval, consent, request or other communication is, in the
absence of contrary evidence, deemed to be received:
(a) in the case of a posted letter, on the third day after posting;
and
(b) in the case of a facsimile, on production of a transmission
report by the machine from which the facsimile was sent which
indicated that the facsimile was sent in its entirety to the
facsimile number of the recipient; and
(c) in the case of a communication left at the address of the
addressee, at the time the communication was so left.
WAIVER
21.20 A provision of or right under this Agreement may not be waived except
in writing signed by the party or parties to be bound.
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ENTIRE AGREEMENT
21.21 This Agreement, any agreement arising under CLAUSE 2.8 and the
Schedules and Manuals constitute the entire agreement of the parties
regarding the subject matter of this agreement.
SEVERABILITY
21.22 The whole or any part of any clause in this Agreement that is illegal
or unenforceable:
(a) will be:
(1) read down to the extent necessary so that it is legal and
enforceable; or
(2) severed (if it cannot be read down in accordance with
paragraph (1)); and
(b) will not affect the continued operation of the remaining
provisions of this Agreement.
INCONSISTENCIES
21.23 In the event of any inconsistency between this Agreement and the
Manuals the terms of this Agreement shall prevail.
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SIGNED by Dr. Abdul Rahim HJ. Daud )
as authorised representative for TELEKOM )
MALAYSIA BERHAD in the presence of: )
)
)
/s/ Tuan Syed Hussain Syed Hamdah )
- ------------------------------------- )
Signature of Witness )
)
)
Tuan Syed Hussain Syed Hamdah )
- ------------------------------------- )
Name of witness (block letters) ) /s/ Dr. Abdul Rahim HJ. Daud
) ---------------------------------
) By executing this Agreement the
0815712 ) signatory warrants that the signatory
- ------------------------------------- ) is duly authorised to execute this
NRIC No. of witness ) Agreement on behalf of TELEKOM
) MALAYSIA BERHAD (Company No. 128740P)
)
Chief Network Implementation )
- ------------------------------------- )
Occupation of witness )
SIGNED by HJ. Shuaib B. HJ. Lazim )
as authorised representative for )
SYARIKAT TELEFON WIRELESS (M) SDN )
BHD in the presence of )
)
)
)
)
)
)
/s/ HJ. Rosli B. Man )
- ------------------------------------- )
Signature of Witness )
)
)
HJ. Rosli B. Man )
- ------------------------------------- )
Name of witness )
) /s/ HJ. Shuaib B. HJ. Lazim
) ---------------------------------
530614-02-5009 ) By executing this Agreement the
- ------------------------------------- ) signatory warrants that the signatory
NRIC No. of witness ) is duly authorised to execute this
) Agreement on behalf of
) SYARIKAT TELEFON WIRELESS (M) SDN BHD
Managing Director ) (Company No. 257906 T)
- ------------------------------------- )
Occupation of witness )
)
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SCHEDULE 1
CHARGES AND CHARGING PRINCIPLES
1. CHARGING PRINCIPLES
1.1 That, in respect of Access Charges, the principles of revenue sharing will
be adopted such that the end to end customer tariff will be
apportioned between Carriers on the basis of point of call handover in
the manner detailed in this Schedule. As a result of Access Charges
being generally based on a share of the customer tariff, revenue
apportionment is on Successful Call basis save as expressly stated in
this Agreement.
1.2 The parties agree that a revenue sharing arrangement promotes
investment in the local access network, and new service rollout, which
is consistent with Malaysia's National Telecommunications Policy and
its challenging penetration targets and automatically builds in a
contribution to Telekom Malaysia's access deficit which results from
the current distorted PSTN tariff structure.
1.3 The agreed revenue shares in this Schedule are based on the gazetted
PSTN tariffs and the Telephone Areas and not the actual call charge
levied on a customer by STW or Telekom Malaysia. Any discount from
the PSTN tariff given to STW customer for a call from STW Network to
Telekom Malaysia's Network, unless agreed in writing beforehand by
Telekom Malaysia, shall be borne by STW from its share of the
retention. Any discount from the gazetted PSTN tariff given to
Telekom Malaysia's customer for a call from Telekom Malaysia's Network
to the STW Network, unless agreed in writing before hand by STW, shall
be borne by Telekoni Malaysia from its share of the retention.
1.4 (a) The rates detailed in this Schedule are fixed for a two (2) year
period from the Commencement Date when a review of these Access
Charges will take place. Failing reaching agreement on any revised
rates the current charges shall continue to apply.
(b) The parties agree to adjust the payments upon reaching an
agreement on the revised rates. If the amounts paid to date for
the period pending agreement ("said Period") are higher than the
amounts payable under the revised rates then the other party will
credit such difference (free of interest) within fourteen (14)
Business Days from the date of agreement to the invoiced party.
If the amounts paid to date for the said Period are less than the
amounts payable under the revised rates then the invoiced party
will pay in full such difference (free of interest) within
fourteen (14) Business Days from the date of agreement to the
other party.
1.5 For a [*] year period from the Commencement Date, STW will route all of
its international Interconnect Traffic through Telekom Malaysia.
- -------------------
* Confidential portion has been omitted and filed separately with the
Commission.
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NOTES TO TABLE 1
1. The following words have these meanings in the Notes to Table 1 unless
the contrary intention appears:
"BAND" refers the different bands of Effective Trunk Calls set out in
tables of the Schedule to Telephone Regulations 1996. The applicable
band is determined by reference to the radial distance between area
and district charge points and as otherwise described in the said
Regulation. Band A is the band with the lowest radial distance, Band
B is the band with the second lowest radial distance and so forth.
"EFFECTIVE NATIONAL CALL" has the meaning given to it in section 2 of
the Telephone Regulations 1996.
"INTERSTATE CALLS" means those Successful Calls which originate from a
PSTN Number and terminate on a PSTN Number located in another State.
"INTRASTATE CALLS" means those Successful Calls which originate from a
PSTN Number and terminate on a PSTN Number located within a State.
"EFFECTIVE LOCAL CALL" has the meaning given to it in Section 2 of the
Telephone Regulations 1996.
"TRANSIT CALLS" are calls bound for other Networks where Telekom
Malaysia provides transit and must pay the terminating carrier for
call termination.
2. The applicable interconnect charge (revenue shares) for calls between
PSTN Numbers between the parties to this Agreement are to be
determined in relation to:
(a) the location of the PSTN Number where the call originated from
and the location of the PSTN Number where the call should have
terminated (that is, "end to end" billing); and
(b) the location of the POI where the Interconnecting Carrier hands
over the call to the Access Carrier.
3. The call charges to be apportioned between the parties are as set in
the Telephone Regulations 1996. If such Regulations are amended such
that the call charges in the said Regulations become maximum call
charges then the maximum call charges shall be used for the
calculation of the applicable revenue share except as otherwise agreed
in writing between the parties.
4. For the purposes of clarification the revenue shares in the tables
shall apply irrespective of whether the applicable trunk fees are for
the full rate period or reduced rate period as defined in section
10(2) of the Telephone Regulations 1996.
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5. In cases where the call charges in the Telephone Regulations 1996 are
calculated on a per call basis and not on a timed basis the revenue
shares will also be calculated on a per call basis.
6. The call charges in the Telephone Regulations 1996 are subject to
review. Any amendment to the said Regulations will be immediately
effective upon notification in the gazette of the effective date.
7. Nothing in this Schedule shall be construed to give a Carrier the
benefit or partial benefit of free allowance of call units provided by
the Other Carrier to its customers in accordance with clause 4 of the
Schedule (or such other clause as amended in order to reflect the
same) to the Telephone Regulations 1996.
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NOTES TO TABLES 2 AND 3
1. The following words have these meanings in the Notes to Tables 2 and 3
unless the contrary intention appears:
"ATUR EXCHANGE AREA" has the meaning given to it in section 2 of the
Telecommunications (Automatic Telephone Using Radio Services)
Regulations 1986, as amended.
2. The applicable interconnect charge (revenue shares) for Successful
Calls between ATUR Numbers and STW's PSTN Numbers are to be determined
in relation to:
(a) the location of the PSTN Number where the call originated and
registered location of the ATUR Number where the call should have
terminated (that is, "end to end" billing); or
(b) the actual location of the ATUR Number where the call originated
and the location of the PSTN Number where the call should have
terminated (that is, "end to end" billing); and
(c) the location of the POI where the Interconnecting Carrier hands
over the call to the Access Carrier.
3. For calls between ATUR Numbers and STW's PSTN Numbers, the call
charges to be apportioned are set in the Telecommunications (Automatic
Telephone Using Radio Services) Regulations 1986, as amended. If
these Regulations are amended such that the call charges in the said
Regulations become maximum call charges then the maximum call charges
shall be used for the calculation of the applicable revenue share
except as otherwise agreed in writing between the parties.
4. For the purposes of clarification the revenue shares in the tables
shall apply irrespective of whether the applicable trunk fees are for
the "full rate" period or "reduced rate" period as defined in section
2 of the Telecommunications (Automatic Telephone Using Radio Services)
Regulations 1986, as amended.
5. The call charges in the Telecommunications (Automatic Telephone Using
Radio Services) Regulations 1986, as amended, are subject to review.
Any amendment to the said Regulations will be immediately effective
upon notification in the gazette of the effective date.
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SCHEDULE 2
DIRECTORY ASSISTANCE SERVICES
1.1 The charge for each Directory Assistance Service Call shall be [*]
per Successful Call. For the purposes of this Schedule, a Successful
Call in respect of a Directory Assistance Service Call, is a maximum
of [*] directory enquiries by caller on the STW's Network.
1.2 Notwithstanding anything to the contrary in this Agreement the above
mentioned charges in item 1.1 will be subject to an increase of [*]
per annum.
__________________
* Confidential portion has been omitted and filed separately with the
Commission.
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SCHEDULE 3
SPECIAL SERVICES
1. OPERATOR ASSISTANCE SERVICES
1.1 Telekom Malaysia agrees to provide the following Operator Assistance
Services for STW:
(a) '101' Telephonist assisted trunk calls;
(b) '104' Telegram Service;
(c) '108' Telephonist assisted international calls;
(d) '1062' Calls to Ships; and
(e) such other operator services agreed in writing between the
parties.
1.2 The charge for such services will be [*] per Communication
Attempt (except [*] calls which shall be [*] per Communications
Attempt) in addition to the gazetted Telekom Malaysia rates for
operator assisted calls.
1.3 Notwithstanding anything to the contrary in this Agreement the above
mentioned charges in item 1.2 will be subject to an increase of [*]
per annum.
1.4 Telekom Malaysia will provide Operator Assistance Services for STW to
the same QOS standard it treats Call Communications of a similar
nature within its own Network.
1.5 STW agrees that consistent with the provision of Operator Assistance
Services to it by Telekom Malaysia, all '108' Telephonist assisted
international calls originating from PSTN Number on STW's Network
shall be routed by the international Network of Telekom Malaysia.
1.6 STW agrees that it will route calls with the dial codes of '100',
'102' and '1061' which originate from PSTN Numbers on its Network to
its own fault reporting centre or customer service centre number as
appropriate and will handle fault reporting and customer services.
Each Carrier will charge [*] per Communications Attempt for calls
transferred from STW fault reporting centre or customer service centre
to Telekom Malaysia's fault reporting centre or customer service
centre.
2. EMERGENCY SERVICE CALLS
2.1 Upon receiving Emergency Service Calls delivered by STW to Telekom
Malaysia's Gateway, Telekom Malaysia will route the calls directly or
via a Telekom Malaysia operator to the appropriate emergency service
through its Network.
__________________
* Confidential portion has been omitted and filed separately with the
Commission.
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2.2 While Telekom Malaysia will attempt to route the calls directly to the
appropriate emergency service in areas where such emergency services
have established their own centres for handling Emergency Service
Calls, STW acknowledges that due to certain technical limitations,
some Emergency Service Calls will be routed via a Telekom Malaysia
operator to such centres notwithstanding that the Emergency Service
Call originated from a PSTN Number that may be located in an area
served by such a centre.
2.3 STW shall pay Telekom Malaysia [*] per each Emergency Service Call
which is routed to a Telekom Malaysia Operator and [*] per each
Emergency Call which is directly routed to an emergency services
centre respectively.
2.4 Notwithstanding anything to the contrary in this Agreement the charges
in item 2.3 will be subject to an increase of [*] percent per annum.
2.5 Telekom Malaysia will provide Emergency Service Calls for STW to the
same QOS standard it treats Call Communications of a similar nature
within its own Network
2.6 Telekom Malaysia excludes all liability to STW and/or any other party
which may directly or indirectly arise out of or in connection with
the provision of the emergency service or Interconnection of Emergency
Service Calls whether arising in contract, tort, by statute or
otherwise. This exclusion and limitation of liability is in addition
to the exclusions and limitations of Telekom Malaysia's liability
under clause 16 of this Agreement.
3. REVERSE CHARGE CALLS
3.1 As requested by STW, Telekom Malaysia is not to provide STW and its
customers with Reverse Charge Call service.
4. TOLL FREE NUMBER CALLS
4.1 A call made to a Toll Free Number will, as between the parties, be
treated:
(a) where the Call is made from a STW PSTN Number to a Toll Free
Number on the Telekom Malaysia Network, as if the Call
Communication originated on the Network of Telekom Malaysia; and
(b) where the Call is made from a Telekom Malaysia PSTN Number or
ATUR Number to a Toll Free Number on the STW Network, as if the
Call Communication originated on the Network of STW.
4.2 For calls from PSTN Numbers to the Other Carrier's Toll Free Numbers
the parties agree that the Local Call charge which is levied on the
PSTN Number which actually originated the call to the Toll Free Number
shall be retained by the Interconnecting
__________________
* Confidential portion has been omitted and filed separately with the
Commission.
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Carrier while the other revenues generated by the call shall be
retained by the Access Carrier. In the event that the Local Call
charge for calls to the Toll Free Numbers is reduced, the Carriers
agree to negotiate an appropriate revenue share for the
Interconnecting Carrier.
4.3 For calls from ATUR Numbers to STW's Toll Free Numbers Telekom
Malaysia shall be entitled to charge its customers the applicable
gazetted tariff for directly dialled calls (within an ATUR exchange
area) in accordance with the Telecommunications (Automatic Telephone
Using Radio Services) Regulations 1986. This airtime revenue shall be
shared between the parties on the basis of [*] for Telekom Malaysia
and [*] for STW.
4.4 All calls to Toll Free Numbers of the Other Carrier shall be handed
over on a Near end Handover basis.
5. CALLING CARD CALLS
5.1 A Carrier shall be entitled to invoice the calling card account holder
for any originating calls from the Other Carrier's number using the
Carrier's calling card as the caller is the Carrier's customer.
5.2 For calling card calls from the Other Carrier's PSTN Numbers the
Carriers agree to share only the Call charge which is levied on the
PSTN Number which originated the call to the dial code or dial code
and number by which the Carrier's calling card service may be
accessed. At the date of signing of this agreement the dial code for
Telekom Malaysia's calling card is "1092".
5.3 All calls to the dial code or dial code and number by which the
Carrier's calling card service may be accessed shall be handed over on
a Near end Handover basis.
6. INFORMATION SERVICES CALLS
STANDARD RATE SERVICE CALLS
6.1 Telekom Malaysia agrees to provide access to the following Information
Services for customers of STW:
(a) '1051' Time Announcement;
(b) '1052' Weather (Kuala Lumpur and Petaling Jaya only);
(c) '1055' Time announcement for breaking fast; and
(d) such other information services agreed in writing between the
parties.
6.2 The charge to STW for calls to such services will be the gazetted rate
for Local Calls.
__________________
* Confidential portion has been omitted and filed separately with the
Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
53
PREMIUM RATE SERVICE CALLS
6.3 The Carriers hereby agree that reciprocal access will not be provided
for each other's customers to the information services which utilise
the '600' numbering range on each Carrier's Network unless otherwise
agreed in writing between the Carriers.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
54
SCHEDULE 4
TELEPHONE AREAS
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
TABLE 1: INTERCONNECTION (REVENUE SHARING) CHARGES FOR CALLS
BETWEEN PSTN NUMBERS - STW
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TYPE OF ARRANGEMENT Call Category
- ------------------------------------------------------------------------------------------------------------------------------
Local Call Band A Band B Band C Band D
Orig:Term Orig:Term Orig:Term Orig:Term Orig:Term
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A. INTRASTATE CALLS
- ------------------------------------------------------------------------------------------------------------------------------
A.1 Intrastate Calls handed by Interconnecting [*] [*] [*] [*] not
Carrier to the Access Carrier at POI applicable
located within the State
- ------------------------------------------------------------------------------------------------------------------------------
A.2 Intrastate Calls handed by Interconnecting
Carrier to the Access Carrier at a POI
located outside the State where:
- ------------------------------------------------------------------------------------------------------------------------------
(a) the POI is designated by the [*] [*] [*] [*] not
Interconnecting Carrier; or, applicable
- ------------------------------------------------------------------------------------------------------------------------------
(b) the POI is designated by the Access Carrier [*] [*] [*] [*] not
applicable
- ------------------------------------------------------------------------------------------------------------------------------
B. INTERSTATE CALLS
- ------------------------------------------------------------------------------------------------------------------------------
B.1 Interstate Calls handed by the Interconnecting [*] [*] [*] [*] [*]
Carrier to the Access Carrier at a POI within
the State where the call originates
- ------------------------------------------------------------------------------------------------------------------------------
B.2 Interstate Calls handed by the Interconnecting [*]
Carrier to the Access Carrier at a POI which is
not located either within the state where the
Interstate call originated or the state where
the Interstate Calls will terminate where:
- ------------------------------------------------------------------------------------------------------------------------------
(a) the POI is designated by the Interconnecting [*] [*] [*] [*] [*]
Carrier; or
- ------------------------------------------------------------------------------------------------------------------------------
(b) the POI is designated by the Access Carrier. [*] [*] [*] [*] [*]
- ------------------------------------------------------------------------------------------------------------------------------
B.3 Interstate Calls handed by the Interconnecting [*] [*] [*] [*] [*]
Carrier to the Access Carrier at POI located
within the State where the Interstate Calls
will terminate.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: "Orig' refers to the revenue share retained by the Interconnecting
Carrier originating the call and "Term' refers to the revenue share retained
by the Access Carrier for terminating the call
- ----------------
* Confidential portion has been omitted and filed separately with the
Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
TABLE 2: INTERCONNECT CHARGES (REVENUES SHARES) FOR DIRECT DIALLED CALLS
BETWEEN ATUR NUMBERS AND STW'S PSTN NUMBERS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
DIRECT DIALLED CALLS Within same ATUR Between Adjacent Between Non Adjacent
exchange area ATUR exchange area ATUR exchange areas
- -------------------------------------------------------------------------------------------------
Orig:Term Orig:Term Orig:Term
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Near end Handover [*] [*] [*]
Far end Handover [*] [*] [*]
- -------------------------------------------------------------------------------------------------
</TABLE>
Note: "Orig' refers to the revenue share retained by the Interconnecting
Carrier for originating the call and "Term' refers to the revenue share
retained by the Access Carrier for terminating the call.
- -----
* Confidential portion has been omitted and filed separately with the
Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
CALLS TO SINGAPORE
Interconnect Charges
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
STW ORIGINATE
TYPE OF ARRANGEMENT Charge Band
- ------------------------------------------------------------------------------
<S> <C> <C>
STW RETENTION
- ------------------------------------------------------------------------------
Rev. Share
Percentage
- ------------------------------------------------------------------------------
TYPE I - FAR END HAND OVER Peninsular Malaysia [*]
(FEH)
- ------------------------------------------------------------------------------
Sagah, Sarawak & FT Labuan [*]
- ------------------------------------------------------------------------------
TYPE II - NEAR END HAND OVER Peninsular Malaysia [*]
(NEH)
- ------------------------------------------------------------------------------
Sabah, Sarawak & FT Labuan [*]
- ------------------------------------------------------------------------------
TYPE I AND TYPE II Johor Bahru Charge District [*]
(PSTN CODE 07)
- ------------------------------------------------------------------------------
</TABLE>
Note:
i) [*]
ii) Telekom Malaysia shall pay STW [*] per minute for Standard Rate call
and [*] per minute for Reduced Rate call for calls originating in
Singapore and terminating elsewhere in Malaysia.
Payment to STW will be made only when TELEKOM MALAYSIA has received
inpayment from Singapore.
- ------------------
*Confidential portion has been omitted and filed separately with the Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
DOMESTIC TRANSIT CALL
Interconnect Charges
STW calls transitting Telekom Malaysia's network (where STW is the originator
and the terminator).
A) INTRASTATE CALLS (SIMPLE TRANSIT)
- -------------------------------------------------------------------------------
Charge Band STW Retention Payment to TM
- -------------------------------------------------------------------------------
Rev. Share Rev. Share
Percentage Percentage
- -------------------------------------------------------------------------------
Local Call [*] [*]
- -------------------------------------------------------------------------------
Band A [*] [*]
- -------------------------------------------------------------------------------
Band B [*] [*]
- -------------------------------------------------------------------------------
Band C [*] [*]
- -------------------------------------------------------------------------------
B) INTERSTATE CALLS (TRUNK TRANSIT)
- -------------------------------------------------------------------------------
Charge Band STW Retention Payment to TM
- -------------------------------------------------------------------------------
Rev. Share Rev. Share
Percentage Percentage
- -------------------------------------------------------------------------------
Local Call [*] [*]
- -------------------------------------------------------------------------------
Band A [*] [*]
- -------------------------------------------------------------------------------
Band B [*] [*]
- -------------------------------------------------------------------------------
Band C [*] [*]
- -------------------------------------------------------------------------------
Band D [*] [*]
- -------------------------------------------------------------------------------
- ----------------------------
* Confidential portion has been omitted and filed separately with the
Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
DOMESTIC TRANSIT CALL
Interconnect Charges
1) FIXED NETWORK TO FIXED NETWORK TRANSIT+
(where traffic originated from STW terminated into another network and
vice versa)
A) INTRASTATE CALLS (SIMPLE TRANSIT)
- -------------------------------------------------------------------------------
Charge Band STW ORIGINATE STW TERMINATE
- -------------------------------------------------------------------------------
STW Retention Payment to STW
- -------------------------------------------------------------------------------
Rev. Share Rev. Share
Percentage Percentage
- -------------------------------------------------------------------------------
Local Call [*] [*]
- -------------------------------------------------------------------------------
Band A [*] [*]
- -------------------------------------------------------------------------------
Band B [*] [*]
- -------------------------------------------------------------------------------
Band C [*] [*]
- -------------------------------------------------------------------------------
B) INTRASTATE CALLS (TRUNK TRANSIT)
- -------------------------------------------------------------------------------
Charge Band STW ORIGINATE STW TERMINATE
- -------------------------------------------------------------------------------
STW Retention Payment to STW
- -------------------------------------------------------------------------------
Rev. Share Rev. Share
Percentage Percentage
- -------------------------------------------------------------------------------
Local Call [*] [*]
- -------------------------------------------------------------------------------
Band A [*] [*]
- -------------------------------------------------------------------------------
Band B [*] [*]
- -------------------------------------------------------------------------------
Band C [*] [*]
- -------------------------------------------------------------------------------
Band D [*] [*]
- -------------------------------------------------------------------------------
2) STW TO MOBILE NETWORK TRANSIT (INCLUDING TRUNK TRANSIT)++
- -------------------------------------------------------------------------------
STW (FIXED) ORIGINATE STW (FIXED)
Charge Band TERMINATE
- -------------------------------------------------------------------------------
STW Retention Payment to STW
- -------------------------------------------------------------------------------
Rev. Share Rev. Share
Percentage Percentage
- -------------------------------------------------------------------------------
Within the [*] [*]
same ATUR Exchange area
- -------------------------------------------------------------------------------
Between [*] [*]
Adjacent ATUR Exchange area
- -------------------------------------------------------------------------------
Between [*] [*]
Non Adjacent ATUR Exchange area
- -------------------------------------------------------------------------------
+ Where the Telephone Regulations (as ammended) apply.
++ Were the Telecommunications (Automatic Telephone using Radio Services)
Regulation 1966 apply.
- --------------------------
* Confidential portion has been omitted and filed separately with the
Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
1. TELEKOM MALAYSIA/SYARIKAT TELEFON WIRELESS INTERNATIONAL CALLS
REVENUE APPORTIONMENT
Existing IDD Rate STW Share
Country
Standard Reduced Standard Reduced
(RM/MIN) (RM/MIN)
1 Netherlands [*] [*] [*]% [*]%
2 Thailand [*] [*] [*]% [*]%
3 Thailand South [*] [*] [*]% [*]%
4 Canada [*] [*] [*]% [*]%
5 France [*] [*] [*]% [*]%
6 Italy [*] [*] [*]% [*]%
7 Japan [*] [*] [*]% [*]%
8 Alaska [*] [*] [*]% [*]%
9 Australia [*] [*] [*]% [*]%
10 Brunei [*] [*] [*]% [*]%
11 Cyprus [*] [*] [*]% [*]%
12 Gambia [*] [*] [*]% [*]%
13 Germany [*] [*] [*]% [*]%
14 Iran [*] [*] [*]% [*]%
15 Ireland [*] [*] [*]% [*]%
16 Kyrgyzstan [*] [*] [*]% [*]%
17 Liechtenstein [*] [*] [*]% [*]%
18 Lithuania [*] [*] [*]% [*]%
19 Madeira [*] [*] [*]% [*]%
20 Monaco [*] [*] [*]% [*]%
21 Nigeria [*] [*] [*]% [*]%
22 Niue Island [*] [*] [*]% [*]%
23 Phillipines [*] [*] [*]% [*]%
24 Portugal [*] [*] [*]% [*]%
25 Puerto Rico [*] [*] [*]% [*]%
26 Slovak Rep [*] [*] [*]% [*]%
27 Slovenia [*] [*] [*]% [*]%
28 South Africa [*] [*] [*]% [*]%
29 South Korea [*] [*] [*]% [*]%
30 Swaziland [*] [*] [*]% [*]%
31 Sweden [*] [*] [*]% [*]%
32 Taiwan [*] [*] [*]% [*]%
33 Tajikistan [*] [*] [*]% [*]%
34 Turkey [*] [*] [*]% [*]%
35 United Kingdom [*] [*] [*]% [*]%
36 USA [*] [*] [*]% [*]%
37 Venezuela [*] [*] [*]% [*]%
38 Zambia [*] [*] [*]% [*]%
39 Jordan [*] [*] [*]% [*]%
40 Algeria [*] [*] [*]% [*]%
41 Andorra [*] [*] [*]% [*]%
42 Antigua [*] [*] [*]% [*]%
43 Armenia [*] [*] [*]% [*]%
44 Azores [*] [*] [*]% [*]%
-----------------------
* Confidential portion has been omitted and filed separately with the
Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
<TABLE>
<CAPTION>
Existing IDD Rate STW share
Country
Standard Reduced Standard Reduced
(RM/MIN) (RM/MIN)
<S> <C> <C> <C> <C>
45 Bahamas [*] [*] [*]% [*]%
46 Bahrain [*] [*] [*]% [*]%
47 Barbados [*] [*] [*]% [*]%
48 Belarus [*] [*] [*]% [*]%
49 Belgium [*] [*] [*]% [*]%
50 Benin [*] [*] [*]% [*]%
51 Bermuda [*] [*] [*]% [*]%
52 Bhutan [*] [*] [*]% [*]%
53 Bolivia [*] [*] [*]% [*]%
54 Bosnia [*] [*] [*]% [*]%
55 Botswana [*] [*] [*]% [*]%
56 Christmas Is. [*] [*] [*]% [*]%
57 Cocos Is. [*] [*] [*]% [*]%
58 Colombia [*] [*] [*]% [*]%
59 Comores [*] [*] [*]% [*]%
60 Costa Rica [*] [*] [*]% [*]%
61 Crotia [*] [*] [*]% [*]%
62 D Garcia [*] [*] [*]% [*]%
63 Denmark [*] [*] [*]% [*]%
64 Dom Rep [*] [*] [*]% [*]%
65 Falkland Is. [*] [*] [*]% [*]%
66 Finland [*] [*] [*]% [*]%
67 Gibraltar [*] [*] [*]% [*]%
68 Greenland [*] [*] [*]% [*]%
69 Grenada [*] [*] [*]% [*]%
70 Guadeloupe [*] [*] [*]% [*]%
71 Guam [*] [*] [*]% [*]%
72 Guyana [*] [*] [*]% [*]%
73 Hawaii [*] [*] [*]% [*]%
74 Hong Kong [*] [*] [*]% [*]%
75 Hungary [*] [*] [*]% [*]%
76 Iceland [*] [*] [*]% [*]%
77 India [*] [*] [*]% [*]%
78 Indonesia [*] [*] [*]% [*]%
79 Jamaica [*] [*] [*]% [*]%
80 Kenya [*] [*] [*]% [*]%
81 Kiribati [*] [*] [*]% [*]%
82 Korea Pdr [*] [*] [*]% [*]%
83 Lesotho [*] [*] [*]% [*]%
84 Macao [*] [*] [*]% [*]%
85 Malawi [*] [*] [*]% [*]%
86 Maldive Is. [*] [*] [*]% [*]%
87 Mauritania [*] [*] [*]% [*]%
88 Mauritius [*] [*] [*]% [*]%
89 Nakhoda Rep [*] [*] [*]% [*]%
90 Nepal [*] [*] [*]% [*]%
</TABLE>
- -------------------------------
* Confidential portion has been omitted and filed separately with the
Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Existing IDD Rate STW Share
Country
--------- ---------------------- --------------
Standard Reduced Standard Reduced
(RM/MIN) (RM/MIN)
---------- ----------- --------- --------
91 New Zealand [*] [*] [*]% [*]%
92 Norway [*] [*] [*]% [*]%
93 Oman [*] [*] [*]% [*]%
94 Panama [*] [*] [*]% [*]%
95 Peru [*] [*] [*]% [*]%
96 P.N. Guinea [*] [*] [*]% [*]%
97 Qatar [*] [*] [*]% [*]%
98 Reunion Is. [*] [*] [*]% [*]%
99 Seycelles [*] [*] [*]% [*]%
100 Sri Lanka [*] [*] [*]% [*]%
101 Sudan [*] [*] [*]% [*]%
102 Switzerland [*] [*] [*]% [*]%
103 Tanzania [*] [*] [*]% [*]%
104 Tonga [*] [*] [*]% [*]%
105 Trinidad & Tobag [*] [*] [*]% [*]%
106 Uae [*] [*] [*]% [*]%
107 Uganda [*] [*] [*]% [*]%
108 Vanuatu [*] [*] [*]% [*]%
109 Vatican City [*] [*] [*]% [*]%
110 Yugoslavia [*] [*] [*]% [*]%
111 Zimbabwe [*] [*] [*]% [*]%
112 American Samoa [*] [*] [*]% [*]%
113 Angola [*] [*] [*]% [*]%
114 Argentina [*] [*] [*]% [*]%
115 Aruba [*] [*] [*]% [*]%
116 Ascension Is. [*] [*] [*]% [*]%
117 Austria [*] [*] [*]% [*]%
118 Azerbaijan [*] [*] [*]% [*]%
119 Bangladesh [*] [*] [*]% [*]%
120 Belize [*] [*] [*]% [*]%
121 Brazil [*] [*] [*]% [*]%
122 Bulgaria [*] [*] [*]% [*]%
123 Burkina Faso [*] [*] [*]% [*]%
124 Burundi [*] [*] [*]% [*]%
125 Canary Is. [*] [*] [*]% [*]%
126 Cape Verde [*] [*] [*]% [*]%
127 Cayman Is. [*] [*] [*]% [*]%
128 Chad [*] [*] [*]% [*]%
129 Chile [*] [*] [*]% [*]%
130 China [*] [*] [*]% [*]%
131 Combellga [*] [*] [*]% [*]%
132 Congo [*] [*] [*]% [*]%
133 Cook Is. [*] [*] [*]% [*]%
134 Cuba [*] [*] [*]% [*]%
135 Czech Rep [*] [*] [*]% [*]%
- -----------------------------------
* Confidential portion has been omitted and filed separately with
the Commission.
99
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
<TABLE>
<CAPTION>
COUNTRY EXISTING IDD RATE STW SHARE
- ---------------------------------------- -------------------- ---------------------
STANDARD REDUCED
(RM/MIN) (RM/MIN) STANDARD REDUCED
- ---------------------------------------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
136 Djibouti [*] [*] [*]% [*]%
137 Dominican Is. [*] [*] [*]% [*]%
138 Ecuador [*] [*] [*]% [*]%
139 Egypt [*] [*] [*]% [*]%
140 El Salvador [*] [*] [*]% [*]%
141 Equ. Guinea [*] [*] [*]% [*]%
142 Eritrea [*] [*] [*]% [*]%
143 Estonia [*] [*] [*]% [*]%
144 Ethiopia [*] [*] [*]% [*]%
145 F Guiana [*] [*] [*]% [*]%
146 Faroe Is. [*] [*] [*]% [*]%
147 Gabon [*] [*] [*]% [*]%
148 Georgia [*] [*] [*]% [*]%
149 Ghana [*] [*] [*]% [*]%
150 Greece [*] [*] [*]% [*]%
151 Haiti [*] [*] [*]% [*]%
152 Honduras [*] [*] [*]% [*]%
153 Iraq [*] [*] [*]% [*]%
154 Israel [*] [*] [*]% [*]%
155 Ivory Coast [*] [*] [*]% [*]%
156 Kazakhstan [*] [*] [*]% [*]%
157 Kuwait [*] [*] [*]% [*]%
158 Laos [*] [*] [*]% [*]%
159 Latvia [*] [*] [*]% [*]%
160 Lebanon [*] [*] [*]% [*]%
161 Libya [*] [*] [*]% [*]%
162 Luxembourg [*] [*] [*]% [*]%
163 Macedonia [*] [*] [*]% [*]%
164 Maldova [*] [*] [*]% [*]%
165 Mali [*] [*] [*]% [*]%
166 Malta [*] [*] [*]% [*]%
167 Marshall Is. [*] [*] [*]% [*]%
168 Martinque [*] [*] [*]% [*]%
169 Mayotte [*] [*] [*]% [*]%
170 Mexico [*] [*] [*]% [*]%
171 Micronesia [*] [*] [*]% [*]%
172 Mongolia [*] [*] [*]% [*]%
173 Morocco [*] [*] [*]% [*]%
174 Myanmar [*] [*] [*]% [*]%
175 Namibia [*] [*] [*]% [*]%
176 Nauru [*] [*] [*]% [*]%
177 Neth Antilles [*] [*] [*]% [*]%
178 Nicaragua [*] [*] [*]% [*]%
179 Norfolk Island [*] [*] [*]% [*]%
180 Pakistan [*] [*] [*]% [*]%
</TABLE>
- --------------------
* Confidential portion has been omitted and filed separately with the
Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
<TABLE>
<CAPTION>
COUNTRY EXISTING IDD RATE STW SHARE
- ---------------------------------------- -------------------- ---------------------
STANDARD REDUCED
(RM/MIN) (RM/MIN) STANDARD REDUCED
- ---------------------------------------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
181 Palau [*] [*] [*]% [*]%
182 Paraguay [*] [*] [*]% [*]%
183 Poland [*] [*] [*]% [*]%
184 Romania [*] [*] [*]% [*]%
185 Russia [*] [*] [*]% [*]%
186 Rwanda Rep [*] [*] [*]% [*]%
187 Sahara West [*] [*] [*]% [*]%
188 Saipan [*] [*] [*]% [*]%
189 Sakhalin Rep [*] [*] [*]% [*]%
190 Samao West [*] [*] [*]% [*]%
191 San Marino [*] [*] [*]% [*]%
192 Saudi Arabia [*] [*] [*]% [*]%
193 Senegal [*] [*] [*]% [*]%
194 Sierra Leone [*] [*] [*]% [*]%
195 Solomon Island [*] [*] [*]% [*]%
196 Somalia [*] [*] [*]% [*]%
197 Spain [*] [*] [*]% [*]%
198 Spanish N. Africa [*] [*] [*]% [*]%
199 St. Kitts [*] [*] [*]% [*]%
200 St. Lucia [*] [*] [*]% [*]%
201 St. Pierre & M [*] [*] [*]% [*]%
202 St. Vincent [*] [*] [*]% [*]%
203 Surinam [*] [*] [*]% [*]%
204 Syria [*] [*] [*]% [*]%
205 Tatarstan [*] [*] [*]% [*]%
206 Togo Rep [*] [*] [*]% [*]%
207 Tokelau Island [*] [*] [*]% [*]%
208 Tunisia [*] [*] [*]% [*]%
209 Turkmenistan [*] [*] [*]% [*]%
210 Tuvalu [*] [*] [*]% [*]%
211 Ukraine [*] [*] [*]% [*]%
212 Uruguay [*] [*] [*]% [*]%
213 US Samoa [*] [*] [*]% [*]%
214 US Virgin Is [*] [*] [*]% [*]%
215 Uzbekistan [*] [*] [*]% [*]%
216 Vietnam [*] [*] [*]% [*]%
217 Yemen Ar [*] [*] [*]% [*]%
218 Afghanistan [*] [*] [*]% [*]%
219 Albania [*] [*] [*]% [*]%
220 Anguilla [*] [*] [*]% [*]%
221 Bt Virgin Is [*] [*] [*]% [*]%
222 C Afr Rep [*] [*] [*]% [*]%
223 Cameroon [*] [*] [*]% [*]%
224 F Polynesia [*] [*] [*]% [*]%
225 Fiji [*] [*] [*]% [*]%
</TABLE>
- --------------------
* Confidential portion has been omitted and filed separately with the
Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
<TABLE>
<CAPTION>
COUNTRY EXISTING IDD RATE STW SHARE
- ---------------------------------------- -------------------- ---------------------
STANDARD REDUCED
(RM/MIN) (RM/MIN) STANDARD REDUCED
- ---------------------------------------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
226 Guatemala [*] [*] [*]% [*]%
227 Guinea Bis [*] [*] [*]% [*]%
228 Guinea Rep [*] [*] [*]% [*]%
229 Kampuchea [*] [*] [*]% [*]%
230 Liberia [*] [*] [*]% [*]%
231 Madagascar [*] [*] [*]% [*]%
232 Montserrat [*] [*] [*]% [*]%
233 Mozambique [*] [*] [*]% [*]%
234 New Caledonia [*] [*] [*]% [*]%
235 Niger [*] [*] [*]% [*]%
236 Sao Thome [*] [*] [*]% [*]%
237 Turk Island [*] [*] [*]% [*]%
238 Yemen Pdr [*] [*] [*]% [*]%
239 Zaire [*] [*] [*]% [*]%
</TABLE>
2 INBOUND INTERNATIONAL CALLS
For Inbound International Calls to Syarikat Telefon Wireless customers,
Telekom Malaysia shall pay Syarikat Telefon Wireless [*] per min.
Payment to Syarikat Telefon Wireless will be made as and when Telekom
Malaysia receives inpayment from the foreign telecommunications
administration.
- --------------------
* Confidential portion has been omitted and filed separately with the
Commission.
<PAGE>
EXHIBIT 10.26A
May 29, 1997
Vanguard Cellular Financial Corp.
2002 Pisgah Church Road, Suite 300
Greensboro, NC 27455
ATTN: Haynes G. Griffin, President
RE: Warrant Exchange Guaranty and The Toronto-Dominion Bank Guaranty
Gentlemen:
This letter seeks to clarify our understanding of certain of the
terms of the Guaranty provided by Vanguard Cellular Financial Corp., a North
Carolina corporation ("Vanguard") to International Wireless Communications
Holdings, Inc., a Delaware corporation ("IWCH") pursuant to the Agreement
dated as of May 5, 1997 between Vanguard and IWCH (the "Warrant Exchange
Agreement"). Under the terms of the Warrant Exchange Agreement, Vanguard
agreed to assist IWCH in arranging such interim financing by guarantying (the
"Guaranty") up to an aggregate or $3,200,000 of indebtedness incurred by IWCH
or its wholly owned subsidiaries (the "Guaranty Amount"), from May 5, 1997
until the earlier of February 3, 1999 and such time as IWCH either receives
at least $3,200,000 in alternative debt financing or consummates an initial
public offering providing it with at least $3,200,000 in net proceeds (the
"Guaranty Period").
This letter confirms our understanding that IWCH may utilize the
Guaranty from time to time during the Guaranty Period pursuant to one or more
guarantys by Vanguard provided that the aggregate amount of any such guaranty
shall not at any time exceed the Guaranty Amount. Without limiting the
foregoing, Vanguard's obligation to make available the Guaranty shall remain
in full force and effect following the termination of Vanguard's guarantee on
behalf of IWCH pursuant to the Bridge Loan Agreement between Star Digitel
Limited, a company organized under the laws of Hong Kong ("Star Digitel") and
The Toronto-Dominion Bank ("TD") (the "Bridge Loan Agreement"), whereby TD
has agreed to make advances to Star Digitel for a period of up to one year in
an aggregate amount not to exceed $8,000,000.
Sincerely,
/s/ Douglas S. Sinclair
Douglas S. Sinclair
Executive Vice President and Chief Financial Officer
ACCEPTED AND AGREED TO
BY: VANGUARD CELLULAR FINANCIAL CORP.
By: /s/ Haynes G. Griffin
------------------------------
Haynes G. Griffin, President
<PAGE>
EXHIBIT 10.27A
DATED 17 JULY 1997
MOTOROLA INTERNATIONAL DEVELOPMENT CORPORATION
AND
INTERNATIONAL WIRELESS COMMUNICATIONS PAKISTAN LIMITED
____________________________________________________________
SHARE PURCHASE AGREEMENT
____________________________________________________________
Ref: H53/30657093
<PAGE>
INDEX
CLAUSE HEADING PAGE
- ------ ------- ----
1. Definitions 1
2. Purchase and Sale of the Sale Shares 5
3. Representations, Warranties and Undertakings Concerning
the Transaction 6
4. Representations and Warranties Concerning the Company 9
5. Further Provisions relating to the Seller's Representations
and Warranties 16
6. Pre-Closing Covenants 17
7. Post-Closing Covenants 19
8. Conditions to Obligation to Close 19
9. First Option and Second Option 22
10. Remedies for Breach of this Agreement 23
11. Undertaking of Seller 26
12. Termination 27
13. Arbitration 29
14. Miscellaneous 29
SCHEDULES
- ---------
A: Tangible assets
B: Financial statements
C: Immovable property
D: Leased or sub-leased immovable property
E: Material contracts
F: Litigation
G: Licence
EXHIBIT
- -------
A - Restated and Amended Shareholders Agreement
<PAGE>
SHARE PURCHASE AGREEMENT
Agreement entered into on 17 July, 1997, by and among Motorola International
Development Corporation, a Delaware corporation ("Seller"), and International
Wireless Communications Pakistan Limited, a company established under the laws
of Mauritius (the "Buyer"). Buyer and Seller are referred to collectively
herein as the "Parties".
RECITALS
Pakistan Mobile Communications (Pvt) Ltd. is a limited liability company
organised under the laws of Pakistan (the "Company") with an authorised share
capital of Rupees 600,000,000 divided into 60,000,000 shares of Rupees 10 each
("Shares"), of which 54,387,750 Shares have been issued and are fully paid up.
The Company owns and operates a cellular mobile telephone company in Pakistan
under the service mark Mobilink/a Motorola Network.
Seller owns 40,248,036 Shares and pursuant to the terms and conditions of this
Agreement:-
(i) Seller desires to sell, and Buyer desires to purchase 17,028,804 of
such Shares representing 31.31% of the total issued Shares (the "Sale
Shares"); and
(ii) Seller intends to grant an exclusive option ("First Option"),
exercisable on one occasion only at any time during the period
commencing on the date hereof and ending on (and including) 5:00 p.m.
Hong Kong time on 25th August, 1997 or, if clause 11 shall apply,
such later date as provided therein ("First Option Period"), to Buyer
to purchase Shares representing a further 12.69% of the total issued
Shares on the date on which the First Option is exercised (the "First
Option Shares"). In the event that the First Option is not exercised
prior to the expiry of the First Option Period, an exclusive option
("Second Option") is granted by the Seller to Buyer to purchase
Shares representing 5% of the total issued Shares on the date on
which the Second Option is exercised ("Second Option Shares").
Contemporaneously herewith, Buyer is negotiating the purchase of an additional
14.69% of the Shares, such percentage representing all of the interest in the
Company held by Continental Communications Limited ("CCL").
Now, therefore, in consideration of the mutual agreements, representations,
warranties, and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS
1
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"Active Subscribers" has the meaning set forth in clause
4(aa);
"Adverse Consequences" means all actions, suits,
proceedings, hearings,
investigations, charges, complaints,
claims, demands, injunctions,
judgments, orders, decrees, rulings,
damages, dues, penalties, fines,
costs, reasonable amounts paid in
settlement, liabilities, obligations,
taxes, liens, losses, expenses, and
fees, including court costs and
lawyers' and advocates' fees and
expenses.
"Affiliated Entity" means any Person with respect to
which a specified Person owns a
majority of the common stock or
equity interests or has the power to
vote or direct the voting of
sufficient securities to elect a
majority of the board of directors or
similar governing body of such Person.
"Applicable Laws" has the meaning set forth in clause
4(i).
"Buyer" has the meaning set forth in the
preface above.
"Closing" has the meaning set forth in clause
2(c).
"Closing Date" means the day on which the Closing
shall take place.
"Company" has the meaning set forth in the
recitals.
"Condition of the Company" means the property, condition
(financial or otherwise) business or
operations of the Company.
"Confidential Information" means any information concerning the
businesses and affairs of the Company
that is not already generally available
to the public.
"Disclosure Letter" means the letter from Seller to Buyer
delivered immediately prior to the
execution of this Agreement by the
Parties.
2
<PAGE>
"Financial Statements" has the meaning set forth in clause
4(h).
"First Option" has the meaning set forth in the
recitals.
"First Option Closing" has the meaning set forth in clause
9(d).
"First Option Closing Date" means the day on which the First Option
Closing takes place.
"First Option Period" has the meaning set forth in the
recitals.
"First Option Purchase Price" means the sum of US$13,959,000.
"First Option Shares" has the meaning set forth in the
recitals.
"GOP" means the Government of Pakistan and
any agency, department and/or
instrumentality thereof.
"Liabilities" has the meaning set forth in clause
4(s).
"LIBOR" means, in relation to any relevant
time and any relevant period of one
month or more, the rate per annum
quoted at or about 11:00 a.m. (London
time) on the first day of such
period, on the page "LIBO" of the
Reuters Monitor Money Rates Service
(or such other page as may replace
the "LIBO" page for the purpose of
displaying London interbank offered
rates of leading reference banks) as
being the interest rates offered in
the London interbank market for
United States dollar deposits for the
same period as that period.
"Licence" means the licence grant from the
Ministry of Communications of the
Government of Pakistan issued on 6th
July, 1992, as amended on 27th October,
1993, pursuant to which the Company
operates a cellular mobile telephone
system in Pakistan.
3
<PAGE>
"MINC" means Motorola, Inc., the parent
company of Seller.
"Most Recent Financial has the meaning set forth in clause
Statements" 4(h).
"Most Recent Fiscal Month has the meaning set forth in clause
End" 4(h).
"Net Deficit" means the amount by which the
liabilities of the Company exceed its
assets.
"Sale Shares" has the meaning set forth in the
recitals.
"Second Option" has the meaning set forth in the
recitals.
"Second Option Closing" has the meaning set forth in clause
9(e).
"Second Option Closing Date" means the day on which the Second Option
Closing takes place.
"Second Option Period" has the meaning set forth in clause
9(e).
"Second Option Purchase Price" means the sum of US$5,500,000 plus
interest at a rate of 10% per annum,
compounded monthly, on such aggregate
amount from the date on which the
Second Option is exercised to the
date of actual payment.
"Second Option Shares" has the meaning set forth in the
recitals.
"Seller" has the meaning set forth in the
preface above.
"Party" has the meaning set forth in the
preface above.
"Person" means an individual, a partnership, a
corporation, an association, a joint
stock company, a trust, a joint
venture, an unincorporated
organisation, or other entity,
including but not limited to, a
governmental entity (or any
department, agency, or political
subdivision thereof).
4
<PAGE>
"Purchase Price" has the meaning set forth in clause
2(b).
"Saif" means Saif Telecom (Pvt) Limited, a
Pakistan company and the direct owner
of 11.31% of the Shares.
"Sale Shares" has the meaning set forth in the
recitals.
"Seller" has the meaning set forth in the
preface above.
"Shareholders' Agreement" means the Shareholders' Agreement
between the Seller and Saif executed
on 3rd June, 1993 as amended pursuant
to the Equity Ownership Agreement
dated 2nd July 1996 between Seller,
Saif and CCL.
"SBP" means the State Bank of Pakistan.
"Unaudited June Net Deficit" has the meaning set forth in clause
6(f).
2. PURCHASE AND SALE OF THE SALE SHARES
(a) BASIC TRANSACTION
On and subject to the terms and conditions of this Agreement,
Buyer agrees to purchase from Seller, and Seller agrees to sell
to Buyer, the Sale Shares for the consideration specified below
in this clause 2.
(b) PURCHASE PRICE
Buyer shall pay to Seller at the Closing, except as provided
in clause 2(c) below, the aggregate price of thirty four
million four hundred and forty one thousand United States
Dollars (US$34,441,000) in cash by wire transfer in
immediately available funds to Seller's bank account, number
40694123 at Citibank N.A. in New York, New York (the "Purchase
Price").
(c) THE CLOSING
Subject to the provisions of clause 11, the closing of the
sale and purchase of the Sale Shares (the "Closing") shall
take place at the offices of Seller in London, in the United
Kingdom, commencing at 3:00 p.m. local time on or before 14th
August, 1997, contingent upon the Parties being satisfied or
having waived in writing all conditions to the obligations of
the Parties to consummate the transaction contemplated thereby
(other than conditions with respect to actions
5
<PAGE>
the respective Parties will take at the Closing itself).
Subject to the provisions of clause 11, the Closing Date may
be extended only by mutual agreement of the Parties.
(d) DELIVERIES AT THE CLOSING
At the Closing, (i) Seller will deliver to Buyer the various
certificates, instruments, and documents referred to in clause
8(a) below, (ii) Buyer will deliver to Seller the various
certificates, instruments, and documents referred to in clause
8(b) below, (iii) Seller will deliver to:- (A) the Buyer the
share certificates totalling 14,853,294 Shares equal to a
27.31% interest in the Company and duly executed instruments
of transfer in respect thereof, and (B) Citibank in New York,
New York as the escrow agent pursuant to the terms of an
escrow agreement in form and substance reasonably acceptable
to the Parties to be entered into between Buyer and Seller
under clause 8(c)(iii), the share certificates totalling
2,175,510 Shares equal to a 4% interest in the Company, in
each case validly issued to Seller and on a fully repatriable
basis and SBP-approved for export out of Pakistan, accompanied
by transfer deeds duly executed on behalf of Seller, the
signatures of whose signatory(ies) are verified by the
Company, and (iv) Buyer will deliver to Seller the
consideration specified in clause 2(b) above.
3. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS CONCERNING THE TRANSACTION
(a) REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS OF SELLER
Seller represents and warrants to Buyer that:
(i) ORGANISATION OF SELLER
Seller is duly organised, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation.
(ii) AUTHORISATION OF TRANSACTION
Seller has full corporate power and authority to execute
and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable in
accordance with its terms and conditions. There are no
authorizations, consents, or approvals that Seller must
obtain from the GOP, including the SBP, prior to Closing,
in order to consummate the transactions contemplated by
this Agreement.
6
<PAGE>
(iii) OWNERSHIP OF SALE SHARES
Seller is the lawful holder of record and beneficial
owner of the Sale Shares, the First Option Shares and
the Second Option Shares, free and clear of any liens,
claims, restrictions on sale and security interests,
and has full legal right to sell, transfer, and convey
the Sale Shares, the First Option Shares and the Second
Option Shares pursuant to this Agreement; the
registration of the Sale Shares and, upon exercise of
the First Option or the Second Option (as the case may
be), the First Option Shares or the Second Option
Shares (as the case may be) in the name of Buyer in the
Company's register of shareholders will transfer good
and valid title thereto, free and clear of any liens,
claims, restrictions and security interests. Seller
further undertakes to Buyer that it shall discharge any
and all capital gains tax or any other taxes or duties
in Pakistan or anywhere in the world which may arise
from Seller's sale of the Sale Shares, the First Option
Shares and the Second Option Shares (as the case may
be) to Buyer pursuant to this Agreement except for
stamp duty on the transfer of the Sale Shares, the
First Option Shares and Second Option Shares, which is
to be paid by Buyer. The Sale Shares, the First Option
Shares and the Second Option Shares are held by Seller
on a fully repatriable basis both as to capital, all
accretions thereto and dividends payable thereon.
(iv) NONCONTRAVENTION
Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which
Seller is subject or any provision of its charter or
bylaws or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration
of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is
a party or by which it is bound or to which any of its
assets is subject, except with respect to the
restrictions on transfer of Shares under the
Shareholders' Agreement. Seller has obtained a waiver
from Saif with respect to Clauses 11.4 and 11.5 of the
Shareholders' Agreement, permitting the Parties hereto
to proceed with the transaction contemplated hereunder.
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<PAGE>
(v) BROKERS' FEES
Seller has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement.
(vi) STATEMENTS COMPLETE AND CORRECT
The statements contained in this clause 3(a) are true,
correct and complete as of the date of this Agreement
and will be true, correct and complete as of the
Closing Date and the First Option Closing Date and, if
applicable, the Second Option Closing Date (as though
made then and as though the Closing Date and, if
applicable, the First Option Closing Date or the
Second Option Closing Date were substituted for the
date of this Agreement throughout this clause 3(a)).
(b) REPRESENTATIONS AND WARRANTIES OF THE BUYER
Buyer represents and warrants to Seller that:
(i) ORGANISATION OF THE BUYER
Buyer is a corporation duly organised, validly
existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) AUTHORISATION OF TRANSACTION
Buyer has full corporate power and authority to execute
and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and
legally binding obligation of the Buyer, enforceable in
accordance with its terms and conditions. Subject to the
provisions of the Licence and to confirmation from Seller
that it obtained the requisite exchange control approval
to the issue of the Sale Shares, the First Option Shares
and the Second Option Shares to itself on a repatriable
basis both as to capital, all accretions thereto and
dividends payable thereon there are no authorisations,
consents, or approvals that Buyer must obtain from the
GOP, including the SBP, prior to Closing, in order to
consummate the transactions contemplated by this
Agreement.
8
<PAGE>
(iii) FUNDS AVAILABLE
Buyer has, or will have on or prior to the Closing
Date, sufficient cash, available lines of credit or
other sources of immediately available funds to enable
it to make payment of the Purchase Price as well as
meet its pro-rata share of the Company's funding
requirements under the 1997 Business Plan.
(iv) DISCLOSURE
As of the date hereof neither the Buyer nor any of its
Affiliated Entities, directors, employees or agents have
been advised of or have knowledge of facts or
circumstances involving the Condition of the Company that
demonstrate an existing material misrepresentation by
Seller pursuant to this Agreement that would give rise to
an ability by Buyer to terminate this Agreement or to a
claim for indemnification pursuant to clause 10(b)(i).
(v) NONCONTRAVENTION
Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which
Buyer is subject or any provision of its charter or
by-laws or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration
of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, licence,
instrument, or other arrangement to which the Buyer is
a party or by which it is bound or to which any of its
assets is subject.
(vi) BROKERS' FEES
The Buyer has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement
for which Seller could become liable or obligated.
(vii) STATEMENTS COMPLETE AND CORRECT
The statements contained in this clause 3(b) are true,
correct and complete as of the date of this Agreement
and will be true, correct and complete as of the
Closing Date (as though made then and as though the
Closing Date
9
<PAGE>
were substituted for the date of this Agreement
throughout this clause 3(b)).
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
Seller represents and warrants to Buyer that save as fairly disclosed
in the Disclosure Letter:
(a) ORGANISATION, QUALIFICATION AND CORPORATE POWER
The Company is a limited liability company duly organised and
validly existing under the laws of Pakistan, and is duly
authorised to conduct the business in which it is engaged and to
own and use the properties owned and used by it.
(b) CAPITALISATION
The entire authorised share capital of the Company consists of
60,000,000 Shares, all one class, of which 54,387,750 are
validly issued. All of the validly issued Shares have been
duly authorised and are fully paid, and are held of record by
the Seller, CCL, and Saif in the proportions specified in the
Disclosure Letter. There are no outstanding or authorised
options, warrants, purchase rights, subscription right,
conversion rights, exchange rights, or other contracts or
commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its share
capital. There are no outstanding or authorised stock
appreciation, phantom stock, profit participation, or similar
rights with respect to the Company.
(c) SUBSIDIARIES
The Company has no, and never has had any, subsidiaries.
(d) NONCONTRAVENTION
Neither the execution nor the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court
to which the Company is subject or any provision of the
charter or by-laws of the Company or (ii) to the best of the
knowledge of Seller, conflict with, result in a breach of,
constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement,
contract, lease, licence, instrument, or other arrangement to
which the Company is a party or by which it is bound or to
which any of its assets is subject (or result in the
imposition of any security interest upon any of its assets) or
(iii) conflict with, result in a breach of, constitute a
default under, result in the
10
<PAGE>
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under the
Licence. To the best of Seller's knowledge, the Company does
not need to give any notice to, make any filing with, or
obtain any authorisation, consent, or approval of any
government or governmental agency prior to the Closing in
order for the parties to consummate the transactions
contemplated by this Agreement.
(e) BROKERS' FEES
The Company has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(f) TITLE TO TANGIBLE ASSETS
Schedule A lists all material tangible assets which the Company
uses in the conduct of its business. All of such assets are
owned by the Company free and clear of all liens, claims, or
other security interests, are in good operating condition and
repair, subject to normal wear and use, and are usable in a
manner consistent with their current use.
(g) LEASED TANGIBLE PROPERTY
No tangible property has been leased or sub-leased to the
Company.
(h) FINANCIAL STATEMENTS
Schedule B contains the following financial statements
(collectively the "Financial Statements"): (i) audited balance
sheets and profit and loss account as of and for the fiscal
years ended 31st December, 1995, and 31st December, 1996 for
the Company; and (ii) unaudited balance sheets and summary
profit and loss account (the "Most Recent Financial
Statements") as of and for the six months ended 30th June,
1997 (the "Most Recent Fiscal Month End") for the Company.
The Financial Statements (including the notes thereto) have
been prepared in accordance with accounting principles
generally accepted in Pakistan and applied on a consistent
basis throughout the periods covered thereby, comply with the
requirements of Pakistan law and present fairly the financial
condition of the Company as of such dates and the results of
operations of the Company for such periods.
11
<PAGE>
(i) LEGAL COMPLIANCE
To Seller's knowledge, after making all due and careful
enquiries, the Company has complied in all material respects
with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of the GOP and any applicable laws of the
United States federal, state and local governments (and all
agencies thereof) (the "Applicable Laws") and the Company has
filed all returns and made all filings required by all
applicable laws. As at the date hereof, the Company has not
received any notice of any failure to comply with, nor are
there any circumstances which indicate that the Company is in
violation of, any such Applicable Laws.
(j) TAX MATTERS
The Company has timely filed all Pakistan tax returns that it
was required to file, and has paid all applicable taxes shown
thereon as owing, except taxes that are being contested in
good faith by appropriate proceedings and for which adequate
reserves have been made. There are no outstanding claims,
assessments (including penalty or interest claims) in respect
of taxation and the Company is not subject to any dispute with
the relevant tax authorities or any other fiscal authority at
the date hereof and there is no fact or matter which might
result in any such dispute or any liability for taxation
(present and future) not provided for in its audited accounts.
(k) IMMOVABLE PROPERTY
(i) Schedule C attached hereto lists all immovable property
that the Company owns. With respect to each such parcel
of owned immovable property:
(A) the Company has good and marketable title to the
parcel of immovable property, free and clear of
any security interest, easement, covenant, or
other restriction, recorded easements, covenants,
and other restrictions, and utility easements,
building restrictions, zoning restrictions, and
other easements and restrictions existing
generally with respect to properties of a similar
character; and
12
<PAGE>
(B) there are no leases, subleases, licenses,
concessions, or other agreements granting to any
party or parties the right to use or occupancy of
any portion of the parcel of immovable property.
(ii) Schedule D lists all immovable property leased or
subleased to the Company. Each such lease and sublease
listed in Schedule D is legal, valid, binding,
enforceable, and in full force and effect, and the
Company has not received any notice of any default
thereunder.
(l) MATERIAL CONTRACTS
Schedule E lists all material contracts and other written
agreements to which the Company is a party or by which its
assets or properties may be bound. All such contracts and
agreements are in full force and effect, are valid and binding
upon and enforceable against the parties thereto in accordance
with their respective terms. The Company has not violated any
of the terms or conditions of any contract or agreement set
forth in Schedule E in any material respect, and to Seller's
knowledge after having made all due and careful enquiries, all
of the covenants to be performed by any other party thereto
have been materially performed.
For the purposes of this sub-paragraph, "material" contracts or
agreements means any contract or agreement (whether written or
oral) with a value of US$10,000 or more in any twelve month
period.
(m) POWERS OF ATTORNEY
There are no outstanding powers of attorney executed on behalf
of the Company.
(n) LITIGATION
To the knowledge of Seller after having made all due and careful
enquiries, there is no pending or threatened litigation against
the Company. Except as set forth in Schedule F, there are no
actions, suits, proceedings, hearings, or investigations before
any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction that involve the
Company or any of its assets or properties, nor is it a party to
or its assets or properties subject to any injunction, judgment,
order, decree, ruling, or charge which would have a material
adverse effect on the Condition of the Company, and there are no
circumstances at present which indicate the Company is about to
become involved in any litigation.
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<PAGE>
(o) EMPLOYEE BENEFITS
The Company complies in form and in operation in all respects
with the applicable requirements of the labour laws and
regulations currently in effect in Pakistan.
(p) INTELLECTUAL PROPERTIES
Except with respect to the License and the trade name
"Mobilink", the Company has no patents, patent rights,
licenses, trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights, copyrights or
similar rights, and does not require any such rights in
connection with the conduct of its business. The Company is
not infringing or otherwise acting adversely to, the right of
any Person under or in respect of any patent, license,
trademark, trade name, service mark, copyright or similar
intangible right.
(q) STATEMENTS CORRECT AND COMPLETE
The statements contained in this clause 4 are true correct and
complete in all material respects as of the date of this
Agreement and will be true correct and complete in all material
respects as of the Closing Date and, if applicable, the First
Option Closing Date or the Second Option Closing Date (as though
made then and as though the Closing Date and the First Option
Closing Date or the Second Option Closing Date were substituted
for the date of this Agreement throughout this clause 4), except
as Seller may otherwise notify Buyer pursuant to clause 6(e).
(r) MEMORANDUM AND ARTICLES OF ASSOCIATION
Seller has heretofore delivered to Buyer true and complete
copies of the Memorandum and Articles of Association and
minute books of the Company. The minute books of the Company
contain true and complete records of all meetings and consents
in lieu of meeting of the board of directors (and any
committees thereof) and of shareholders thereof since the time
of its incorporation in reasonable detail and accurately
reflect in all material respects all transactions referred to
in such minutes and consents in lieu of meeting.
(s) LIABILITIES
Save in respect of a potential additional liability of US$1
million payable to MINC on account of the supply of
infrastructure equipment, the Company does not have any
Liabilities other than (i) Liabilities fully and adequately
reflected or reserved against on the Most Recent Financial
Statements or disclosed in the
14
<PAGE>
footnotes thereto and (ii) Liabilities incurred since December
31, 1996 in the ordinary course of business.
"Liabilities" means, with respect to any Person as of any time,
any direct or indirect indebtedness, liability, claim, loss,
damage, deficiency, obligation or responsibility, fixed or
unfixed, choate or inchoate, liquidated or unliquidated, secured
or unsecured, accrued, absolute, contingent or otherwise, of a
kind required to be set forth on a balance sheet of such Person
as at such time prepared in accordance with generally accepted
accounting principles in effect in Pakistan or individually,
collectively, specifically or generally to be included in the
notes to such balance sheet.
(t) NO MATERIAL ADVERSE CHANGE
Since December 31, 1996, there has not been any (i) material
adverse change, or any development involving a prospective
material adverse change, in the Condition of the Company, (ii)
damage to, destruction or loss of any assets or properties of
the Company, whether or not covered by insurance, which has
had or could have a material adverse effect on the Condition
of the Company, or (iii) commencement or discontinuance of any
material line of business of the Company.
(u) OFFICERS, DIRECTORS AND KEY EMPLOYEES; EMPLOYEE RELATIONS
(i) No officer or director of the Company or any other
employee of the Company had compensation reported for
the fiscal year ended December 31, 1996 exceeding
US$50,000 or received or is entitled to receive bonuses
in excess of US$10,000 in respect of the fiscal year
ended December 31, 1996 (each a "Highly Compensated
Person") and there are no commitments or agreements by
the Company to increase the wages of any such Highly
Compensated Person. No officer, director or employee
of the Company is a party to or beneficiary of any
contract or other agreement pursuant to which such
Person shall receive any bonus or other payment from
the Company in connection with the transactions
contemplated hereby.
(ii) To the knowledge of Seller, there is not now
threatened, a strike, picket, work stoppage, work
slowdown or other labour trouble or similar event by
any employee of the Company.
(v) ARRANGEMENTS WITH DIRECTORS AND CONNECTED PERSONS
There is not outstanding:
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<PAGE>
(i) any loan made by the Company to, or debt owing to the
Company by, any director of the Company or any Person
connected with any of them;
(ii) any agreement or arrangement to which the Company is a
party and in which any director of the Company or any
Person connected with any of them is interested.
(w) THE LICENCE
A true, complete and accurate copy of the Licence is annexed
in Schedule G hereto. The Licence is in full force and effect
and validly subsisting and there do not exist any
circumstances which might lead to the revocation or non
renewal of the Licence or any amendment or variation of its
terms. Seller has disclosed to Buyer all information known to
it which might reasonably be considered to affect the value of
the Licence to the Company in the carrying on of its business,
now and in the future.
(x) MATERIAL INFORMATION
All information relating to the Company which is known to
Seller and which is material to be known by a purchaser for
value of the Shares has been disclosed to Buyer in writing.
(y) RECITALS AND DISCLOSURES
The recitals and Schedules to this Agreement and all
information and documents relating to the Company disclosed or
supplied by Seller or the Company or any agent of any of them
to the Purchaser, its legal advisers, accountants or other
agents or advisers during or with a view to the negotiations
leading up to this Agreement, including (but not limited to)
the information contained in the Disclosure Letter, are true
and accurate in all material respects and there is no fact
known to Seller not disclosed which would render any such
information or document inaccurate or misleading or which, if
disclosed, might reasonably affect the willingness of Buyer to
purchase the Sale Shares and/or the First Option Shares and/or
the Second Option Shares for the consideration or otherwise on
the terms specified in this Agreement.
(z) POSITION SINCE 31ST DECEMBER, 1996
Since 31st December, 1996:
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(i) no dividend or other distribution has been declared, paid
or made by the Company;
(ii) the business of the Company has been carried on in the
ordinary course and so as to maintain it as a going
concern;
(iii) there has been no reduction in the value of the net
tangible assets of the Company on the basis of the
valuations adopted in the Most Recent Financial
Statements;
(iv) the Company has not acquired or disposed of or agreed to
acquire or dispose of any business or any material asset
other than trading stock in the ordinary course of
business;
(v) no debtor has been released by the Company on terms that
he pays less than the book value of any debt in excess of
US$10,000 (subject to settlement discounts on the usual
terms which have been disclosed to the Purchaser) and no
debt in excess of US$10,000 has been written off or has
proved to be irrecoverable to any extent;
(vi) other than making payments in the ordinary course of
business under the existing management agreement with
Motorola, and payment of principal and interest under
the outstanding third party loans, the Company has not
paid any service, management or similar charges or any
interest or amount in the nature of interest to any
Person or incurred any liability to make such a payment.
(aa) The Company had on 30th June, 1997 a minimum of 22,000 active
subscribers in respect of its cellular mobile telephone system.
For the purposes of this sub-paragraph (aa), active subscribers
means subscribers who are not blocked from making calls and who
in the three month period after 30th June, 1997 make payment in
full of at least one of their monthly accounts with the Company.
(bb) The Company had, as at 30th June, 1997, Delinquent Receivables
of not more than 60 million Rupees (before netting off any
deposits or other security held by the Company from
subscribers). For the purposes of this sub-paragraph (bb),
Delinquent Receivables means receivables which, as at the date
at which the calculation is made, have been outstanding for
120 days or more.
5. FURTHER PROVISIONS RELATING TO THE SELLER'S REPRESENTATIONS AND
WARRANTIES
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(a) Each of the representations and warranties of Seller in clause
4 shall be construed as a separate representation and warranty
and is given subject to the matters of which true, complete
and accurate details are given in the Disclosure Letter but
(save as expressly provided to the contrary) shall not be
otherwise limited or restricted by reference to or inference
from the terms of any other representation and warranty or any
other term of this Agreement.
(b) Buyer shall not be entitled to claim after Closing that any of
the representations and warranties of Seller is or was untrue
or misleading or has been breached even if Buyer had
discovered but failed to raise such fact before Closing,
provided, however, that Buyer shall not be deemed to have
waived its right to claim a breach of such relevant
representation or warranty after Closing if Buyer knew of but
failed to raise such breach before Closing because Buyer in
good faith believed such breach was not material and had no
reason to believe it would become material, but subsequent to
Closing the representation and warranty giving rise to such
immaterial breach prior to Closing shall have changed, thereby
resulting in an Adverse Consequence.
(c) The rights and remedies of Buyer in respect of any breach of
the representations and warranties of Seller shall not be
affected by Closing, by any investigation made by or on behalf
of Buyer into the affairs of the Company, by the giving of
time or other indulgence by Buyer to any Person, by Buyer
rescinding or not rescinding this Agreement or by any other
cause whatsoever except a specific waiver or release by the
Buyer in writing; and any such waiver or release shall not
prejudice or affect any remaining rights or remedies of the
Buyer.
6. PRE-CLOSING COVENANTS
The parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
(a) GENERAL
Each of the parties will use its reasonable best efforts to
take all actions and to do all things necessary in order to
consummate and make effective the transactions contemplated by
this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in clause 8 below).
(b) OPERATION OF BUSINESS
Seller will not cause or permit the Company to engage in any
practice, take any action, or enter into any transaction
outside the ordinary and usual course of business or
inconsistent with past practices and the preservation of the
goodwill of the Company's suppliers, customers, employees and
others having business
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relations with the Company. The Seller shall cause the
Company to preserve all licenses and permits of the Company in
full force and effect and preserve the business of the Company
as in effect on the date hereof.
(c) Without prejudice to the generality of paragraph (b), Seller
shall procure that unless Buyer shall have consented thereto in
writing the Company shall not:
(i) create, extend, grant or issue, or agree to create, grant
or issue any mortgage, charge, debenture or other
security; or
(ii) create or issue or agree to create or issue any share or
loan capital, or give or agree to give any option in
respect of any share or loan capital; or
(iii) pass any resolution by its members in general meeting or
make any alteration of its Memorandum or Articles of
Association; or
(iv) declare, make or pay any dividend or other distribution;
or
(v) pay its creditors otherwise than in the ordinary course
or change its policy in relation to the payment of
creditors; or
(vi) enter into any contract or commitment in relation to the
Licence except with the GOP, as may be necessary for the
reissuance of the License; or
(vii) sell or transfer any of its assets or cancel, release or
assign any indebtedness owed to it or any claims held by
it, in each case in excess of US$10,000; or
(viii) do any act, matter or thing which would make any of the
representations and warranties contained in clause 4
untrue if the same were repeated at any time prior to
Closing by reference to the facts and circumstances then
pertaining.
(d) FULL ACCESS
Seller will permit, and Seller will cause the Company to
permit, representatives of Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with
the normal business operations of the Company, to all
premises, properties, personnel, books, records (including tax
records), contracts, and documents of or pertaining to the
Company. Buyer will treat and hold as Confidential
Information any such information it receives from either of
Seller or the Company in the course of the reviews
contemplated by this clause 6(d), will not use any of the
Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason
whatsoever, will
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return to Seller and the Company all tangible
embodiments (and all copies) of the Confidential Information
which are in its possession.
(e) NOTICE OF DEVELOPMENTS
Each Party will give prompt written notice to the other Party
of any material adverse development causing a breach of any of
its own representations and warranties in clause 3 above, and
Seller shall notify Buyer of any development causing a breach
of any of the representations and warranties in clause 4
above. Unless Buyer has the right to terminate this Agreement
pursuant to clause 12(a)(ii) below by reason of such
development and exercises that right within the period of 10
business days referred to in clause 12(a)(ii) below, the
written notice pursuant to this clause 6(e) will be deemed to
have amended any applicable Schedule or the Disclosure Letter,
as the case may be, to have qualified the representations and
warranties contained in clause 4 above, and to have cured any
inaccurate or incomplete representation or breach of warranty
that otherwise might have existed hereunder by reason of the
development.
(f) Buyer acknowledges that Seller has provided to Buyer in writing
notice that the Net Deficit of the Company was as at 30th June,
1997 US$14,889,977 (the "Unaudited June Net Deficit").
7. POST-CLOSING COVENANTS
In case at any time after the Closing any further action is necessary
or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to
indemnification therefor under clause 10 below), except where such
action is undertaken solely on behalf or to facilitate any necessary
action required of the other Party, in which event the other Party
shall be liable for reimbursing the costs and expenses of the
requesting Party.
8. CONDITIONS TO OBLIGATION TO CLOSE
(a) CONDITIONS TO OBLIGATION OF BUYER
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The obligation of Buyer to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth in clause
3(a) and clause 4 above shall be true and correct at and
as of the Closing Date;
(ii) Seller shall have performed and complied with all of its
covenants hereunder required to be performed or complied
with by Seller on or before the Closing Date in all
material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling or charge in effect preventing
consummation of any of the transactions contemplated by
this Agreement;
(iv) approval of the transfers to Buyer of the Sale Shares
by majority vote of the Company's Board of Directors
and registration of the Sale Shares in the name of
Buyer in the Company's register of shareholders at a
meeting of such Board, to occur at the Closing,
followed by the resignation of one of the directors
representing Seller on the Company's Board of
Directors, effective as of the Closing Date;
(v) Seller shall have delivered to Buyer a certificate of an
officer of Seller to the effect that each of the
conditions specified above in clause 8(a)(i)-(iv) is
satisfied;
(vi) Buyer shall have received from counsel to Seller an
opinion in form and substance reasonably satisfactory to
Buyer, addressed to Buyer, and dated as of the Closing
Date;
(vii) all actions to be taken by Seller in connection with
consummation of the transactions contemplated hereby
and all certificates, opinions, instruments and other
documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in
form and substance to Buyer. Except as may have been
previously disclosed to Buyer by Seller pursuant to
clause 6(e), there shall have been no material adverse
change or any development involving a prospective
material adverse change, in the Condition of the
Company; and
(viii) the License shall have been reissued pursuant to the
requirements of the Pakistan Telecommunications
(Reorganization) Act, 1996, on terms reasonably
satisfactory to Buyer.
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<PAGE>
Buyer may waive any condition specified in this clause 8(a) in
writing at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF SELLER
The obligation of Seller to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth in clause
3(b) above (other than in paragraph (iv) of clause 3(b))
shall be true and correct in all material respects at and
as of the Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder required to be performed or complied
with by Buyer on or before the Closing Date in all
material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling or charge in effect preventing the Buyer
from consummating any of the transactions contemplated by
this Agreement;
(iv) Buyer shall have delivered to Seller a certificate of
an officer of Buyer to the effect that each of the
conditions specified above in clause 8(b)(i)-(iii) is
satisfied;
(v) Seller shall have received from counsel to Buyer an
opinion in form and substance reasonably satisfactory to
Seller, addressed to Seller, and dated as of the Closing
Date; and
(vi) all actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other
documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in
form and substance to Seller.
Seller may waive any condition specified in this clause 8(b) in
writing at or prior to the Closing.
(c) CONDITIONS APPLICABLE TO BOTH BUYER AND SELLER
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<PAGE>
The obligation of both Buyer and Seller to consummate the
transactions contemplated by this Agreement shall be subject to
the further conditions that:
(i) the Company shall have called a meeting of the
shareholders of the Company to be held on the Closing
Date, for the purpose of adopting Articles of Association
in form and substance reasonably satisfactory to the
Parties and reflecting, as applicable, the provisions of
the Restated and Amended Shareholders' Agreement referred
to below, in substitution for its existing articles of
association and upon the convening of such meeting
following the consummation of this transaction Buyer and
Seller shall vote in favour thereof;
(ii) the Shareholders Agreement shall have been terminated,
including any amendments thereto, and each of the
parties to the Shareholders Agreement shall have
executed a mutual release of their respective rights
and obligations to each other under such agreement; and
the Restated and Amended Shareholders' Agreement in the
form of Exhibit A attached hereto shall be executed on
the Closing Date;
(iii) Buyer and Seller shall have entered into the escrow
agreement in form substance reasonably satisfactory to
the Parties and the same shall be in full force and
effect as at the Closing Date;
(iv) the Shareholders shall have entered into that certain
side letter negotiated between the Parties regarding
the capitalization of the Company during financial
years 1997 and 1998.
(d) POST-CLOSING OBLIGATIONS OF BUYER
Following the Closing the Buyer shall furnish a certificate to
the Company (with a copy to the Seller) stating that it has
acquired the Sale Shares on a repatriable basis with payment
having been made outside Pakistan.
9. FIRST OPTION AND SECOND OPTION
(a) Seller hereby irrevocably and unconditionally grants to Buyer
the First Option, exercisable on one occasion only at any time
during the First Option Period to purchase the First Option
Shares in consideration of the payment of the First Option
Purchase Price on the terms and subject to the conditions of
this clause 9.
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<PAGE>
(b) Subject to the other provisions of this clause, Buyer may at
any time during the First Option Period, exercise the First
Option by serving on the Seller written notice of such
exercise and the date of exercise of the First Option shall be
the date when such written notice has been served on the
Seller in accordance with clause 14(g). The First Option
shall lapse forthwith upon the expiration of the First Option
Period.
(c) The notice of exercise of the First Option referred to in clause
9(b) once served shall be irrevocable and binding on Buyer and
may not be withdrawn without the prior written consent of the
Seller.
(d) Following the exercise of the First Option in accordance with
clause 9(b), closing of the sale and purchase of the First
Option Shares (the "First Option Closing") shall take place at
the offices of Seller in London on the seventh business day
after the date of exercise of the First Option or, if the
provisions of clause 11 shall apply, on the date provided in
such clause, and the following matters shall be simultaneously
completed:
(i) Seller shall deliver to the Buyer share certificates
evidencing the total number of First Option Shares
together with instruments of transfer in respect thereof;
and
(ii) The Buyer shall pay to the Seller the First Option
Purchase Price in cash by wire transfer in immediately
available funds to Seller's bank account number 40694123
at Citibank N.A. in New York, New York.
(e) Seller irrevocably and unconditionally grants to Buyer the
Second Option, effective upon the lapse of the First Option
(whether due to the expiry of the First Option Period or the
failure to exercise the First Option) but not otherwise, and
exercisable on one occasion only at any time during the period
commencing on the expiry of the First Option Period and ending
on (and including) 11:00 p.m. Hong Kong time on 27th August,
1997 or, if the provisions of clause 11 shall apply, on the
date provided in such clause, ("Second Option Period"), to
purchase the Second Option Shares for the Second Option
Purchase Price.
(f) Subject to the other provisions of this clause, Buyer may at
any time during the Second Option Period, exercise the Second
Option by serving on the Seller written notice of such
exercise and the date of exercise of the Second Option shall
be the date when such written notice has been served on the
Seller in accordance with clause 14(g). The Second Option
shall lapse forthwith upon the expiration of the Second Option
Period.
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<PAGE>
(g) The notice of exercise of the Second Option referred to in
clause 9(f) once served shall be irrevocable and binding on
Buyer and may not be withdrawn without the prior written
consent of the Seller.
(h) Following the exercise of the Second Option in accordance with
clause 9(f), closing of the sale and purchase of the Second
Option Shares (the "Second Option Closing") shall take place at
the offices of Seller in London on the seventh business day after
the date of exercise of the Second Option (or such later date as
may be agreed by Seller not exceeding 30 days from the time of
expiry of the Second Option Period) and the provisions of Clause
9(d) shall apply, mutatis mutandis, to the Second Option Closing.
10. REMEDIES FOR BREACHES OF THIS AGREEMENT
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All of the representations and warranties of the Parties in
clause 3 and of the Seller contained in clause 4 above shall
survive the Closing hereunder and shall continue in full force
and effect subject to the provisions of paragraph (b) of this
clause.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER:
(i) In the event Seller breaches any of its
representations, warranties and covenants contained
herein (other than the representations and warranties
in clause 3(a) above), and, provided that Buyer makes a
written claim for indemnification against Seller
pursuant to clause 14(g) below prior to 31st December
1999 (the "Cut-off Date") or, in respect of claims
relating to taxation ("Taxation Claims") prior to the
sixth anniversary of the Closing Date, then Seller
shall indemnify Buyer from and against any Adverse
Consequences Buyer shall suffer originating prior to
and continuing through and after the date of the claim
for indemnification caused by the breach. There shall
be no indemnification for any Adverse Consequences
Buyer shall suffer where written notice of the claim is
first made after the Cut-off Date or, in respect of
Taxation Claims, the sixth anniversary of the Closing
Date. The Seller shall not have any obligation to
indemnify Buyer from and against any Adverse
Consequences caused by the breach of any representation
or warranty of Seller contained in clause 4 above
unless the amount of Buyer's claim in respect thereof,
when aggregated with one or more other claims brought
against Seller hereunder, exceeds two hundred thousand
United States Dollars (US$200,000). The maximum
liability of Seller for a breach of any of its
representations, warranties and covenants contained
herein shall be limited to an amount equal to the
aggregate of 50% of the Purchase Price and, if the
First Option or the Second Option is exercised, 50% of
the First Option
25
<PAGE>
Purchase Price or 50% of the Second Option Purchase
Price (as the case may be).
(ii) In the event Seller breaches any of its representations
and warranties in clause 3(a) above, provided that Buyer
makes a written claim for indemnification against Seller
pursuant to clause 14(g) below prior to the first
anniversary of the Closing Date, then Seller shall
indemnify Buyer from and against the entirety of any
Adverse Consequences Buyer shall suffer through and
continuing after the date of the claim for indemnification
caused by the breach, without regard to the monetary limit
set forth above in clause 10(b)(i). There shall be no
indemnification for any Adverse Consequences Buyer shall
suffer where written notice of the claim is first made
after the first anniversary of the Closing Date.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER
In the event Buyer breaches any of its representations,
warranties, and covenants contained herein, and provided that
Seller makes a written claim for indemnification against Buyer
pursuant to clause 14(g) below prior to the first anniversary of
the Closing Date, then Buyer agrees to indemnify Seller from and
against the entirety of any Adverse Consequences Seller shall
suffer through and continuing after the date of the claim for
indemnification caused by the breach. There shall be no
indemnification for any Adverse Consequences Seller shall suffer
where written notice of the claim is first made after the first
anniversary of the Closing Date.
(d) DETERMINATION OF ADVERSE CONSEQUENCES
In quantifying the Adverse Consequences suffered by a Party as a
result of a breach of any of the warranties in this Agreement,
there shall be taken into account any proceeds of insurance and
any tax repayment or other tax benefit actually received by the
indemnified Party in respect of the same event, matter or thing
for which it is seeking indemnification under this Agreement.
(e) Seller shall not be liable for loss of profits, business,
revenue, goodwill, anticipated savings, or any other special,
indirect or consequential losses even if such losses were
foreseeable by Seller, except for such losses which cannot be
legally excluded, and as further qualified below.
Notwithstanding the foregoing, Seller shall be liable to Buyer
with respect to the following:
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<PAGE>
(i) the amount (if any) by which the Delinquent Receivables as
at 30th June, 1997 exceed 60 million Rupees, on a Rupee
for Rupee basis;
(ii) the amount (if any) by which the number of Active
Subscribers as at 30th June, 1997 is less than 22,000, on
the basis of US$1,432 for each subscriber; and
(iii) the amount (if any) by which the audited Net Deficit of
the Company as at 30th June, 1997 is greater than 115% of
the Unaudited June Net Deficit, on the basis of:-
(1) US$0.3131 for every US$1; or
(2) if the First Option is exercised, US$0.44 for
every US$1; or
(3) if the Second Option is exercised, US$0.3631 for
every US$1
in each case, by which the audited Net Deficit as
aforesaid is greater than 115% of the Unaudited June Net
Deficit.
(f) (i) For the purposes of determining the amount of the
Delinquent Receivables and the Net Deficit and the number
of Active Subscribers as at 30th June, 1997, the Parties
shall procure that the Company shall prepare a draft of,
and the Company's auditors will audit, the profit and loss
account of the Company for the period from 1st January,
1997 to 30th June, 1997 and the balance sheet of the
Company as at 30th June, 1997 (together the "June
Accounts") on a basis consistent with the Financial
Statements and, in particular, the treatment of the
operating costs incurred in Karachi during the suspension
of cellular operations in that city shall be the same in
the June Accounts as in the Financial Statements. For the
avoidance of doubt, the June Accounts shall separately
identify the amount of the Delinquent Receivables and the
Net Deficit and the number of Active Subscribers. Once
prepared, the June Accounts as audited by the Company's
auditors (the "Audited June Accounts") shall forthwith be
delivered to each of Buyer and Seller.
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<PAGE>
(ii) The amount of the Delinquent Receivables and the Net
Deficit and the number of Active Subscribers, for the
purposes of paragraph (e) above, shall be as shown in the
Audited June Accounts and any amounts owing by Seller to
Buyer pursuant thereto shall be paid in cash by Seller to
Buyer within seven days of delivery of the Audited June
Accounts to Seller and Buyer pursuant to sub-paragraph (i)
above.
(g) OTHER INDEMNIFICATION PROVISIONS
The indemnification provisions in this clause 10 are the
exclusive remedy any Party may have for breach of any
representation or warranty in this Agreement, except where the
breach arises from the fraud or wilful misrepresentation of the
defaulting Party in which case the other Party's rights of action
shall not be limited as aforesaid.
(h) It is expressly understood that to the extent that Buyer shall
have brought a claim for indemnification against Seller under
clause 10, it shall be barred from pursuing the same or
substantially similar claim under clause 11, and conversely, a
claim under clause 11 shall bar the same or substantially similar
claim under clause 10.
11. UNDERTAKING OF SELLER
To the extent that the License shall not have been reissued on or before
13th August, 1997 on terms reasonably acceptable to Buyer, Buyer shall
have the right to request of Seller, and Seller shall so agree, that the
Closing be postponed until 16th September, 1997, during which one month
period Buyer shall determine whether it desires to participate in the
transaction contemplated hereunder, notwithstanding that the License
shall not have been reissued. It is understood, however, that during
such one month period Seller shall not be restricted from entering into
discussions with third parties for a selldown of its Shares in the
Company, any possible agreement for such selldown to a third party being
contingent on Buyer's determination by 13th September, 1997, that it
will not participate in the acquisition of Shares under this Agreement.
It is further understood that in the event the Closing is postponed and
does occur on 16th September, 1997, that the Buyer shall have determined
on or before 13th September, 1997 whether it desires to purchase the
Shares being made available to Buyer either under the First Option or
the Second Option, and such additional shares under either such option
shall be included in the number of Shares being acquired at Closing on
16th September, 1997.
12. TERMINATION
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(a) TERMINATION OF AGREEMENT
The Parties may terminate this Agreement as provided below:
(i) Buyer and Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing in the
event (A) Seller has within the then previous ten (10)
business days given Buyer any notice pursuant to clause
6(e) above and (B) the development that is subject of the
notice has had or is likely to have a material adverse
effect upon the Condition of the Company or the
consummation of the transactions contemplated hereby;
(iii) Buyer may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing (A) in
the event Seller has breached any of its representations,
warranties, or covenants contained in this Agreement in
any material respect, Buyer has notified Seller of such
breach, and the breach, if capable of cure, has continued
without cure for a period of 10 days after the receipt of
the notice of breach, or (B) if the Closing shall not have
occurred on or before 16th September, 1997, by reason of
the failure of any condition precedent under clause 8(a)
hereof (unless the failure results primarily from the
Buyer itself breaching any of its representations,
warranties, or covenants contained in this Agreement); and
(iv) Seller may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing (A) in
the event Buyer has breached any of its representations,
warranties, or covenants contained in this Agreement in
any material respect, Seller has notified Buyer of such
breach, and the breach if capable of cure has continued
without cure for a period of 10 days after the receipt of
the notice of breach, or (B) if the Closing shall not have
occurred on or before 16th September, 1997, by reason of
the failure of any condition precedent under clause 8(b)
hereof (unless the failure results primarily from Seller
itself breaching any of its representations, warranties,
or covenants contained in this Agreement).
(b) EFFECT OF TERMINATION
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<PAGE>
If any Party terminates this Agreement pursuant to clause 12(a)
above, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to the other Party,
except for any liability of any Party then in breach provided,
however, that the confidentiality provisions contained in clause
6(d) above and the provisions of clause 13 and clause 14 shall
survive termination.
13. ARBITRATION
The Parties shall attempt to resolve all disputes under this Agreement
through amicable discussions and consultations. In the event that they
are unable to resolve any differences the matter shall be referred to
final and binding arbitration in accordance with the following: Any
dispute arising out of or in connection with this Agreement, including
any questions regarding its existence, validity, breach or termination,
shall be referred to and finally resolved by arbitration in London in
accordance with the Rules for the time being in force of the
International Chamber of Commerce, which rules are deemed to be
incorporated into this Agreement. The tribunal shall consist of three
(3) arbitrators, with each side to the dispute choosing one arbitrator
and such two arbitrators choosing the third. If within 30 days any of
the parties to the dispute has not selected its arbitrator, or the two
arbitrators have been unable to agree on the selection of the third
arbitrator, such arbitrator shall be chosen by the ICC. The third
arbitrator shall serve as the chairperson of the arbitration panel. The
language of the arbitration shall be English.
14. MISCELLANEOUS
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS
No Party shall issue any press release or make any public
announcement relating to the subject matter of this Agreement
without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making
the disclosure).
(b) NO THIRD PARTY BENEFICIARIES
This Agreement shall not confer any rights or remedies upon any
Person other than the Parties and their respective successors and
permitted assigns.
(c) ENTIRE AGREEMENT
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This Agreement (including the documents referred to herein which
may be amended in accordance with clause 6(e)) constitutes the
entire agreement among the Parties and supersedes any prior
understanding, agreements, or representations by or among the
Parties, written or oral, to the extent they related in any way
to the subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of
the Parties named herein and their respective successors and
permitted assigns. Neither Party may assign either this
Agreement or any of his or its rights, interests, or obligations
hereunder without the prior approval of the other Party.
(e) COUNTERPART
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together
will constitute one and the same instrument.
(f) HEADINGS
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES
All notices, requests, demands, claims, and other communications
hereunder will be in writing, deemed duly given (and received
five days after) if sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Seller: J. Michael Norris Copy to: Halyna Traversa
Vice-President Sr. International
Motorola International Counsel
Development Corporation (same address)
425 Martingale Road
Schaumburg, II 60173
If to Buyer: Hugh McClung
Vice-Chairman
International Wireless
Communications, Inc.
12/F, Sun Hung Kai Centre
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<PAGE>
30 Harbour Road
Wanchai, Hong Kong
John Troy Copy to: Antonio Yeung
Executive Director (same address)
Asian Infrastructure Fund
Advisers Limited
Suite 2302-3
Nine Queen's Road Central
Hong Kong
Either Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address 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 duly given unless and
until it actually is received by the intended recipient. Either Party
may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
(h) GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of England without giving effect to any choice or conflict of
law provision or rule that would cause the application of the laws of
any jurisdiction other than that of England.
(i) AMENDMENTS AND WAIVERS
No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by Buyer and Seller. No
waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(j) SEVERABILITY
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
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<PAGE>
(k) EXPENSES
Each of Buyer and Seller will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. Stamp duty
payable on the sale and purchase of the Sale Shares shall be borne by
Buyer.
(l) CONSTRUCTION
The Parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall
arise favouring or disfavouring any Party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word "including" shall mean
including without limitation. Reference to the singular includes a
reference to the plural and vice versa and reference to any gender
includes a reference to all other genders. Where any warranty is
qualified by the expression "to the best of Seller's knowledge" or
"known to Seller" or any similar expression, that warranty shall be
deemed to be made to the best of the knowledge of all employees of
Motorola Inc. (or its Affiliated Entities) who have been or are
involved in the management of the Company.
(m) INCORPORATION OF ANNEXES, SCHEDULES AND EXHIBITS
The Schedules and Exhibits identified in this Agreement are
incorporated herein by reference and made a part hereof.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date
first above written.
Motorola International Development Corporation
By: /s/ Fernando A. Amandi
------------------------------------------
Title: By POA
---------------------------------------
Witnessed by: 1 /s/
------------------------------
2 /s/
------------------------------
International Wireless Communications Pakistan Limited
By: /s/ Antonio Yeung /s/ Robin Maule
--------------------------------------------------
Title: Director Director
-----------------------------------------------
Witnessed by: 1 /s/
------------------------------
2 /s/
------------------------------
34
<PAGE>
EXHIBIT 10.27B
DATED 17 JULY 1997
CONTINENTAL COMMUNICATIONS LIMITED
and
INTERNATIONAL WIRELESS COMMUNICATIONS PAKISTAN LIMITED
____________________________________________________________
SHARE PURCHASE AGREEMENT
____________________________________________________________
Ref: H53/30657093/A001CCL7.DOC
<PAGE>
INDEX
CLAUSE HEADING PAGE
- ------ -------
1. Definitions 1
2. Purchase and Sale of the Sale Shares 3
3. Representations and Warranties Concerning the Transaction 4
4. Representations and Warranties Concerning the Company 6
5. Further Provisions relating to the Seller's Representations
and Warranties 9
6. Pre-Closing Covenants 9
7. Post-Closing Covenants 10
8. Conditions to Obligation to Close 10
9. Remedies for Breach of this Agreement 12
10. Termination 14
11. Arbitration 15
12. Miscellaneous 15
SCHEDULES
A: Financial statements
B: Licence
EXHIBITS
A - Restated and Amended Shareholders Agreement
<PAGE>
SHARE PURCHASE AGREEMENT
Agreement entered into on 17 July, 1997, by and among Continental
Communications Limited a company established under the laws of the Republic
of Ireland ("Seller") and International Wireless Communications Pakistan
Limited, a company established under the laws of Mauritius (the "Buyer").
Buyer and Seller are referred to collectively herein as the "Parties".
RECITALS
Pakistan Mobile Communications (Pvt) Ltd. is a limited liability company
organised under the laws of Pakistan (the "Company") with an authorised share
capital of Rupees 600,000,000 divided into 60,000,000 shares of Rupees 10
each, of which 54,387,000 shares have been issued and are fully paid up
("Shares"). The Company owns and operates a cellular mobile telephone company
in Pakistan under the service mark Mobilink/a Motorola Network.
Seller owns 7,989,560 Shares and pursuant to the terms and conditions of this
Agreement Seller desires to sell, and Buyer desires to purchase all of such
Shares (the "Sale Shares") representing 14.69% of the total issued Shares.
Contemporaneously herewith, the Buyer is negotiating the purchase of an
additional 31.31% of the Shares together with an option to purchase a further
12.69% of the Shares, such percentage representing part of the interest in
the Company held by Motorola International Development Corporation
("Motorola").
Now, therefore, in consideration of the mutual agreements, representations,
warranties, and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS
"Adverse Consequences" means all actions, suits,
proceedings, hearings,
investigations, charges,
complaints, claims, demands,
injunctions, judgments, orders,
decrees, rulings, damages, dues,
penalty, fines, costs,
reasonable amounts paid in
settlement, liabilities,
obligations, taxes, liens,
losses, expenses, and fees,
including court costs and
lawyers' and advocates' fees and
expenses.
"Affiliated Entity" means any Person with respect to
which a specified Person owns a
majority of the
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<PAGE>
common stock or equity interests or
has the power to vote or direct the
voting of sufficient securities
to elect a majority of the board
of directors or similar
governing body of such Person.
"Buyer" has the meaning set forth in the
preface above.
"Closing" has the meaning set forth in
clause 2(c) below.
"Closing Date" means the day on which the
Closing shall take place.
"Company" has the meaning set forth in the
preface above.
"Condition of the Company" means the property, condition
(financial or otherwise),
business or operations of the
Company.
"Confidential Information" means any information concerning
the businesses and affairs of
the Company that is not already
generally available to the
public.
"Financial Statements" has the meaning set forth in
clause 4(e) below.
"GOP" means the Government of Pakistan
and any agency, department
and/or instrumentality thereof.
"Licence" means the licence grant from the
Ministry of Communications of
the Government of Pakistan
issued on 6th July, 1992, as
amended on 27th October, 1993,
pursuant to which the Company
operates a cellular mobile
telephone system in Pakistan.
"Motorola" has the meaning set forth in the
preface above.
2
<PAGE>
"Party" as the meaning set forth in the
preface above.
"Person" means an individual, a
partnership, a corporation, an
association, a joint stock
company, a trust, a joint
venture, an unincorporated
organisation, or a governmental
entity (or any department,
agency, or political subdivision
thereof).
"Purchase Price" has the meaning set forth in
clause 2(b) below.
"Saif" means Saif Telecom (Pvt)
Limited, a Pakistan company and
the direct owner of 11.31% of
the Shares.
"Seller" has the meaning set forth in the
preface above.
"Shareholders' Agreement" means the Shareholders'
Agreement between the Seller and
Saif executed on 3rd June, 1993
as amended pursuant to the
Equity Ownership Agreement dated
2nd July 1996 between Seller,
Saif and CCL.
"SBP" means the State Bank of
Pakistan.
2. PURCHASE AND SALE OF THE SALE SHARES
(a) BASIC TRANSACTION
On and subject to the terms and conditions of this
Agreement, Buyer agrees to purchase from Seller, and
Seller agrees to sell to Buyer, the Sale Shares for the
consideration specified below in this clause 2.
(b) PURCHASE PRICE
Buyer shall pay to Seller at the Closing, except as
provided in clause 2(c) below, the aggregate price of 10
million United States Dollars (US$10 million) (the
"Purchase Price") in cash by wire transfer in immediately
available funds to Seller's bank account as shall be
nominted by Seller prior to Closing and shall procure the
allotment or transfer to Seller (or such other person as
Seller may nominate) 493,510 newly issued shares ("IWC
Shares") of common stock of International Wireless
3
<PAGE>
Communications Holdings, Inc ("IWC"), such IWC Shares to
be held on and subject to and with the benefit of the
terms of the letter dated June 18, 1997 from IWC to
Yates-Falcon Limited and the term sheet referred to
therein.
(c) THE CLOSING
The closing of the transaction contemplated by this
Agreement (the "Closing") shall take place at the offices
of Motorola International Development Corporation in
London, in the United Kingdom, commencing at 3:00 p.m.
local time on or before 14th August, 1997, contingent
upon the Parties being satisfied or having waived in
writing all conditions to the obligations of the Parties
to consummate the transaction contemplated thereby (other
than conditions with respect to actions the respective
Parties will take at the Closing itself). The Closing
Date may be extended by Buyer to 16th September, 1997 and
thereafter only by mutual agreement of the Parties.
(d) DELIVERIES AT THE CLOSING
At the Closing, (i) Seller will deliver to Buyer the
various certificates, instruments, and documents referred
to in clause 8(a) below, (ii) Buyer will deliver to
Seller the various certificates, instruments, and
documents referred to in clause 8(b) below, (iii) Seller
will deliver to the Buyer the stock certificates
totalling 7,989,036 Shares equal to a 14.69% interest in
the Company validly issued to Seller and SBP-approved for
export out of Pakistan, endorsed in blank or accompanied
by duly executed transfer documents, and (iv) Buyer will
deliver to Seller the consideration specified in clause
2(b) above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to Buyer that:
(i) ORGANISATION OF SELLER
Seller is duly organised, validly existing, and in
good standing under the laws of the jurisdiction
of its incorporation.
(ii) AUTHORISATION OF TRANSACTION
Seller has full corporate power and authority to
execute and deliver this Agreement and to perform
its obligations hereunder.
4
<PAGE>
This Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in
accordance with its terms and conditions. There
are no authorizations, consents, or approvals that
Seller must obtain from the GOP, including the
SBP, prior to Closing, in order to consummate the
transactions contemplated by this Agreement.
(iii) OWNERSHIP OF SALE SHARES
Seller is the lawful holder of record and
beneficial owner of the Sale Shares, free and
clear of any liens, claims, restrictions sale and
security interests, and has full legal right
subject to the Shareholders' Agreement to sell,
transfer, and convey the Sale Shares pursuant to
this Agreement; the delivery of the Sale Shares to
the Buyer will transfer good and valid title
thereto, free and clear of any liens, claims,
restrictions and security interests. The Sale
Shares are held by Seller on a fully repatriable
basis both as to capital, all accretions thereto
and dividends payable thereon.
(iv) NONCONTRAVENTION
Neither the execution and the delivery of this
Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate
any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling,
charge, or other restriction of any government,
governmental agency, or court to which Seller is
subject or any provision of its charter or bylaws
or (B) conflict with, result in a breach of,
constitute a default under, result in the
acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract,
lease, license, instrument, or other arrangement
to which the Seller is a party or by which it is
bound or to which any of its assets is subject,
except with respect to the restrictions on
transfer of Shares under the Shareholders'
Agreement. Seller has obtained a waiver from Saif
and Motorola International Development Corporation
with respect to Clauses 11.4 and 11.5 of the
Shareholders' Agreement, permitting the Parties
hereto to proceed with the transaction
contemplated hereunder.
(v) BROKERS' FEES
Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or
agent with respect to the transactions
5
<PAGE>
contemplated by this Agreement for which the Buyer
could become liable or obligated.
(vi) STATEMENTS COMPLETE AND CORRECT
The statements contained in this clause 3(a) are
true, correct and complete as of the date of this
Agreement and will be true, correct and complete
as of the Closing Date (as though made then and as
though the Closing Date were substituted for the
date of this Agreement throughout this clause
3(a)).
(b) REPRESENTATIONS AND WARRANTIES OF THE BUYER
Buyer represents and warrants to Seller that:
(i) ORGANISATION OF THE BUYER
Buyer is a corporation duly organised,
validly existing, and in good standing
under the laws of the jurisdiction of its
incorporation.
(ii) AUTHORISATION OF TRANSACTION
Buyer has full corporate power and
authority to execute and deliver this
Agreement and to perform its obligations
hereunder. This Agreement constitutes the
valid and legally binding obligation of
the Buyer, enforceable in accordance with
its terms and conditions. There are no
authorisations, consents, or approvals
that Buyer must obtain from the GOP,
including the SBP, prior to Closing, in
order to consummate the transactions
contemplated by this Agreement.
(iii) NONCONTRAVENTION
Neither the execution and the delivery of
this Agreement, nor the consummation of
the transactions contemplated hereby, will
(A) violate any constitution, statute,
regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other
restriction of any government,
governmental agency, or court to which
Buyer is subject or any provision of its
charter or by-laws or (B) conflict with,
result in a breach of, constitute a
default under, result in the acceleration
of, create in any party the right to
accelerate, terminate, modify, or cancel,
or require any notice under any agreement,
contract, lease, licence, instrument, or
other
6
<PAGE>
arrangement to which the Buyer is a party
or by which it is bound or to which any
of its assets is subject.
(iv) BROKERS' FEES
The Buyer has no liability or obligation
to pay any fees or commissions to any
broker, finder, or agent with respect to
the transactions contemplated by this
Agreement for which Seller could become
liable or obligated.
(v) STATEMENTS COMPLETE AND CORRECT
The statements contained in this clause
3(b) are true, correct and complete as of
the date of this Agreement and will be
true, correct and complete as of the
Closing Date (as though made then and as
though the Closing Date were substituted
for the date of this Agreement throughout
this clause 3(b)).
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
The Seller represents and warrants to Buyer that to the best
of its knowledge and belief:
(a) ORGANISATION, QUALIFICATION AND CORPORATE POWER
The Company is a limited liability company duly
organised, validly existing, and in good standing under
the laws of Pakistan, and is duly authorised to conduct
the business in which it is engaged and to own and use
the properties owned and used by it.
(b) CAPITALISATION
The entire authorised share capital of the Company
consists of 60,000,000 Shares, all one class, of which
54,387,750 are validly issued. All of the validly issued
and outstanding Shares have been duly authorised, are
fully paid and are held of record by the Seller, Motorola
and Saif with each of them holding a 14.69%, 74% and
11.31% interest, respectively, in the Company. There are
no outstanding or authorised options, warrants, purchase
rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could
require the Company to issue, sell, or otherwise cause to
become outstanding any of its share capital. There are
no outstanding or authorised stock appreciation, phantom
stock, profit participation, or similar rights with
respect to the Company.
(c) SUBSIDIARIES
7
<PAGE>
The Company has no, and never has had any, subsidiaries.
(d) NONCONTRAVENTION
Neither the execution nor the delivery of this Agreement,
nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is
subject or any provision of the charter or by-laws of the
Company or (iii) conflict with, result in a breach of,
constitute a default under, result in the acceleration
of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, licence, instrument, or
other arrangement to which the Company is a party or by
which it is bound or to which any of its assets is
subject (or result in the imposition of any security
interest upon any of its assets). To the Seller's
knowledge the Company does not need to give any notice
to, make any filing with, or obtain any authorisation,
consent, or approval of any government or governmental
agency prior to the Closing in order for the parties to
consummate the transactions contemplated by this
Agreement.
(e) FINANCIAL STATEMENTS
Schedule A contains the following financial statements
(collectively the "Financial Statements"): audited
balance sheets and statements of income, and cash flow as
of and for the fiscal years ended 31st December, 1995,
and 31st December, 1996 for the Company. The Financial
Statements (including the notes thereto) have been
prepared in accordance with accounting principles
generally accepted in Pakistan and applied on a
consistent basis throughout the periods covered thereby,
comply with the requirements of Pakistan law and present
fairly the financial condition of the Company as of such
dates and the results of operations of the Company for
such periods.
(f) MEMORANDUM AND ARTICLES OF ASSOCIATION
The Seller has heretofore delivered to Buyer true
and complete copies of the Memorandum and Articles of
Association of the Company.
(g) OFFICERS, DIRECTORS AND KEY EMPLOYEES; EMPLOYEE RELATIONS
There is not now threatened, a strike, picket, work
stoppage, work slowdown or other labour trouble or
similar event by any employee of the Company.
8
<PAGE>
(h) ARRANGEMENTS WITH DIRECTORS AND CONNECTED PERSONS
There is not outstanding:
(i) any loan made by the Company to, or debt owing to
the Company by, any director of the Company or any
person connected with any of them;
(ii) any agreement or arrangement to which the Company
is a party and in which any director of the
Company or any person connected with any of them
is interested.
(i) THE LICENCE
A true, complete and accurate copy of the Licence
is annexed in Schedule B hereto. The Licence is
in full force and effect and validly subsisting
and there do not exist any circumstances which
might lead to the revocation of the Licence or any
amendment or variation of its terms. The Seller
has disclosed to Buyer that the Pakistan
Telecommunication Authority has the competence to
reissue the Licence under the provisions of the
Pakistan Telecommunication Act 1996 and the Seller
is unaware of any circumstances in which the
Licence will not be reissued on terms no less
favourable to the Company.
(j) POSITION SINCE 31ST DECEMBER, 1996
Since 31st December, 1996:
(i) no dividend or other distribution has been
declared, paid or made by the Company;
(ii) the business of the Company has been
carried on in the ordinary course and so
as to maintain it as a going concern; and
(iii) the Company has not acquired or disposed
of or agreed to acquire or dispose of any
business or any material asset other than
trading stock in the ordinary course of
business.
5. FURTHER PROVISIONS RELATING TO THE SELLER'S REPRESENTATIONS
AND WARRANTIES
(a) Each of the representations and warranties of the Seller
in clause 4 shall be construed as a separate
representation and warranty and shall not be otherwise
limited or restricted by reference to or inference from
the terms
9
<PAGE>
of any other representation and warranty or any other
term of this Agreement.
(b) Buyer shall be entitled to claim both before and after
Closing that any of the representations and warranties of
the Seller is or was untrue or misleading or has been
breached even if Buyer discovered or could have
discovered before Closing that the representation or
warranty in question was untrue or misleading or had been
breached and Closing shall not in any way constitute a
waiver of Buyer's rights.
(c) The rights and remedies of Buyer in respect of any breach
of the representations and warranties of the Seller shall
not be affected by Closing, by any investigation made by
or on behalf of Buyer into the affairs of the Company, by
the giving of time or other indulgence by Buyer to any
person, by Buyer rescinding or not rescinding this
Agreement or by any other cause whatsoever except a
specific waiver or release by the Buyer in writing; and
any such waiver or release shall not prejudice or affect
any remaining rights or remedies of the Buyer.
6. PRE-CLOSING COVENANTS
(a) GENERAL
The parties agree as follows with respect to the period
between the execution of this Agreement and the Closing
each of the parties will use its reasonable best efforts
to take all actions and to do all things necessary in
order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction,
but not waiver, of the closing conditions set forth in
clause 8 below).
(b) NOTICE OF DEVELOPMENTS
In the period between the execution of this Agreement and
the Closing, each Party will give prompt written notice
to the other Party of any material adverse development
causing a breach of any of its own representations and
warranties in clause 3 above, and Seller shall notify
Buyer of any development causing a breach of any of the
representations and warranties in clause 4 above. Unless
Buyer has the right to terminate this Agreement pursuant
to clause 10(a)(ii) below by reason of such development
and exercises that right within the period of 10 business
days referred to in clause 10(a)(ii) below, the written
notice pursuant to this clause 6(b) will be deemed to
have amended any applicable Schedule, to have qualified
the representations and warranties contained in clause 4
above, and to have cured any misrepresentation or breach
of warranty that otherwise might have existed hereunder
by reason of the development.
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<PAGE>
7. POST-CLOSING COVENANTS
In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action
(including the execution and delivery of such further
instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to
indemnification therefor under clause 9 below), except where
such action is undertaken solely on behalf or to facilitate
any necessary action required of the other Party, in which
event the other Party shall be liable for reimbursing the
costs and expenses of the requesting Party.
8. CONDITIONS TO OBLIGATION TO CLOSE
(a) CONDITIONS TO OBLIGATION OF BUYER
The obligation of Buyer to consummate the transactions to
be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
clause 3(a) and clause 4 above shall be true and
correct at and as of the Closing Date;
(ii) Seller shall have performed and complied with all
of its covenants hereunder required to be
performed or complied with by Seller on or before
the Closing Date in all material respects through
the Closing;
(iii) there shall not be any injunction, judgment,
order, decree, ruling or charge in effect
preventing consummation of any of the transactions
contemplated by this Agreement;
(iv) approval of the transfers to Buyer of the Sale
Shares by majority vote of the Company's Board of
Directors at a meeting of such Board, to occur at
the Closing, followed by the resignation of one of
the directors representing Seller on the Company's
Board of Directors, effective as of the Closing
Date;
(v) Seller shall have delivered to Buyer a certificate
of the Secretary of Seller to the effect that each
of the conditions specified above in clause
8(a)(i)-(iv) is satisfied;
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<PAGE>
(vi) Buyer shall have received from counsel to Seller
an opinion in form and substance reasonably
satisfactory to Buyer, addressed to Buyer, and
dated as of the Closing Date;
(vii) all actions to be taken by Seller in connection
with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments
and other documents required to effect the
transactions contemplated hereby will be
reasonably satisfactory in form and substance to
Buyer. There shall have been no material adverse
change or any development involving a prospective
material adverse change, in the Condition of the
Company;
(viii) Buyer having completed its business, accounting
and legal investigation and examination of the
Company and being satisfied with the results
thereof; and
(ix) Buyer having completed its acquisition of the
Shares representing a 31.31% interest in the
Company from Motorola referred to in the preface
above.
Buyer may waive any condition specified in this clause
8(a) in writing at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF SELLER
The obligation of Seller to consummate the transactions
to be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
clause 3(b) above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) Buyer shall have performed and complied with all
of its covenants hereunder required to be
performed or complied with by Buyer on or before
the Closing Date in all material respects through
the Closing;
(iii) there shall not be any injunction, judgment,
order, decree, ruling or charge in effect
preventing the Buyer from consummating any of the
transactions contemplated by this Agreement;
(iv) Buyer shall have delivered to Seller a certificate
to the effect that each of the conditions
specified above in clause 8(b)(i)-(iii) is
satisfied;
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<PAGE>
(v) Seller shall have received from counsel to Buyer
an opinion in form and substance reasonably
satisfactory to Seller, addressed to Seller, and
dated as of the Closing Date; and
(vi) all actions to be taken by Buyer in connection
with consummation of the transactions contemplated
hereby and all certificates, opinions,
instruments, and other documents required to
effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance
to Seller.
Seller may waive any condition specified in this clause
8(b) in writing at or prior to the Closing.
(c) CONDITIONS APPLICABLE TO BOTH BUYER AND SELLER
The obligation of both Buyer and Seller to consummate the
transaction pursuant to this Agreement shall be subject
to the further conditions that:-
(i) the Company shall have adopted the Articles of
Association in form and substance reasaonably
satisfactory to the Parties and reflecting, as
applicable, the provisions of the Restated and
Amended Shareholders Agreement referred to below,
in substitution for its existing articles of
association;
(ii) the relevant parties shall have entered into a
Restated and Amended Shareholders' Agreement in
the form of Exhibit A attached hereto and the same
shall be in full force and effect as at the
Closing Date.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All of the representations and warranties of the Parties
in clause 3 and of the Seller contained in clause 4 above
shall survive the Closing hereunder and shall continue in
full force and effect subject to the provisions of
paragraph (b) of this clause.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER:
(i) In the event the Seller breaches any of its
representations, warranties and covenants
contained herein (other than the representations
and warranties in clause 3(a) above), and,
provided that Buyer makes a written claim for
indemnification against Seller
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<PAGE>
pursuant to clause 12(g) below prior to 31st
December, 1999, then the Seller shall indemnify
Buyer from and against any Adverse Consequences
Buyer shall suffer originating prior to and
continuing through and after the date of the
claim for indemnification caused by the breach.
There shall be no indemnification for any Adverse
Consequences Buyer shall suffer where written
notice of the claim is first made after 31st
December, 1999. The Seller shall not have any
obligation to indemnify Buyer from and against
any Adverse Consequences caused by the breach of
any representation or warranty of the Seller
contained in clause 4 above unless the amount
of Buyer's claim in respect thereof, when
aggregated with one or more other claims brought
against Seller hereunder, exceeds two hundred
thousand United States Dollars (US$200,000). The
maximum liability of the Seller for a breach of
any of his representations, warranties and
covenants contained herein shall be limited to an
amount equal to the aggregate of 50% of the
Purchase Price.
(ii) In the event the Seller breaches any of his
representations and warranties in clause 3(a)
above, provided that Buyer makes a written claim
for indemnification against the Seller pursuant to
clause 12(g) below prior to the first anniversary
of the Closing Date, then the Seller shall
indemnify Buyer from and against the entirety of
any Adverse Consequences Buyer shall suffer
through and continuing after the date of the claim
for indemnification caused by the breach, without
regard to the monetary limit set forth above in
clause 9(b)(i). There shall be no indemnification
for any Adverse Consequences Buyer shall suffer
where written notice of the claim is first made
after the first anniversary of the Closing Date.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER
In the event Buyer breaches any of its representations,
warranties, and covenants contained herein, and provided
that Seller makes a written claim for indemnification
against Buyer pursuant to clause 12(g) below prior to the
first anniversary of the Closing Date, then Buyer agrees
to indemnify Seller from and against the entirety of any
Adverse Consequences Seller shall suffer through and
continuing after the date of the claim for
indemnification caused by the breach. There shall be no
indemnification for any Adverse Consequences Seller shall
suffer where written notice of the claim is first made
after the first anniversary of the Closing Date.
(d) DETERMINATION OF ADVERSE CONSEQUENCES
14
<PAGE>
The indemnification provisions in this clause 9 are in
addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for
breach of representation, warranty, or covenant.
10. TERMINATION
(a) Termination of Agreement
The Parties may terminate this Agreement as provided
below:
(i) Buyer and Seller may terminate this Agreement by
mutual written consent at any time prior to the
Closing;
(ii) Buyer may terminate this Agreement by giving
written notice to Seller at any time prior to the
Closing in the event (A) Seller has within the
then previous ten (10) business days given Buyer
any notice pursuant to clause 6(b) above and (B)
the development that is subject of the notice has
had or is likely to have a material adverse effect
upon the Condition of the Company or the
consummation of the transactions contemplated
hereby;
(iii) Buyer may terminate this Agreement by giving
written notice to Seller at any time prior to the
Closing (A) in the event the Seller has breached
any of his representations, warranties, or
covenants contained in this Agreement in any
material respect, Buyer has notified the Seller of
such breach, and the breach, if capable of cure,
has continued without cure for a period of 10 days
after the notice of breach, or (B) if the Closing
shall not have occurred on or before 16th
September, 1997, by reason of the failure of any
condition precedent under clause 8(a) hereof
(unless the failure results primarily from the
Buyer itself breaching any of its representations,
warranties, or covenants contained in this
Agreement); and
(iv) Seller may terminate this Agreement by giving
written notice to Buyer at any time prior to the
Closing (A) in the event Buyer has breached any of
its representations, warranties, or covenants
contained in this Agreement in any material
respect, Seller has notified Buyer of such breach,
and the breach if capable of cure has continued
without cure for a period of 10 days after the
notice of breach, or (B) if the Closing shall not
have occurred on or before 16th September,1997, by
reason of the failure of any condition precedent
under clause 8(b) hereof (unless the failure
results primarily the Seller itself breaching any
of its
15
<PAGE>
representations, warranties, or covenants contained
in this Agreement).
(b) EFFECT OF TERMINATION
If any Party terminates this Agreement pursuant to clause
10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any
Party to the other Party, except for any liability of any
Party then in breach provided, however, that the
provisions of clause 11 and clause 12 shall survive
termination.
11. ARBITRATION
The Parties shall attempt to resolve all disputes under this
Agreement through amicable discussions and consultations. In
the event that they are unable to resolve any differences the
matter shall be referred to final and binding arbitration in
accordance with the following: Any dispute arising out of or
in connection with this Agreement, including any questions
regarding its existence, validity, breach or termination,
shall be referred to and finally resolved by arbitration in
London in accordance with the Rules for the time being in
force of the International Chamber of Commerce, which rules
are deemed to be incorporated into this Agreement. The
tribunal shall consist of three (3) arbitrators, with each
side to the dispute choosing one arbitrator and such two
arbitrators choosing the third. If within 30 days any of the
parties to the dispute has not selected its arbitrator, or the
two arbitrators have been unable to agree on the selection of
the third arbitrator, such arbitrator shall be chosen by the
ICC. The third arbitrator shall serve as the chairperson of
the arbitration panel. The language of the arbitration shall
be English.
12. MISCELLANEOUS
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS
No Party shall issue any press release or make any public
announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written
approval of Buyer and Seller; provided, however, that any
Party may make any public disclosure it believes in good
faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use
its reasonable best efforts to advise the other Parties
prior to making the disclosure).
(b) NO THIRD PARTY BENEFICIARIES
16
<PAGE>
This Agreement shall not confer any rights or remedies
upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement
This Agreement (including the documents referred to
herein) constitutes the entire agreement among the
Parties and supersedes any prior understanding,
agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to
the subject matter hereof.
(d) Succession and Assignment
This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign
either this Agreement or any of his or its rights,
interests, or obligations hereunder without the prior
approval of Buyer and Seller.
(e) Counterpart
This Agreement may be executed in one or more
counterpart, each of which shall be deemed an original
but all of which together will constitute one and the
same instrument.
(f) Headings
The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
(g) Notices
All notices, requests, demands, claims, and other
communications hereunder will be in writing, deemed duly
given (and received five days after) if sent by
registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient
as set forth below:
If to Seller: Continental Communications Limited
PO Box 108
2-6 Church Street
St. Helier, Jersey
Channel Islands JE4 8QD
17
<PAGE>
If the Buyer: Hugh McClung
Vice-Chairman
International Wireless Communications, Inc.
12/F, Sun Hung Kai Centre
30 Harbour Road
Wanchai, Hong Kong
John Troy
Executive Director
Asian Infrastructure Fund Advisers Limited
Suite 2302-03
Nine Queen's Road Central
Hong Kong
Any Party may send any notice, request, demand, claim or
other communication hereunder to the intended recipient
at the address set for the 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 to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by
giving the other Parties notice in the manner herein set
forth.
(h) GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of England without giving effect
to any choice or conflict of law provision or rule that
would cause the application of the laws of any
jurisdiction other than that of England.
(i) AMENDMENTS AND WAIVERS
No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by
Buyer and Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
(j) SEVERABILITY
18
<PAGE>
Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
(k) EXPENSES
Each of Buyer and Seller will bear its own costs and
expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions
contemplated hereby.
(l) CONSTRUCTION
The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this
Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word
"including" shall mean including without limitation.
(m) INCORPORATION OF ANNEXES, SCHEDULES AND EXHIBITS
The Annexes, Schedules and Exhibits identified in this
Agreement are incorporated herein by reference and made a
part hereof.
19
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
on the date first above written.
Continental Communications Limited
By: /s/
------------------------------------------------
Title:
---------------------------------------------
Witnessed by: 1. /s/
-------------------------------
2. /s/
-------------------------------
International Wireless Communications Pakistan Limited
By: /s/ Antonio Yeung /s/ Robin Maule
------------------------------------------------
Title: Director Director
---------------------------------------------
Witnessed by: 1. /s/
-------------------------------
2. /s/
-------------------------------
20
<PAGE>
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
<PAGE>
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
i
<PAGE>
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 P.O. Box 1130, 3rd Floor, 12 Remy Ollier
Street, Port Louis, Mauritius ("IWCPL"); SAIF TELECOM (PVT) LIMITED, a
company organized under the laws of PAKISTAN with a place of business
located at 4th Floor, Kulsum Plaza, 42 Blue Area, Islamabad, Pakistan
("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.
3
<PAGE>
"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 Javed Saifullah Khan and Osman Saifullah 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., Javed Saifullah Khan and Osman
Saifullah 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.
4
<PAGE>
"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."
5
<PAGE>
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
6
<PAGE>
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 Mr. Javed Saifullah Khan, and his current term
as Chairman of the Board shall be extended through financial year 1998.
SAIF shall cause Mr. Javed Saifullah Khan 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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<PAGE>
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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<PAGE>
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.
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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.
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<PAGE>
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
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<PAGE>
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
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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.
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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:
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(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
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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
<PAGE>
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 mark "Motorola" in the phrase "A
Motorola Network" in conjunction with the Company's tradename,
"Mobilink". The Company may not use the "Motorola" name or mark 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
<PAGE>
(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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<PAGE>
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
<PAGE>
J. Michael Norris
Vice President
Motorola International Development Corporation
425 Martingale Rd.
Schaumburg, IL, 60173
Facsimile Number: (847) 435-3915
if to IWCPL:
Hugh McClung, Vice President
International Wireless Communications Pakistan Limited
c/o 1 2/F Sun Hung Kai Centre
30 Harbour Road
Wanchai, Hong Kong
John Troy
Executive Director
Asian Infrastructure Fund Advisors Limited
Suite 2302-03, Nine Queen's Road Central
Hong Kong
with a copy to Antonio Y.P.Yeung
(same address as for John Troy)
if to SAIF:
Javed Saifullah Khan
SAIF Telecom (PVT) Limited 4th F1., Kulsum Plaza
42 Blue Area,
Islamabad, Pakistan
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
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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
<PAGE>
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
<PAGE>
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.
28
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1
EXHIBIT 10.27D
Final Draft
_____________, 1997
International Wireless Communications
Pakistan Limited
P.O. Box 1130
3rd Floor
12 Remy Ollier Street
Port Louis, Mauritius
Saif Telecom (Pvt.) Limited
4th Floor
Kulsum Plaza
42 Blue Area
Islamabad
Pakistan
Pakistan Mobile Communications (Pvt.) Limited
(the "Company")
----------------------------------------
Ladies and Gentlemen:
Reference is made to the Restated and Amended Shareholders Agreement,
dated as of even date herewith (the "Shareholders Agreement"), among
International Wireless Communications Pakistan Limited, a company organized
under the laws of Mauritius ("Newco"), Saif Telecom (Pvt.) Limited, a company
organized under the laws of Pakistan ("SAIF"), and Motorola International
Development Corporation, a company organized under the laws of the State of
Delaware, United States of America ("MIDC"). All capitalized terms used but not
defined herein shall have the respective meanings assigned to them in the
Shareholders Agreement.
The parties hereto agree that the execution and delivery of this
letter agreement by each of them is a condition precedent to the execution and
delivery of the Shareholders Agreement.
Accordingly, 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 hereto agree as
follows:
1. FIVE YEAR BUSINESS PLAN.
Each Shareholder agrees that, at the meeting of the board of directors
of the Company (the "Board") to be held on the date of this letter agreement or
immediately thereafter,
<PAGE>
2
it shall cause its representatives on the Board to vote in favor of the
approval and adoption of the Five Year Business Plan which is attached hereto
as Annex A.
2. DEBT TO EQUITY RATIO.
The Shareholders agree that they intend to procure non-recourse
project financing for the Company as soon as is feasible. Accordingly, the
Shareholders anticipate that the debt to equity ratio of the Company will be
adjusted to 60:40 or, if the Shareholders think necessary, 50:50 in 1997 and
1998, through a combination of additional capital contributions and loans to be
made by the Shareholders ("Shareholder Loans") to the Company as more fully
described in Paragraph 3 of this letter agreement. For the purpose of
determining the Company's debt-to-equity ratio, all Shareholder Loans shall be
treated as equity.
3. RECAPITALIZATION OF THE COMPANY.
(a) On the date hereof, the Shareholders shall make additional
capital contributions in the aggregate amount of US$8,100,000 and Shareholder
Loans in the aggregate amount of US$5,900,000, each such capital contributions
and Shareholder Loans to be made on a pro rata basis in respect of the Shares
that are held by them as of the date hereof.
(b) For the purpose of Paragraph 3(a), SAIF has, concurrently
with the execution of the Shareholders Agreement and this letter agreement,
remitted or caused to be remitted on its behalf the amount of US$2,000,000 (the
"Base Amount") to the bank account of the Company. The portion of the Base
Amount in excess of the additional capital contributions required to be made by
SAIF under Paragraph 3(a) shall be treated as a Shareholder Loan made by SAIF to
the Company (the "SAIF Loan").
(c) The Shareholders agree that, from the date hereof through
December 31, 1999 (the "Carry Period"), SAIF shall not be obligated to provide
its pro rata share of any additional capital contributions or Shareholder Loans
that the Board calls for in excess of the Base Amount, and with respect to the
SAIF pro rata share of any such additional capital contributions or Shareholder
Loans, the matter shall be handled in accordance with Paragraphs 3(d), (e), (f),
(g), (h), (i) and (j), as the case may be.
(d) If, during the Carry Period, the Company requires additional
funds, then except where applicable Pakistan law requires, or the Board
determines that it is necessary or desirable, that such funding be made in the
form of capital contributions, such funding shall be made in the form of
Shareholder Loans. All Shareholder Loans (including the SAIF Loan) shall bear
interest at 15% per annum compounded annually or, if less, the maximum interest
rate permitted by the State Bank of Pakistan, and shall be evidenced by a
promissory note in form and substance reasonably acceptable to the Company and
the Shareholders.
<PAGE>
3
(e) Subject to Paragraph 3(i), if, during the Carry Period, the
Board makes calls for Shareholder Loans and SAIF declines to make its pro rata
share of the Shareholder Loans called for by the Board, each of MIDC and Newco
shall, in addition to the pro rata Shareholder Loans that are required to be
made by them, make an additional Shareholder Loan on a pro rata basis based on
their then respective shareholdings in the Company without taking into account
the shareholding percentage of SAIF (such ratio, the "MIDC/Newco Ratio") in an
aggregate principal amount of the pro rata Shareholder Loan that would otherwise
have been made by SAIF. Such Shareholder Loans made by MIDC and Newco shall be
non-convertible loans bearing interest at 15% per annum compounded annually or,
if less, the maximum interest rate permitted by the State Bank of Pakistan, and
shall be evidenced by a promissory note in form and substance reasonably
acceptable to the Company, MIDC and Newco.
(f) If the Board calls for additional capital contributions to
be made by the Shareholders after the date hereof and during the Carry Period, a
corresponding principal amount of the SAIF Loan shall be automatically converted
as of the due date of the capital contributions into SAIF's pro rata share of
the capital contributions that have been called for by the Board.
(g) To the extent that, during the Carry Period, (i) the Company
requires additional funds, (ii) applicable Pakistan law requires or the Board
determines that it is necessary or desirable for such additional funding to be
in the form of additional capital contributions and (iii) the Board makes calls
for additional capital contributions after the entire principal amount of the
SAIF Loan has theretofore already been converted into capital contributions by
SAIF to the Company as contemplated by Paragraph 3(f), at SAIF's request made on
or before the due date of the capital call, MIDC and Newco shall lend funds to
SAIF in United States dollars based on the MIDC/Newco Ratio in the amount of
SAIF's pro rata share of the additional capital contributions that have been
called for (the "MIDC/Newco Loans"). If SAIF does not request or incur a
MIDC/Newco Loan for the applicable capital call, it shall be diluted
accordingly. The MIDC/Newco Loans shall be evidenced by promissory notes to be
in form and substance reasonably acceptable to the Shareholders, which shall
contain the following principal terms: (i) the proceeds of the MIDC/Newco Loans
shall be used solely by SAIF to make its pro rata share of the capital
contributions called for by the Board, (ii) the MIDC/Newco Loans shall bear
interest at 15% per annum compounded annually or, if less, the maximum interest
rate permitted by the State Bank of Pakistan, and all principal of and interest
on the MIDC/Newco Loans shall be payable in United States dollars, (iii) the
final maturity date of all amounts outstanding under any MIDC/Newco Loan shall
be the eighth anniversary of the making of each such MIDC/Newco Loan, (iv) SAIF
shall, as of the making of any such MIDC/Newco Loan, instruct the Company in
writing to pay directly to MIDC and Newco in accordance with the MIDC/Newco
Ratio (A) all of the cash dividends or distributions that SAIF is entitled to
receive from the Company in respect of the Shares that are subscribed for by
SAIF and paid for with the proceeds of such MIDC/Newco Loan, and (B) half of all
cash dividends or distributions that SAIF is entitled to receive from the
Company in respect of all of the Shares held by it that are not encumbered or
pledged in any way in favor of MIDC or Newco, which
<PAGE>
4
payments shall be applied in the order set forth in clause (vi), (v) SAIF
shall, on the date of receipt of any cash proceeds from any sale, transfer or
other disposition of any or all of its Shares pay such amounts to MIDC and
Newco in accordance with the MIDC/Newco Ratio, which amounts shall be applied
in the order set forth in clause (vi), and (vi) any amounts received by MIDC
or Newco pursuant to clauses (iv) and (v) shall be applied first to the
payment of interest accrued but unpaid on, and then to the outstanding
principal amount of, all of their respective MIDC/Newco Loans, and to the
extent that more than one MIDC/Newco Loan has been made by MIDC and Newco,
then payment of interest or principal shall be made with respect to the
MIDC/Newco Loans in the order that they were made. In addition, SAIF shall
pledge to each of MIDC and Newco the applicable number of Shares, determined
on the basis of the MIDC/Newco Ratio on which the applicable MIDC/Newco Loans
were made, that were subscribed to and acquired by SAIF with the additional
capital contributions made by it using the proceeds of the MIDC/Newco Loans,
which pledge shall be pursuant to a pledge agreement in form and substance
reasonably satisfactory to the Shareholders.
If either MIDC or Newco fails to make its respective MIDC/Newco Loan
to SAIF as provided in this Paragraph 3(g), then MIDC or Newco (as the case may
be) shall be a defaulting Shareholder, such default shall be deemed to
constitute an Event of Default under Clause 16.3(d) of the Shareholders
Agreement and the provisions of Clause 16.5 of the Shareholders Agreement shall
apply MUTATIS MUTANDIS with respect to such default, except that as between MIDC
or Newco (as the case may be) and SAIF as the non-defaulting Shareholders, SAIF
shall have the right to first acquire from MIDC or Newco (as the case may be),
as the defaulting Shareholder, without paying any consideration to the
defaulting Shareholder, such number of Shares of the defaulting Shareholder so
as to preserve its shareholding percentage in the Company as if the requisite
MIDC/Newco Loans had been made under this Paragraph 3(g) and SAIF had made its
pro rata share of the additional capital contributions that had been called for
using the proceeds of such MIDC/Newco Loans. Thereafter, SAIF and MIDC or Newco
(as the case may be) shall have the right under Clause 16.5 of the Shareholders
Agreement to purchase the remaining Shares of the defaulting Shareholder on a
pro rata basis as set forth therein.
(h) With respect to any call for additional capital
contributions made by the Board after the date hereof and during the Carry
Period, there shall be an increase in the share capital of the Company, with
each Shareholder subscribing for additional Shares in cash at the subscription
price determined by the Board in proportion to the number of Shares then held by
them.
(i) Notwithstanding anything to the contrary contained in this
letter agreement, if the aggregate amount of calls for additional capital
contributions or Shareholder Loans made by the Board after the date hereof
exceed, at any time prior to December 31, 1998, the aggregate commitments of any
party to make capital contributions and Shareholder Loans to the Company through
to December 31, 1998 as set forth in the Five Year Business Plan attached hereto
as Annex A, then such party shall have no obligation to make any capital
contributions or Shareholder Loans in excess of its commitments and the making
of any such capital contributions or Shareholder Loans in excess of its
commitments shall be handled in accordance
<PAGE>
5
with Clause 9.2 and Clause 9.3 of the Shareholders Agreement, respectively,
except that in order to ensure that SAIF's interest in the Company during the
Carry Period is not diluted: (x) with respect to the application of Clause
9.2 of the Shareholders Agreement, MIDC and Newco shall lend funds to SAIF in
United States dollars based on the MIDC/Newco Ratio to enable SAIF to make
its pro rata share of the capital contributions called for pursuant to Clause
9.2 of the Shareholders Agreement, and the provisions of Paragraph 3(g) of
this letter agreement shall apply MUTATIS MUTANDIS to such loans from MIDC
and Newco; and (y) with respect to the application of Clause 9.3 of the
Shareholders Agreement, the maker of any convertible Shareholder Loan
thereunder shall enter into arrangements, including, but not limited to the
loan mechanism set out in Paragraph 3(g), reasonably satisfactory to SAIF as
of the date of the making of such Shareholder Loan to ensure that SAIF's
interest in the Company is not diluted by virtue of the right to convert such
Shareholder Loan into Shares of the Company (even though such right of
conversion may be exercised after the expiration of the Carry Period).
(j) For the avoidance of doubt, if the aggregate amount of calls
for additional capital contributions or Shareholder Loans made by the Board
after the date hereof through to December 31, 1998 is less than the aggregate
commitments of any party to make capital contributions and Shareholder Loans to
the Company through to December 31, 1998 as set forth in the Five Year Business
Plan attached hereto as Annex A, then all such unfulfilled commitments shall
automatically terminate as of December 31, 1998.
4. SAIF SALE OF SHARES.
(a) If, during the Carry Period and in accordance with the
provisions of the Shareholders Agreement, SAIF accepts a bona fide offer from an
unrelated third party for the purchase of its Shares after the Remaining
Shareholders have waived their rights of first refusal under Clause 12 of the
Shareholders Agreement with respect to such proposed sale of the Shares held by
SAIF, then as of the date of SAIF's acceptance of such offer:
(i) the Carry Period shall automatically terminate;
(ii) the proposed transferee of the Shares shall not be
entitled to any of the rights of SAIF contained in this letter agreement,
except that any Shareholder Loans made by MIDC and Newco pursuant to
Paragraph 3(e) shall continue in effect and remain outstanding in
accordance with their terms; and
(iii) any future needs of the Company for Shareholders
Loans shall be handled in accordance with Clause 9.3 of the Shareholders
Agreement.
<PAGE>
6
PROVIDED, HOWEVER, that if SAIF fails to consummate the sale of its Shares to
the unrelated third party, then this letter agreement shall continue in full
force and effect as though SAIF had never accepted any such offer.
(b) In addition to the provisions of Paragraph 4(a), on the date
of the closing of the sale and purchase of the Shares held by SAIF to such
unrelated third party, SAIF shall repay the principal of all outstanding
MIDC/Newco Loans used for the purchase of such Shares, together with any
interest accrued but unpaid thereon, and upon receipt of all amounts due and
owing with respect thereto, MIDC and Newco shall deliver to SAIF the applicable
promissory notes evidencing such MIDC/Newco Loans marked "canceled," together
with the share certificates evidencing the Shares that were purchased with the
proceeds of such MIDC/Newco Loans and which were pledged by SAIF to MIDC and
Newco to secure the MIDC/Newco Loans made by them, respectively.
(c) For the avoidance of doubt, the anti-dilution provisions in
this letter agreement in favor of SAIF shall not inure to the benefit of an
unrelated third party transferee of the Shares held by SAIF.
5. SHAREHOLDER GUARANTIES.
Notwithstanding anything contained to the contrary in Clause 9.4
of the Shareholders Agreement and other than with respect to the third party
debt of the Company existing as of the date hereof which is dealt with
separately in Paragraph 6 of this letter agreement, if the Company needs to
borrow money from third party lenders and it is a condition precedent to the
extension of such credit that the Shareholders issue guaranties with respect
thereto, SAIF shall not be required to issue any such Shareholder guaranty, but
each of MIDC and Newco shall issue a Shareholder guaranty in accordance with the
MIDC/Newco Ratio in respect of the amounts that are required to be so
guaranteed. The provisions of Clause 9.4 of the Shareholders Agreement granting
an option to purchase additional Shares at par to Shareholders that provide
disproportionate Shareholder guaranties shall not apply to the Shareholder
guaranties made by MIDC and Newco under this Paragraph 5.
6. MOTOROLA GUARANTY.
(a) The parties hereto acknowledge that an Associate of MIDC,
Motorola Inc. ("Motorola Parent"), has heretofore issued (i) two guaranties for
the benefit of Citibank, N.A., the first dated December 20, 1993 and the second
dated June 7, 1994 (together, the "Citibank Guaranties") and (ii) a guaranty for
the benefit of Sanwa Bank, dated February 14, 1997 (the "Sanwa Guaranty", and
together with the Citibank Guaranties, the "Motorola Guaranties") to guarantee
the payment of the principal of, and interest on, loans made by Citibank, N.A.
and Sanwa Bank, respectively (together, the "Lenders") to the Company and all
other amounts payable by the Company to the Lenders with respect thereto
(together, the "Obligations"). As of the date of this letter agreement, the
aggregate outstanding Obligations guaranteed under the Motorola Guaranties is
US$42,700,000, consisting of outstanding
<PAGE>
7
Obligations of US$15,000,000 under the first Citibank Guaranty and
US$7,700,000 under the second Citibank Guaranty and outstanding Obligations
of US$20,000,000 under the Sanwa Guaranty.
(b) The parties agree that if, on or before the first
anniversary of the Closing (as defined in the Share Purchase Agreement, dated
_______________________, 1997, between MIDC and Newco (the "Share Purchase
Agreement")), Newco has not made any arrangements reasonably satisfactory to the
Shareholders, the Lenders and Motorola Parent, with effect as of such date (i)
to terminate the Motorola Guaranties, or (ii) to reduce the liability of
Motorola Parent or any of its Associates under the Motorola Guaranties or any
guaranty or guaranties issued in substitution thereof to only a portion of the
then outstanding Obligations in an amount equal to its pro rata share thereof
based on the MIDC/Newco Ratio (such arrangements, the "Guaranty Solution"),
then, on the first anniversary of the Closing, subject to the Paragraph 6(c),
Shares representing 4% of the total issued share capital of the Company as
determined as of the date of this letter agreement (the "Subject Shares") that
have been placed in escrow with an escrow agent (the "Escrow Agent") as provided
in Clause 2(d) of the Share Purchase Agreement shall be transferred to MIDC.
(c) The parties acknowledge and agree that all of the Subject
Shares are to be transferred to MIDC if, on or before the first anniversary of
the Closing, Newco has failed to arrange any Guaranty Solution and the amount of
the aggregate outstanding Obligations as set forth in Paragraph 6(a) has not
been reduced. However, if Newco has arranged any partial Guaranty Solution
under which the disproportionate nature of the Motorola Guaranties has been
reduced so as to more closely proximate the MIDC/Newco Ratio or the aggregate
outstanding Obligations have been reduced from the amount set forth in Paragraph
6(a), then Newco shall only be obligated to transfer to MIDC, and MIDC shall
only be entitled to receive from Newco through the Escrow Agent, a corresponding
proportion of the Subject Shares. On the first anniversary of the Closing,
Newco shall deliver to MIDC a statement setting forth in reasonable detail its
calculation of the number of the Subject Shares to be transferred to MIDC
pursuant to this Paragraph 6(c). Subject to the immediately following sentence,
Newco and MIDC shall then issue joint instructions to the Escrow Agent to
release to MIDC share certificates evidencing such number of Subject Shares
(which shall have been duly endorsed for transfer to MIDC); PROVIDED, HOWEVER,
that if Newco is required to apply to the Company to issue new share
certificates in the requisite number of Subject Shares to be transferred to MIDC
and to the relevant Pakistan authorities for approval to export out of Pakistan
such new share certificates, then the Escrow Agent shall promptly deliver the
share certificates to MIDC for the requisite number of Subject Shares after the
appropriate share certificates have been issued by the Company in substitution
for the share certificates held by the Escrow Agent and such approval has been
obtained and until such events have occurred MIDC shall enjoy all beneficial
ownership of such Subject Shares, including the right to receive dividends and
distributions with respect thereto and the right to vote such Subject Shares.
Any dispute between Newco and MIDC regarding the number of Subject Shares to be
transferred to MIDC that cannot be resolved through consultation shall be
handled in accordance with Clause 18.4 of the Shareholders Agreement. If Newco
shall fail to instruct the Escrow Agent to release and transfer the requisite
number of Subject Shares to MIDC (except, however, where such failure is
<PAGE>
8
due to a BONA FIDE dispute between MIDC and Newco regarding the requisite
number of Subject Shares to be transferred), then such breach shall
constitute an Event of Default and MIDC shall have the rights set forth in
Clause 16.5 of the Shareholders Agreement, except that in lieu of an
appraisal of the value of the Shares held by Newco, MIDC shall have the right
to purchase the Shares held by Newco at 50% of the Purchase Price (as defined
in the Share Purchase Agreement) per Share that was paid by Newco at the
Closing.
(d) If, on or before the date that is eighteen months after the
date of the Closing, no Guaranty Solution has been made, then Newco shall be
obligated to provide, at its option, a Shareholder guaranty (which shall be
acceptable to the third party lenders of the loans that are being so
guaranteed), a Shareholder Loan or a combination of the foregoing, in an
aggregate amount equal to its pro rata share based on the MIDC/Newco Ratio of
the then outstanding Obligations, and the liability of Motorola Parent under the
Motorola Guaranties shall accordingly be reduced to its pro rata share based on
the MIDC/Newco Ratio of the then outstanding Obligations. If at any time
thereafter the Obligations are reduced, then to the extent that Newco shall have
provided any Shareholder Loans under this Paragraph 6(d) and the Company has not
repaid such Shareholder Loans in such amount as to preserve the pro rata nature
of MIDC's and Newco's obligations to guarantee the Obligations, then MIDC shall
make a Shareholder Loan to the Company so that, when taking into account the
then outstanding Obligations as so reduced, MIDC and Newco shall each continue
to guarantee such Obligations on a pro rata basis based on the MIDC/Newco Ratio,
whether through the provision of Shareholder guaranties and/or Shareholder
Loans.
(e) If Newco shall fail to perform its obligations described in
Paragraph 6(d), then MIDC shall have the right, but not the obligation, to
purchase up to such number of the Shares held by Newco, which when purchased at
50% of the Purchase Price (as defined in the Share Purchase Agreement) per Share
would result in a purchase price equal to the amount of Newco's pro rata share
of the then outstanding Obligations with respect to which it failed to perform
its obligations under Paragraph 6(d). If MIDC exercises its right to purchase
any such Shares held by Newco, then Newco shall be obligated to make a
Shareholder Loan to the Company with the purchase price paid to it for such
Shares so as to cause the obligation of MIDC and Newco to guarantee the
outstanding Obligations to be made on a pro rata basis based on the MIDC/Newco
Ratio or, if MIDC has not purchased the maximum number of Shares held by Newco
that it is entitled to purchase under this Paragraph 6(e), then as closely
thereto as possible.
(f) Any Shareholder Loans made pursuant to Paragraph 6(d) or (e)
shall be non-convertible loans bearing interest at 15% per annum compounded
annually or, if less, the maximum interest rate permitted by the State Bank of
Pakistan, and shall be evidenced by a promissory note in form and substance
reasonably acceptable to the Company, MIDC and Newco. Such Shareholder Loans
shall be used to reduce the then outstanding Obligations in such manner as the
Company thinks fit for the sole purpose of preserving the pro rata shares, based
on the MIDC/Newco Ratio, of MIDC's and Newco's obligations to guarantee the
Obligations.
<PAGE>
9
(g) In addition to the foregoing, if, as of the first
anniversary of the Closing, no Guaranty Solution has been made, then the parties
agree that the Company shall pay a fee to Motorola Parent to compensate it for
continuing to maintain the Motorola Guaranties on a disproportionate basis.
Such fee shall accrue from the date of the first anniversary of the Closing
until a Guaranty Solution has been made and shall be payable in United States
dollars quarterly in arrears. The fee shall be the greater of (x) the average
of the fees quoted by three banks or other financial institutions of
international standing reasonably acceptable to MIDC and Newco for the issuance
of guaranties of like tenor or (y) the difference between (i) the amount in
interest payable to Newco for any Shareholder Loans it may provide pursuant to
Paragraphs 6(d) and (e) and (ii) the interest that is payable by the Company on
the third party loans that are the subject of the Motorola Guaranties. The fee
payable to Motorola Parent under this Paragraph 6(g) shall be appropriately
adjusted from time to time if a partial Guaranty Solution is made or the
aggregate outstanding Obligations are reduced from the amount set forth in
Paragraph 6(a). If, for whatever reason, the State Bank of Pakistan does not
approve the payment of such fee to be paid to Motorola Parent or approves a fee
that does not fully compensate Motorola Parent as contemplated under this
Paragraph 6(g), then the parties agree to seek alternative solutions with which
to equitably compensate Motorola Parent for continuing to maintain the Motorola
Guaranties on a disproportionate basis.
7. DEFAULT OF A NEWCO INVESTOR.
(a) The parties acknowledge that, under Clause 16.3(d) of the
Shareholders Agreement, the failure by a Shareholder to provide capital
contributions or Shareholder loans which it has agreed to provide pursuant to
Clause 9.1 of the Shareholders Agreement on the due date or within the cure
period stipulated in Clause 16.3(d) of the Shareholders Agreement constitutes an
Event of Default which will give the non-defaulting Shareholders the right to
purchase the Shares held by the defaulting Shareholder at a purchase price of
50% of their fair market value.
(b) The parties acknowledge that Newco has been newly-formed by
a group of investors (the "Newco Investors") and that, whenever Newco is
obligated to make capital contributions or Shareholder loans to the Company
pursuant to Clause 9.1 of the Shareholders Agreement, the Newco Investors shall
fund the requisite amounts to Newco in proportion to their shareholding
percentages in Newco so as to enable Newco to fulfil such obligations. If any
Newco Investor (the "Defaulting Newco Investor") shall so fail to provide its
pro rata share of any such funding that is required for Newco to make capital
contributions or Shareholder loans to the Company pursuant to Clause 9.1 of the
Shareholders Agreement, but the other Newco Investors (the "Non-defaulting Newco
Investors") shall have done so and where none of the Non-defaulting Newco
Investors have elected to make up the funding that the Defaulting Newco Investor
has failed to provide as provided in the shareholders agreement among the
shareholders of Newco, then Newco shall, on the due date of the making of the
capital contributions or the Shareholder loans to the Company or within the cure
period stipulated in Clause 16.3(d) of the Shareholders Agreement, make such
part of its required capital contributions or Shareholder loans with the funds
that have been provided by the Non-defaulting Newco Investors, and in so doing
and notwithstanding Paragraph 7(a) of this letter
<PAGE>
10
agreement, no Event of Default shall be deemed to have occurred with respect
to Newco. Instead, the parties agree that Newco shall have the right to
purchase the shares held by the Defaulting Newco Investor in Newco or to
otherwise cause the Defaulting Newco Investor to divest its shares in Newco
in consideration for the transfer by Newco to the Defaulting Newco Investor
of such number of Shares that is attributable and corresponds to the
shareholding percentage in Newco of the Defaulting Newco Investor, with the
result that the Defaulting Newco Investor shall become a direct Shareholder
of the Company. In connection therewith, Newco shall cause the Defaulting
Newco Investor to execute and deliver a deed of adherence substantially in
the form of Exhibit C to the Shareholders Agreement. The parties hereby agree
that Clause 12 of the Shareholders Agreement shall not apply to any such
transfer of Shares by Newco. Immediately following the transfer of Shares to
the Defaulting Newco Investor, the Defaulting Newco Investor shall be deemed
to have been in default under Clause 16.3(d) of the Shareholders Agreement by
virtue of having failed to fund its share of the capital contributions or
Shareholder loans that should have been made by it originally to Newco, and
MIDC, SAIF and Newco (as so constituted with only the Non-defaulting Newco
Investors as its shareholders) shall all have the right to purchase the
Shares held by the Defaulting Newco Investor in accordance with Clause 16.5
of the Shareholders Agreement.
8. OPTION SHARES. Notwithstanding anything to the contrary
contained in the Shareholders Agreement or in this letter agreement, until the
First Option or the Second Option (each as defined in the Share Purchase
Agreement), as applicable, is exercised or otherwise lapses, Motorola shall not
be obligated to make any capital contributions or Shareholder loans to the
Company in respect of the First Option Shares or the Second Option Shares (each
as defined in the Share Purchase Agreement); it being understood that (i) if the
First Option or the Second Option is exercised, then, concurrently with the
closing thereof, Newco shall make the capital contributions and Shareholder
loans to the Company that should have been made in respect of the First Option
Shares or the Second Option Shares during the period from and after the Closing
of the Sale Shares (each as defined in the Share Purchase Agreement) until the
closing of the First Option or Second Option, as applicable, (ii) if the First
Option is not exercised or lapses, then, upon the expiration of the First Option
Period (as defined in the Share Purchase Agreement), Motorola shall make the
capital contributions and Shareholder loans to the Company that should have been
made in respect of the 7.69% shareholding in the Company that it has retained
and which has not been reserved for the exercise of the Second Option during the
period from and after the Closing of the Sale Shares until the expiration of the
First Option Period, and (iii) if neither the First Option nor the Second Option
is exercised, then, in addition to clause (ii) hereof, upon the expiration of
the Second Option Period (as defined in the Share Purchase Agreement), Motorola
shall make the capital contributions and Shareholder loans that should have been
made in respect of the Second Option Shares during the period from and after the
Closing of the Sale Shares until the expiration of the Second Option Period.
9. SHAREHOLDERS AGREEMENT. This letter agreement shall be read
together with the Shareholders Agreement.
10. GOVERNING LAW. This letter agreement shall be governed by and
construed in accordance with the laws of Pakistan.
<PAGE>
11
11. COUNTERPARTS. This letter agreement may be executed in
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one and the same instrument.
If the foregoing accurately reflects our agreements relating to the
subject matter thereof, please indicate by signing in the spaces indicated
below.
Yours sincerely,
MOTOROLA INTERNATIONAL
DEVELOPMENT CORPORATION
By______________________
Name:
Title:
AGREED TO AND ACCEPTED
AS OF THE DATE SET FORTH
ABOVE BY:
INTERNATIONAL WIRELESS
COMMUNICATIONS PAKISTAN
LIMITED
By_______________________
Name:
Title:
SAIF TELECOM (PVT.) LIMITED
By_______________________
Name:
Title:
AGREED TO AND ACCEPTED AS OF
THE DATE SET FORTH ABOVE WITH
RESPECT TO PARAGRAPH 6 ONLY BY:
MOTOROLA INC.
By_______________________
Name:
Title:
<PAGE>
EXHIBIT 10.27E
EXECUTION COPY
-----------------------------------------------
-----------------------------------------------
SHAREHOLDERS' AGREEMENT
among
INTERNATIONAL WIRELESS COMMUNICATIONS
PAKISTAN LIMITED,
INTERNATIONAL WIRELESS COMMUNICATIONS LIMITED
and
SOUTH ASIA WIRELESS COMMUNICATIONS
(MAURITIUS) LIMITED
Dated as of July 17, 1997
-----------------------------------------------
-----------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE/SECTION PAGE
- --------------- ----
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Definitions. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Principles of Interpretation . . . . . . . . . . . . . . . . . 2
2. Business of the Company . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 PMCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Restrictions on Transfer of Shares. . . . . . . . . . . . . . . . . . 3
3.1 Limitation on Transfer . . . . . . . . . . . . . . . . . . . . 3
3.2 Transfers in Compliance with Law . . . . . . . . . . . . . . . 3
3.3 Affiliate Transfers. . . . . . . . . . . . . . . . . . . . . . 4
3.4 Right of First Refusal . . . . . . . . . . . . . . . . . . . . 5
3.5 Veto Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Right of First Offer. . . . . . . . . . . . . . . . . . . . . . . . . 6
5. First Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Exercise of First Option . . . . . . . . . . . . . . . . . . . 8
5.2 IWC Option . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 SA Put Right . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.4 Closing of IWC Option or SA Put Right. . . . . . . . . . . . . 9
5.5 Second Option Shares.. . . . . . . . . . . . . . . . . . . . .10
6. Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
6.2 Shareholder Votes. . . . . . . . . . . . . . . . . . . . . . .11
6.3 Board of Directors . . . . . . . . . . . . . . . . . . . . . .13
6.4 Board Meetings . . . . . . . . . . . . . . . . . . . . . . . .14
6.5 PMCL Board . . . . . . . . . . . . . . . . . . . . . . . . . .14
6.6 PMCL Affairs . . . . . . . . . . . . . . . . . . . . . . . . .15
6.7 Management of PMCL . . . . . . . . . . . . . . . . . . . . . .15
6.8 Non-Competition. . . . . . . . . . . . . . . . . . . . . . . .16
6.9 Deadlock with respect to PMCL. . . . . . . . . . . . . . . . .16
6.10 Directors' Access. . . . . . . . . . . . . . . . . . . . . . .16
7. Financial Reports and Auditing. . . . . . . . . . . . . . . . . . . .17
7.1 Right of Inspection. . . . . . . . . . . . . . . . . . . . . .17
7.2 Books and Records. . . . . . . . . . . . . . . . . . . . . . .17
7.3 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
<PAGE>
ARTICLE/SECTION PAGE
- --------------- ----
7.4 PMCL Reports . . . . . . . . . . . . . . . . . . . . . . . . .18
8. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
8.1 Additional Capital Contributions; Shareholder Loans. . . . . .18
8.2 Failure to Subscribe for Additional Shares or Provide
Shareholder Loans. . . . . . . . . . . . . . . . . . . . . . .19
8.3 Procedures.. . . . . . . . . . . . . . . . . . . . . . . . . .19
8.4 Divestment . . . . . . . . . . . . . . . . . . . . . . . . . .20
8.5 Dilution of Breaching Shareholder. . . . . . . . . . . . . . .21
9. Memorandum and Articles of Association. . . . . . . . . . . . . . . .22
10. Representations and Warranties. . . . . . . . . . . . . . . . . . . .22
11. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . .23
12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . .23
12.1 General Obligation . . . . . . . . . . . . . . . . . . . . . .23
12.2 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . .23
12.3 Disclosure to Third Parties. . . . . . . . . . . . . . . . . .23
13. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
14. U.S. Investment Company Act of 1940.. . . . . . . . . . . . . . . . .24
15. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
15.1 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
15.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
15.3 Discrepancies. . . . . . . . . . . . . . . . . . . . . . . . .25
15.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . .26
15.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . .26
15.6 Term of Agreement. . . . . . . . . . . . . . . . . . . . . . .26
15.7 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . .26
15.8 Consent to Specific Performance. . . . . . . . . . . . . . . .26
15.9 Assignment; Binding on Transferee. . . . . . . . . . . . . . .26
15.10 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . .26
15.11 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . .27
15.12 Shareholder Obligations; Further Assurances. . . . . . . . . .27
15.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . .28
Annex A: Pro Rata Share of Capital Contributions and Shareholder Loans to
be made to PMCL
Exhibit A: Form of Deed of Adherence
<PAGE>
1
SHAREHOLDERS' AGREEMENT, dated as of July 17, 1997 (this "Agreement"),
among INTERNATIONAL WIRELESS COMMUNICATIONS PAKISTAN LIMITED, a Mauritius
company with its registered offices at P.O. Box 1130, 3rd Floor, 12 Remy Ollier
Street, Port Louis, Mauritius (the "Company"), INTERNATIONAL WIRELESS
COMMUNICATIONS LIMITED, a Mauritius corporation with its principal offices at
400 South El Camino Real, San Mateo, CA 94402, U.S.A. ("IWC") and SOUTH ASIA
WIRELESS COMMUNICATIONS (MAURITIUS) LIMITED, a Mauritius corporation with its
principal offices at Suite 2302-03, Nine Queen's Road Central, Hong Kong ("SA
Wireless").
As of the date of this Agreement, the authorized share capital of the
Company is US$1,000,000, comprised of 1,000,000 ordinary shares, nominal value
US$1.00 each ("Shares").
The Company has issued and allotted to IWC, and IWC has subscribed
for, 26 Shares, and the Company has issued and allotted to SA Wireless, and SA
Wireless has subscribed for, 20 Shares.
The parties have agreed to enter into this Shareholders' Agreement to
provide for certain matters relating to the transfer of Shares and the
management and operation of the Company.
In consideration of the foregoing and of the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
1.1 CERTAIN DEFINITIONS. The following capitalized terms
shall have the following meanings for purposes of this Agreement:
"AFFILIATE" means, in relation to any Shareholder, a Person
controlling, controlled by or under common control with such Shareholder. For
purposes of this Agreement, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"AIF" means the Asian Infrastructure Fund.
"BOARD" means the board of directors of the Company.
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2
"BUSINESS DAY" means any day (excluding Saturday and Sunday) on
which banks in the State of New York, USA, Hong Kong and Mauritius are open for
business.
"CHARTER DOCUMENTS" means, collectively, the Memorandum of
Association and the Articles of Association of the Company.
"DIRECTOR" means a director of the Company (including any duly
appointed alternate director).
"FINANCIAL YEAR" means the financial year of the Company, which
shall end on December 31.
"PERSON" means any natural person, corporation, partnership,
firm, joint venture, association, joint stock company, trust, unincorporated
association, governmental authority or other legal entity.
"PMCL" means Pakistan Mobile Communications (Pvt.) Limited, a
company incorporated under the laws of Pakistan.
"SECURITIES" means shares in the share capital of the Company and
any options, warrants or other securities that are directly or indirectly
convertible into, or exercisable or exchangeable for, such share capital.
"SHAREHOLDER" means (i) each of IWC and SA Wireless for so long
as such Shareholder remains a shareholder of the Company, and (ii) any other
Person who becomes a shareholder of the Company in accordance with the terms of
this Agreement and executes a Deed of Adherence substantially in the form
attached hereto as Exhibit A, for so long as such Person remains a shareholder
of the Company.
"SUBSIDIARY" means any corporation, partnership or other entity
in which the Company directly or indirectly holds a majority interest in the
form of shares, membership, partnership interests or otherwise.
"US DOLLARS" or "US$" means United States dollars, the lawful
currency of the United States of America.
1.2 PRINCIPLES OF INTERPRETATION.
(a) Any reference herein to any Article, Section or
Exhibit shall refer to such Article or Section of, or Exhibit to, this
Agreement. The words "herein," "hereof" and "hereunder," and words of like
import, shall refer to this Agreement as a whole and not to any particular
provision hereof.
<PAGE>
3
(b) All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the antecedent Person may require.
(c) The headings in this Agreement are intended solely
for convenience of reference and shall be given no effect in the interpretation
of this Agreement.
2. BUSINESS OF THE COMPANY.
2.1 GENERAL. The business of the Company shall be restricted
to its holding of shares in the capital of PMCL. Unless the Shareholders
unanimously agree, the Company shall not form or establish any other
Subsidiaries.
2.2 PMCL.
(a) Promptly after the date hereof, the Company will
enter into separate share purchase agreements with Motorola International
Development Corporation ("Motorola") and Continental Communications Limited to
acquire, in the aggregate, a 46% interest in PMCL. Under the share purchase
agreement to be entered by and between the Company and Motorola (the "Motorola
Share Purchase Agreement"), (i) Motorola will grant an option to the Company to
acquire up to a further 12.69% interest in PMCL from Motorola (the "First
Option") and (ii) if the First Option is not exercised, then the Company shall
have an option (the "Second Option") to purchase from Motorola the Second Option
Shares (as defined in the Motorola Share Purchase Agreement).
(b) At the closing of the transactions contemplated by
the Motorola Share Purchase Agreement, the Company will enter into a
Shareholders Agreement with the other shareholders of PMCL relating to certain
rights and obligations of the shareholders of PMCL (the "PMCL Shareholders
Agreement").
3. RESTRICTIONS ON TRANSFER OF SHARES.
3.1 LIMITATION ON TRANSFER. No Shareholder shall sell, give,
transfer, assign, charge, mortgage, hypothecate, pledge, encumber, grant a
security interest in or otherwise dispose of (whether by operation of law or
otherwise) (each, a "Transfer") any Securities, or any right, title or interest
therein or thereto, except as expressly permitted by this Article 3. Any
attempt to Transfer any Securities or any rights therein or thereto in violation
of this Article 3 shall be null and void AB INITIO, and the Company shall not
register any such Transfer.
3.2 TRANSFERS IN COMPLIANCE WITH LAW. Notwithstanding any
other provision of this Agreement, no Transfer may be made pursuant to this
Article 3 unless (a) the transferee has agreed in writing to be bound by the
terms and conditions of this Agreement
<PAGE>
4
pursuant to a Deed of Adherence substantially in the form attached hereto as
Exhibit A, (b) the transferee assumes all shareholder loans that have been
made by the transferor to the Company on or prior to the Transfer, (c) the
Transfer complies in all respects with the applicable provisions of this
Agreement and (d) the Transfer complies in all respects with applicable
securities laws. If requested by the Company in its reasonable discretion,
an opinion of counsel to such transferring Shareholder shall be supplied to
the Company, at such transferring Shareholder's expense, to the effect that
such Transfer complies with applicable securities laws.
3.3 AFFILIATE TRANSFERS.
3.3.1 PERMITTED TRANSFEREES. Any Shareholder may
Transfer some or all of the Securities held by such Shareholder to an Affiliate
of such Shareholder without compliance with the provisions of Section 3.4;
PROVIDED that the Shareholder shall remain liable for any and all of its
obligations under this Agreement.
3.3.2 CHANGE IN STATUS. If Securities are Transferred by
a Shareholder to an Affiliate of such Shareholder and such transferee shall at
any time cease to be an Affiliate of such Shareholder, such Shareholder shall
notify the other Shareholders of such an event within five Business Days after
the occurrence of such an event, and such Securities shall be transferred
(i) back to the original Shareholder or (ii) to another Affiliate of that
Shareholder without compliance with the provisions of Section 3.4.
3.3.3 COMBINED HOLDINGS. The Securities held by a
Shareholder and such Shareholder's Affiliates shall for all purposes of this
Agreement be treated as Securities held by a single Shareholder.
3.3.4 IWC TRANSFERS. Notwithstanding the foregoing,
within 120 days after the date of this Agreement, IWC may, with notice to SA
Wireless, Transfer 6.52% of the then total issued Shares that are held by IWC to
Vanguard Cellular Systems Inc. ("Vanguard") without compliance with the
provisions of Section 3.4, but so long as Section 3.2 is complied with and so
long as IWC provides SA Wireless with evidence reasonably satisfactory to SA
Wireless that a voting arrangement has been entered into between IWC and
Vanguard pursuant to which IWC shall vote all the Shares held by Vanguard and
that such voting arrangement will be in full force and effect at all times while
Vanguard is a Shareholder, and thereafter or concurrently therewith, IWC may,
with notice to, and the prior written agreement of, SA Wireless, Transfer all,
but not less than all, of the remaining Securities held by it to one of its
Affiliates without compliance with the provisions of Section 3.4 and, upon such
Transfer to its Affiliate, IWC shall no longer be liable for any of its
obligations under this Agreement and all references in this Agreement to "IWC"
shall automatically be deemed a reference to such Affiliate.
<PAGE>
5
3.4 RIGHT OF FIRST REFUSAL. Each Shareholder (each, a
"Transferor") who proposes to Transfer Securities to a third party (a "Third
Party Purchaser") other than pursuant to Section 3.3, grants to each other
Shareholder (a "Section 3.4 Rightholder") a right of first refusal ("Right of
First Refusal") to purchase such Section 3.4 Rightholder's pro-rata share of the
Transferor's Securities, exercisable at the option of each Section 3.4
Rightholder in accordance with Section 3.4(b).
(a) Each Transferor shall furnish to each Section 3.4
Rightholder written notice (the "Transferor Notice") of the intended
disposition, including the identity of the Third Party Purchaser, the number of
Securities to be Transferred (the "Offered Securities"), the price at which the
Securities are proposed to be Transferred and the general terms upon which such
Transfer is proposed to be made.
(b) Subject to Sections 3.4(c) and 3.4(d), each
Section 3.4 Rightholder shall have 21 calendar days (the "Notice Period") after
the receipt of the Transferor Notice to agree irrevocably to purchase up to its
pro-rata share of the Offered Securities for the price and upon the general
terms specified in the Transferor Notice by giving written notice to the
Transferor and stating therein the quantity of the Offered Securities to be
purchased (each such Section 3.4 Rightholder exercising such right being
referred to herein as a "Section 3.4 Purchaser"). Failure by a Section 3.4
Rightholder to respond within such Notice Period shall be regarded as a waiver
of its Right of First Refusal with respect to the Transfer of the Offered
Securities.
(c) Each Transferor shall, promptly after the end of
the Notice Period, give written notice (the "Last-Chance Notice") to all Section
3.4 Rightholders stating whether the Offered Securities have been taken up by
the Section 3.4 Purchasers, and, if not, the number of Offered Securities not so
taken up (the "Remaining Offered Securities"). Subject to Section 3.4(d), each
Section 3.4 Purchaser shall have the right, but not the obligation, to purchase
all, but not less than all, of the Remaining Offered Securities. The right of
each Section 3.4 Purchaser to purchase the Remaining Offered Securities shall be
exercisable irrevocably by written notice delivered to each Transferor, with a
copy to the Company, given within ten calendar days (the "Last Chance Period")
after receipt of the Last-Chance Notice. If more than one Section 3.4 Purchaser
timely elects to exercise its right to purchase the Remaining Offered
Securities, the right to purchase the Remaining Offered Securities shall be
allocated pro rata among those Section 3.4 Purchasers electing to purchase the
Remaining Offered Securities, based on the proportion that the number of
Securities owned by such Section 3.4 Purchaser bears to the total number of
Securities owned by all Section 3.4 Purchasers that elect to purchase the
Remaining Offered Securities. A failure of any Section 3.4 Purchaser to
exercise such right within the Last Chance Period shall be regarded as a waiver
of its right to purchase such Remaining Offered Securities as provided herein.
<PAGE>
6
(d) Notwithstanding anything in this Article 3 to the
contrary, the right of the Section 3.4 Purchasers to purchase any of the Offered
Securities pursuant to this Article 3 shall be exercisable if and only if the
Section 3.4 Purchasers collectively have exercised their rights to purchase all,
but not less than all, of the Offered Securities pursuant to this Section 3.4.
Any exercise by any Shareholder of a Right of First Refusal pursuant to this
Section 3.4 shall be final and irrevocable.
(e) If the Section 3.4 Purchasers collectively have
exercised their Rights of First Refusal with respect to all of the Offered
Securities, then the closing of such sale and purchase shall take place promptly
after the final allocation with respect to such Offered Securities has been
determined, at the principal offices of the Company or such other place and time
as the relevant parties may agree. If the Section 3.4 Purchasers collectively
have not exercised their Rights of First Refusal with respect to all of the
Offered Securities, then the Transferor shall have 120 calendar days after the
end of the Last Chance Period to make the Transfer of the Offered Securities to
the Third Party Purchaser at the price and upon the terms specified in the
Transferor Notice. In the event the Transferor does not Transfer such
Securities to the Third Party Purchaser within such 120-day period, the
Transferor shall not thereafter make a Transfer of such Offered Securities
without again complying with the Right of First Offer provisions in this
Section 3.4.
(f) The exercise or non-exercise of the Right of First
Refusal by a Section 3.4 Rightholder with respect to a Transfer of Securities by
a Transferor shall not affect such Section 3.4 Rightholder's Right of First
Refusal with respect to subsequent Transfers of Securities.
(g) A change in the beneficial ownership of any
Shareholder or any Person that controls a Shareholder shall not constitute a
Transfer of Securities that causes the Right of First Refusal to arise hereunder
so long as such Shareholder's ownership interest in the Company does not
constitute the primary asset of such Shareholder or other Person in respect of
which such change in beneficial ownership occurs.
3.5 VETO RIGHTS. If a Shareholder proposes to Transfer
Securities to a Third Party Purchaser that is engaged in a business directly
competing with that of the Company or PMCL at the time of the proposed Transfer,
non-Transferring Shareholders holding in the aggregate at least 25% of the
issued Shares shall each have the right to prohibit such Transfer,
notwithstanding compliance by the Transferor with Section 3.4. For the
avoidance of doubt, this provision shall not apply to Transfers made pursuant to
Section 3.3.1.
4. RIGHT OF FIRST OFFER. Except as provided in Articles 5 and 8,
the Company hereby grants to each Shareholder a right of first offer ("Right of
First Offer") to subscribe for such Shareholder's pro-rata share of any New
Securities (as defined in Section 4(e) below) that the Company may from time to
time propose to issue, and the provisions of this Article 4 shall apply to such
issuances.
<PAGE>
7
(a) In the event that the Company proposes to undertake an
issuance of New Securities, the Company shall give written notice (the "Company
Notice") of its intention to so issue such New Securities to each Shareholder.
The Company Notice shall include the type and number of such New Securities, the
price and the general terms upon which such New Securities are proposed to be
issued, the number of such New Securities for which each Shareholder is entitled
to subscribe pursuant to this Article 4 and the identity of the Person(s) to
whom such New Securities are proposed to be issued (the "Proposed Acquirers").
(b) Each Shareholder shall have 28 calendar days after the
receipt of the Company Notice to agree irrevocably to subscribe for up to its
pro-rata share of such New Securities for the price and upon the general terms
specified in the Company Notice by giving written notice to the Company and
stating therein the number of New Securities for which such Shareholder shall
subscribe. If any Shareholder fails to exercise or waives its Right of First
Offer hereunder (a "Non-Exercising Shareholder"), the Company shall give notice
to all Shareholders who do exercise their Right of First Offer (the "Exercising
Shareholders") of such failure or waiver.
(c) Each Exercising Shareholder shall have a right of over
allotment to subscribe for up to its pro-rata portion of any New Securities not
subscribed for by a Non-Exercising Shareholder hereunder. Each Exercising
Shareholder may exercise irrevocably such right of over allotment by giving
written notice to the Company within 28 calendar days of receipt of the notice
of non-exercise or waiver from the Company described in Section 4(b) and stating
therein the number of New Securities for which such Exercising Shareholder shall
subscribe. Upon exercises of the Right of First Offer hereunder in connection
with any proposed issuance of New Securities, the Company shall simultaneously
issue such New Securities pursuant to such exercises at such time and place as
the Company shall determine. Any exercise by any Shareholder of a right of
subscription pursuant to this Article 4 shall be final and irrevocable.
(d) If the Shareholders waive or fail to exercise in full the
Right of First Offer set forth in Sections 4(b) and (c) with respect to all of
the New Securities within the above-mentioned time periods, then the Company
shall have 120 calendar days thereafter to sell any New Securities with respect
to which the Shareholders did not exercise their Right of First Offer at a price
and upon general terms no more favorable to the Proposed Acquirers than those
specified in the Company Notice. In the event the Company does not sell the New
Securities within such 120-day period, the Company shall not thereafter issue or
sell such New Securities without first offering such New Securities to the
Shareholders in accordance with this Article 4.
<PAGE>
8
(e) For the purposes of this Article 4, the term "New
Securities" shall mean any Securities, whether now authorized or authorized in
the future, that are offered for subscription or sale by the Company.
(f) The exercise or non-exercise of the Right of First Offer
by a Shareholder hereunder with respect to an issuance of New Securities shall
not affect such Shareholder's Right of First Offer with respect to subsequent
issuances of New Securities.
(g) Any Proposed Acquirer to whom New Securities are issued
pursuant to this Article 4 shall become a party to and shall be bound by the
restrictions on Transfer and the other restrictions and obligations set forth in
this Agreement to the same extent and with the same force and effect as if such
person were an original signatory hereto. Each Proposed Acquirer shall, as a
condition to subscribing for such New Securities, execute a Deed of Adherence
substantially in the form of Exhibit A upon or before the consummation of the
issuance of such New Securities.
5. FIRST OPTION; IWC OPTION SHARES; SECOND OPTION SHARES.
5.1 EXERCISE OF FIRST OPTION. The parties hereto agree and
acknowledge that the decision to exercise the First Option shall be made by SA
Wireless. If SA Wireless wishes to exercise the First Option, it shall notify
the other Shareholders and the Company, and each Shareholder shall cause the
Company to exercise the First Option in accordance with the provisions of
Clauses 9(a) to (d) of the Motorola Share Purchase Agreement. The parties agree
that the cost of the acquisition of the First Option Shares (as defined in the
Motorola Share Purchase Agreement) shall be funded entirely by SA Wireless
through the subscription by SA Wireless of new Shares at an aggregate
subscription price equal to the amount of the First Option Purchase Price (as
defined in the Motorola Share Purchase Agreement). The number of new Shares to
be issued to SA Wireless for this purpose shall be such number of Shares as to
cause IWC (together with Vanguard (if applicable)) and SA Wireless to have a
shareholding in the Company immediately prior to or concurrently with the First
Option Closing (as defined in the Motorola Share Purchase Agreement) of 44.3%
and 55.7%, respectively.
5.2 IWC OPTION.
(a) SA Wireless hereby irrevocably and unconditionally
grants an option to IWC (the "IWC Option"), effective upon the exercise of the
First Option, exercisable on one occasion only at any time in the 12 month
period commencing from January 1, 1998 (the "IWC Option Period") to purchase
from SA Wireless such number of Shares held by SA Wireless so as to enable IWC
(together with Vanguard (if applicable)) to have a shareholding in the Company
of 50.01% (the "IWC Option Shares") on the terms and subject to the conditions
of this Section 5.2 and Section 5.4; PROVIDED, HOWEVER, that notwithstanding the
<PAGE>
9
foregoing, IWC may exercise the IWC Option on one occasion at any time prior to
the commencement of the IWC Option Period if it pays to SA Wireless the IWC
Option Share Price (as defined in Section 5.4(a)) calculated as if the IWC
Option had been exercised as of January 1, 1998.
(b) Subject to this Section 5.2 and Section 5.4, IWC
may, at any time during the IWC Option Period, exercise the IWC Option by
serving on SA Wireless written notice of such exercise. The notice of exercise
of the IWC Option once served shall be irrevocable and binding on IWC and may
not be withdrawn without the prior written consent of SA Wireless.
5.3 SA PUT RIGHT.
(a) SA Wireless shall have the right (the "SA Put
Right"), effective upon the exercise of the First Option, exercisable on one
occasion only at any time in the 12 month period commencing from January 1, 1998
(the "SA Put Period") and so long as the IWC Option has not theretofore been
exercised, to sell the IWC Option Shares to IWC and IWC shall be obligated to
purchase the IWC Option Shares from SA Wireless on the terms and subject to the
conditions of this Section 5.3 and Section 5.4.
(b) Subject to this Section 5.3 and Section 5.4, SA
Wireless may, at any time during the SA Put Period and so long as the IWC Option
has not theretofore been exercised, exercise the SA Put Right by serving on IWC
written notice of such exercise. The notice of exercise of the SA Put Right
once served shall be irrevocable and binding on SA Wireless and may not be
withdrawn without the prior written consent of IWC.
5.4 CLOSING OF IWC OPTION OR SA PUT RIGHT.
(a) The purchase price (the "IWC Option Share Price")
payable by IWC for the IWC Option Shares, whether pursuant to the exercise of
the IWC Option under Section 5.2 or the exercise of the SA Put Right under
Section 5.3, shall be the sum of the amounts that have been paid by the Company
in respect of the underlying shares of PMCL that are attributable and correspond
to the IWC Option Shares (the "Underlying PMCL Shares") by way of the original
Purchase Price (as defined in the Motorola Share Purchase Agreement) per share
of the Underlying PMCL Shares, any amounts funded by the Company as additional
capital contributions or shareholder loans to PMCL in respect of the Underlying
PMCL Shares, the amounts of any loans that the Company may have made to Saif
Telecom (Pvt.) Limited, a shareholder of PMCL ("SAIF"), to enable SAIF to
respond to any shareholder loans to, or any capital call of, PMCL which are
attributable to the Underlying PMCL Shares and the pro rata share based on the
percentage of the IWC Option Shares to the total issued Shares of the fees,
costs and expenses of third party advisers and consultants engaged on behalf of
the Company in connection with evaluating the proposed acquisition of shares in
PMCL and of any fees (if any) required to have been paid in connection with the
consummation of the acquisition by the
<PAGE>
10
Company of shares in PMCL (such amounts, collectively, the "Actual Investment
Cost"), plus a return in United States dollars terms on the Actual Investment
Cost calculated at a rate equal to 40% internal rate of return. The
calculation of the internal rate of return shall be made with respect to each
separate amount that constitutes the Actual Investment Cost commencing on the
date each such separate amount was paid by the Company in respect of the
Underlying PMCL Shares. For the purposes of this Section 5.4(a), "internal
rate of return" means the discount rate which, when applied, constitutes the
present value, as of the date of closing of the sale and purchase of the IWC
Option Shares, of the Actual Investment Cost that is equal to the present
value of all the proceeds generated from the Actual Investment Cost.
(b) Following the exercise of the IWC Option in
accordance with Section 5.2 or the exercise of the SA Put Right in accordance
with Section 5.3, the closing of the sale and purchase of the IWC Option Shares
shall take place at the principal offices of the Company or such other place as
IWC and SA Wireless mutually agree on the seventh Business Day after the date of
the exercise of the IWC Option or the SA Put Right, as the case may be. At the
closing, (i) SA Wireless shall deliver share certificates to IWC totalling the
number of the IWC Option Shares, together with instruments of transfer in
respect thereof, and (ii) IWC shall pay the IWC Option Share Price in cash by
wire transfer of immediately available funds to the bank account designated by
SA Wireless in writing.
5.5 SECOND OPTION SHARES. If the First Option is not
exercised and the provisions of Clause 9 of the Motorola Share Purchase
Agreement relating to the Second Option apply, the parties hereto agree and
acknowledge that the decision to exercise the Second Option shall be made by
IWC. If IWC wishes to exercise the Second Option, it shall notify the other
Shareholders and the Company, and each Shareholder shall cause the Company to
exercise the Second Option in accordance with the provisions of Clauses 9(e) to
(h) of the Motorola Share Purchase Agreement. The parties agree that the cost
of the acquisition of the Second Option Shares shall be funded entirely by IWC
through the subscription by IWC of new Shares at an aggregate subscription price
equal to the amount of the Second Option Purchase Price (as defined in the
Motorola Share Purchase Agreement). The number of new Shares to be issued to
IWC for this purpose shall be such number of Shares as to cause IWC (together
with Vanguard (if applicable)) and SA Wireless to have a shareholding in the
Company immediately prior to or concurrently with the closing of the sale and
purchase of the Second Option Shares of 60.8% and 39.2%, respectively.
6. MANAGEMENT.
6.1 GENERAL. From and after the date hereof, each Shareholder
shall vote its Shares at any ordinary general meeting or extraordinary general
meeting of Shareholders (a "Shareholders' Meeting") or in any written resolution
executed in lieu of such a meeting of Shareholders (a "Written Resolution"), and
shall take all other actions necessary, to give effect to the provisions of this
Agreement (including, without limitation, Section 6.3.2) and to ensure that the
Charter Documents do not, at any time hereafter, conflict in any respect with
the provisions
<PAGE>
11
of this Agreement. In addition, each Shareholder shall vote its Shares at
any Shareholders' Meeting, or act by Written Resolution with respect to such
Shares, upon any matter submitted for action by the Shareholders or with
respect to which such Shareholder may vote or act by Written Resolution, in
conformity with the specific terms and provisions of this Agreement and the
Charter Documents.
6.2 SHAREHOLDER VOTES.
(a) The following matters in relation to the Company
shall require the unanimous consent of all of the Shareholders in a Written
Resolution or the unanimous consent of representatives of all of the
Shareholders present at a duly convened Shareholders' Meeting:
(i) any amendment, modification or waiver of
the Charter Documents;
(ii) the formation or establishment of any
Subsidiary;
(iii) any change to the scope of business of the
Company or any Subsidiary;
(iv) any sale or other disposition of all or
substantially all of the assets of the Company or any Subsidiary;
(v) the liquidation, winding up or dissolution
of the Company, the making or entry into by the Company of any general
assignment, arrangement or composition with or for the benefit of its
creditors, or the cessation by the Company to carry on its business or any
material part of its business;
(vi) the settlement, waiver or discontinuance of
any litigation or arbitration proceedings involving a claim exceeding the
equivalent of US$500,000 per claim and US$1,000,000 in the aggregate in any
financial year or the commencement of any litigation or arbitration
proceedings involving a claim exceeding the equivalent of US$500,000;
(vii) any merger, amalgamation or consolidation
of the Company or any Subsidiary with any other entity;<PAGE>
<PAGE>
12
(viii) issuance of any Securities of the Company
or any Subsidiary other than pursuant to Articles 5 and 8;
(ix) the acquisition or disposition of any
material assets by the Company or any Subsidiary other than in the ordinary
course of business;
(x) any of the matters referred to in the PMCL
Shareholders Agreement that require a Supermajority (as defined therein)
vote of the board of directors of PMCL (the "PMCL Board") or the
shareholders of PMCL;
(xi) any decision of the Company with respect to
the making of (i) additional capital contributions to PMCL pursuant to
Clause 9.2 of the PMCL Shareholders Agreement, (ii) shareholder loans to
PMCL pursuant to Clause 9.3 of the PMCL Shareholders Agreement, and (iii)
shareholder guarantees for the obligations of PMCL pursuant to Clause 9.4
of the PMCL Shareholders Agreement; and
(xii) other than pursuant to Section 6.9 or 8.4,
any decision of the Company with respect to the sale or other disposition
of all or a part of its shares in PMCL or the exercise of rights of first
refusal to acquire shares of PMCL pursuant to Clause 12 of the PMCL
Shareholders Agreement or the exercise of rights to acquire shares of a
defaulting shareholder of PMCL pursuant to Clause 16.5 of the PMCL
Shareholders Agreement.
(b) Notwithstanding the provisions of Section
6.2(a)(vi), where litigation or arbitration proceedings are or are proposed to
be brought by or against the Company against or by any Shareholder or any
Affiliate of any Shareholder, irrespective of the amount involved, such
Shareholder, and the Directors appointed by such Shareholder to the Board, shall
have no vote in determining whether such litigation or arbitration proceedings
shall be commenced, settled or discontinued or how the same shall be conducted.
(c) Any decision of the Company to exercise its right
to postpone the Closing (as defined in the Motorola Share Purchase Agreement) of
the transactions contemplated by the Motorola Share Purchase Agreement pursuant
to Clause 11 thereof or to terminate the Motorola Share Purchase Agreement prior
to the Closing (as defined therein) pursuant to Clause 12 thereof may be made by
SA Wireless by notice to the other Shareholders, whereupon all of the
Shareholders shall cause the Company to postpone the Closing or terminate the
Motorola Share Purchase Agreement in accordance with the provisions of Clause 11
or 12, respectively, thereof.
<PAGE>
13
(d) The parties acknowledge that if IWC exercises its
right to Transfer a portion of its Shares to Vanguard as provided in Section
3.3.4, IWC will enter into a voting arrangement with Vanguard pursuant to which
IWC shall vote the Shares held by Vanguard.
6.3 BOARD OF DIRECTORS.
6.3.1 AUTHORITY OF BOARD. Subject only to the provisions
of this Agreement and the Charter Documents, the Board shall have ultimate
responsibility for management and control of the Company.
6.3.2 NUMBER AND COMPOSITION. The number of members
constituting the entire Board shall be six; PROVIDED, HOWEVER, that if the
Second Option is exercised and IWC funds the purchase by the Company of the
Second Option Shares pursuant to Section 5.3, then the number of members
constituting the Board shall be reduced to five. Each Shareholder shall vote
its Shares at any Shareholders' Meeting called for the purpose of filling the
positions on the Board or in any Written Resolution executed for such purpose to
elect, and shall take all other actions necessary to ensure the election to the
Board of initially, (i) three nominees of IWC and (ii) three nominees of SA
Wireless, and if the number of members constituting the Board is reduced to five
as provided in the proviso to the first sentence of this Section 6.3.2, then (i)
three nominees of IWC and (ii) two nominees of SA Wireless. Each Shareholder
who has a right to nominate a director (a "Nomination Right") pursuant to this
Section 6.3.2 shall not be permitted to transfer its Nomination Right in
connection with any Transfer of its Securities without the prior written consent
of all other Shareholders who have Nomination Rights at the time of such
Transfer.
6.3.3 REMOVAL AND REPLACEMENT OF DIRECTORS.
(a) A Director shall be removed from the Board,
with or without cause, upon, and only upon, the affirmative vote of the
Shareholders in accordance with this Section 6.3.3. Each Shareholder shall vote
its Shares for the removal of a Director upon the request of the Shareholder
that nominated such Director. Otherwise, no Shareholder shall vote for the
removal of a Director.
(b) In the event any Director resigns or is
removed in accordance with Section 6.3.3(a), the Shareholders shall, before the
transaction of any other business by the Shareholders or the Board, elect a
successor or replacement nominated by the Shareholder that nominated such
Director. Such successor or replacement Director shall be elected on or as soon
as possible after the date of such resignation or removal.
<PAGE>
14
6.3.4 ALTERNATE DIRECTORS. A Director may at any time
appoint another person (including another Director) to be his alternate
Director, and may at any time terminate such appointment. Any person so
appointed shall be entitled to receive notices of and to attend and vote at
meetings of the Board and count towards a quorum and shall automatically vacate
his office on the expiration of the term for, or the happening of the event,
until which he is by the terms of his appointment to hold office or if the
appointor in writing terminates the appointment or if the appointor himself
ceases for any reason to hold office as a Director. An appointment of an
alternate Director shall not prejudice the right of the appointor to receive
notices of and to attend and vote at meetings of the Board, and the powers of
the alternate Director shall automatically be suspended during such time as the
Director appointing him is himself present in person at a meeting of the Board.
6.4 BOARD MEETINGS.
6.4.1 NOTICE. Meetings of the Board may be called by the
Chairman of the Board or any two Directors. Not less than 14-days' notice of
any Board meeting shall be given to all Directors; PROVIDED, HOWEVER, that such
notice period may be reduced if approved by all of the Directors in writing.
The venue for Board meetings shall be the principal offices of the Company
unless otherwise approved by the Board.
6.4.2 QUORUM. All meetings of the Board shall require a
quorum consisting of at least three Directors, including at least one Director
nominated by IWC and at least one Director nominated by SA Wireless.
Notwithstanding the foregoing, if such a quorum is not present within one hour
from the time appointed for the meeting, the meeting shall adjourn to such place
and time (which is at least 14 days later) as those Directors who did attend
shall decide or, if no such decision is reached, at the same place and time 14
days later, at which time any three Directors present shall constitute a quorum;
PROVIDED that not less than seven days' notice of such adjourned meeting of the
Board shall be given to all the Directors.
6.4.3 TELEPHONIC MEETINGS. Directors may participate in
a meeting of the Board by means of conference telephone or similar
communications equipment whereby all persons participating in the meeting can
hear each other at the same time.
6.4.4 VOTING. The adoption of any resolution of the
Board shall require the affirmative vote of Directors holding a majority of the
votes held by Directors present at a duly constituted meeting of the Board at
which a quorum is present. The Chairman of the Board shall have no casting
vote.
6.4.5 WRITTEN RESOLUTION. By notice and copy to all
Directors, resolutions may be adopted in writing by a majority of Directors.
<PAGE>
15
6.5 PMCL BOARD. The parties agree that (a) so long as the
beneficial ownership of Shares owned by SA Wireless is not less than 30% of the
total issued Shares, AIF shall have the right to directly nominate two directors
to the PMCL Board where the PMCL Board has eight members but if the number of
directors constituting the PMCL Board is increased to 10, then AIF shall have
the right to directly nominate three directors to the PMCL Board, and (b) if the
beneficial ownership of Shares owned by SA Wireless is less than 30%, but more
than 15%, of the total issued Shares, then AIF shall have the right to directly
nominate one director to the PMCL Board where the PMCL Board has eight members
and two directors to the PMCL Board where the PMCL Board has 10 members. Each
of the Shareholders shall cause the Company to vote its shares in PMCL for the
election of the SA Wireless nominees nominated in accordance with this Section
6.5.
6.6 PMCL AFFAIRS.
(a) If any of the matters referred to in Section
6.2(a)(x) fails to obtain a unanimous vote of the Shareholders, then the
Shareholders shall cause the Company acting in its capacity as a shareholder of
PMCL or the nominees of the Company on the PMCL Board, as the case may be, to
vote at the applicable shareholders' meeting of PMCL or applicable PMCL Board
meeting, as the case may be, to maintain the status quo.
(b) Except for the matters referred to in Section 6.2,
the Shareholders and the Board shall discuss matters concerning the business of
PMCL with a view to achieving a unanimous position of IWC and SA Wireless in
respect of decisions of the shareholders of PMCL or of the PMCL Board. If a
unanimous position cannot be reached then (i) in the case of a PMCL shareholder
decision, the Company in its capacity as a shareholder of PMCL shall vote the
shares held by it in PMCL in such manner to reflect the differing positions of
IWC (which shall have the right to vote the Shares held by Vanguard (if
applicable)), on the one hand, and SA Wireless, on the other hand, and (ii) in
the case of a PMCL Board decision, each of IWC and SA Wireless shall be free to
direct their nominees on the PMCL Board to vote as IWC or SA Wireless, as the
case may be, may determine.
(c) With respect to a unanimous decision of the
Shareholders in respect of the matters referred to in Section 6.2(a)(x), (xi)
or (xii), if at any meeting of the PMCL Board, any nominee of any Shareholder to
the PMCL Board shall not vote on any matter in accordance with the specific
resolution of the Shareholders on such matter thereby resulting in the PMCL
Board passing a resolution contrary to such specific resolution of the
Shareholders, then the Shareholder nominating such nominee shall be deemed to
have committed a material breach of this Agreement.
6.7 MANAGEMENT OF PMCL. The parties hereto acknowledge and
agree that IWC or an Affiliate wishes to enter into a management services
agreement with PMCL pursuant to which IWC or its Affiliate will provide such
management services as are required to ensure the proper day-to-day management
and operation of PMCL and at such a level and to
<PAGE>
16
such an extent so as to enable IWC and its Affiliates to comply with the
requirements of the U.S. Investment Company Act of 1940 so as not to be
deemed an "investment company" thereunder. The parties hereto acknowledge
that any such management services agreement will be in a form to be agreed
between IWC and SA Wireless and will require a Supermajority vote of the
shareholders of PMCL. SA Wireless hereby agrees to take all such actions to
support and encourage the shareholders of PMCL to vote in favor of PMCL
entering into any such management services agreement.
6.8 NON-COMPETITION. With respect to Clause 14.1(b) of the
PMCL Shareholders Agreement, if another consortium is formed without SA Wireless
or an Affiliate thereof as contemplated in subclause (y) of the second paragraph
of Clause 14.1(b) and such consortium is successful in bidding for a license or
other rights that are offered by the Government of Pakistan, then IWC agrees
that as soon as it is practicable, it will transfer to SA Wireless or an
Affiliate designated by it part of the equity interest of IWC in such
consortium, which shall reflect the then current shareholding of IWC and SA
Wireless in the Company. The purchase price of such equity interest in the
consortium to be transferred by IWC to SA Wireless or its Affiliate shall be
equal to the subscription price per share that IWC originally paid for such
interest, plus any additional capital contributions or shareholder loans
subsequently made by IWC in respect of such interest. Notwithstanding the
foregoing, IWC shall not be required to make any transfer to SA Wireless of
equity interests in such consortium if such transfer would result in (i) a
violation of any order, decree, award or injunction of any governmental or
administrative authority or (ii) the revocation, restriction or imposition of
conditions on the license or rights that have been acquired by the consortium.
6.9 DEADLOCK WITH RESPECT TO PMCL.
(a) If the requisite vote of the Shareholders pursuant
to Section 6.2(a)(x), 6.2(a)(xi) or 6.2(a)(xii) cannot be obtained or there
occurs an irreconcilable difference of opinion or interest among the
Shareholders or the Directors with respect to a subject on which their
concurrence is required and which relates to the management or operations of the
Company or PMCL, then a deadlock (a "Deadlock") shall be deemed to arise.
(b) If a Deadlock occurs and shall continue for more
than 30 days, the Company shall notify PMCL of the existence of the Deadlock and
the Shareholders shall cause the Company to transfer the shares of PMCL held by
it to each of the Shareholders on a pro rata basis based on their shareholding
in the Company, with the result that each of the Shareholders shall become
direct shareholders of PMCL.
<PAGE>
17
6.10 DIRECTORS' ACCESS. Each Director shall be entitled to
examine the books and accounts of the Company. The Company shall provide to each
Director, within 30 days after the end of each month, a monthly operating report
of the Company and each Subsidiary containing such information as may be
specified by the Board and such information relating to the business affairs and
financial position of the Company as such Director may require. Any Director
may provide such information to a Shareholder.
7. FINANCIAL REPORTS AND AUDITING.
7.1 RIGHT OF INSPECTION. The Company shall allow the
Shareholders and their authorized representatives the right during normal
business hours to inspect its books and accounting records and those of the
Subsidiaries, to make extracts and copies therefrom at their own expense and to
have full access to all of the Company's and each of the Subsidiaries' property
and assets. Notwithstanding the foregoing in this Section 7.1, the Company
shall not be obligated to provide any information to any Shareholder or
Shareholder's representatives or to any competitor of the Company pursuant to
this Section 7.1 that the Company considers to be a trade secret or similar
confidential information unless such Shareholder and such Shareholder's
representatives agree not to use such information and to keep such information
confidential. The foregoing rights of visitation and inspection shall be in
addition to any other similar rights the Shareholders may have under the laws of
Mauritius.
7.2 BOOKS AND RECORDS. The Company and the Subsidiaries shall
keep proper, complete and accurate books of account in US dollars in accordance
with international accounting standards and shall have their accounts audited
annually in accordance with such standards by a reputable firm of international
accountants appointed by the Shareholders. The audited financial statements
shall be prepared in US dollars and reconciled according to United States
generally accepted accounting principles.
7.3 REPORTS. The Company shall provide to each Shareholder
(i) within 60 days after the end of each Financial Year, the annual audited
consolidated financial statements of the Company for such Financial Year, (ii)
within 15 days after the end of each month, monthly unaudited consolidated
financial statements of the Company for such month, (iii) within 30 days after
the end of each quarter, quarterly unaudited consolidated financial statements
of the Company for such quarter which have been reconciled according to United
States generally accepted accounting principles, and (iv) such other reports as
the Board may determine. The Company shall furnish to the Shareholders and
their auditors such financial and other information relating to the business of
the Company and its Subsidiaries as any of them may reasonably require.<PAGE>
<PAGE>
18
7.4 PMCL REPORTS.
(a) If any Shareholder wishes to obtain financial or
other information relating to the business of PMCL that is not otherwise being
provided by PMCL, upon its request, the Shareholders shall cause the Company to
make a request pursuant to Clause 7.7 of the PMCL Shareholders Agreement for
such financial or other information.
(b) Upon the request of any Shareholder, the
Shareholders shall cause the Company to take all such actions or do all such
things as may be necessary or desirable to procure that the books and records,
financial affairs and internal audits of PMCL comply with the provisions of
Clauses 7.1 and 7.2 of the PMCL Shareholders Agreement.
8. FUNDING.
8.1 ADDITIONAL CAPITAL CONTRIBUTIONS; SHAREHOLDER LOANS.
(a) To the extent that the Company is required to make
capital contributions or shareholder loans to PMCL as provided in Clause 9.1 of
the PMCL Shareholders Agreement, each Shareholder shall make its pro rata share,
as set forth in Annex A attached hereto, of the required capital contributions
or loans to the Company to enable the Company to fulfil its obligations with
respect to PMCL.
(b) Except as provided in Section 8.1(a), if the
Shareholders unanimously approve the making of capital contributions or
shareholder loans by the Company as referred to in Section 6.2(a)(xi), then each
Shareholder shall make its pro rata share of the approved capital contributions
or loans to the Company to enable the Company to fulfil its obligations with
respect to PMCL.
(c) For the avoidance of doubt, all equity capital
contributions required to be made pursuant to this Agreement shall be made by
way of subscription for additional Shares by the Shareholders. The aggregate
subscription price for such additional Shares shall be equal to the aggregate
amount of the capital contributions required to be made by the Company to PMCL.
If it shall be necessary to increase the authorized share capital of the Company
to issue additional Shares in connection with the making of any additional
equity capital contributions, then each Shareholder shall vote its Shares in
favor of a resolution to increase appropriately the share capital of the Company
and to allot such additional Shares in accordance with this Agreement, and shall
cause its Directors to adopt a resolution authorizing such increase and the
allotment of such additional Shares in accordance with this Agreement.
(d) If shareholder loans are required to be made
pursuant to this Agreement to enable the Company to provide a shareholder loan
to PMCL, then the terms
<PAGE>
19
and conditions of the loans made by the Shareholders to the Company shall be
the same as the terms and conditions on which the shareholder loan of the
Company to PMCL is being made.
8.2 FAILURE TO SUBSCRIBE FOR ADDITIONAL SHARES OR PROVIDE
SHAREHOLDER LOANS.
(a) If any Shareholder (the "Defaulting Shareholder")
fails to (i) subscribe and pay for its pro rata portion of any additional Shares
required to be subscribed by such Shareholder pursuant to Sections 8.1(a) and
(c) within 20 Business Days after receiving notice from the Company of the
Shares to be offered by the Company pursuant to Sections 8.1(a) and (c) and the
subscription price therefor, or (ii) provide its pro rata portion of any
shareholder loans required to be made by such Shareholder pursuant to Section
8.1(a) within 20 Business Days after receiving notice from the Company of a call
for such loans, then the other Shareholders (the "Non-Defaulting Shareholders")
shall have the right (the "Section 8.2 Right") to purchase all, but not less
than all, of the Shares of the Defaulting Shareholder (the "Subject Shares") at
a purchase price equal to 50% of their fair market value as established in
accordance with Section 8.3(c).
(b) Any Non-Defaulting Shareholders who exercise their
Section 8.2 Right shall make up the share of the capital contributions or
shareholder loans to the Company that the Defaulting Shareholder failed to make,
and shall make the requisite capital contributions or shareholder loans on the
original due date thereof, notwithstanding that the closing of the sale and
purchase of the Subject Shares may occur after such date as provided in Section
8.3. If there are more than one such Non-Defaulting Shareholders, they shall
make up the capital contributions or shareholder loans that the Defaulting
Shareholder failed to make in proportion to the Shares of the Defaulting
Shareholder that they have each elected to purchase.
8.3 PROCEDURES.
(a) Upon the expiration of the 20-Business Day period
referred to in Section 8.2(a), the Company shall notify the Non-Defaulting
Shareholders in writing of their Section 8.2 Right. Within five Business Days
after delivery of such notice from the Company, the Non-Defaulting Shareholders
shall decide whether they wish to purchase the Subject Shares, and shall notify
the Company and the Defaulting Shareholder of their decision. If more than one
Non-Defaulting Shareholder wishes to purchase the Subject Shares, then they
shall have the right to purchase a pro rata portion of the Subject Shares based
on the proportion that the number of Shares owned by each such Non-Defaulting
Shareholder bears to the total number of Shares owned by all such Non-Defaulting
Shareholders that elect to purchase the Subject Shares. Failure by a Non-
Defaulting Shareholder to respond within such five-Business Day period shall be
regarded as a waiver of its right to purchase the Subject Shares.
<PAGE>
20
(b) If the Non-Defaulting Shareholders decline to
exercise their Section 8.2 Right or otherwise fail to elect to purchase all of
the Subject Shares within the five-Business Day period referred to in Section
8.3(a), then the right to exercise the Section 8.2 Right shall lapse and the
provisions of Section 8.4 shall apply.
(c) If the Non-Defaulting Shareholders elect to
exercise their Section 8.2 Right, then the Company shall, within two Business
Days after receipt of the Non-Defaulting Shareholders' notice of election,
notify the Defaulting Shareholder and the Non-Defaulting Shareholders. Within
10 Business Days of the date of the Company's notice, an appraiser (the
"Appraiser"), which shall be an internationally recognized investment banking
firm that has not had a substantial relationship with any of the Shareholders or
any of their Affiliates in the immediately preceding five years, shall be
selected in the following manner to determine the fair market value of the
Subject Shares. The Non-Defaulting Shareholders, on the one hand, and the
Defaulting Shareholder, on the other hand, shall each select an investment
banking firm and the investment banking firms so selected shall designate the
Appraiser; PROVIDED that if either the Non-Defaulting Shareholders or the
Defaulting Shareholder shall fail to select an investment banking firm within
such 10-Business Day period, then the appraisal shall be conducted by the
investment banking firm that is so selected. The Appraiser shall be instructed
to make its determination and to deliver its report within 20 Business Days of
its appointment. In addition, the Appraiser shall be instructed to take into
account the dilution of the Defaulting Shareholder's shareholding in the Company
as a result of its failure to make its share of the required capital
contributions or shareholder loans to the Company. The fees and expenses of the
Appraiser shall be borne by the Defaulting Shareholder. The Appraiser shall act
as an expert and not an arbitrator, and the determination of the Appraiser shall
be final and binding on all parties.
(d) The Company shall determine the date for the
closing of the sale and purchase of the Subject Shares (which date shall not be
more than 10 days after the date of receipt of the report of the Appraiser) and
shall notify all the Shareholders thereof. The closing shall take place at the
principal office of the Company on the date so specified.
8.4 DIVESTMENT. In the case of capital contributions or
shareholder loans that are required to be made by the Company to PMCL pursuant
to Clause 9.1 of the PMCL Shareholders Agreement, if the Non-Defaulting
Shareholders have not elected to purchase all of the Subject Shares, the Company
shall, on the due date of the making of the capital contributions or the
shareholder loans to PMCL or within the cure period stipulated in Clause 16.3(d)
of the PMCL Shareholders Agreement, make such part of its required capital
contributions or shareholder loans with the funds that have been provided by the
Non-Defaulting Shareholders. The parties agree that thereupon the Company shall
have the right to purchase the Shares held by the Defaulting Shareholder or to
otherwise cause the Defaulting Shareholder to divest its Shares in consideration
for the transfer by the Company to the Defaulting Shareholder of such number of
shares of PMCL that is attributable and corresponds to the shareholding
<PAGE>
21
percentage in the Company of the Defaulting Shareholder, with the result that
the Defaulting Shareholder shall become a direct shareholder of PMCL. Each
Shareholder covenants that, if it is a Defaulting Shareholder, it shall execute
and deliver a deed of adherence, substantially in the form of Exhibit C to the
PMCL Shareholders Agreement. Immediately following the transfer of shares of
PMCL to the Defaulting Shareholder, the Defaulting Shareholder shall be deemed
to have been in default under Clause 16.3(d) of the PMCL Shareholders Agreement
by virtue of having failed to fund its share of the capital contributions or
shareholder loans that should have been made by it originally to the Company,
and the Company (as so constituted with only the Non-Defaulting Shareholders as
its shareholders) shall, together with the other shareholders of PMCL, have the
right to purchase the shares of PMCL held by the Defaulting Shareholder in
accordance with Clause 16.5 of the PMCL Shareholders Agreement.
8.5 DILUTION OF BREACHING SHAREHOLDER. In the case of capital
contributions or shareholder loans that are required to be made by the Company
pursuant to Clause 9.2 or 9.3 of the PMCL Shareholders Agreement following the
unanimous approval of the Shareholders as required under Section 6.2(a)(xi), if
a Shareholder (the "Breaching Shareholder") fails to (i) subscribe and pay for
its pro rata portion of any additional Shares required to be subscribed by such
Shareholder pursuant to Sections 8.1(b) and (c) or (ii) provide its pro rata
portion of any shareholder loans required to be made by such Shareholder
pursuant to Section 8.1(b), then the Company shall, on the due date of the
making of the capital contributions or the shareholder loans to PMCL, make such
part of its required capital contributions or shareholder loans with the funds
that have been provided by the other Shareholders (the "Non-Breaching
Shareholders"). The parties agree, however, that any dilution of the Company's
shareholdings in PMCL resulting from the failure of the Company to make its
required capital contributions or shareholder loans in full to PMCL shall
require a corresponding dilution of the shareholding of the Breaching
Shareholder in the Company. Accordingly, in the case of the Breaching
Shareholder's failure to make its pro rata share of capital contributions, the
number of Shares to be issued to the Non-Breaching Shareholders for their
capital contributions and the subscription price therefor shall be determined
based upon the extent of such dilution and the aggregate amount of the capital
contributions made by the Non-Breaching Shareholders. In the case of the
Breaching Shareholder's failure to make its pro rata shareholder loan, such
dilution shall be effected through the issuance by the Company of additional
Shares to the Non-Breaching Shareholders at no cost. Each of the Shareholders
agrees that it shall vote its Shares in favor of a resolution to increase
appropriately the share capital of the Company (if required) and to allot such
additional Shares to the Non-Breaching Shareholders in accordance with this
Section 8.5, and shall cause its Directors to adopt a resolution authorizing
such increase (if required) and the allotment of such additional Shares in
accordance with this Section 8.5.
<PAGE>
22
9. MEMORANDUM AND ARTICLES OF ASSOCIATION. The parties agree,
promptly after the date hereof, to take all necessary actions and execute all
documents and instruments necessary to amend the Charter Documents to conform to
the terms of this Agreement.
10. REPRESENTATIONS AND WARRANTIES. Each party hereto represents
with respect to itself, severally and not jointly, to the other parties hereto
that:
(a) such party has the full power and authority to enter into,
execute and deliver this Agreement and to perform the transactions contemplated
hereby and such party is duly organized and existing under the laws of the
jurisdiction of its organization and that the execution and delivery by such
party of this Agreement and the performance by such party of the transactions
contemplated hereby have been duly authorized by all necessary corporate or
other action of such party;
(b) assuming the due authorization, execution and delivery
hereof by the other parties, this Agreement constitutes the legal, valid and
binding obligation of such party, enforceable against such party in accordance
with its terms;
(c) the execution, delivery and performance of this Agreement
by such party and the consummation of the transactions contemplated hereby will
not (i) violate any provision of the Memorandum or Articles of Association or
By-laws (or comparable instruments) of such party; (ii) require such party to
obtain any consent, approval or action of, or make any filing with or give any
notice to, any governmental authority in such party's country of organization or
any other person pursuant to any instrument, contract or other agreement to
which such party is a party or by which such party is bound other than such
filings as may be required under applicable securities laws and such notices and
copies of documents as it may be required to provide its or its Affiliates'
lenders; (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 constitute) a default under, any instrument, contract or other
agreement to which such party is a party or by which such party is bound; (iv)
violate any order, judgment or decree against, or binding upon, such party or
upon its respective securities, properties or businesses; or (v) violate any law
or regulation of such party's country of organization or any other country in
which it maintains its principal office; and
(d) with respect to Clause 3(b)(iv) of the Motorola Share
Purchase Agreement, neither it nor any of its Affiliated Entities (as defined in
the Motorola Share Purchase Agreement), directors, employees or agents have been
advised of or have knowledge of facts or circumstances involving the Condition
of the Company (as defined in the Motorola Share Purchase Agreement) that
demonstrate an existing material misrepresentation by Motorola pursuant to the
Motorola Share Purchase Agreement that would give rise to an ability of the
Company to terminate the Motorola Share Purchase Agreement or to a claim for
indemnification pursuant to Clause 10(b)(i) of the Motorola Share Purchase
Agreement.
<PAGE>
23
11. FEES AND EXPENSES. Except as otherwise specifically provided in
this Agreement, each of the parties hereto shall bear its respective fees and
expenses incurred in connection with the preparation, execution and performance
of this Agreement and the transactions contemplated hereby and thereby,
including, without limitation, all fees and expenses of agents, representatives,
counsel and accountants.
12. CONFIDENTIALITY.
12.1 GENERAL OBLIGATION. Each party undertakes that it shall
not reveal, and shall cause its directors, officers and employees not to reveal,
to any third party any information acquired by it or them in connection with
this Agreement or confidential or proprietary information concerning the
organization, business, technology, finance, transactions or affairs of the
Company or the Subsidiaries or any other party hereto without the prior written
consent of the other parties.
12.2 EXCEPTIONS. The provisions of Section 12.1 shall not
apply to:
(a) information that is publicly available (except by
virtue of a breach of this Agreement);
(b) a disclosure to legal, financial or professional
advisors or bankers of any party;
(c) a disclosure, after giving prior notice to the
other parties to the extent practicable under the circumstances and subject to
any practicable arrangements to protect confidentiality, to the extent required
under the rules of any stock exchange or by applicable laws or governmental
regulations or judicial or regulatory process or in connection with any judicial
process regarding any legal action, suit or proceeding arising out of or
relating to this Agreement;
(d) a disclosure by the Company reasonably necessary in
the ordinary course of business or otherwise in connection with transactions or
proposed transactions of the Company; or
(e) a disclosure required by the lenders of any
Shareholder or of any Shareholder's Affiliates.
12.3 DISCLOSURE TO THIRD PARTIES. Upon any Shareholder
entering into negotiations with any Person with a view to selling any Shares to
such Person, information in respect of the Company or any Subsidiary that is
reasonably necessary to permit such Person to evaluate the business of the
Company or such Subsidiary may be provided to such Person, provided that such
Person has executed a binding confidentiality letter in a form approved by the
<PAGE>
24
Board; PROVIDED that where such Person is involved in a business directly
competing with that of the Company, the Board may prohibit the disclosure of any
such confidential information as the Board may reasonably determine.
13. PUBLICITY. Except for a publicity release or public announcement
(after giving prior notice to and consulting with the other parties to the
extent practicable under the circumstances), to the extent required under the
rules of any stock exchange or by applicable laws or governmental regulations or
judicial or regulatory process, and except for disclosures permitted by Article
12, no publicity release or public announcement concerning the Company any
Subsidiary or the relationship or involvement of the parties shall be made by
any party without advance approval thereof by the Board; PROVIDED that no
disclosure of a party's identity may be made without the prior approval of such
party, except as permitted by Article 12.
14. U.S. INVESTMENT COMPANY ACT OF 1940. Each of the parties hereto
agrees that the Company and the Subsidiaries shall conduct their business at all
times such that the Company or any present or future Subsidiary is not deemed to
be an "investment company" under the U.S. Investment Company Act of 1940.
15. MISCELLANEOUS.
15.1 LEGEND. Each certificate for any Shares now held or
hereafter acquired by any Shareholder shall, for as long as this Agreement is
effective, bear a legend as follows:
"International Wireless Communications Pakistan Limited (the "Company") is
a company organized under the laws of Mauritius, and the shares represented
by this certificate may not be sold, assigned, transferred, exchanged,
mortgaged, pledged or otherwise disposed of or encumbered without
compliance with the provisions of that certain Shareholders' Agreement,
dated as of ______________________________, 1997 among the Company and the
shareholders of the Company named therein. A copy of such Shareholders'
Agreement is on file at the registered offices of the Company. The Company
will not register the transfer of such shares on the register of members of
the Company unless and until the transfer has been made in compliance with
the terms of such Shareholders' Agreement."
15.2 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally or
sent by registered mail or international courier service, in either case postage
prepaid, or delivered by facsimile or similar telecommunications equipment. Any
such notice shall be deemed given when so delivered personally or, if sent by
registered mail, five days after the date of deposit in the mails or, if sent by
international courier service, three days after the date of deposit with the
courier service or, if delivered by facsimile or similar telecommunications
equipment, at the time of receipt thereof, as follows:
<PAGE>
25
(a) if to the Company, to:
International Wireless Communications
Pakistan Limited
P.O. Box 1130
3rd Floor
12 Remy Ollier Street
Port Louis
Mauritius
Attention: _____________
Facsimile No.: _________
(b) if to IWC, to:
International Wireless Communications Limited
400 South El Camino Real
San Mateo, California 94402
United States of America
Attention: Mr. Doug Sinclair
Facsimile No.: 1-415-548-1842
(c) if to SA Wireless, to:
South Asia Wireless Communications
(Mauritius) Limited
Suite 2302-03
Nine Queen's Road Central
Hong Kong
Attention: ___________________
Facsimile No.: ________________
Any party may, by notice to the other parties, designate another
address or person for receipt of notices hereunder.
15.3 DISCREPANCIES. If there is any discrepancy between any of
the provisions of the Charter Documents or documents analogous to the Charter
Documents of any of the Subsidiaries and this Agreement, the provisions of this
Agreement shall prevail, and the parties shall thereupon procure that the
Charter Documents or relevant analogous documents, as the case may be, are
promptly amended, to the extent permitted by applicable law, in order to conform
with this Agreement.
<PAGE>
26
15.4 SEVERABILITY. In the event any provision hereof is held
void or unenforceable by any court, such provision shall be severable and shall
not affect the remaining provisions hereof.
15.5 ENTIRE AGREEMENT. This Agreement, together with the other
agreements referred to herein, reflects the entire agreement among the parties
and supersedes all prior agreements and communications, either oral or in
writing, among the parties hereto with respect to the subject matter hereof.
15.6 TERM OF AGREEMENT. This Agreement shall become effective
upon the execution hereof by all of the parties hereto and shall continue in
effect until the earlier to occur of (a) the date on which at least 30% of the
Shares in issue on a fully diluted basis are publicly traded on an
internationally recognized stock exchange and (b) any date agreed upon in
writing by all of the Shareholders.
15.7 AMENDMENT AND WAIVER. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by all of the parties hereto or, in the case
of a waiver, by the party waiving compliance. No delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right, power
or privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
15.8 CONSENT TO SPECIFIC PERFORMANCE. The parties hereto
declare that it is impossible to measure in money the damages that would be
suffered by a party by reason of the failure by any other party to perform any
of the obligations hereunder. Therefore, if any party shall institute any
action or proceeding to enforce the provisions hereof, any party against whom
such action or proceeding is brought hereby waives any claim or defense therein
that the other party has an adequate remedy at law.
15.9 ASSIGNMENT; BINDING ON TRANSFEREE. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted transferees from and after the
effective date hereof.
15.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF ENGLAND AND WALES.
<PAGE>
27
15.11 ARBITRATION.
(a) Any dispute or claim arising out of or relating to
this Agreement, or the breach, termination or invalidity hereof, shall be
finally settled by arbitration under the Rules of Conciliation and Arbitration
of the International Chamber of Commerce (the "Rules") as are currently in force
and as may be amended by the rest of this Section 15.11. For the purpose of
such arbitration, there shall be one or more arbitrators appointed in accordance
with the Rules (such single arbitrator or board of arbitrators, as the case may
be, are referred to below as the "Arbitration Board"). The place of arbitration
shall be Hong Kong. All arbitration proceedings shall be conducted in the
English language. The arbitrators shall decide any such dispute or claim
strictly in accordance with the governing law specified in Section 15.10 of this
Agreement. Judgment upon any arbitral award rendered hereunder may be entered
in any court having jurisdiction, or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be.
(b) Each party shall cooperate in good faith to
expedite (to the maximum extent practicable) the conduct of any arbitral
proceedings commenced under this Agreement.
(c) The costs and expenses of the arbitration,
including, without limitation, the fees of the Arbitration Board, shall be borne
equally by each party to the dispute or claim, and each party shall pay its own
fees, disbursement and other charges of its counsel.
(d) Any award made by the Arbitration Board shall be
final and binding on the parties hereto. The parties expressly agree to waive
the applicability of any laws and regulations that would otherwise give the
right to appeal the decisions of the Arbitration Board so that there shall be no
appeal to any court of law for the award of the Arbitration Board, and a party
shall not challenge or resist the enforcement action taken by another party in
whose favor the award of the Arbitration Board was given.
15.12 SHAREHOLDER OBLIGATIONS; FURTHER ASSURANCES. The parties
hereto shall comply with the provisions of this Agreement in relation to their
investment in the Company and in transacting business with the Company and shall
exercise their respective rights and powers in accordance with and so as to give
effect to this Agreement. Each of the parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby.
<PAGE>
28
15.13 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
INTERNATIONAL WIRELESS
COMMUNICATIONS PAKISTAN LIMITED
By: /s/ Antonio Yeung
--------------------------------------------------
Name: Antonio Yeung
Title: Director
INTERNATIONAL WIRELESS
COMMUNICATIONS LIMITED
By: /s/ Robin Maule
--------------------------------------------------
Name: R. Maule
Title: Director
SOUTH ASIA WIRELESS
COMMUNICATIONS (MAURITIUS)
LIMITED
By: /s/ Antonio Yeung
--------------------------------------------------
Name: Antonio Yeung
Title: Director
EXHIBIT A
<PAGE>
29
DEED OF ADHERENCE
THIS DEED OF ADHERENCE is made the day of 199
BETWEEN:
(1) International Wireless Communications Pakistan Limited, a company
incorporated in Mauritius (the "Company"); and
(2) [Name of New Shareholder] (the "New Shareholder").
WHEREAS:
(A) On the [ ] day of [ ] 1997, the Company and its
shareholders entered into a Shareholders' Agreement (the "Shareholders'
Agreement") to which a form of this Deed is attached as Exhibit A.
(B) The New Shareholder wishes to [be allotted/have transferred to him/her/it]
[ ] shares (the "Shares") in the share capital of the Company from [ ]
(the "Former Shareholder") and in accordance with the Shareholders'
Agreement has agreed to enter into this Deed.
(C) The Company enters this Deed on behalf of itself and as agent for all the
existing Shareholders of the Company.
NOW THIS DEED WITNESSES as follows:
1. INTERPRETATION.
In this Deed, except as the context may otherwise require, all words and
expressions defined in the Shareholders' Agreement shall have the same
meanings when used herein.
2. COVENANT.
The New Shareholder hereby covenants to the Company as trustee for all
other persons who are at present or who may hereafter become bound by the
Shareholders' Agreement, and to the Company itself to adhere to and be
bound by all the duties, burdens and obligations of a shareholder holding
the same class of share capital as the Shares imposed pursuant to the
provisions of the Shareholders' Agreement and all documents expressed in
writing to be supplemental or ancillary thereto as if the New Shareholder
had been an original party to the Shareholders' Agreement since the date
thereof.
<PAGE>
30
3. ENFORCEABILITY.
Each existing shareholder and the Company shall be entitled to enforce the
Shareholders' Agreement against the New Shareholder, and the New
Shareholder shall be entitled to all rights and benefits of the Former
Shareholder (other than those that are non-assignable) under the
Shareholders' Agreement in each case as if the New Shareholder had been an
original party to the Shareholders' Agreement since the date thereof.
4. GOVERNING LAW.
THIS DEED OF ADHERENCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF ENGLAND AND WALES.
IN WITNESS WHEREOF, this Deed of Adherence has been executed as a deed
on the date first above written.
INTERNATIONAL WIRELESS
COMMUNICATIONS PAKISTAN
LIMITED
By:______________________________
Name:
Title:
[NAME OF NEW SHAREHOLDER]
By:______________________________
Name:
Title:
<PAGE>
ANNEX A
PRO RATA SHARE OF CAPITAL CONTRIBUTIONS
AND SHAREHOLDER LOANS TO BE MADE TO PMCL
I. Capital Contributions and Shareholder Loans to be made by the Company as at
THE CLOSING (AS DEFINED IN THE MOTOROLA SHARE PURCHASE AGREEMENT).
1. CAPITAL CONTRIBUTIONS.
US$___________________________ in the aggregate.
SHAREHOLDER SHARE OF CAPITAL CONTRIBUTIONS
IWC US$________________________
SA Wireless US$________________________
2. SHAREHOLDER LOANS.
US$___________________________ in the aggregate.
SHAREHOLDER SHARE OF SHAREHOLDER LOANS
IWC US$________________________
SA Wireless US$________________________
<PAGE>
EXHIBIT 10.27F
LETTER SUPPLEMENTAL TO SHAREHOLDERS AGREEMENT
RELATING TO INTERNATIONAL WIRELESS COMMUNICATIONS
PAKISTAN LIMITED DATED 17TH JULY, 1997
We, International Wireless Communications Limited ("IWC") and South Asia
Wireless Communications (Mauritius) Limited ("South Asia") refer to:
1. the shareholders agreement of even date hereto (the "Shareholders
Agreement") between ourselves relating to our investment in
International Wireless Communications Pakistan Limited ("IWC
Pakistan"); and
2. the share purchase agreement of even date hereto (the "Share Purchase
Agreement") between Motorola International Development Corporation and
IWC Pakistan relating to the purchase of shares in Pakistan Mobile
Communications (Pvt.) Ltd. ("PMCL").
We agree that notwithstanding any other provision of the Shareholders Agreement,
South Asia alone shall have the right to determine whether or not IWC Pakistan:
(a) elects to postpone Closing of the Share Purchase Agreement until 16th
September, 1997 by reason of the License not having been re-issued by
13th August, 1997 (the "License Condition"); and
(b) exercises its right by 13th September, 1997 not to acquire the shares
in PMCL pursuant to the Share Purchase Agreement 1997 by reason of the
License Condition not having been fulfilled.
It is further agreed that if the License Condition is not fulfilled and South
Asia shall on behalf of IWC Pakistan decide that IWC Pakistan shall not complete
the purchase of the shares in PMCL under the Share Purchase Agreement, South
Asia shall procure that the shares held by it in IWC Pakistan are forthwith
transferred at cost to IWC and that the directors nominated by it to the board
of IWC Pakistan forthwith resign.
/s/ Robin Maule
- ----------------------------------------------
for and on behalf of
International Wireless Communications Limited
/s/ Antonio Yeung
- ----------------------------------------------
for and on behalf of
South Asia Wireless Communications (Mauritius) Limited
Dated 16th July, 1997
<PAGE>
EXHIBIT 10.27G
[Seal] No 7(30)/89PTC. GOVERNMENT OF PAKISTAN
MINISTRY OF COMMUNICATIONS
ISLAMABAD, the 6th July 1992
M/s Pakistan Mobile Communications (P) Limited,
4th Floor, Kulsum Plaza,
Blue Area,
Islamabad
SUBJECT: GRANT OF LICENCE FOR ESTABLISHMENT AND OPERATION OF
CELLULAR MOBILE TELEPHONE SYSTEMS IN PAKISTAN.
----------------------------------------------
In exercise of powers vested under Section 4 of the Telegraph Act
1885 as amended in 1975 (hereinafter called the Act), the Federal Government
hereby grants Licence to M/s Pakistan Mobile Communications (Pvt) Limited, a
company incorporated under laws of Companies Ordinance 1984, having its
principal office at Kulsum Plaza, Blue Area, Islamabad (hereinafter called
the Licencee) to establish, maintain and operate Cellular Mobile Telephone
public service and systems within the territory of Pakistan, subject to
registration of Telegraph Licence to establish, maintain and operate Wireless
Telegraph in Pakistan for fixed stations and land mobile stations by
Chairman, Pakistan Telecommunications Corporation (hereinafter called PTC) or
his successor on the following terms and conditions:
1. The Licence shall be valid initially for a period of 15 years and may
be renewed subject to satisfactory performance, at the discretion of
the Government of Pakistan. No Licence, excluding those issued to M/s
PAKTEL and PAKCOM and now PMCL, shall be granted for this purpose to
any other party during the period of 15 years from the date of
starting the operations. Review period of the Licence for renewal
thereof could commence three years before expiry of this period.
2.1 The Licencee shall pay royalty at the rate of 4% of gross sales
revenues minus PTC call charges and 4% of net profit after tax.
2.2 The Licencee will make quarterly payment to the Chairman, PTC, of
"Royalty" as provided in the Licence in Pak Rupees in arrears but not
later than 30 days after the receipt by the Chairman, PTC, of the
audited accounts of the Licencee according to the prescribed time
schedule.
-1-
<PAGE>
2.3 The Licencee shall have the right to bill its own charges and Pakistan
Telecommunications Corporation's charges directly to its customers,
and the Licencee shall not charge more than PTC's published charges.
If necessary the Licencee would be responsible for providing
appropriate size of billing and accounting equipment to be installed
at PTC premises. In that case the purchase of such equipment would be
financed by Licencee and adjusted against payment due to PTC.
2.4 The rate at which the Licencee accounts with the Pakistan
Telecommunications Corporation for use of PTC's services shall be the
prevailing PTC published tariff.
2.5 The Licencee shall be responsible for submission of the monthly
accounts, and their settlement with the designated local Accounts
offices. All charges levied by the PTC shall be paid within 30 days
of settlement of account.
3. The Licencee shall pay import duties and taxes, levied on imported
machinery and equipment as per existing regulations inforce from time
to time.
4. The Ministry of Communications shall be the Regulating Authority and
will exercise all the powers of the Government of Pakistan in this
behalf under the Act (as amended in 1975).
5.1 The Licencee shall, following consultation and agreement with the
licencing Authority publish its rate of Rs. 4/per minute of air time
and tariffs subject to changes as may be decided from time to time for
the use of each of the Licenced Services and the rental or purchase of
any apparatus or equipment needed for the use of the Licenced Services
and shall submit to the Licencing authority, for approval, such
increases to these rates as the Licencee may think reasonable from
time to time. Revisions to such rates and tariffs may be allowed by
the Government subject to justification.
5.2 The Licencee shall submit its application for revision of rates 90
days prior to the date of revision and the Licencing authority will
respond to such applications within 60 days of receipt of same. The
Licencee shall, in turn, notify its customers for any change in rates
30 days prior to the introduction of new rates.
-2-
<PAGE>
5.3 Upon the establishment or revision of the rates and tariffs, regard
shall be had (interalla) to the costs to the Licencee of establishing
and operating the Licenced Services and Licenced System, the need to
amortize all capital expenditure of and loans to the Licencee, the
need to provide for further investment in the improvement and
expansion of the Licenced Services or the Licenced System, the ability
of the Licencee to pay royalties as herein provided, the right of the
Licencee to a reasonable return on the investment made by it under or
in relation to this Licence and the published retail price index for
Pakistan.
5.4 Tariffs, for the use of Licenced Services, shall be effective from the
date of grant of this Licence and shall remain in force until such
time as they become subject to review.
6. The Licencee shall provide licenced Services within 30 days of the
issue of this Licence in at least the major cities of Pakistan, i.e.
Islamabad/Rawalpindi, Karachi and Lahore to begin with. The services
at other places in Pakistan shall be provided in consonance with the
development programme advised to the Licencing authority and based on
purely commercial and economic considerations. However, it shall be
the responsibility of the Licencee to provide, as practically
possible, a nationwide network.
7.1 The Licencee shall be obliged to submit his proposals in relation to
the Transmission Plan, Signalling Plan, Switching Plan, Numbering
Plan, Charging Plan, Quality Assurance Plan to the Chairman, PTC, for
approval.
7.2 Initially, where the Pakistan Telecommunications Corporation plans do
not allow for interface with the Cellular Network, the Licencee will
incur the cost of the additional equipment on behalf of the PTC. This
cost will be repaid out of the charges accruing to the PTC from the
Licencee. The actual method of adjustment will be suitably arranged
between Licencee and Chairman, PTC. The work will be undertaken by
the manufacturer under PTC supervision.
7.3 The Licencee shall be allowed to Interconnect the licenced System with
other exchanges on different hierarchical levels on grounds of
economy, performance and other benefits.
-3-
<PAGE>
7.4 The Licencee shall be responsible, in all respects to install and have
necessary technical, financial, managerial and other resources to
ensure the provision of the services specified in the Licence.
7.5 The Licencee shall regularly publish and provide the subscribers,
under intimation to Chairman, PTC, suitable directory information
specifying the charges, terms and conditions, facilities of the
services in accordance with terms and conditions of the Licence.
7.6 The Chairman, PTC, may permit printing of directory information of
Licenced Services in the normal telephone directory published by the
Chairman, PTC, on payment of prescribed charges by the Licencee.
7.7 The Licencee shall comply with relevant laid-down International
Telecommunications Standards of Consultative Committee of
International telegraph and Telephone (CCITT), Consultative Committee
of International Radio (CCIR) and National Standards.
7.8 If desired the Licencee shall provide at his cost and set up suitable
equipment at Telegraph and Telephone Centres enabling Government to
monitor the performance, traffic billing or any other aspect desired
by the Chairman, PTC.
7.9 The Licencee would be required to pay rent of the facilities utilised
at Telegraph and Telephone Centres, within 30 days upon serving a
demand note by the Department.
7.10 The Licencee shall not lease or sell to any person or company the
ownership of the system or any part of it except subscriber terminal
set/apparatus.
7.11 As far as technically possible the Licencee would comply with the
requirement of National security and secrecy of communication and in
this regard shall comply with any directions given by the Chairman,
PTC, issued from time to time which would be binding on the Licencee
to implement.
8.1 The system will be designed for a system availability of 99.5% of the
time and maximum 3% blocking in Switching will be acceptable.
8.2 The system will be designed to cater for the number of subscribers
connected to it and will ensure an acceptable level of service and
price.
-4-
<PAGE>
8.3 The Licencee shall accept the frequency, powers, conditions of the
Wireless Licence (Cellular Mobile, Approach Links etc) issued by the
Chairman, PTC, with the permission of the competent authority, for the
system standard of ETA, IS3d, IS19A and IS20. The Chairman, PTC,
reserves the right to close down such transmissions without notice in
event of their being harmful interference from radio equipment
apparatus of the Licencee.
8.4 No support poles, stays, struts or any other type fixtures will be
fixed at any public road or road reservation without prior approval of
the concerned local authority.
8.5 The aerial and mast erected for use at any of the stations shall
comply with the requirement of International Civil Aviation
Organisation rules and regulations.
8.6 The apparatus used for the Licensed Systems shall comply with the
relevant laid-down International regulations and recommendations of
CCITT/CCIR/National Standards which shall be binding on the Licencee
to follow and implement within the stipulated time.
9.1 The Licencee shall advise Chairman, PTC, of the format in which it
will enter into a formal agreement with the subscriber regarding
conditions of provision of Cellular Mobile services and obtain
approval.
9.2 The Licencee shall ensure the satisfactory billing of local, national,
international and other charges and that the tariffs are according to
rates approved by Chairman, PTC.
9.3 The Licencee shall make suitable arrangements for distribution of
monthly bills and allocation of charges.
9.4 The Licencee shall make suitable arrangements for settlement of
excessive billing and service quality complaints.
10. The Licencee shall make suitable arrangements for interworking between
other licenced systems allowed to operate concurrently and parallelly,
and will also make suitable accounting arrangement with the other
Licencees direct.
-5-
<PAGE>
11. The Licencee shall keep confidentiality of the message transmitted
over the Licencee's System and shall not divulge the contents of any
message or part thereof to any person not entitled to become
acquainted with the system. The provision of Article 5 of the
Telegraph Act will be observed. The facility of tracing of obnoxious
calls, would however, be afforded to the customer of this service on
no cost and obligation basis. Name of such defaulter will not be
divulged by the Licencee to any one except the Chairman, PTC.
12. The Licencee shall be entitled to all facilities and concessions as
are admissible to foreign investment in Pakistan under Pakistan Laws,
Rules and Regulations including but not limited to repatriation of
foreign capital and remittance of profits.
13. The Licencee shall have the right to employ expatriate staff to assist
in the establishment, operation and maintenance of Licenced System and
the Licenced Services in accordance with the relevant laws/rules of
the Government of Pakistan subject to the condition that no qualified
person to run or operate the services is available in the country.
14. The Licencee shall ensure suitable arrangements for local manufacture
of Cellular Subscriber's terminal equipment.
15. Notwithstanding anything to the contrary contained in this Licence, if
the Licencee shall be rendered unable to carry out the whole or any
part of its obligations under this Licence for any reasons beyond the
control of the Licencee, including but not limited to, acts of God,
strikes, wars, riots etc. then the performance of the obligations of
the Licencee as it is affected by such cause shall be excused during
the continuance of any inability so caused, provided that the Licencee
has taken all appropriate precautions and reasonable measures to
fulfill its obligations and that it shall without delay give notice to
Government/Chairman, PTC, stating the causes of such inability and its
effects to remove such cause and remedy its consequences.
16. A Licence will be issued by the Chairman, PTC, to the Licencee on
formal application and completion of prescribed procedure for use of
frequencies and land mobile equipment.
17. Cellular subscriber equipment can only be imported, distributed and
maintained by the Licencee or its subsidiary or its nominated agent.
-6-
<PAGE>
18.1 The Chairman, PTC, shall use his authority to assist the Licencee to
have the right to build, construct, install, lay, exert, place,
assemble and otherwise deal with any plan, equipment, lines, cable,
buildings, Licensed System or the provision of the Licensed Services.
18.2 Where any interest in, over or under any land or building is required
by the Licencee for any of the purposes referred to in section 4
above, and the Licencee has failed after negotiation with the holder
of the interest to acquire such interest for purposes for which it is
so required, it will report such fact to the Licensor/Licencing
Authority and the Licensor/licencing Authority will, if it considers
it necessary or desirable to do so, after consultation with the
relevant authorities acquire the interest for and on behalf of the
Licencee.
18.3 The Licencee shall report to the Licencing Authority from time to time
on its requirements for land, buildings and other facilities,
including inter-connection with the Public Switched Network for use
within the Licenced Systems. The Licencing Authority shall indicate
to the Licencee the availability of such facilities and the terms on
which they will be made available to the Licencee. Furthermore, the
Licencing Authority shall take account of the Licencee's requirements
in planning and constructing the Public Switched Network.
19. The Licencee shall initially install the mobile telephone
exchanges/equipment as per their original proposal and simultaneously
ensure compatibility with PTC's exchanges/equipment to the
satisfaction of the PTC authorities.
20. The Federal Government may at any time revoke the Licence under
section 8 of the Act, on the breach of any of the conditions
hereinabove contained, or in default of payment of any consideration
payable under the Licence.
21. The Licence is subject to the provisions of the Act and the rules made
thereunder from time to time.
22. This Licence is subject to such changes/modifications as may be
considered expedient and necessary from time to time.
/s/
-------------------------
W.A.Asothaa
Section Officer (PTC)
Ministry of Communications
(Communications Division)
Islamabad
-7-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND ON PAGES 4 AND 5 OF THE COMPANY'S FORM 10-Q FOR THE YEAR TO DATE, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 14,571
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 34,662
<PP&E> 23,196
<DEPRECIATION> 1,358
<TOTAL-ASSETS> 148,212
<CURRENT-LIABILITIES> 8,737
<BONDS> 83,640
104,176
9
<COMMON> 8
<OTHER-SE> (53,438)
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<TOTAL-COSTS> 1,248
<OTHER-EXPENSES> 25,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,751
<INCOME-PRETAX> (31,877)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31,877)
<EPS-PRIMARY> 0
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</TABLE>
