<PAGE>
Exhibit 10.5
PARTNERS AGREEMENT BETWEEN THE PARTNERS OF FIRSTMARK
COMUNICACIONES ESPANA, S.L.
In Madrid, on 18 November, 1999
BETWEEN
A) THE ONE PARTY,
FIRSTMARK COMMUNICATIONS EUROPE, S.C.A., a Company validly incorporated
and existing under and pursuant to the laws of Luxembourg, with registered
address in Rue de Jean Monet, 6, L-2180, Luxembourg, and entered in the
Companies Register under number B65610 (hereinafter, "FMCE").
FMCE is represented in this act by Mr Keith Arthur Cornell, of legal age,
with Passport number 054773566, with professional address in Russell
Square House, 10-12, Russell Square, London WC1B 5HB, United Kingdom, in
his capacity as attorney of the same.
B) THE OTHER PARTY,
PROMOTORA DE INFORMACIONES, S.A., a Spanish Company incorporated for an
indefinite period by means of a public deed executed before Felipe
Gomez-Acebo Santos, Notary of Madrid, on 18 January 1972 with number 119
of his protocol, with registered address in Madrid-28013, Gran Via, 32 and
with C.I.F. (Tax Identification Licence) number A-28297059 (hereinafter,
"PRISA").
PRISA is represented in this act by Mr Ignacio Santillana del Barrio, of
legal age, with D.N.I number 15160375-V, with professional address in
Madrid, Gran Via 32, in his capacity as attorney of the same.
C) THE OTHER PARTY,
INMOBILIARIA AZTLAN, S.A. DE C.V., a company incorporated for an definite
period by means of a public deed executed before Francisco de P. Morales
Junior, Notary 19 of Mexico City, on 14 October 1954, with number 26.543
of his protocol, with registered address in Mexico City (hereinafter,
"AZTLAN"). AZTLAN is a Party to this Agreement in its capacity as wholly
and indirectly owned subsidiary of TELEFONOS DE MEXICO, S.A. DE C.V.
AZTLAN is represented in this act by Mr Keith Arthur Cornell, of legal
age, in his capacity as attorney of the same.
D) THE OTHER PARTY,
INFORMATICA EL CORTE INGLES, S.A, Spanish Company incorporated for an
indefinite period under the name of INFOSPA, S.A. by means of a public
deed executed before Mr Aurelio Escribano Gozalo, Notary of Madrid, on 12
July 1983 with number
<PAGE>
1,500 of his protocol, with registered address in Madrid, c/Hermosilla 112
and with C.I.F. number A-28/855260 (hereinafter, "CORTE INGLES").
CORTE INGLES is represented in this act by Mr Florencio Lasaga Munarriz,
of legal age, with D.N.I number 15.820.025-G, with address for the
purposes of this agreement in Madrid, c/Nunez de Balboa 73, in his
capacity as Managing Director of the same.
For the purposes of this agreement, FMCE, PRISA, AZTLAN and CORTE INGLES
may be referred to jointly as the "FOUNDING PARTNERS".
E) THE OTHER PARTY,
OMEGA CAPITAL, S.L., Spanish Company incorporated for an indefinite period
by means of a public deed executed before Mr Carlos Gascon Huidobro,
Notary of Madrid, on 27 May 1994, with registered address in P(0) de la
Castellana, 31, 28046 Madrid and with C.I.F. number B-80932445
(hereinafter, "OMEGA ").
OMEGA is represented in this act by Mr Mario Fernandez Pena, of legal age,
with D.N.I number 105525-R, with address for the purposes of this
agreement at P(0) de la Castellana, 31, 28046 Madrid, in his capacity as
attorney of the same.
F) THE OTHER PARTY,
DIARIO DE BURGOS, S.A., Spanish Company incorporated by means of a public
deed executed before Mr Ursino Vitoria Burgoa, who was Notary of Burgos,
on 14 September 1959, with registered address in c/ San Pedro de Cardena
34, 09002 Burgos, and with C.I.F. number A-09002387 (hereinafter, "DIARIO
DE BURGOS").
DIARIO DE BURGOS is represented in this act by Mr Jesus Angel Bueno
Ordonez, of legal age, with D.N.I number 13.094.464-N, with address for
the purposes of this agreement at c/ San Pedro de Cardena 34, 09002
Burgos, in his capacity as attorney of the same.
G) THE OTHER PARTY,
CAJA DE AHORROS DE SALAMANCA Y SORIA (GRUPO DUERO), Spanish Company
incorporated by means of a public deed executed before Mr Julio Rodriguez
Garcia, Notary of Salamanca, on 11 May 1991 with number 1619 of his
protocol, with registered address in Plaza de los Bandos, 15-17, Salamanca
and with C.I.F. number G 37244191 (hereinafter, "CAJA DUERO").
CAJA DUERO is represented in this act by Mr Dativo Martin Jimenez, of
legal age, with D.N.I number 6.490.013, with address for the purposes of
this agreement at Paseo de la Castellana, 167, 28046 Madrid, in his
capacity as attorney of the same.
-2-
<PAGE>
H) THE OTHER PARTY,
CAJA DE AHORROS Y MONTE DE PIEDAD DE ZARAGOZA, ARAGON Y RIOJA (IBERCAJA),
incorporated by the REAL SOCIEDAD ECONOMICA ARAGONESA DE AMIGOS DEL PAIS,
approved by Royal Order of 28 January 1873. It began its activities on 28
May 1876 and is registered in the REGISTRO ESPECIAL DE CAJAS DE AHORRO
POPULAR, with number 51 in folio 31, by Royal Order of 13 December 1930,
with registered address in Zaragoza, Plaza Basilio Paraiso, 2 and with
C.I.F. number G 50000652 (hereinafter, "IBERCAJA").
IBERCAJA is represented in this act by Mr Miguel Angel Navarro Garcia, of
legal age, with D.N.I number 17.818.887, with address for the purposes of
this agreement at Zaragoza, Plaza Basilio Paraiso, 2, in his capacity as
attorney of the same.
I) THE OTHER PARTY,
CAJA DE AHORROS PROVINCIAL SAN FERNANDO DE SEVILLA Y JEREZ, Spanish
Company incorporated for an indefinite period by means of a public deed
executed before Mr Antonio Ojeda Escobar, Notary of Sevilla, on 23 April
1993 with number 1142 of his protocol, with registered address in Sevilla,
Plaza de San Francisco 1, and with C.I.F. number G-41/000167 (hereinafter,
"CAJA SAN FERNANDO").
CAJA SAN FERNANDO is represented in this act by Mr Manuel Pinar Parias, of
legal age, with D.N.I number 27.884.219-P, with address for the purposes
of this agreement at Plaza de San Francisco 1, Sevilla, in his capacity as
attorney of the same.
J) THE OTHER PARTY,
MONTE DE PIEDAD Y CAJA DE AHORROS DE HUELVA Y SEVILLA, Spanish Company
incorporated for an indefinite period by means of a public deed executed
before Mr Rafael Lena Fernandez, Notary of Sevilla, on 25 June 1990, with
registered address in Sevilla, Plaza de Villasis 2, and with C.I.F. number
G-41/402819 (hereinafter, "EL MONTE").
EL MONTE is represented in this act by Mr Juan Jose Garcia Munoz, of legal
age, with D.N.I number 50.822.922, with address for the purposes of this
agreement at Plaza de Villasis 2, Sevilla in his capacity as attorney of
the same.
CAJA DUERO, IBERCAJA, CAJA SAN FERNANDO, EL MONTE shall together be referred to
hereinafter as the "CAJAS".
FMCE, PRISA, AZTLAN, CORTE INGLES, OMEGA , DIARIO DE BURGOS, CAJA DUERO,
IBERCAJA, CAJA SAN FERNANDO and EL MONTE may likewise be referred to
individually herein as the "PARTY" and jointly as the "PARTIES".
THEY DECLARE
I. That up to the date of this agreement FMCE and PRISA were the sole
partners of the company FIRSTMARK COMUNICACIONES ESPANA, S.L., a
Spanish Company
-3-
<PAGE>
incorporated for an indefinite period by means of a public deed
executed by Mr Xavier Roca Ferrer, Notary of Barcelona, on 3 March
1999, with number 655 of his protocol, with registered address in
Madrid-28046, Paseo de la Castellana, 110, planta 12, and with C.I.F.
number B-61912069 (hereinafter, "FMCS").
II. The business purpose of FMCS is (i) the construction, deployment,
marketing and operation of telecommunications local-loop access systems
in Spain, including, without limitation, broadband wireless local loop
technology; (ii) the application for and obtaining of all necessary
licenses, approvals and permits in relation to the foregoing; (iii) the
leasing of sites for the operation of the business described in (i)
above; (iv) the training and development of employees and consultants
in relation to the foregoing; and (v) the development and exploitation
of content in Spain (hereinafter, the "BUSINESS OF FMCS").
III. That as part of its strategy of implementation of the Business of FMCS,
FMCS:
(i) Presented to the Secretariat General of Communications of the
Ministry of Development ("MINISTERIO DE FOMENTO"), last 12
August 1999:
(i.1) an application for a type C2 individual licence for the
implementation and operation of a public network for
broadband radio access (26 GHz) and the concession of
radio-electric public domain annexed to it by virtue of
the Resolution of the Secretary General of
Communications, the announcement of which was published
in the "BOLETIN OFICIAL DEL ESTADO" (STATE OFFICIAL
GAZETTE) number 166, dated 13 July 1999; along with
(i.2) an application relating to type C general
authorisations for the rendering of interconnection
services for local area networks, "FRAME RELAY", access
to the Internet and service for lines suitable for
leasing both to operators and to end users.
(ii) It likewise presented to the Secretariat General of
Communications of the Ministry of Development, last 13
September 1999:
(ii.1) an application for a type C2 individual licence for the
implementation and operation of a public network in the
band from 3.4 to 3.6 GHz and the concession of
radio-electric public domain annexed to it by virtue of
the Resolution of the Secretary General of
Communications, the announcement of which was published
in the "BOLETIN OFICIAL DEL ESTADO" (STATE OFFICIAL
GAZETTE) number 166, dated 13 July 1999; along with
(ii.2) an application relating to type C general
authorisations for the rendering of interconnection
services for local area networks, "FRAME RELAY", access
to the Internet and service for lines suitable for
leasing both to operators and to end users.
-4-
<PAGE>
IV. That the Spanish Administration have decided on 9 October 1999 to hold
separate public tender competitions for awarding the licences described
in declarations III.(i.1) and III.(ii.1) and the concession of
radio-electric public domain annexed to them, and consequently the
Founding Partners have the firm intention that FMCS should formulate
the appropriate tenders and present whatsoever documents that might be
necessary and/or required by the relevant bidding conditions, with the
aim of it being awarded one of the said licences in either or in both
of the competitions (hereinafter, the "TENDERS") This notwithstanding,
the Founding Partners, pursuant to Clause II.5 (x) hereunder, shall be
entitled to decide from time to time to withdraw FMCS from either of
the competitions for the awarding of the Licences (as defined below),
should they deem it beneficial for the best interest of FMCS.
V. That the Parties acknowledge the possibilities for expansion of their
own businesses and of the Business of FMCS in Spain that any future
collaboration between them could entail, and in this regard they agree
that their respective activities could be strengthened by sharing their
infrastructures, technology, business experience, human potential and
other resources.
VI. That the Parties are interested in actively participating in the
Spanish telecommunications sector and in this regard they wish to enter
into the capital of FMCS in the terms and conditions set out in this
Partners Agreement and that FMCE and PRISA are likewise interested in
inviting the Parties to enter into the capital of FMCS under the terms
to be stated hereinafter, and that all of the Parties are interested in
implementing and developing the Business Plan of FMCS as defined in
Clause 5(xii) a) below, a sample summary of which is attached hereto as
Schedule 1. The entire Business Plan will be available should the
Parties so desire.
VII. That the Parties intend to transform FMCS into limited liability
company ("SOCIEDAD ANONIMA") as soon as possible.
VIII. The Parties reciprocally acknowledge the sufficient capacity of the
others in this act and they agree to enter into the capital of FMCS in
accordance with the following
CLAUSES
I. OBJECT OF THIS AGREEMENT
The object of this Agreement consists of establishing:
(i) the terms and conditions under which each of the Parties hereby enters
into the capital of FMCS; and
(ii) the bases and scope of collaboration by the Parties so that FMCS might
successfully:
(ii.1) achieve its immediate objective of being awarded:
-5-
<PAGE>
- a licence for the implementation and operation of a
public network for broadband radio access (26 GHz) and
the concession of public domain annexed to it; and/or of
- a licence for the implementation and operation of a
public network for radio access in the band from 3.4 to
3.6 GHz and the concession of public domain annexed to
it,
hereinafter, the "LICENCES"; and
(ii.2) develop its strategy of implementation in Spain and achieve
its immediate aim of becoming a leading company in the sector.
II. INCORPORATION OF THE PARTIES INTO THE CAPITAL OF FMCS
1. SUBSCRIPTION OF CAPITAL INCREASE OF FMCS
On the date hereof, FMCE and PRISA have agreed in a Partners' Meeting
resolution to increase the capital of FMCS up to 2,484,960 EUROS, and
simultaneously have waived their preferential subscription right to
such capital increase, in order for the rest of the Parties to
subscribe for it. On the date hereof, the Parties have subscribed for
and totally paid up the capital in FMCS in the following proportions:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
PARTNER N(0) OF PARTICIPATIONS NOMINAL VALUE % OF CAPITAL IN FMCS
EUROS AFTER INCREASE
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FMCE 748 749,496 35%
----------------------------------------------------------------------------------------------------
PRISA 404 404,808 17.5%
----------------------------------------------------------------------------------------------------
AZTLAN 434 434,868 17.5%
----------------------------------------------------------------------------------------------------
CORTE INGLES 298 298,596 12.02%
----------------------------------------------------------------------------------------------------
OMEGA 124 124,248 5%
----------------------------------------------------------------------------------------------------
CAJA DUERO 99 99,198 3.99%
----------------------------------------------------------------------------------------------------
IBERCAJA 62 62,124 2.5%
----------------------------------------------------------------------------------------------------
CAJA SAN 62 62,124 2.5%
FERNANDO
----------------------------------------------------------------------------------------------------
EL MONTE 62 62,124 2.5%
----------------------------------------------------------------------------------------------------
DIARIO DE BURGOS 37 37,074 1.49%
----------------------------------------------------------------------------------------------------
</TABLE>
2. ADDITIONAL FUNDING
The Parties acknowledge that, in order to finance the Business of FMCS,
additional funding of FMCS to the capital subscribed by each Party will
be required. Accordingly, the Parties agree that to the extent that
FMCS determines that the Business of FMCS should be financed through
capital contributions, the Parties will contribute such capital pro
rata with their respective holdings in FMCS, subject to the following:
-6-
<PAGE>
(i) such a resolution being agreed in Partners Meeting in accordance
with the provisions of Clause 4.(vii) below; and
(ii) in an aggregate amount not to exceed 240 million EUROS.
The Parties agree that they will take all actions required under
Spanish law to reflect such contributions as additional equity
contributions to FMCS.
If any Party fails to make its required additional contributions, its
holding in FMCS will be diluted accordingly (i.e., the percentage of
capital in FMCS held by the non-contributing Party prior to the
additional capital call shall be reduced as a consequence of such
Party's decision not to subscribe for the additional capital
contribution agreed). Should a dilution occur in the context of the
Partners meeting having approved a capital increase and having excluded
the Parties from their preferential subscription right, such additional
capital contribution will be made at a value per participation not less
than the real value as provided for in article 159 of the Spanish
Companies Act ("LEY DE SOCIEDADES ANONIMAS").
3. PREFERENTIAL SUBSCRIPTION RIGHTS
Each Partner shall have a preferential subscription right to purchase
such new participations as FMCS may from time to time issue. The
Parties agree to waive such preferential rights and therefore allow the
entrance in the capital of FMCS of a new Partner, in the event of the
issuance of participations or rights, options or securities exercisable
for, exchangeable for or convertible into participations in the
circumstances set out below and provided the Partners Meeting, in
accordance with the provisions of Clause 4.(vii) below, approves a
resolution in this sense and provided that article 159 of the Spanish
Companies Act ("LEY DE SOCIEDADES ANONIMAS") is complied with and all
the Founding Partners have agreed:
(i) as compensation to employees or consultants, provided, such
compensation does not exceed 15% of the issued and outstanding
participations after giving effect to such issuance;
(ii) in connection with any BONA FIDE financing transactions with
FMCS' lessors, lenders or customers, in the aggregate not to
exceed 5 million EUROS if such transactions have previously
been approved by the Board of Directors;
(iii) in connection with a public offering of FMCS or of FMCE, once
the voluntary conversion has been made pursuant to Clause 11;
(iv) in payment of the purchase price of any assets or business; or
(v) upon exercise or conversion of any right, option or security
exercisable for, exchangeable for or convertible into
participations which is referred to in paragraphs (i) through
(iv) above.
-7-
<PAGE>
Such preferential subscription right shall be exercisable in the
respective ratio which the number of fully diluted participations held
by each Party at the time of such issue bears to the total number of
participations held by all Parties at such time on a fully diluted
basis.
4. PARTNERS MEETINGS: QUORA AND MAJORITIES
(i) The quorum to validly hold any Meeting of Partners shall be
not less than 75% in first call and 70% in second call of the
issued participations.
(ii) Notice for Meetings of Partners, procedures for resolutions at
such meetings and any other necessary rules with respect
thereto shall be as prescribed in FMCS' Charter or in the law
("LEY DE SOCIEDADES DE RESPONSABILIDAD LIMITADA"),
(hereinafter, the "LAW").
(iii) Partners shall be entitled to exercise their rights to vote by
proxy at Meetings of Partners as provided by the Law.
(iv) Whenever FMCS, the Meeting of Partners, or the Board of
Directors is required to take or refrain from taking an action
under this Agreement, the Parties hereby undertake to cause
the relevant corporate body of FMCS to cause FMCS to take or
refrain from taking all such actions.
(v) Except for the majorities set forth below, Resolutions of the
Meetings of Partners shall be as adopted by the majority of
votes present or represented in the Meeting.
(vi) The Meeting of Partners shall not take any of the following
actions without the prior approval of FMCE, PRISA, AZTLAN and
CORTE INGLES for so long as such Parties each own at least 5%
of the participations in FMCS:
a) any change in the Business of FMCS as described in
Declaration II herein;
b) any public financing of debt securities through the
Spanish securities markets or any other debt financing
in excess of 50 million EUROS other than loans from the
Parties;
c) the issuance of any participations or preferred stock
including without limitation those for employee stock
option plans or similar benefits, either bonus or
phantom stock;
d) the amendment or repeal of any provision of FMCS'
Charter;
e) the entering, transporting, modifying, cancelling or
finishing any agreement in which FMCS is a party
together with, directly or indirectly, its directors,
officers, employees, inspectors or Parties, including
without limitation, agreements between FMCS directly or
indirectly with
-8-
<PAGE>
relatives of the Parties or any other company in
which directly or indirectly such Parties, directors,
officers, employees, inspectors or relatives
participate;
f) the granting of credits, loans or any other financing
to third parties, that exceeds the limits or amounts
previously established and approved by the Board;
g) the entering into any act or operation that has as an
objective the guarantee of debts or liabilities in
charge of any person or assume the obligation to
indemnify any other person of any liability or
obligation in which it may incur;
h) the purchase, sale, lease or encumbrance of real estate
through sale agreements or in any other manner, or the
entering into, altering or modifying the terms or any
lease or other contract concerning real estate and that
such amount exceeds the limits previously established
and approved by the Board;
i) the entering into, transferring, modifying, cancelling
or termination of any license agreement, technical
assistance agreement, technical or administrative
services agreement or any other similar agreements in
which FMCS is a party;
j) the incorporation of a new subsidiary of FMCS or the
acquisition, disposition or closing of any regular
operation establishment of FMCS or the formation,
acquisition, dissolution or sale of or participation in
whatever form in any interest in any other enterprise
including the increase or decrease in the capital of
any other company and the resolution of any other
matters that affect the interest or participation of
FMCS in other companies;
k) any action by FMCS which is beyond the scope of the
Business of FMCS or beyond what has previously been
authorised by the Board;
l) the incurring by FMCS of any borrowing or any other
indebtedness or liability in the nature of borrowing
which in aggregate exceed 5 million EUROS in any one
year provided always that such indebtedness or
liability is outside the scope of the Business Plan (as
defined in Clause 5 (xii) a) below);
m) the creation of any mortgage, charge or other
encumbrance over any asset of FMCS and the giving of
any guarantee by FMCS other than in the ordinary course
of business;
n) the appointment of new auditors of FMCS different from
Arthur Andersen;
-9-
<PAGE>
o) any proposal related to Clause 3 of this Agreement.
(vii) Additionally to the provisions of paragraph (vi) above, the
Meeting of Partners shall not take any of the following
actions without the favourable vote of 70% of capital in first
call and 67% of capital in second call:
a) waiver by the Parties of the preferential subscription
right for the purposes of the circumstances referred to
in Clause 3 above;
b) the variation of FMCS' Charter including but no limited
to the increase of capital stock of FMCS;
c) the declaration or distribution of any dividend or
other payment out of the distributable profits of FMCS;
d) the disposal (including the lease to a third party) or
acquisition or capital expenditure by FMCS in any
financial year of assets with a book value, market
value or sale value in excess of 5 million EUROS,
provided always that such disposal or acquisition is
outside the scope of the Business Plan (as defined in
Clause 5 (xii) a) below);
e) the taking of steps to wind up or dissolve FMCS;
f) the incurring by FMCS of any borrowing or any other
indebtedness or liability in the nature of borrowing
which in aggregate exceed 5 million EUROS in any one
year provided always that such indebtedness or
liability is outside the scope of the Business Plan (as
defined in Clause 5 (xii) a) below);
g) the creation of any mortgage, charge or other
encumbrance over any asset of FMCS and the giving of
any guarantee by FMCS other than in the ordinary course
of business;
h) the entering into by FMCS of any contract or
arrangement outside the ordinary course of trading or
otherwise than at arm's length (which includes any
contract or arrangement with a Party's manager or
employee, or a connected person);
i) the listing or the taking of steps to list FMCS or the
public offering of equity securities of FMCS; the
Partners Meeting may only approve this action with the
majorities required pursuant to this paragraph (vii) if
such 70% or 67% favourable vote (as the case may be)
include the positive vote of FMCE, so long as FMCE owns
at least 5% of the participations in FMCS;
j) the transfer by any Party of any or all of its
participations to an Affiliate as described in Clause
10.6 below;
k) any action by FMCS which is beyond the scope of the
Business of FMCS or beyond what has previously been
authorised by the Board;
The foregoing restrictions of paragraphs (vi) and (vii) shall terminate
upon an initial public offering of equity securities of FMCS or any
successors thereto or upon an
-10-
<PAGE>
initial public offering of equity securities of FMCE or any successors
thereto, provided always that all Parties have exercised their
voluntary conversion rights referred to in Clause 11 below. If this is
not the case, the restrictions of paragraphs (vi) and (vii) shall
remain in force upon an initial public offering of equity securities
of FMCE.
5. BOARD OF DIRECTORS: APPOINTMENT OF MEMBERS, QUORA AND MAJORITIES
(i) FMCS shall have a Board of Directors (hereinafter, the "BOARD")
consisting of twelve (12) directors (hereinafter each individually, the
"DIRECTOR" and collectively, the "DIRECTORS").
(ii) Directors shall be elected at the Meeting of Parties in accordance with
the provisions of Clause 4 (vii) above, from candidates nominated by
the Partners. For so long as FMCE, PRISA, AZTLAN and CORTE INGLES each
own at least 5% of the participations, FMCE shall be entitled to
nominate four (4) candidates for the position of Director, PRISA shall
be entitled to nominate two (2) candidates for the position of
Director, AZTLAN shall be entitled to nominate two (2) candidates for
the position of Director. CORTE INGLES shall be entitled to nominate
one (1) candidate for the position of Director, OMEGA shall be entitled
to nominate one (1) candidate for the position of Director and the
Cajas shall together be entitled to nominate a total of two (2)
candidates for the position of Director. The Parties agree to vote
their respective participations at each Meeting of Partners for the
purpose of electing Directors to elect the respective nominees of the
Parties. Directors may at any time be removed, without compensation,
with or without cause, by the Meeting of Partners provided that the
Directors appointed to replace the removed Directors shall be
designated by the Party that nominated the removed Director or its
successor.
(iii) Upon transformation of FMCS into a limited liability company ("SOCIEDAD
ANONIMA"), FMCS shall have a new Board of Directors (hereinafter, the
"NEW BOARD") consisting of fifteen (15) directors (hereinafter each
individually, the "NEW DIRECTOR" and collectively, the "NEW
DIRECTORS").
New Directors shall be elected at the Meeting of Shareholders in
accordance with the provisions of Clause II.4 (vii) above, from
candidates nominated by the Partners. For so long as FMCE, PRISA,
AZTLAN, and CORTE INGLES each own at least 5% of the shares, FMCE shall
be entitled to nominate five (5) candidates for the position of New
Director, PRISA shall be entitled to nominate three (3) candidates for
the position of New Director, AZTLAN shall be entitled to nominate two
(2) candidates for the position of New Director. CORTE INGLES shall be
entitled to nominate two (2) candidates for the position of New
Director, OMEGA shall be entitled to nominate one (1) candidate for the
position of New Director and the Cajas shall together be entitled to
nominate a total of two (2) candidates for the position of New
Director. The Parties agree to vote their respective shares at each
Meeting of Shareholders for the purpose of electing New Directors to
elect the respective nominees of the Parties. New Directors may at any
time be removed, without compensation, with or without cause, by the
Meeting of Shareholders provided that the New Directors appointed to
replace the
-11-
<PAGE>
removed New Directors shall be designated by the Party that nominated
the removed New Director or its successor.
References in this agreement to the Board, the Director or Directors,
shall be deemed to also be referred to the New Board, the New Director
or New Directors, as appropriate.
(iv) The term of office of a Director shall be three (3) years. Directors
shall be eligible to serve successive terms.
(v) The Board shall select one Director as President who shall act as such
at meetings of the Board and Meetings of Partners, and a Company
Secretary, who shall also act as such at meetings of the Board and
Meetings of Partners and who will not need to be a Director. A Vice
President and a Vice-Secretary may also be selected by the Board in the
same form as the selection for President and Secretary, respectively,
for the purposes of substituting them in their absence.
(vi) Meetings of the Board shall take place at such times as may be required
by Law or as requested by the President or three (3) Directors, with a
minimum of twice a year, at such place, within or out of Spain, as
shall be specified by the President. Unless otherwise agreed in writing
by all the Directors, at least five (5) day's prior notice in writing
shall be given of each meeting of the Board, which notice shall
indicate the agenda to be considered at the meeting.
(vii) In order to have a quorum at meetings of the Board the following will
be required:
- If the Board is composed of an even number of Directors, the
quorum will be that number of Directors divided by 2, plus 1;
- If the Board is composed by an odd number of Directors, the
quorum will be that number of Directors divided by 2, and
rounded up to the nearest integer number.
(viii) Directors shall be entitled to participate and exercise their rights to
vote in the meetings of the Board, either by attending the meetings in
person or by proxy to another Director. Each Director, including the
President, shall have one vote.
(ix) Any action by the Board may be taken by written consent IN LIEU of a
meeting, provided such consent is signed by half plus one of the total
number of Directors and provided that all Directors have received prior
notice of such action by written consent and agreed to hold the meeting
in writing.
(x) Subject to paragraphs (xi) and (xii) below, any questions arising at
any meeting of the Board shall be decided by a majority of votes of the
Directors present or represented.
(xi) The Board shall not take any of the following actions or pass
resolutions in respect of the same without the prior approval of the
Directors appointed by FMCE, PRISA, AZTLAN and CORTE INGLES for so long
as such Parties each own at least 5% of the participations:
-12-
<PAGE>
a) any fundamental change in the Business of FMCS;
b) the execution of any agreement with a third party to provide
content over FMCS' network on terms better than those offered to
any of the Parties wherever such Party also provides
substantially similar content;
c) the execution, amendment, termination or waiver of any
provision of any agreement with an affiliate of FMCE or of any of
the execution of any transaction with an affiliate of FMCE or of
any of the Parties (other than all such agreements and
transactions done at arms length and approved by the Board);
d) the entering, transporting, modifying, cancelling or finishing
any agreement in which FMCS is a party together with, directly or
indirectly, its directors, officers, employees, inspectors or
Parties, including without limitation, agreements between FMCS
directly or indirectly with relatives of the Parties or any other
company in which directly or indirectly such Parties, directors,
officers, employees, inspectors or relatives participate;
e) the granting of credits, loans or any other financing to third
parties, that exceeds the limits or amounts previously
established and approved by the Board;
f) the entering into any act or operation that has as an
objective the guarantee of debts or liabilities in charge of any
person or assume the obligation to indemnify any other person of
any liability or obligation in which it may incur;
g) the purchase, sale, lease or encumbrance of real estate
through sale agreements or in any other manner, or the entering
into, altering or modifying the terms or any lease or other
contract concerning real estate and that such amount exceeds the
limits previously established and approved by the Board;
h) the entering into, transferring, modifying, cancelling or
termination of any license agreement, technical assistance
agreement, technical or administrative services agreement or any
other similar agreements in which FMCS is a party;
i) the incorporation of a new subsidiary of FMCS or the
acquisition, disposition or closing of any regular operation
establishment of FMCS or the formation, acquisition, dissolution
or sale of or participation in whatever form in any interest in
any other enterprise including the increase or decrease in the
capital of any other company and the resolution of any other
matters that affect the interest or participation of FMCS in
other companies;
j) the incurring by FMCS of any borrowing or any other
indebtedness or liability in the nature of borrowing which in
aggregate exceed 10 million EUROS in any one year provided always
that such indebtedness or liability is outside the scope of the
Business Plan or exceeds the limits previously established by the
Board;
-13-
<PAGE>
k) the creation of any mortgage, charge or other encumbrance over
any asset of FMCS and the giving of any guarantee by FMCS other
than in the ordinary course of business;
l) any action by FMCS which is beyond the scope of the Business
of FMCS or beyond what has previously been authorised by the
Board;
m) any proposal related to Clause 3 of this Agreement.
(xii) Additionally to the provisions of paragraph (xi) above, the Board shall
not take any actions or pass resolutions in respect of the same without
the prior approval of eight (8) of the twelve (12) Directors of FMCS
unless the Board is composed at the moment of passing any of the
resolutions referred to below, of a number of Directors below twelve
(12), in which case the percentage of votes required for the Board to
take the following actions or to pass the following resolutions shall
be 66% of the total number of Directors composing the Board at the time
of taking the following actions or passing the following resolutions:
a) the approval of FMCS' business plan (as approved by the Board
on the date hereof and that will be presented for each of the
Licences, the "BUSINESS PLAN"). For the purposes of this
Agreement, Business Plan shall mean FMCS' 5-year base financial
model as agreed and approved by the Parties and to be reviewed
annually or as required by material and unforeseen changes in the
Business of FMCS. A sample summary of the Business Plan is
attached hereto as Schedule 1. The entire Business Plan will be
available should the Parties so desire. Such Business Plan shall
comprise a financial plan setting out cash flow charts, income
and expenses statements, balance sheet, profit and loss forecasts
and financing proposals using capital or borrowings;
b) the declaration or distribution of any dividend or other
payment out of the distributable profits of FMCS;
c) the disposal (including the lease to a third party) or
acquisition or capital expenditure FMCS in any financial year of
assets with a book value, market value or sale value in excess of
5 million EUROS, provided always that such disposal or
acquisition is outside the scope of the Business Plan;
d) the incurring by FMCS of any borrowing or any other
indebtedness or liability in the nature of borrowing which in
aggregate exceed 10 million EUROS in any one year provided always
that such indebtedness or liability is outside the scope of the
Business Plan or exceeds the limits previously established by the
Board;
e) the creation of any mortgage, charge or other encumbrance over
any asset of FMCS and the giving of any guarantee by FMCS other
than in the ordinary course of business;
f) the entering into by FMCS of any contract or arrangement
outside the ordinary course of trading or otherwise than at arm's
length (which includes any contract or arrangement with a Party's
manager or employee or a connected person);
-14-
<PAGE>
g) the instigation or settlement of any litigation or arbitration
proceedings by FMCS when the amount claimed exceeds 1 million
EUROS;
h) the execution and delivery to the government of Spain of any
license application to provide wireless local loop services as
well as the withdrawal from any license application process;
i) the execution of any agreement with a third party to provide
content over FMCS' network on terms better than those offered to
any of the Parties wherever such Party also provides
substantially similar content;
j) the execution, amendment, termination or waiver of any
provision of any agreement with an affiliate of FMCE or of any of
the execution of any transaction with an affiliate of FMCE or of
any of the Parties;
k) the provision of guarantees by each of the Parties as may be
required or necessary in order for FMCS to obtain the Licences.
Upon transformation of FMCS into a limited liability company ("SOCIEDAD
ANONIMA"), additionally to the provisions of paragraph (xii) above, the New
Board shall not take any actions or pass resolutions in respect of the same
without the prior approval of ten (10) of the fifteen (15) New Directors of FMCS
unless the New Board is composed at the moment of passing any of the resolutions
referred to in (a) to (k) above, of a number of New Directors below fifteen
(15), in which case the percentage of votes required for the New Board to take
the actions or pass the resolutions mentioned in (a) to (k) above shall be 66%
of the total number of New Directors composing the New Board at the time of
taking said actions or passing said resolutions.
The foregoing restrictions shall terminate upon an initial public offering of
equity securities of FMCS or any successors thereto or upon an initial public
offering of equity securities of FMCE or any successors thereto, provided always
that all Parties have exercised their voluntary conversion rights referred to in
Clause 11 below. If this is not the case, the restrictions of paragraphs (xi)
and (xii) shall remain in force upon an initial public offering of equity
securities of FMCE.
6. BOARD COMMITTEES
The Board shall form from their members the following subcommittees:
6.1 EXECUTIVE COMMITTEE
(i) Except for those actions expressly reserved to the Audit
Committee pursuant to Clause 6.3(i) below, the Executive
Committee shall have full powers delegated from the Board and
will be responsible for the day to day running of FMCS.
(ii) The Executive Committee shall be comprised of seven (7)
Directors, two (2) appointed by FMCE, two (2) appointed by
PRISA, one (1) appointed by AZTLAN, one (1) appointed by CORTE
INGLES and one (1) appointed jointly by the Cajas. On the
second year from the execution of this Agreement and during
the term of such second year, AZTLAN shall be entitled to
request that
-15-
<PAGE>
one (1) additional Director of AZTLAN is appointed to the
Executive Committee in which case PRISA shall reduce the
number of Directors to one (1). After the elapse of the second
year PRISA will appoint two (2) Directors for the term of such
third year, after which AZTLAN will be again entitled to make
the same request of two (2) Directors which will imply PRISA
reducing the number of Directors to one (1). This mechanism
will be a right for AZTLAN on every alternate year while this
Agreement is in force and AZTLAN holds at least 5% of the
capital in FMCS.
(iii) The Executive Committee shall be entitled to vote on all types
of resolutions relating to the day to day Business of FMCS,
and expressly on the appointment and removal of the General
Manager and the Chief Operating Officer, and on the approval
of the annual budget of FMCS. Notwithstanding the above, the
Executive Committee will not be entitled to vote on all those
actions or resolutions relating to the same and defined in
Clause 5(xi) and 5(xii) above, which shall be reserved
exclusively to the meetings of the Board of Directors.
(iv) Resolutions of the Executive Committee shall be approved by a
majority of votes of the Executive Committee Members present
or represented by proxy by another Executive Committee Member.
(v) In all that has not been expressly referred to in this Clause
6.1, the Executive Committee shall be governed by the rules
set forth for the Board in Clause 5 above and in FMCS'
Charter.
6.2 RESOURCE COMMITTEE
(i) The Resource Committee shall be responsible for providing
recommendations to the Board for all significant finance,
human resources and budgetary activities, and shall be
consulted by the General Manager (as defined in Clause 7
below) in the terms stated in such Clause, including without
limitation any proposal to the Board in connection with
compensation to employees or consultants through stock or
other form of equity or participation.
(ii) The Resource Committee shall be comprised of five (5)
Directors, one (1) appointed by FMCE, one (1) appointed by
PRISA, one (1) appointed by AZTLAN, one (1) appointed by CORTE
INGLES and one (1) appointed jointly by the Cajas.
(iii) Resolutions of the Resource Committee shall be approved by a
majority of votes of the Resource Committee Members present or
represented by proxy by another Resource Committee Member.
(iv) In all that has not been expressly referred to in this Clause
6.2, the Resource Committee shall be governed by the rules set
forth for the Board in Clause 5 above and in FMCS' Charter.
-16-
<PAGE>
6.3 AUDIT COMMITTEE
(i) The Audit Committee shall be responsible for:
- authorising any contract to be entered into by FMCS for
an amount exceeding 5 million EUROS;
- authorising the formalisation, ratification, variation,
termination, repudiation or performance of (or the
setting of consideration or issuing of approvals under)
any contract between FMCS and any Party or any Party's
related party;
- carrying out and/or reviewing the results of internal
audits;
- reviewing the quarterly reports before presentation to
the Parties;
- proposing to the Partners Meetings or Board, whichever
is competent, INTER ALIA:
* the appointment of external auditors which initially
the Parties agree to be Arthur Andersen;
* a change of the tax year;
* the distribution of dividends or amounts on account
of dividends;
* the fixing of the Directors' remuneration, as the
case may be, together with the remuneration of the
senior executives and of any employee of FMCS whose
emoluments exceed 100,000 EUROS;
* the application by FMCS for suspension of payments
or bankruptcy, and the proposal for the approval of
arrangements in the course of such proceedings;
* the taking of any action, transaction or event which
differs materially from or conflicts materially with
the Business Plan;
* the taking of any action, transaction or event or
series of similar actions, transactions or events
different from or in conflict with FMCS' budget in a
total amount, over a financial year, of or in excess
of 5% of the budget;
* the taking of any action, transaction or event which
may have a materially adverse effect on the
financial performance, or which would cause
unreasonable detriment to the public standing and
reputation of FMCS;
- proposing any variation to FMCS' annual budget (or the
adoption of a new budget), FMCS' Business Plan (or the
adoption of a any new Business Plan, or the renewal of
the Business Plan);
- carrying out any other task which the Board might from
time to time consider appropriate to have delegated to
the Audit Committee.
-17-
<PAGE>
(ii) The Audit Committee shall be represented by five (5)
Directors, three (3) of which can not be members of the
Executive Committee. One (1) member shall be appointed by
FMCE, one (1) by PRISA, one (1) by AZTLAN, one (1) by CORTE
INGLES and one (1) appointed jointly by the Cajas.
(iii) Resolutions of the Audit Committee shall be approved by a
majority of votes of the Audit Committee Members present or
represented by proxy by another Audit Committee Member.
(iv) In all that has not been expressly referred to in this Clause
6.3, the Audit Committee shall be governed by the rules set
forth for the Board in Clause 5 above and in FMCS' Charter.
7. GENERAL MANAGER
(i) FMCS shall be managed on a day to day basis by the General
Manager, who will receive instructions directly from the Board
and the Executive Committee, and who will consult his business
decisions with the Resource Committee.
(ii) The General Manager shall be elected by the Executive
Committee, by a majority of the votes in accordance with
Clause 5.(xii). The General Manager may at any time be removed
and replaced, with or without cause, by the Executive
Committee.
(iii) The period of employment of the General Manager shall be
determined by the Executive Committee. The period of
employment of the General Manager shall not exceed five (5)
years and shall expire when his successor is elected, provided
that if no period is fixed by the Executive Committee, the
period of employment of the General Manager shall
automatically be five (5) years. The General Manager shall be
eligible to serve successive periods.
(iv) The General Manager will act as a senior executive employee of
FMCS with limited powers of attorney as decided by the
Executive Committee from time to time and pursuant to a senior
executive agreement.
8. ACCOUNTING
(i) The accounting period of FMCS shall be the twelve-month period
commencing the 1st day of January and ending on the 31st day
of December. However, FMCS' first fiscal year commenced on the
day of its incorporation and shall end on December 31, 1999.
(ii) A balance sheet and a profit and loss statement shall be
submitted by FMCS to each Party on an annual basis, with
enough time for the Parties to review them and in any event
within ninety (90) days after the end of each fiscal year.
Such statements shall be audited at the expense of FMCS by
Arthur Andersen which has been agreed by the Parties that will
be designated as FMCS auditors, or
-18-
<PAGE>
another accounting firm designated by the Meeting of Partners
in accordance with international accounting standards.
(iii) FMCS shall deliver to each Party quarterly unaudited financial
statements within thirty (30) days after the end of each
period with comparisons to the prior year and budget for that
period.
(iv) FMCS shall submit to each Party quarterly and annual
management projections, the 5-year Business Plan and annual
budgets prior to the start of each calendar year.
(v) The Founding Partners shall have the right to inspect or
arrange for audits to be carried out in respect of the books
and records of FMCS upon reasonable notice and during the
regular business hours of FMCS.
The balance sheet and the profit & loss account as of 30 October 1999
of FMCS is attached as Schedule 2.
The provisions of paragraphs (ii), (iii) and (iv) shall terminate with
respect to each of the Parties upon the earlier of (i) a conversion of
their respective participations into FMCE participations or (ii) such
time when such Party ceases to own at least 1% of the participations,
provided that thereafter such Party shall receive copies of publicly
filed periodic reports and financial statements of FMCS.
9. REIMBURSEMENT OF EXPENSES
(i) All expenses incurred by FMCS in the preparation of the
applications indicated in Declarations III (i.1) and III
(ii.1) herein as well as in the Tenders will be paid by the
Parties pro rata with their respective holdings in FMCS, prior
to FMCS filing the applications to obtain the Licences
provided however that such expenses may not exceed in any case
2,484,460 Euros. For such purposes among others, the Parties
will fund FMCS pursuant to Clause II.1 above.
(ii) The Parties agree to cause FMCS to reimburse each Party for
all reasonable and documented costs and expenses incurred by
such Party or any of its affiliates in respect of works
carried out in relation to the business and operations of FMCS
provided such costs and expenses have been budgeted and
expressly approved by the Executive Committee of FMCS prior to
incurring in the same and are determined on a arm's length
basis. Each Party shall submit quarterly statements to FMCS
for reimbursement, and such reimbursement shall be made by
FMCS within thirty (30) days after receipt of such quarterly
statements so long as such statements do not exceed the
initially approved budget.
(iii) FMCS shall not reimburse to the Parties any other costs or
expenses different to those expressly referred to in 9 (ii)
above. Consequently, each Party shall support all costs and
expenses in which it incurs except for those referred to in
9(ii) above.
-19-
<PAGE>
The budget summary and the undertakings assumed by FMCS are attached as
Annex 3.
10. TRANSFER OF PARTICIPATIONS
The Parties agree, as a personal and binding obligation, that they will
take any and all actions required under corporate or contractual rules
to allow for timely and strict compliance with the terms of this
Clause. The Parties similarly agree that anything to the contrary in
FMCS' Charter will be amended and that in any event, the provisions of
this Clause shall prevail.
10.1 RESTRICTIONS ON THE TRANSFER OF PARTICIPATIONS
(i) Unless otherwise expressly approved by all of the other
Parties, no Party may Transfer (as defined below) any
participations or any interest or right therein prior to the
obtention by FMCS of either or both of the Licenses, and
thereafter except in compliance with the terms and conditions
of this Agreement, including without limitation, satisfaction
of the following conditions:
a) no Transfer shall be made other than pursuant to a
written BONA FIDE offer by a third party to acquire any
or all of the participations by means of a Transfer from
a Party (hereinafter, the "THIRD PARTY OFFER");
b) no Transfer shall be made where the transferring
Party and transferee agree in connection therewith that
the transferor shall exercise any residual powers in the
participations so transferred; and
c) the transferee must agree to become subject to, and
bound by, the obligations of the transferring Party
under this Agreement, including, but not limited to, all
of the restrictions on transferability of such
participations.
(ii) Any Transfer in contravention of any of the provisions of this
Clause shall be void and of no effect, and the Parties agree
that they shall always cause their representatives in the
governing bodies of FMCS to take any action conducive to
reject or not recognise said Transfer.
(iii) In any event and as from the date of submission of the
application for the Licences, no Party may transfer any
participations of FMCS or any interest or right therein during
the period of one (1) year from the date of awarding of any of
the Licences and for the subsequent period of three (3) years,
no Party may transfer any participations of FMCS or any
interest or right therein unless such transfer is to another
of the Parties and for a total percentage for such two Parties
below 15% of FMCS capital. The Parties agree that in order to
carry out any transfer between two Parties which exceed 15% of
the capital of FMCS during such three (3) year period, they
shall obtain prior authorisation from the relevant Spanish
authorities.
-20-
<PAGE>
For the purpose of this Agreement, Transfer means, in respect of a
participation, any actual, attempted or purported sale, conveyance,
assignment or other transfer of a participation, whether voluntary or
involuntary, including any indirect sale or transfer pursuant to a
merger or consolidation of or sale of a majority or more of the equity
interests in a Party, but only if the primary purpose of such merger,
consolidation or sale of equity interests is to circumvent the
restrictions of this Clause.
10.2 RIGHT OF FIRST REFUSAL
(i) Except in the case of a transfer pursuant to Clause 10.4
below, if a Party (hereinafter the "TRANSFERRING PARTNER")
desires to Transfer any or all of its participations to any
person (a "THIRD PARTY"), it shall promptly give to FMCE
written notice thereof. Such notice shall be accompanied by a
true and complete copy of the Third Party Offer and an offer
in writing from the Transferring Partner first to sell such
participations to FMCE (hereinafter the "PARTNER OFFER"). FMCE
shall have a thirty (30) day period to accept or reject the
Partner Offer. In case of acceptance of the Partner Offer the
Parties hereby undertake to perform any and all actions
required to allow FMCE to acquire the participations included
in the Partner Offer, including, without limitation waiving
any first refusal right to which, pursuant to Spanish law or
FMCS's by-laws, they might be entitled. Should FMCE reject the
Partner Offer, it shall give written notice of such rejection
to the Transferring Partner and to FMCS so that the
Transferring Partner may offer the Partner Offer to the rest
of the Parties, including FMCE, in proportion to their stake
in the capital of FMCS.
(ii) FMCS shall immediately inform the rest of the Parties of the
Partner Offer and the rest of the Parties may accept, in
proportion to their stake in FMCS, or reject the Partner Offer
within thirty (30) days from the receipt thereof. If the
Partner Offer is not accepted by a notice in writing delivered
to the Transferring Partner within the aforementioned period,
it shall be deemed to have been rejected, in which case the
Transferring Partner shall inform in writing the rest of the
Parties who have accepted the Partner Offer who shall have the
right to accept to increase the amount of participations to
which they were entitled by another notice in writing
delivered to the Transferring Partner within a new thirty (30)
day period from receipt of such notice from the Transferring
Partner.
(iii) Acceptance of the Partner Offer:
a) If any or all of the Parties (other than the
Transferring Partner) accept the Partner Offer, they
shall pay a purchase price per participation subject to
the Partner Offer equal to the purchase price per
participation (or cash equivalent thereof) set forth in
the Third Party Offer.
b) Purchase by the Parties and Transfer by the
Transferring Partner of the participations shall occur
on a mutually agreeable date, time and place within
thirty (30) days following acceptance of the Partner
Offer by
-21-
<PAGE>
the relevant Parties, or such later date on which any
governmental approvals required for such purchase and
Transfer have been obtained, it being understood that
the Transferring Partner shall take all actions and make
all filings necessary in connection with any required
governmental approvals.
c) The Parties shall, at their election, pay for the
participations at the time of purchase or pursuant to
the same terms and conditions contained in the Third
Party Offer.
(iv) Following expiration of the periods mentioned in paragraph
(ii), if the Partner Offer has not been totally accepted, the
Transferring Partner may Transfer the participations not
purchased by the rest of the Parties to the Third Party,
provided that if the Transfer does not occur on the terms and
conditions contained in the Third Party Offer or within thirty
(30) days after the expiration of the periods referred to in
paragraph (ii), the Transferring Partner shall follow the
procedure set out in paragraphs (i) to (iv) of this Clause
10.2 prior to any Transfer thereof.
10.3 EFFECT OF TRANSFER
In the event of a Transfer of participations, the transferee shall be
subject to, and bound by, the obligations of the Transferring Partner
under this Agreement, including, but not limited to, all of the
restrictions on transferability of such participations, and upon the
execution and delivery by such transferee of a written adhesion to this
Agreement, such transferee shall have and assume all of the rights of
the Transferring Partner relating to the participations so transferred.
Should a Transfer take place without the transferee having executed a
written adhesion to this Agreement, the Transferring Partner shall
remain liable for any breach by the transferee of the terms and
conditions and obligations set forth in this Agreement
10.4 INTRA-GROUP TRANSFER OF PARTICIPATIONS
Subject to the commitment to permanency in the capital of FMCS set
forth in Clause 10.1 (iii) above, any Party shall be entitled to
propose to the rest of the Parties the transfer of any or all of the
participations held by it to any affiliate as described below
(hereinafter an "AFFILIATE") provided that the following conditions are
met:
(i) the transferee must be an Affiliate that is wholly owned and
controlled by the Transferring Partner or which wholly owns
and controls the Transferring Partner;
(ii) the transferee must be an Affiliate over which the
Transferring Partner undertakes to retain full ownership and
control for as long as this Agreement shall remain in force,
or an Affiliate which undertakes to retain full ownership and
control over the Transferring Partner for as long as this
Agreement shall remain in force;
-22-
<PAGE>
(iii) the Transferring Partner assumes joint and several liability
with the transferee vis-a-vis the rest of the Parties for the
strict compliance by the said transferee of this Agreement;
(iv) the proposed transfer is notified by the Transferring Partner
in writing to the rest of the Parties prior to its execution
and said transfer is approved by Parties in a Partners Meeting
with the majorities set forth in Clause 4(vii) above;
(v) the transferee signs an adhesion contract to this Agreement
undertaking to be bound by it to the same extent as the
Transferring Partner would have been bound had the transfer
not been effected.
10.5 NO OTHER RESTRICTIONS
Provided that all applicable conditions set forth in this Clause have
been complied with, no Party shall oppose or in any other way obstruct,
any Transfer of another Partner's participations.
11. VOLUNTARY CONVERSION
Prior to filing in the United States of America a registration
statement under the Securities Act of 1933 of the United States of
America, as amended (or similar document under the laws of another
jurisdiction), for an initial public offering of common equity
securities (hereinafter, an "IPO") of FMCE or its successor or any
holding company for shares of FMCE or such successor (hereinafter, the
"ISSUER"), the Issuer will deliver to the Parties a notice
(hereinafter, the "IPO NOTICE") of its intention to effect an IPO. The
IPO Notice will include the Issuer's good faith estimate of the
anticipated gross proceeds to the Issuer and the anticipated per share
offering price for the IPO.
Upon execution of an agreement for the sale (hereinafter, a "SALE") of
more than 50% of the outstanding common stock of the Issuer
(hereinafter, a "SALE AGREEMENT"), the Issuer shall deliver to the
Parties a notice (hereinafter, the "SALE NOTICE") of its execution of
the Sale Agreement. The Sale Notice will include the consideration per
share to be received by the Issuer pursuant to the Sale Agreement and
other material terms of the Sale Agreement.
Subject to the terms of this Clause 11, (i) upon receipt by the Parties
of an IPO Notice, (ii) upon receipt by the Parties of a Sale Notice or
(iii) if no IPO Notice or Sale Notice has previously been delivered to
the Parties, by notice in writing to the Issuer at any time within 30
days after the fifth anniversary of the date of this Agreement
(hereinafter, the "FIVE YEAR OPTION"), the Parties shall have the
option to exchange (hereinafter, the "CONVERSION OPTION") all, but not
less than all, of their respective participations for a number of
shares of common equity securities of the Issuer computed per the
Conversion Formula set forth in subparagraph (b) and subject to the
provisions of subparagraph (c) below. Each of the Parties may exercise
the Conversion Option for their respective participations at any time
within the above referred period
-23-
<PAGE>
of thirty (30) days, independently whether the rest of the Parties
exercise the Conversion Option for their participations.
The only Parties that may exercise the Conversion Option will be those
in respect of which the Issuer receives written notice of the intention
of each of them to exercise (hereinafter, a "CONVERSION NOTICE") within
15 days of receipt of an IPO Notice or Sale Notice or within 30 days
after the fifth anniversary of the date of this Agreement (hereinafter,
the "CONVERTING PARTIES"). An election to exercise the Conversion
Option by any Party shall be irrevocable, provided that any of the
Converting Parties may revoke their Conversion Notice (i) in the case
of an IPO, if the IPO is not consummated within 4 months from the date
of the IPO Notice, or the gross proceeds to the Issuer and the price
per common share are not at least 80% of the respective minimum amounts
referenced in the IPO Notice and (ii) in the case of a Sale, if the
Sale is not consummated within nine months from the date of the Sale
Notice.
(i) the Parties hereby agree that the common shares received by
the Parties pursuant to the exercise of the Conversion Option
will be subject to the same restrictions (including
restrictions on transfer), as are applicable to FirstMark
Holdings L.L.C. (hereinafter, "HOLDINGS") and any subsidiaries
of Holdings which own shares of capital stock of the Issuer
(whether such restrictions are imposed by the Issuer, its
underwriters or applicable law); provided that nothing in this
Agreement is intended to restrict the Parties ability to sell
common shares of the Issuer following the date that is two
years after the consummation of the IPO or Sale unless a
subsequent public offering constrains Holdings' ability to
sell common shares of the Issuer, in which event the Parties
will agree to such further restrictions for up to six months.
(ii) The number of shares of the Issuer which shall be issued to
each of the Parties shall be computed in accordance with the
formula (hereinafter, the "CONVERSION FORMULA") given below.
Such formula assumes that the Issuer is engaged solely in the
wireless local loop business. In the event that the Issuer is
not engaged solely in the wireless local loop business, the
Parties agree to adjust the Conversion Formula as appropriate:
ES= S% X ((VR X RS)+ (VP X PS) - (DS - CS))
---------------------------------------
PPS
Where VR = 0.6 X EVE
---------
RE
and VP = 0.4 X EVE
------------
PE
ES: Number of shares of the Issuer to be received by each
of the Parties as a result of exercise of the
Conversion Option in exchange for their
participations in FMCS.
-24-
<PAGE>
S%: Each of the Parties' Ownership Percentage of FMCS at
the time of exercise.
VR: Value of Revenue (as defined in the formula above).
RS: Either (i) in the event that any of the Issuer's
subsidiaries has negative EBITDA for the fiscal year
prior to the delivery of the Conversion Notice,
revenue of FMCS based upon the latest audited
financial statements prepared prior to the date on
which the Parties notify the Issuer of their
intention to exercise the Conversion Option, or (ii)
in the event all of the Issuer's subsidiaries have
positive EBITDA for the fiscal year prior to the
delivery of the Conversion Notice, EBITDA of FMCS
based upon the latest audited financial statements
prepared prior to the date on which the Parties
notify the Issuer of their intention to exercise the
Conversion Option.
VP: Value of Population (as defined in the formula
above).
PS: 40 million (i.e., current population of Spain
-39,669,394- rounded up to the nearest million).
DS: Amount of outstanding indebtedness of FMCS for
borrowed money (including capitalised lease
obligations) and the aggregate liquidation preference
of outstanding preferred equity interests of FMCS at
the date of the Conversion.
CS: Cash and cash equivalents of FMCS at the date of the
Conversion.
EVE: Enterprise value of FMCE calculated as: EE + DE - CE.
PPS: Price per common share of the Issuer (i) in the IPO,
(ii) in the Sale or (iii) valued at Fair Market Value
as determined by the valuation procedure in paragraph
d. below in the case of an exercise of the Five Year
Option, whichever of (i), (ii) and (iii) is
applicable.
RE: Either (i) in the event that any of the Issuer's
subsidiaries has negative EBITDA for the fiscal year
prior to the delivery of the Conversion Notice,
revenue of the Issuer based upon the latest audited
financial statements prepared prior to the date on
which each of the Parties notify the Issuer of their
intention to exercise the Conversion Option, or (ii)
in the event all of the Issuer's subsidiaries have
positive EBITDA for the fiscal year prior to the
delivery of the Conversion Notice, EBITDA of the
Issuer based upon the latest audited financial
statements prepared prior to the date on which each
of the Parties notify the Issuer of their intention
to exercise the Conversion Option.
PE: Population of the geographic area covered by the
Issuer's licenses, or licenses held by any operating
subsidiaries of the Issuer in which the
-25-
<PAGE>
Issuer has an equity stake multiplied by the Issuer's
percentage equity interest, as per the latest
censuses conducted by each of the governments of
jurisdictions in which the Issuer or its subsidiaries
have a license at the date on which each of the
Parties notify the Issuer of their intention to
exercise the Conversion Option. For the purposes of
the Spanish population, the figure referred to in
paragraph PS above shall apply.
EE: Equity value of the Issuer based upon the PPS in the
IPO or Sale or the Fair Market Value on a pro forma
basis, including any outstanding stock options,
warrants and convertible securities, the exercise or
conversion price of which is less than the PPS,
excluding shares issuable upon exercise of the
Conversion Option.)
DE: Outstanding indebtedness for borrowed money
(including capitalised lease obligations) and the
aggregate liquidation preference of outstanding
preferred stock of the Issuer and its subsidiaries
(excluding convertible preferred stock of the Issuer
the conversion price of which is less than the PPS)
at the date of the Conversion.
CE: Cash and cash equivalents of the Issuer at the date
of the Conversion (including the Issuer's
proportionate share of intercompany advances to FMCS
and its subsidiaries and the aggregate exercise price
of any outstanding stock options and warrants, the
exercise price of which is less than the PPS) it
being understood that the proceeds of the IPO, if
applicable, do not constitute cash or cash
equivalents.
All calculations for the Issuer include the Issuer's
proportionate share of revenues, EBITDA (earnings before
interest, taxes, depreciation and amortisation), population,
indebtedness for borrowed money, preferred stock obligations
and cash and cash equivalents of non-wholly owned
subsidiaries, before giving effect to the exercise of the
Conversion Option.
(iii) (a) The conversion contemplated by the Conversion
Option shall take place as applicable (x)
simultaneously with the consummation of the IPO, (y)
simultaneously with the Closing of the transactions
contemplated by the Issuer Sale Agreement or (z) in
the case of the Five Year Option, within 30 days of
agreement upon or determination of the Fair Market
Value, as the case may be.
(b) Each of the Parties shall expressly represent and
warrant that the Participations are duly authorised,
validly issued, fully paid and non-assessable
Participations of FMCS and that they are free and clear
of any contractual lien, charge, pledge, encumbrance or
other contractual security interest.
-26-
<PAGE>
(iv) (a) In the event any of the Parties exercise the Five
Year Option, and the Issuer and such Party cannot
within thirty (30) days agrees upon the Fair Market
Value, the Fair Market Value shall be determined in
accordance with the procedure provided below based
upon the hypothetical trading value of FMCE assuming
that the Shares of FMCE were publicly traded.
(b) Within thirty (30) days after the delivery by the last
of the Parties of the Conversion Notice, (i) the
Converting Parties shall jointly select one appraiser
and (ii) the Issuer shall appoint another (hereinafter,
the "APPRAISERS").
(c) Within sixty (60) days after the delivery by each of
the Parties of the Conversion Notice, the Converting
Parties shall deliver to the Issuer, their Appraiser's
written estimate of the Fair Market Value and the
Issuer shall deliver to the Converting Parties its
Appraiser's written estimate of the Fair Market Value.
(d) The Fair Market Value shall be determined in
accordance with the following rules:
- should the estimates of both Appraisers be
the same figure, such figure shall be
selected as the Fair Market Value;
- should the estimates of both Appraisers
differ in no more than 10%, the average
figure of such two estimates shall be
selected as the Fair Market Value;
- should the estimates of both Appraisers
differ in more than 10%, a third appraiser
(hereinafter, the "THIRD APPRAISER") shall
be jointly appointed by the Appraisers. The
Third Appraiser shall, within thirty (30)
days after its appointment, deliver to the
Converting Parties, the Issuer and the
Appraisers its written estimate of the Fair
Market Value;
- should the estimate of the Third Appraiser
exceed the higher of the estimates of the
Appraisers, such higher estimate of the
Appraisers shall be selected as the Fair
Market Value;
- should the estimate of the Third Appraiser
be lower than the lowest of the estimates of
the Appraisers, such lower estimate of the
Appraisers shall be selected as the Fair
Market Value; or
- should the estimate of the Third Appraiser
be a figure between those of the estimates
of the Appraisers, the estimate of the Third
Appraiser shall be selected as the Fair
Market Value.
(e) The Converting Parties shall be deemed to have hereby
engaged and agreed to pay equally the fees and expenses
of the Appraiser appointed jointly by them. The Issuer
shall pay the fees and expenses of its
-27-
<PAGE>
Appraiser and the Converting Parties and the Issuer
shall pay equally (50-50) the fees and expenses of
the Third Appraiser.
(f) The failure by the Converting Parties or by the Issuer
to appoint their respective Appraisers, or the failure
by any of the Appraisers to deliver their written
estimates of the Fair Market Value on the periods
referred to in (d) above, shall imply that the estimate
delivered by the other Appraiser shall be selected as
the Fair Market Value.
(g) The failure by any of the Appraisers to appoint the
Third Appraiser on the period referred to in (d) above,
shall imply that the estimate delivered by the other
Appraiser shall be selected as the Fair Market Value
The Fair Market Value determined in accordance with the foregoing
procedure shall be binding on the Parties in all events and for all
purposes.
(v) After the later of (i) the date of exercise and consummation
of each of the Parties' Conversion Option and (ii) the
expiration of nine months from the date of an IPO and subject
to the restriction contemplated by paragraph a. above, the
Issuer shall, if requested by any of the Converting Parties in
writing, as expeditiously as possible prepare and file up to
one registration statement under the Securities Act of the
United States of America (or other applicable securities laws)
if such registration is necessary in order to permit the sale
or other disposition of any or all securities that have been
acquired by any of the Converting Parties pursuant to the
Conversion Option; and the Issuer shall use commercially
reasonable efforts to qualify such securities under applicable
securities laws. Each of the Parties agree to use reasonable
best efforts to cause, and to cause any underwriters of any
sale or other disposition to cause, any sale or other
disposition pursuant to such registration statement to be
effected on a widely distributed basis. The Issuer shall use
reasonable best efforts to cause such registration statement
to become effective, to obtain all consents or waivers of
other parties which are required therefor, and to keep such
registration statement effective for such period not in excess
of 90 calendar days from the day such registration statement
first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of the
Issuer to file a registration statement and to maintain its
effectiveness may be (i) postponed until the expiration of a
period of 180 days from the effective date of the most recent
registration of common equity securities of the Issuer (other
than a registration relating to employee benefit plans or any
merger or acquisition transaction), or (ii) suspended for one
or more periods of time not exceeding 180 calendar days with
respect to any registration statement if the Board of
Directors of the Issuer shall have determined that the filing
of such registration statement or the maintenance of its
effectiveness would require disclosure of non-public
information that would materially and adversely affect the
Issuer or would interfere with a planned merger, sale of
material assets, recapitalisation or other significant
corporate
-28-
<PAGE>
action (other than the issuance of equity securities). Any
registration postponed or suspended under this paragraph shall
not be counted for purposes of the rights of the Parties under
this paragraph unless and until such registration statement
has become effective and remained effective for the lesser of
90 days and the period necessary for the Parties to effect the
sale of all shares covered thereto. Any registration statement
prepared and filed under this paragraph, and any sale covered
thereby, shall be at the Issuer's expense except for
underwriting discounts or commissions and brokers' fees and
fees of legal counsel to each of the Converting Parties, which
shall be borne solely by each of them, respectively. The
Parties undertake to provide in writing all information
reasonably requested by FMCE for inclusion in any registration
statement to be filed hereunder. If, during the time periods
referred to in the first sentence of this Clause, FMCE effects
a registration under the Securities Act of the United States
of America or any other applicable legislation, of FMCE's
equity securities for its own account or for any other of its
stockholders (other than on a registration relating to
employee benefit plans or any merger or acquisition
transaction), it shall allow each of the Parties the right to
participate in such registration; provided that, if the
managing underwriters of such offering advise FMCE that in
their opinion the number of securities requested to be
included in such registration exceeds the number which can be
sold in such offering on a commercially reasonable basis,
priority shall be given, first, to the securities intended to
be included therein by FMCE for its own account or for the
account of the stockholders requesting such registration and,
thereafter, second, FMCE shall include the securities
requested to be included therein by each of the Converting
Parties pro rata with any other securities included in such
registration. In connection with any registration pursuant to
this Clause, the Parties and FMCE shall provide each other and
any underwriter of the offering with customary
representations, warranties, covenants, indemnification, and
contribution in connection with such registration.
(vi) Should an IPO occur prior to the elapse of the first year
period from the date on which FMCS submits the applications of
both Licences the number of shares to be converted pursuant to
this Clause shall be determined in accordance with the
conversion formula calculated at the time on which the IPO is
effectively carried out. However, the Parties shall not be
entitled to convert their shares in FMCS until such one (1)
year period has elapsed.
III. SCOPE OF COLLABORATION OF THE PARTIES
12. SUPPORT FOR FMCS
The Parties undertake to collaborate in the bidding procedures that
FMCS might take part in, playing an active role in the preparation of
the tenders to be presented therein and in the monitoring of them until
the award is made and, very particularly, in everything to do with the
Tenders and the obtaining of either or both of the Licences.
-29-
<PAGE>
13. PHASE PRIOR TO THE AWARDING OF THE LICENCES
From the date of this Agreement up to the date on which each of the
Licences is awarded, and notwithstanding the general collaboration
commitment set down in Clause 12 above, the Parties undertake in
particular, though without this constituting any limitation, to:
(i) collaborate actively with FMCS and with its advisers in
preparing the Tenders and in gathering together and producing
whatsoever documents and/or material that might be required by
the Spanish Administration;
(ii) provide their assistance and support in whatsoever steps that
FMCS might need to carry out before the competent authorities for
the obtaining of the Licences;
(iii) place at the disposal of FMCS the technical and human means,
infrastructure, technology and other resources required by FMCS
so that it might attain its immediate objective of being awarded
the Licences;
(iv) to provide as Partners of FMCS, in a due form and time, all
the documentation that will be necessary to obtain the Licenses
and which is listed in Schedule 4 to this Agreement.
14. PHASE SUBSEQUENT TO THE AWARDING OF THE LICENCES
If FMCS is finally awarded either of the Licences, or both, and
notwithstanding the general collaboration commitment set down in Clause
12 above, the Parties undertake in particular, though without this
constituting any limitation, to:
(i) collaborate actively in the "TIME TO MARKET" strategies of
FMCS, that is, the launching on the market of the various
products and services of FMCS in order to accelerate and cut down
as much as possible the time for the proper implementation of
those products and services and the start-up of the Business of
FMCS;
(ii) collaborate actively in the strategies of operation, marketing
and distribution of the wireless local-loop products and services
provided by FMCS at any moment.
-30-
<PAGE>
15. INCORPORATION OF FUTURE PARTNERS
The Parties hereby declare that if they consider it beneficial for
their own interests and for those of FMCS, the Parties shall study the
possible incorporation of other Partners into the capital of FMCS
(hereinafter, the "FUTURE PARTNERS") which shall be materialised if
approved by the Partners Meeting with the majorities set forth in
Clause 4 (vii) above, in which majorities should be included the vote
of all of the Founding Partners, only if the future Partner is to
subscribe for new participations, by means of signing:
(i) an adhesion contract binding the Future Partners to the
present Agreement; and
(ii) whatsoever public and/or private documents that might be
necessary for formalising the taking of a stake by the Future
Partners in the capital of FMCS by the percentages that are
agreed.
16. EXCLUSIVITY AND NON-COMPETITION
For the purposes of this Clause, "Permitted Activities" shall mean any
specific action not prohibited pursuant to this Clause 16.
Additionally, for the purposes of this Clause "Wireless Local-Loop"
shall refer to any fixed communication local loop access network
utilising radio frequency falling in 3.5, 26 and 28 frequency bands.
16.1 EXCLUSIVITY AND NON-COMPETITION
(i) Except for Permitted Activities, each of the Parties
undertakes for so long as each of them hold, directly or
indirectly, participations in FMCS, and for one (1) year after
the date in which each of them ceases to hold such
participations, not to, directly or indirectly, enter into or
hold conversations, negotiations or agreements for acquiring
any equity shareholding in persons or bodies that render or
might be interested in rendering Wireless Local-Loop services
in Spain, or which might frustrate the purpose of this present
Agreement or the obtention by FMCS of either or both of the
Licences, unless it is with the express prior agreement of the
remaining Parties or allowed pursuant to Clause 16.1 (iii) e).
(ii) In particular, during the life of this Agreement, the Parties
are obliged not to participate, whether directly or
indirectly, in any consortium or any other form of business
collaboration that might be interested in presenting a
competing tender to any of the Wireless Local-Loop Tenders.
(iii) Additionally, each of the Parties undertake, for so long as
each of them hold directly or indirectly participations in
FMCS, and for one (1) year after the date in which each of
them ceases to hold such participations:
a) not to be engaged in any other Wireless Local-Loop
activities in Spain in competition with those conducted
by FMCS; or
-31-
<PAGE>
b) not to induce or attempt to induce any supplier or
customer of FMCS to terminate or vary the terms of its
business relationship with FMCS in a manner adverse to
FMCS; or
c) not to induce, or attempt to induce, any officer or
employee of FMCS to leave his employment with FMCS, with
a detrimental result to FMCS; or
d) not to be engaged in any activity which implies a
direct holding of any amount in the capital of any
company that owns or has applied to a wireless
local-loop licence in Spain, including but not limited
to licences relating to 26, 3.5 and 28 GHz; or
e) not to be engaged in any activity which implies an
indirect holding of a stake over 5% in the capital of
any company competing in wireless local-loop in Spain.
(iv) Notwithstanding the provisions of this Clause 16.1, any of the
Parties will be entitled to be engaged, participate or acquire
an interest in, or become connected with any business
opportunity that could otherwise fall within the scope of the
prohibitions of this Clause 16, provided always that such
Party shall have made such business opportunity available to
the Board of FMCS by written notice describing the business
opportunity in reasonable detail and the Board shall have
notified such Party in writing within thirty (30) business
days of receipt of such notice that it does not wish to pursue
such business opportunity, or having notified to such Party
its interest in pursuing such business opportunity, does not
effectively take any action for these purposes in the term of
six (6) months from the date of such notification to the
relevant Party.
(v) Should any of the Parties perform any of the prohibited
activities referred to in paragraph (iv) above without
fulfilling the conditions referred to therein or should any of
the Parties breach in any way the non competition undertakings
included in this Clause 16, the relevant Party shall be
obliged to sell its participations in FMCS to the rest of the
Parties in accordance with the provisions of Clause 10 at the
Fair Market Value calculated in accordance with Clause 11 (iv)
above.
Additionally the Parties hereby agree that the breach by any
Party of any of the undertakings contained in this Clause
shall imply the assumption and payment by such breaching Party
of all costs that may be derived from the negotiation with the
relevant Spanish authorities and from the execution of the
guarantees that the Spanish authorities may require as well as
to the enforcement of the same in order to make effective the
transfer of the participations of the breaching Party to the
rest of the Parties.
-32-
<PAGE>
Moreover, breach by any Party of the undertakings assumed in
this Clause shall entail a penalty consisting of payment to
the remaining Parties of a sum up to 100 million EUROS, but in
any event not higher than the value of the equity interest of
each Party in FMCS. This sum shall be distributed amongst the
non-breaching Parties in proportion to the number of
participations in FMCS owned by each. The penalty referred to
above shall be applied for each breach committed by a Party of
the obligations assumed in this Clause.
Notwithstanding the foregoing, should a breach of the
Agreement by any Party cause loss to any Party or several
Parties greater than the part of the penalty payable to it or
them, such Party or Parties shall be entitled to require from
the Party in breach indemnity for the damages directly and
actually suffered by it or them.
(vi) Each of the Parties acknowledges that the provisions of this
Clause are no more extensive than is reasonable to protect
FMCS' legitimate interests. If any court shall determine that
the scope of this Clause is broader than is enforceable, the
Parties agree that this Clause shall be deemed modified to be
only so broad as shall be enforceable.
(vii) For the purposes of this Clause, the Parties agree that the
non-competition undertakings shall bind each of them and the
companies within the group of companies to which each them
belong.
16.2 INDEPENDENT CONTRACTORS
None of the Parties shall create obligations, accept commitments, act
as a representative, contractor or agent of the remaining Parties or of
FMCS, nor shall it operate on behalf of the former or of the latter,
without written consent from the remaining Parties or from FMCS giving
confirmation of such an agreement.
IV. MISCELLANEOUS
17. CONFIDENTIALITY
17.1 CONFIDENTIAL INFORMATION
For the purposes of this Agreement, Confidential Information means any
information relating to the Business of FMCE or any of its affiliates
including FMCS disclosed to the Parties or their representatives
orally, in writing or other tangible or intangible form including,
without limitation, discoveries, ideas, concepts, know-how, techniques,
designs, specifications, drawings, blueprints, diagrams, models,
samples, flow charts, computer programs, diskettes, marketing plans,
financial plans, business plans, names of customers or suppliers and
other technical, financial or business information.
Confidential Information shall not include any information that:
-33-
<PAGE>
(i) was known by the Parties free of any obligation to keep it
confidential prior to its disclosure by FMCE, its affiliates
or representatives;
(ii) is independently developed by the Parties other than in
connection with this Agreement and the transactions
contemplated hereby;
(iii) is publicly available when received or which later becomes so
available through no fault of the Parties, but only from the
date that such information becomes so available; or
(iv) was disclosed to the Parties by a third party who, to the
Parties' knowledge after due inquiry, is not prohibited from
disclosing such information by virtue of a nondisclosure
obligation to FMCE or any of its affiliates.
17.2 CONFIDENTIALITY
Each of the Parties shall use any Confidential Information obtained by
it only in connection with its investment in FMCS. Each of the Parties
shall hold the Confidential Information in confidence and shall
disclose the Confidential Information only to their respective
employees, agents and contractors who have a need to know such
information to accomplish this purpose and who have agreed to be bound
by the terms and conditions of this Clause. None of the Parties shall
disclose the Confidential Information to any other person without the
Founding Partners' prior written consent. Each of the Parties shall
require their employees, agents and contractors to use the same degree
of care to protect the confidentiality of the Confidential Information
as they use with respect to similar information of the respective
Party.
Any disclosure of Confidential Information of direct relevance to FMCE
such as business plans, operations, strategies (including but not
limited to marketing, pricing or financing strategies) relating to FMCE
wireless local-loop and other related activities shall require the
prior written consent of FMCE.
17.3 UNAUTHORISED DISCLOSURE
If any of the Parties becomes aware of any unauthorised disclosure,
loss or misuse of the Confidential Information, they shall promptly
notify the Founding Partners.
17.4 DISCLOSURE REQUIRED BY LAW
If any of the Parties is required to disclose the Confidential
Information (as defined in Clause 17.1 above) by a competent judicial
or administrative body pursuant to applicable law or regulation, they
shall promptly notify the Founding Partners or FMCE if it is
Confidential Information relating to FMCE as described in 17.2 above,
so that the Founding Partners or FMCE, as the case may be, may seek a
protective order or other appropriate remedy. In the event that no such
protective order or other remedy is obtained, the relevant Party shall
furnish only that portion of the Confidential Information that it is
advised by counsel is legally required and shall exercise all
-34-
<PAGE>
reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded to the Confidential Information.
17.5 NO RIGHTS OR LICENSES
This Agreement does not give any of the Parties any rights by license
or otherwise to any of the Confidential Information.
17.6 DURATION AND TERMINATION
The Parties' obligations under this Clause shall remain in full force
and effect for a period of three (3) years after the date of
termination of this Agreement.
17.7 RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION
On a written request from any of the Founding Partners or from FMCE
should it be in relation to Confidential Information relating to FMCE
as described in 17.2 above, and, in any event, on termination of this
Agreement, each of the Parties shall promptly and at their own expense
either return to FMCS or to FMCE as instructed, or destroy the
Confidential Information (including all copies thereof), depending on
the instructions of the Founding Partners or FMCE, as the case may be,
except as otherwise required by applicable law.
17.8 REMEDIES
Each of the Parties acknowledges that the breach or threatened breach
of this Clause may result in irreparable injury to FMCS and/or FMCE and
that, in addition to its other remedies, FMCS and/or FMCE shall be
entitled to injunctive relief to restrain any actual or threatened
breach of this Agreement. Each of the Parties hereby waives any
requirement for the posting of a bond or other security in connection
with the granting to FMCS or FMCE of such injunctive relief.
18. REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants as follows:
(i) the Party is a company duly organised and validly existing
under the laws of its jurisdiction of incorporation, with full
powers to carry out the business which it carries out and
proposes to carry out for the purposes of this Agreement;
(ii) the Party has the full legal right, power and authority to
execute and deliver this Agreement and to perform all of its
obligations hereunder;
(iii) this Agreement has been duly authorised, executed and
delivered by the Party and the obligations of the Party
contained therein constitute valid and legally binding
obligations of the Party, enforceable against the Party in
accordance with their terms;
-35-
<PAGE>
(iv) the execution, delivery and performance of this Agreement and
the compliance with its terms does not, and shall not result
in a violation of the Party's charter or of any provision
contained in any other agreement or instrument to which the
Party is a party or by which the Party or any of its assets
are affected or any statute, law, rule, regulation, judgement,
award, decree or order applicable to the Party or any of its
assets; and
(v) no consent, approval or authorisation of, or declaration,
filing or registration with, any governmental or regulatory
authority, or any other person or entity, is required to be
made or obtained by the Party, in connection with the
execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby, save for
the declarations to be filed by the non-Spanish resident
Parties with the relevant Spanish foreign investment
authorities.
Each Party warrants to the other Parties that each of such
representations is true and correct in all material respects as of the
date of this Agreement and that none of them omits any matter the
omission of which makes any of such representations misleading.
FMCE represents and warrants that as of the date hereof, Holdings is
not subject to any restrictions on the transfer of Participations it
holds indirectly in FMCS.
19. TERM AND TERMINATION
19.1 TERM
This Agreement shall continue in effect until:
(i) the agreement of 70% of the equity interest in FMCS to
terminate;
(ii) the termination by any Party, if none of the Licenses has been
awarded to FMCS by December 31, 2000, in which case the
Agreement shall terminate for that Party and shall continue to
be valid and binding between the remaining Parties; or
(iii) automatically in respect of that Party (or its affiliate)
which ceases to own any participations, in which case the
Agreement shall continue to be valid and binding between the
remaining Parties.
Notwithstanding the foregoing, the provisions relating to
Confidentiality (Clause 17), Exclusivity and Non-competition (Clause
16) and those of Clause 19.3 below, shall remain in effect for the term
specified therein.
19.2 EFFECT OF TERMINATION
The termination of this Agreement shall not in any way operate to
impair or destroy any of the rights or remedies of any Party, or to
relieve any Party of its obligations to
-36-
<PAGE>
comply with any of the provisions of this Agreement, which shall have
accrued prior to the effective date of termination.
19.3 LIQUIDATION
Upon termination pursuant to Clause 19.1 (i) above, the Partners will
take the necessary actions to cause FMCS to be dissolved and
liquidated.
20. INDEMNIFICATION
20.1 LIMITATION ON PARTIES' LIABILITY
Except as required by applicable law, the debts, obligations and
liabilities of FMCS, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of FMCS, and
none of the Parties, Directors or officers of FMCS shall be obligated
personally for any such debt, obligation or liability of FMCS solely by
reason of being a partner, director, officer or participating in the
management of FMCS. The failure of FMCS to observe any formalities or
requirements relating to the exercise of its powers or management of
its business or affairs under applicable law or this Agreement shall
not be grounds for imposing personal liability on the Parties for
liabilities of FMCS.
20.2 SURVIVAL
The provisions of this Clause 20 shall survive the termination of this
Agreement and the dissolution and liquidation of FMCS.
21. ASSIGNMENT
This Agreement shall be binding and shall operate for the benefit of
the Parties and their respective beneficiaries and assignees.
Notwithstanding the above, except as provided for in section 10.4
above, the contractual position (rights and obligations) of each of the
signatory Parties to this Agreement shall not be able to be assigned to
a third party without prior express consent in writing from the
signatory Parties to it that are not affected by the assignment of
contractual position that it is wished to carry out.
An exception to the above is made for the case of assignments of
contractual position made by signatory Parties to this Agreement in
favour of Affiliates, according to the definition of this contained in
Clause 10.4 above.
The efficacy of assignments of contractual position made by the
signatory Parties to this Agreement in conformity with the provisions
contained in this Clause shall in all cases be subject to the express
written acceptance from the assignee of the terms and conditions set
down herein.
22. ENTIRE AGREEMENT
-37-
<PAGE>
This Agreement, together with the documents referred to herein and the
Schedules hereto, constitutes the entire agreement of the Parties with
respect to the subject matter contained herein and supersedes all prior
understandings and negotiations between them, whether written or oral.
23. PARTIAL NULLITY
If any provision of this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions set forth herein shall not in any way be
affected or impaired; provided, however, that in such case the Parties
agree to use their best efforts to achieve the purpose of the invalid
provision through a new, legally valid and enforceable provision.
24. NOTICES
Any notice, instruction or other communication to be given under this
Agreement to a Party shall be in writing. Such notice, instruction or
communication shall be deemed to have been duly given when it shall be
delivered by hand or sent by airmail, telex or facsimile to the Party
to which it is required or permitted to be given at such Party's
address specified below or at such other address as such Party shall
have designated by notice to the Party giving such notice, instruction
or other communication.
For FMCE:
To the attention of: General Counsel
6, rue Jean Monnet
L-1218 Luxembourg
FAX: +(352) 22 99 99 54 99
To FirstMark Communications International LLC
660 Madison Avenue, 22nd Floor
New York, NY 10021
FAX: (212) 699-4301
For PRISA:
To the attention of: Eduardo Diez Hochleitner
Promotora de Informaciones, S.A.
Gran Via 32
28013 Madrid
FAX: 34 91 330 1036
For AZTLAN:
To the attention of: Adolfo Cerezo Perez
Inmobiliaria Aztlan, S.A. de C.V.
Parque Via n(0) 190, piso 10
-38-
<PAGE>
Colonia Cuahutemoc
Mexico 06599, Distrito Federal
Fax: (525) 255 15 76
For CORTE INGLES:
To the attention of: Lorenzo Lasaga Munarriz
C/ Hermosilla, 112
28009 Madrid
FAX: 91 309 11 67
For OMEGA:
To the attention of: D. Mario Fernandez Pena
C/ P(0) de la Castellana, 31
280046 Madrid
FAX: 91 319 57 33
For DIARIO DE BURGOS
To the attention of: Antonio Mendez Pozo
C/ San Pedro de Cardena, 34
09002 Burgos
FAX: 947 27 55 33
For CAJA DUERO:
To the attention of: Dativo Martin Jimenez
C/ Plaza de los Bandos, 15-17
37002 Salamanca
FAX: 91 571 24 23
For IBERCAJA:
To the attention of: Miguel Angel Navarro Garcia
C/ Plaza Basilio Paraiso, 2
50008 Zaragoza
FAX: 976 21 76 03
For CAJA SAN FERNANDO:
To the attention of: D. Manuel Pinar Parias
C/ Plaza de San Francisco, 1
41004 Sevilla
FAX: 95 459 72 31
-39-
<PAGE>
For EL MONTE:
To the attention of: Juan Jose Garcia Munoz
C/ Plaza de Villasis, 2
41003 Sevilla
FAX: 95 450 24 58
25. HEADINGS
The headings to the covenants and Clauses of this Agreement have been
included strictly for reasons of convenience and they in no way affect
or prejudice the interpretation of the content of them.
26. ENGLISH LANGUAGE
This Agreement has been executed in English language. A translation
into Spanish is attached hereto as Schedule 5 only for information and
clarification purposes as the Parties expressly agree that the English
version shall always prevail.
All documents to be furnished or communications to be given or made
under this Agreement shall be in the English language or, if in another
language, shall be accompanied by a translation into English duly
certified, which translation shall be the governing version between the
Parties.
27. GOVERNING LAW AND RESOLUTION OF DISPUTES
This Agreement will be governed by the laws of Spain without giving
effect to principles of conflicts of laws that would result in
application of the law of another jurisdiction.
Any dispute, controversy or claim arising out of or relating to this
Agreement or the breach, termination or invalidity thereof, shall be
settled by the Parties within the thirty (30) day period following the
receipt by the last one of parties of a written notice pointing out the
existence of such dispute, controversy, claim, breach, termination or
invalidity. Should the parties not reach an agreement in the thirty
(30) day period referred to above, the Parties agree to submit the
relevant issue to arbitration. The arbitration shall be in accordance
with the Rules of Conciliation and Arbitration of the International
Chamber of Commerce, except that in the event of any conflict between
those rules and any arbitration provisions of this Agreement, the
provisions of this Agreement shall govern.
There shall be three arbitrators appointed by the Geneva, Switzerland
office of the International Chamber of Commerce in accordance with said
Rules. The arbitration, including the making of the award, shall take
place in Geneva, Switzerland. The arbitration shall be conducted in the
English language and the award, and the reasons supporting it, shall be
written in English.
-40-
<PAGE>
All decisions of the arbitral tribunal shall be final and binding on
the Parties and may be entered against them in a court of competent
jurisdiction. When affixing the cost of arbitration in its award, any
costs, fees or taxes incidental to enforcing the arbitral award shall,
to the maximum extent permitted by law, be borne by the Party resisting
such enforcement.
AND AS PROOF OF CONFORMITY with the foregoing, the Parties sign this agreement
along with its Schedules, in nine originals and for a sole effect, in the place
and on the date stated in the heading.
FIRSTMARK COMMUNICATIONS EUROPE, S.C.A.
BY:
/s/ Keith Arthur Cornell
-----------------------------
SIGNED: MR KEITH ARTHUR CORNELL
PROMOTORA DE INFORMACIONES, S.A.
BY:
/s/ Ignacio Santillana
--------------------------
SIGNED: MR IGNACIO SANTILLANA
AZTLAN CAJA DUERO
BY: BY:
/s/ Keith Arthur Cornell /s/ Dativo Martin Jimenez
----------------------------- -------------------------------
SIGNED: MR KEITH ARTHUR CORNELL SIGNED: MR. DATIVO MARTIN JIMENEZ
INFORMATICA EL CORTE INGLES IBERCAJA
BY: BY:
/s/ Florencio Lasaga Munarriz /s/ Miguel A. Navarro Garcia
---------------------------------- ---------------------------------
SIGNED: MR FLORENCIO LASAGA MUNARRIZ SIGNED: MR. MIGUEL A. NAVARRO GARCIA
OMEGA CAPITAL, S.L. CAJA SAN FERNANDO
BY: BY:
-41-
<PAGE>
/s/ Mario Fernandez Pena /s/ Manuel Pinar Parias
------------------------------ -------------------------------
SIGNED: MR MARIO FERNANDEZ PENA SIGNED: MR. MANUEL PINAR PARIAS
DIARIO DE BURGOS EL MONTE
BY: BY:
/s/ Jesus Angel Bueno Ordonez /s/ Juan Jose Garcia Munoz
--------------------------------- -------------------------------
SIGNED: JESUS ANGEL BUENO ORDONEZ SIGNED: MR JUAN JOSE GARCIA MUNOZ
-42-
<PAGE>
SCHEDULE 1
SUMMARY OF FMCS BUSINESS PLAN
<PAGE>
SCHEDULE 2
BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF FMCS AS OF 30
OCTOBER 1999
<PAGE>
SCHEDULE 3
SUMMARY OF BUDGETS AND UNDERTAKINGS ASSUMED BY FMCS
<PAGE>
SCHEDULE 4
DOCUMENTATION TO BE SUBMITTED BY FIRSTMARK COMUNICACIONES
ESPANA, S.L.'S PARTNERS
1. Copy of the passport or identity card pertaining to the representative
of the partner which must be duly legitimated by a Spanish Notary
Public.
2. Formal commitment undertaken by the partner for the purpose of
accrediting the economic, financial, technical or professional solvency
of FirstMark Comunicaciones Espana, S.L. which must be duly legitimated
by a Spanish Notary Public.
2.1 Power of attorney accrediting the capacity of the signatory of
the commitment referred to in point 2 above. Should the power of
attorney not be granted before a Spanish Notary Public, the
power will have to be translated into Spanish and notarised and
apostilled to be effective in Spain.
3. Financial Statements, should its publication be mandatory in the
country where the company is incorporated.
4. Report issued by a financial entity evidencing the economic and
financial solvency of the shareholder, which must be duly legitimated
by a Notary Public.
4.1 Power of attorney accrediting the capacity of the signatory of
the Report referred to in point 4 above. Should the power of
attorney not be granted before a Spanish Notary Public, the
power will have to be translated into Spanish and notarised and
apostilled to be effective in Spain.
5. Declaration about the global volume of business and services carried
out by the partner for the last three fiscal years, which must be duly
legitimated by a Notary Public.
5.1 Power of attorney accrediting the capacity of the signatory of
the declaration referred to in point 5 above. Should the power
of attorney not be granted before a Spanish Notary Public, the
power will have to be translated into Spanish and notarised and
apostilled to be effective in Spain.
6. Evidence of technical and professional solvency.
Evidence should be provided by means of submitting the following
documents:
a) Professional and academic certificates of the company's
directors and management staff and, in particular, those
pertaining to the employees responsible for the implementation
and development of the service.
b) A statement indicating the average number of employees and
management staff per annum, for the last three years.
c) A list of the main services carried out in the last three
years, including the amounts and beneficiaries thereof.
<PAGE>
d) A statement regarding the research and development resources
available to the company.
Please note that the signature of the person executing the
documentation listed in this point 6 must be duly notarised before a
Notary Public, and the power of attorney setting forth the signatory's
capacity (if a foreign power of attorney is entailed, this power must
be translated into Spanish, legalised and apostilled) should be
attached thereto.
ALL OF THESE DOCUMENTS MUST BE SUBMITTED IN DUPLICATE COPIES, BEARING IN
MIND THAT ANY DOCUMENT DRAFTED IN A FOREIGN LANGUAGE MUST BE ACCOMPANIED BY
A SWORN TRANSLATION INTO SPANISH.
