1
EXHIBIT 4(t)
AMENDED AND RESTATED
SECURITYHOLDERS AGREEMENT
THIS AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT (this "Agreement")
is made as of August 18, 2000, among (i) Maxcom Telecomunicaciones, S.A. de C.V.
(formerly known as "Amaritel, S.A. de C.V."), a corporation organized under the
laws of Mexico (the "Company"), (ii) each of the entities listed on the
signature pages hereto as "Investors" (collectively, the "Investors"), (iii) the
shareholders of the Company and the holders of common, non-redeemable
participation certificates (the "CPOs," and the holders of the CPOs, the "CPO
Holders") issued by Banco Nacional de Mexico, S.A., Institucion de Banca
Multiple, Grupo Financiero Banamex Accival, Division Fiduciaria, in its capacity
as the trustee (the "NIT Trustee") of the Neutral Investment Trust (as
hereinafter defined), if any, listed on the signature pages hereto as "Other
Securityholders" (the "Other Securityholders"), (iv) the existing shareholders
of the Company listed on the signature pages hereto as "Existing
Securityholders" (the "Existing Securityholders"), and (v) Xxxxx Xxxxxxxxx Xxxxx
and Xxxxxxxxx Xxxxx Xxxxxxx jointly and individually as the initial Common
Representative (as defined in the Neutral Investment Trust). The Investors, the
Other Securityholders and the Existing Securityholders are referred to herein
collectively as the "Securityholders" and individually as a "Securityholder."
Except as otherwise indicated herein, capitalized terms used herein are defined
in Section 13 hereof.
WHEREAS, the Securityholders and the Company entered into a
Shareholders Agreement on May 23, 1998 (the "Original Shareholders Agreement")
for the purposes, among others, of (i) establishing the composition and
operation of the Company's board of directors (the "Board"), (ii) assuring
continuity in the management and ownership of the Company, (iii) limiting the
manner and terms by which the Company Shares may be transferred, and (iv)
providing for certain liquidity rights and remedies upon certain defaults;
WHEREAS, the execution and delivery of the Original Shareholders
Agreement was a condition to, and in consideration of, certain Investors'
subscription to nominative series N shares of the Company with limited voting
rights and no par value ("Series N Shares"), pursuant to the Subscription
Agreement, dated as of May 8, 1998, among such Investors, the Company and
certain of the Existing Securityholders (as such agreement may be modified or
amended from time to time in accordance with its terms (the "Subscription
Agreement");
WHEREAS, the execution and delivery of the Irrevocable Administration
and Security Trust Agreement, dated as of May 21, 1998, among the Company, the
Investors, the Existing Securityholders and Bancomer, S.A., Institucion de Banca
Multiple, Grupo Financiero Bancomer, Direccion Fiduciaria, as trustee (the
"Original Security Trust Agreement"), was a condition to the Existing
Securityholders' subscription to nominative, series A shares of the Company with
full voting rights, no par value and which may only be held by Mexican
individuals or Mexican entities with a clause in their by-laws prohibiting
foreign ownership ("Series A Shares") and nominative series B shares of the
Company with full voting rights, no par value and which may be held by Mexican
and foreign individuals or corporations ("Series B Shares") pursuant to the
Subscription Agreement.
WHEREAS, all of the Series A Shares and Series B Shares beneficially
and actually owned by the Existing Securityholders were previously deposited
into the Irrevocable Administration and Security Trust number F/29206, dated
March 24, 1998, with Bancomer, S.A., Institucion de Banca Multiple, Grupo
Financiero Bancomer, Direccion Fiduciaria, as trustee (the "Nissho Trust") to
secure the Existing Securityholders guarantee of the Company's obligations to
Nissho Iwai American Corporation ("Nissho Iwai") under a certain Credit
Agreement dated as of February 26, 1998 between the Company and Nissho Iwai (as
amended and restated on December 14, 1998, the "Nissho Credit Agreement");
WHEREAS, on March 17, 2000, the Nissho Credit Agreement was terminated
and on April 25, 2000 the Nissho Trust was terminated;
WHEREAS, on April 25, 2000, the Series A Shares and Series B Shares
that were previously held in trust by Bancomer, S.A., Institucion de Banca
Multiple, Grupo Financiero Bancomer, Direccion Fiduciaria as
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trustee under the Nissho Trust were deposited with Bancomer, S.A., Institucion
de Banca Multiple, Grupo Financiero Bancomer, Direccion Fiduciaria, as trustee
(the "Security Trust Trustee") under the Original Security Trust Agreement;
WHEREAS, on August 18, 2000, the Original Security Trust Agreement was
amended and restated by the parties thereto (as amended and restated, and as
amended from time to time thereafter in accordance with its terms and this
Agreement, the "Security Trust Agreement") to, among other things, reflect (i)
the termination of the Nissho Trust, (ii) the release of 255,000 Series A Shares
and 245,000 Series B Shares from the trust estate of the Security Trust, and
(iii) the conversion of such released Series A Shares and Series B Shares into
CPOs (on a two-for-one basis (i.e., the conversion of such released Series A
Shares into one Series C Share and one Series N Share for each two Series A
Shares and the simultaneous deposit of such shares into the Neutral Investment
Trust in exchange for CPOs and the conversion of such released Series B Shares
into one Series C Share and one Series N Share for each two Series B Shares and
the simultaneous deposit of such shares into the Neutral Investment Trust in
exchange for CPOs)) pursuant to the Restructuring (as defined below);
WHEREAS, on February 21, 2000, the shareholders of the Company
approved, subject to certain conditions precedent, a restructuring of the
Company's capital structure, including the authorization of (i) the issuance of
a new series of shares which are comprised of nominative Series C shares of the
Company with full voting rights and no par value (the "Series C Shares") (which,
under the Company's By-laws, are required to be voted in the same manner as the
majority vote of the Series A Shares), (ii) the creation of an Irrevocable
Neutral Investment Trust (the "Neutral Investment Trust"), into which the
holders of Series N Shares and certain holders of Series A Shares and Series B
Shares would deposit such shares into the trust estate, which shares,
simultaneously with their deposit into the trust estate, will be, in the case of
fifty percent of such Series N Shares, converted into Series C Shares pursuant
to clause (iii) below, and in the case of the Series A Shares and Series B
Shares, will be converted into Series C Shares and Series N Shares pursuant to
clause (iv) below, (iii) the conversion of fifty percent (50%) of the issued and
outstanding Series N Shares into Series C Shares on a one-for-one basis, (iv)
the conversion of 255,000 Series A Shares and 245,000 Series B Shares into
Series C Shares and Series N Shares, with each two Series A Shares or Series B
Shares being converted into one Series C Share and one Series N Share, (v) the
conversion of fifty percent (50%) of the Series N Shares held by the Company as
treasury shares and reserved for issuance pursuant to the terms of various
options granted by the Company into Series C Shares on a one-for-one basis, and
(vi) the issuance by the NIT Trustee of CPOs to the settlors of the Neutral
Investment Trust (with each one CPO representing one Series C Share and one
Series N Share) (collectively, the "Restructuring");
WHEREAS, the General Bureau of Foreign Investment of the Ministry of
Commerce and Industrial Development (the "Bureau") has reviewed and approved (i)
the Restructuring, (ii) the form of the Company's Irrevocable Neutral Investment
Trust Agreement No. 14515/5 (as executed on August 18, 2000 and as amended from
time to time in accordance with its terms and this Agreement, the "Neutral
Investment Trust Agreement"), and (iii) the issuance of CPOs pursuant to the
Neutral Investment Trust Agreement;
WHEREAS, the CPO Holders, in accordance with the terms of the Neutral
Investment Trust Agreement and the Issuance Deed dated August 18, 2000 appointed
Xxxxx Xxxxxxxxx Xxxxx and Xxxxxxxxx Xxxxx Xxxxxxx jointly and individually as
the initial Common Representative;
WHEREAS, within 30 days after the date hereof, the Company shall hold
a Shareholders meeting for the purpose of approving and adopting the Amended and
Restated By-laws of the Company in the form attached hereto as Exhibit C and the
Company shall file within 10 days thereof with the Bureau for approval all
provisions of the Company's By-laws adopted by the Shareholders which differ
from the form of the Company's By-laws submitted previously to the Bureau for
approval, to the extent that such approval is necessary with respect to such
provisions; and
WHEREAS, the parties hereto desire to amend and restate the Original
Shareholders Agreement to, among other things, reflect the Restructuring and to
provide that the exchange of Series C Shares and Series N Shares for CPOs and
the deposit of the Series C Shares and Series N Shares into the Neutral
Investment Trust shall not adversely affect in any manner the rights granted to
the holders of the Series N Shares under the Original Shareholders Agreement.
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NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby amend and restate the
Original Shareholders Agreement to reflect the following agreements:
1. Board of Directors.
(a) Each of the Company and the Securityholders agree to take (or
cause to be taken) all necessary actions and agree to exercise, or cause to be
exercised, the voting power of their CPOs and/or Company Shares, as the case may
be, so that:
(i) at all times the Company shall be managed by the Board and the
Board shall be composed of no more than thirteen (13) members and thirteen
(13) alternate members;
(ii) subject to Section 1(e) below, the following individuals shall be
elected to the Board:
(A) four members (and four alternates) designated by the
Investors in their capacity as CPO Holders (collectively, the "N
Directors"); provided that:
(1) the BAIIC Investors shall be entitled to designate one N
Director (and one alternate N Director);
(2) the Bachow Investors shall be entitled to designate one
N Director (and one alternate N Director);
(3) BancBoston Investments, Inc. ("BancBoston") shall be
entitled to designate one N Director (and one alternate N
Director); and
(4) Latinvest Strategic Investment Fund, L.P. shall be
entitled to designate one N Director (and one alternate N
Director);
(B) seven members (and seven alternates) designated by the
holders of a majority of the Series A Shares; and
(C) two members (and two alternates) designated by the holders of
a majority of the Series B Shares.
(iii) at the request of any N Director, each committee of the Board
(each, collectively with each committee of any Sub Board, a "Committee")
shall include at least one N Director (designated by the Requisite
Investors); provided that the Board shall establish a five-member Advisory
Committee (which shall be responsible for advising the Board regarding, and
shall oversee, the Company's continuing operations but which shall not have
the authority to approve any matters and rather which shall only have the
authority to recommend matters to the full Board) consisting of (A) the
Company's Chief Executive Officer; (B) Xxxxxx Xxxxxxx; (C) subject to
Section 1(d) below, the N Directors designated by each of the BAIIC
Investors and the Bachow Investors; and (D) a Board member designated by CT
Global Telecommunications, Inc.; provided, further, that notwithstanding
the foregoing, so long as an Investor holds at least ten percent of the
CPOs identified next to such Investor's name on the attached Schedule of
Securityholders which are attributable to the Series N Shares initially
subscribed for by such Investor pursuant to the Subscription Agreement
(i.e., excluding, for purposes of determining such percentage, any Series N
Shares acquired by such Investor subsequent to May 21, 1998), if the N
Director designated by such Investor is not on the Advisory Committee, the
Board shall (x) give such Investor written notice of each meeting of that
Advisory Committee at the same time and in the same manner as notice is
given to the members thereof, (y) permit a representative of such Investor
to attend as an observer (or participate via telephone in) all meetings of
that Advisory Committee and (z) provide
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to such Investor all written materials and other information (including
copies of meeting minutes) given to members in connection with such
meetings at the same time such materials and information are given to the
such members;
(iv) at the request of any N Director, the composition of the board of
directors or similar body of each of the Company's subsidiaries (a "Sub
Board") shall include at least one N Director (designated by the Requisite
Investors) and at the request of any N Director, each Committee of a Sub
Board shall include at least one N Director (designated by the Requisite
Investors);
(v) except as otherwise provided in Section 1(e) below, the removal of
any person (with or without cause) from the Board, a Sub Board or any
Committee shall be only at the written request of the Securityholder or
Securityholders who designated such member and under no other
circumstances;
(vi) in the event that any person ceases for any reason to serve as a
member of the Board, a Sub Board or any Committee, the vacancy shall be
filled by a new member selected by the Securityholder or Securityholders
who designated such member;
(vii) in the event that any Board member or Sub Board member cannot
attend any meeting of the Board, a Sub Board or a Committee of the Board or
a Committee of a Sub Board, the alternate member designated by the
Securityholder or Securityholders who designated such member may attend
such meeting, and such alternate member shall be given all written notices,
materials and information regarding all meetings of the Board, such Sub
Board or Committee and shall be entitled to vote at such meeting as a
member of the Board, such Sub Board or Committee (it being understood that
any alternate member may nonetheless attend any such meeting of the Board,
a Sub Board or a Committee of the Board as an observer and shall be
entitled to receive copies of all materials and information regarding such
meeting, even if the principal Board member is present); and
(viii) if any party fails (but is otherwise entitled) to designate a
Board member pursuant to the terms of this Section 1, such Board member
seat shall remain vacant until filled in accordance with this Section 1.
(b) The Company shall indemnify members of the Board, any Sub Board or
any Committee (including alternate members) to the fullest extent permitted
under applicable law for all actions taken by such members (or alternates) in
their capacities as members (or alternates) of the Board, any Sub Board or any
Committee.
(c) The Company shall pay the reasonable out-of-pocket expenses
incurred by each member of the Board (and alternate) in connection with
attending each meeting of the Board, any Sub Board or any Committee of the Board
attended by such member (and alternate) and other travel expenses reasonably
incurred in discharging such member's duties as a member of the Board, any Sub
Board, Committee of the Board or Committee of a Sub Board.
(d) After the consummation of a Qualified Public Offering, the rights
of each Investor or group of Investors under this Section 1 to designate an N
Director shall terminate at such time as such Investor or group of Investors
hold(s) in the aggregate less than twenty-five percent (25%) of the number of
CPOs identified next to such Investor's (or group of Investors') name on the
attached Schedule of Securityholders which are attributable to the Series N
Shares initially subscribed for by such Investor (or group of Investors)
pursuant to the Subscription Agreement (i.e., excluding, for purposes of
determining such percentage, any Series N Shares acquired by such Investor (or
group of Investors) subsequent to May 21, 1998). Notwithstanding the foregoing,
prior to or after the consummation of a Qualified Public Offering, each Investor
or group of Investors entitled to designate N Directors pursuant to this Section
1 may assign in writing any right to designate N Directors and/or Committee
members hereunder to any Person or group of affiliated Persons who acquire more
than fifty percent (50%) of the number of CPOs identified next to such
Investor's (or group of Investors') name on the attached Schedule of
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Securityholders which are attributable to the Series N Shares initially
subscribed for by such Investor (or group of Investors) pursuant to the
Subscription Agreement (i.e., excluding, for purposes of determining such
percentage, any Series N Shares acquired by such Investor (or group of
Investors) subsequent to May 21, 1998). In the event that any Investor or group
of Investors assigns any such right to designate an N Director or Committee
member pursuant to the foregoing, such Investor or group of Investors shall
promptly thereafter provide to the Company written notice of such assignment and
the Company shall then promptly provide copies of such written notice to all of
the other Securityholders; provided that, notwithstanding the foregoing, in the
event of any assignment of a right to designate an N Director by either of the
BAIIC Investors or the Bachow Investors pursuant hereto, the replacement for
such N Director to the Advisory Operations Committee shall be designated by the
Requisite Investors
(e) Notwithstanding anything to the contrary in this Agreement, in
addition to the other remedies provided in Sections 8, 10 and 11 below, upon the
request of the Requisite Investors on or after the delivery of a Call Notice or
an IPO Notice (as contemplated by and provided for in the Security Trust
Agreement) and in a manner consistent with Mexican law and the Mexican grant
(concession) permitting the Company to conduct the Business, all of the members
of the Board and all members of each Sub Board (other than those members
designated by the Investors) shall automatically and promptly be removed and
replaced with persons nominated by the Requisite Investors or their designees,
nominees or assignees, and the Securityholders will take (or cause to be taken)
all actions requested by the Requisite Investors for the purpose of effecting
such removals, electing such nominees and consummating a Specific Qualified
Public Offering, a Sale Transaction (as defined in Section 8(e) below) and/or
the Call (as defined in Section 11 below).
2. Board and Securityholder Actions.
2A. The Company and each Securityholder agree to take (or cause to be
taken) all necessary actions so that, in accordance with the Company's By-laws,
the following actions are submitted to the Board for authorization prior to the
taking of any such actions and shall require the approval of (i) at least two
(2) N Directors, so long as the Investors collectively have the right to
designate at least two (2) members of the Board or (ii) one (1) N Director in
the event that the Investors collectively only have the right to designate one
member of the Board (the "Requisite Directors"):
(a) the incurrence or assumption by the Company and/or any of its
subsidiaries of any indebtedness (including capitalized lease obligations) or
other liabilities (other than trade payables incurred in the ordinary course of
business which are not past due), and the mortgaging, pledging or incurring of a
lien, encumbrance or other restriction on any of the assets or properties of the
Company and/or any of its subsidiaries exceeding U.S. $10,000,000 in the
aggregate at any time then outstanding, or the amendment of any loan agreement,
credit agreement, debenture or related document in connection with any
indebtedness (including capitalized leases) approved pursuant to this Section
2A;
(b) the issuance of any equity securities (including, without
limitation, (i) the issuance of any Company Shares to the NIT Trustee or (ii)
the issuance or delivery of any Company Shares held or otherwise reserved by the
Company as treasury shares) or debt securities with equity features or other
securities exercisable or convertible into equity securities (including options
and warrants issued on or after the date hereof) or debt securities with equity
features or containing any profit participation features, other than any Company
Shares shown on the attached Schedule of Capitalization of the Company as
reserved for issuance pursuant to the Management Option Plan, the Amended and
Restated Operating Agreement, dated May 21, 1998, between the Company and CT
Global Telecommunications, Inc. (the "Operating Agreement"), the Strategic
Assistance Agreement, dated May 21, 1998, between the Company and Bachow &
Associates (the "Strategic Assistance Agreement," the Engagement Letter dated
November 13, 1997 as amended on March 13, 1998 and April 2, 1998 between the
Company and Amsterdam Pacific LLC (the "Engagement Letter") (which Company
Shares issued thereunder shall not exceed (i) 24,425 Series N Shares in the
aggregate prior to giving effect to the Restructuring and (ii) 12,213 Series C
Shares and 12,213 Series N Shares in the aggregate after giving effect to the
Restructuring) or the Nissho Stock Option Agreement, dated March 24, 1998
between the Company and Nissho Iwai (the "Nissho Stock Option Agreement") (which
Company Shares issued under the Nissho Stock Option Agreement shall not exceed
(i) 337,471 Series N Shares in the aggregate prior to giving effect to the
Restructuring and (ii) 168,736 Series C Shares and 168,736 Series N Shares in
the aggregate after giving effect to the Restructuring), each as in effect on
the date hereof;
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(c) (i) the sale, transfer, exchange or other disposal of all or a
significant portion of the assets or capital shares of the Company (including,
but not limited to, any Company Shares held by the Company as treasury shares)
in any form of transaction, (ii) the merger, consolidation, spin-off,
recapitalization, reorganization (including a change in the legal nature of the
Company), dissolution or liquidation of the Company (other than the
Restructuring authorized hereby) or (iii) any of the foregoing with respect to
any subsidiary;
(d) (i) any assignment by the Company or any of its subsidiaries for
the benefit of creditors or (ii) the voluntary commencement of any proceeding
relating to the Company or any of its subsidiaries under any bankruptcy,
reorganization, insolvency, suspension of payments, dissolution or liquidation
law of any jurisdiction;
(e) the establishment by the Company of any non-wholly-owned-
subsidiary or the making of any loans or advances to, guarantees for the
benefit of, or investments in, any Person other than a wholly-owned subsidiary
(subject to Section 5(d) below, other than advance payments made to suppliers in
the ordinary course of business up to an aggregate of U.S. $2,000,000
outstanding at any time);
(f) the redemption, purchase or other acquisition of any of the
Company's equity securities or reduction in capital or any Company Shares,
except as otherwise specifically provided herein;
(g) the Company's or any of its subsidiaries' entering into any
transaction or series of related transactions with any of the Company's
officers, directors, employees, CPO Holders or shareholders, or any of their
respective Affiliates or any individual related by blood or marriage to any such
Person (collectively, "Restricted Persons") or any Person in which any such
Restricted Person owns a beneficial interest or any Affiliate of any of the
foregoing, other than any such transaction or series of related transactions
involving U.S. $1,000,000 or less in the aggregate over the term of such
transaction(s), and other than any customary banking relationships, in each case
entered into in the ordinary course of business on an arm's length basis and on
terms no less favorable than those available from a third party (in each case as
determined by the Requisite Directors);
(h) the election, appointment or removal of any of the following key
executives of the Company or any of its subsidiaries: the Chief Executive
Officer, the General Managers of any business units, the Chief Operating
Officer, the Chief Financial Officer, the Director of Marketing and the Chief
Engineer (or any other individual with a similar or more senior title or
position), and the approval of salary, compensation and benefit or other similar
plans for such key executives;
(i) the approval of the Company's annual business plan and annual
budget for each fiscal year (which shall include, among other things, each of
the items set forth on Exhibit A attached hereto) (as so approved, including any
amendments or modifications thereto permitted by this Section 2A(i), the
"Approved Plan"); the approval of any amendment to, modification of or
expenditures in excess of such Approved Plan; and the approval of the entering
into any material transaction outside of the ordinary course of business and not
contemplated in the Approved Plan, including the entering into of any operating
agreements or strategic assistance agreement in addition to or in replacement of
the Operating Agreement and/or the Strategic Assistance Agreement (except that
no such approval shall be required for variances from the Approved Plan in
respect of capital and other expenditures of not more than U.S. $3,000,000 in
the aggregate over the amount approved; provided that if the annual business
plan and budget are not approved by the Board in accordance with this Section
2A(i), then the Approved Plan shall be the Baseline Plan for such fiscal year,
but only for those cities and territories in which the Company is then operating
pursuant to the most recent approval of the Board;
(j) entering into any new line of business (other than the Business);
(k) any agreement which would (under any circumstances) restrict the
Company's or any of its subsidiaries' right or ability to perform the provisions
of this Agreement or any of the other agreements or instruments contemplated
hereby or to conduct its business as currently conducted or as proposed to be
conducted at any time (it being understood that this clause (k) is not intended
to affect in any way the provisions of Section 15 or any other contractual right
or obligation of any Securityholder or the Company);
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(l) the manner in which the shares or other interests of any
subsidiary or entity owned by the Company shall be voted at shareholders' or
equivalent meetings of any such subsidiary or entity with respect to any matter
of the type covered by this Section 2;
(m) any amendments, modifications, waivers or changes to (A) any of
the concessions/licenses granted by the Mexican authorities to conduct the
Business, (B) the Company's By-laws, (C) any of the following, in each case as
in effect on the date hereof: (i) any of the Confidentiality and Non-Compete
Agreements (as defined in the Subscription Agreement), (ii) any of the
Employment Agreements (as defined in the Subscription Agreement), (iii) the
Security Trust Agreement, (iv) the Strategic Assistance Agreement, (v) the
Operating Agreement (including the performance requirements specified therein),
(vi) the Agreement Regarding Participation and Registration Rights, dated May
21, 1998, among the Company, CT Global Telecommunications, Inc., Grupo
Empresarial de Telecomunicaciones, S.A. de C.V., and Trust F/6404 (the
"Participation Agreement"), (vii) the Management Option Plan (as defined in the
Subscription Agreement), (viii) the Guidelines attached hereto as Exhibit F,
(ix) the Engagement Letter, (x) the Nissho Stock Option Agreement, or (xi) the
Side Letter Agreement among the Company, the Subscribers (as defined in the
Subscription Agreement) and the Existing Securityholders, (D) the Neutral
Investment Trust Agreement (as in effect on the date hereof), or (E) any other
agreements to which the Company is a party entered into after the date hereof
with the approval of the Requisite Directors or as of the date hereof, provided
that, notwithstanding anything to the contrary contained herein, members of the
Board designated by any shareholder (or Affiliate thereof) with an interest in,
or party to, any such agreement shall not be entitled to vote on the approval of
any such amendment, modification or change and shall reduce the number of
members required to approve any such matter; and
(n) any commitment or agreement to do any of the foregoing.
The approval of the Requisite Directors required for each of the
foregoing actions set forth in this Section 2A in no way limits or otherwise
affects the obligation of the Company to also (i) submit to the Board for
approval other matters which are required by applicable law or the Company's
By-laws to be submitted to the Board for approval or (ii) obtain any other
approvals which may be required by applicable law or the Company's By-laws with
respect to the actions in this Section 2.
2B. The Company and Securityholders agree to take (or cause to be
taken) all necessary actions so that (i) any matter of the type specified in
Section 2A which is submitted to the shareholders or the Company for approval
and (ii) any amendment, modification or other change to the Company's By-laws
(or the rights, terms or preferences of any equity securities of the Company now
or hereafter issued) shall require the approval of the holders of at least 85%
of the Company Shares then outstanding at the time of such vote (including the
Series C Shares and Series N Shares) (or such higher threshold if set forth in
the Company's By-laws) prior to the taking of any such action.
3. Exchange of Company Shares for CPOs.
(a) Each Securityholder understands and acknowledges that the Neutral
Investment Trust Agreement contemplates that (i) certain shareholders of the
Company, including the Investors, will deposit (simultaneously with the
execution of this Agreement) in trust with the NIT Trustee all of the subscribed
and paid Series N Shares owned by such Investors, (ii) simultaneously with the
deposit of such shares, the Company shall convert fifty percent (50%) of such
deposited Series N Shares into subscribed and paid Series C Shares, and (iii)
the NIT Trustee shall subsequently issue CPOs to such shareholders.
(b) The Company, to the extent permitted by Section 2A(b) and Section
24 of this Agreement, will, from time to time, issue (or take from the Series C
Shares and Series N Shares held by the Company as treasury shares) and deposit
in trust with the NIT Trustee subscribed and paid Series C Shares and subscribed
and paid Series N Shares in connection with the issuance of CPOs upon the
exercise of the stock options listed on the attached Schedule of
Securityholders. With respect to the Company's stock options to acquire Series N
Shares, upon (w) the exercise of such a Company stock option, (x) the Company's
receipt of the requisite consideration thereunder, (y) the optionee's compliance
with the terms of this Agreement, including the execution of such optionee of a
counterpart signature page to this Agreement which binds it to the provisions of
this Agreement, and (z) the optionee's compliance with the terms of Neutral
Investment Trust Agreement relating to the admission of
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new settlors thereunder, the Company will cause the NIT Trustee to issue CPOs to
such option holders in lieu of Series N Shares previously issuable pursuant to
such stock option (with the number of CPOs being issued thereunder equal to one
CPO for each two Series N Shares previously issuable pursuant to such stock
option). Each Securityholder understands and acknowledges that (i) such actions
do not violate the terms of the Original Shareholders Agreement, and (ii) only
to the extent such actions are expressly permitted by Section 2A(b) or Section
24 of this Agreement, such actions will not violate the terms of this Agreement.
4. Representations and Warranties.
(a) Each Securityholder individually (and not jointly or severally)
represents and warrants that (i) after giving effect to the Restructuring, such
Securityholder is the beneficial and/or record owner of the number and type of
Company Securities set forth opposite its name on the Schedule of
Securityholders attached hereto, (ii) this Agreement has been duly authorized,
executed and delivered by such Securityholder and constitutes the valid and
binding obligation of such Securityholder, enforceable in accordance with its
terms and (c) such Securityholder has not granted and will not grant and is not
and will not be a party to any proxy, voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
(b) The Company represents and warrants that attached hereto as (i)
the Schedule of Securityholders is an accurate and complete list of each
beneficial and/or record owner (and option holder) of Company Securities (after
giving effect to the Restructuring), including next to each Securityholder's
name, the number and type of Company Securities beneficially and/or of record
owned by such Securityholder (or option holder) and an accurate and complete
list of any other Company Securities reserved for future issuance (upon the
exercise of options, warrants or otherwise), (ii) the Schedule of Capitalization
of the Company is an accurate and complete list of each beneficial and/or record
owner (and option holder) of Company Shares (immediately prior to the
Restructuring), including next to each shareholder's (or option holder's) name,
the number and type of Company Shares beneficially and/or of record owned by
such shareholder (or option holder) and an accurate and complete list of any
other Company Shares reserved for future issuance (upon the exercise of options,
warrants or otherwise), and (iii) the Schedule of Capitalization of the Company
is an accurate and complete list of each beneficial and/or record owner (and
option holder) of Company Shares (after giving effect to the Restructuring)
(including the NIT Trustee), including next to each shareholder's (or option
holder's) name, the number and type of Company Shares beneficially and/or of
record owned by such shareholder (or option holder) and an accurate and complete
list of any other Company Shares reserved for future issuance (upon the exercise
of options, warrants or otherwise). The Company further represents that the
ownership of all of the Series A Shares previously owned of record by Trust No.
F/6404 have been transferred to Trust F/29549.
(c) The Company further represents and warrants that (i) this
Agreement has been duly authorized, executed and delivered by the Company and
constitutes the valid and binding obligation of the Company, enforceable in
accordance with its terms and (ii) the Company is not a party to any agreement
which is inconsistent with, conflicts with or violates any provision of this
Agreement.
(d) The Company further represents and warrants that the Guidelines
attached as Exhibit E were duly adopted by the Company on May 21, 1998.
5. Covenants.
(a) Financial Statements and Other Information. The Company shall
deliver to each Securityholder and each Member of the Board:
(i) at least 30 days, but not more than 90 days, prior to the
beginning of each fiscal year, a strategic business plan and budget,
prepared on a monthly basis for the Company and its subsidiaries for such
fiscal year (displaying anticipated statements of income, cash flows and
balance sheets and including investment requirements, assessments of the
market, 3-year financial projections and the other items set forth in
Exhibit A hereto);
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(ii) (A) promptly upon preparation thereof any other significant
budgets prepared by the Company and any revisions of such Approved Plan or
other budgets; (B) within 20 days after any monthly period, a report
comparing actual performance against that month's budgetary projections
contained in the Approved Plan and containing at least the information
specified in Exhibit B hereto and other information and data reasonably
requested by the Investors; and (C) within 20 days after any monthly period
in which there is a material adverse deviation from the Approved Plan, an
officer's certificate explaining the deviation and what actions the Company
has taken and proposes to take with respect thereto;
(iii) as soon as available but not more than 30 days after the end of
each quarterly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its subsidiaries for such quarterly period and for the period
from the beginning of the fiscal year to the end of such quarter, and
unaudited consolidating and consolidated balance sheets of the Company and
its subsidiaries as of the end of such quarterly period, setting forth in
each case comparisons to the Approved Plan and to the corresponding period
in the preceding fiscal year, and all such statements shall be prepared in
accordance with Mexican generally accepted accounting principles and shall
be certified by an officer of the Company;
(iv) (a) accompanying the financial statements referred to in Section
5(a)(iii), an officer's certificate stating that (1) there is no Event of
Noncompliance in existence and that neither the Company nor any of its
subsidiaries is in default under any of its other material agreements, the
concession/license granted by the Mexican government to conduct the
Business or the Guidelines and (2) the Company and its Subsidiaries have
fully complied with the laws referenced in Section 5(b)(v), including the
United States Foreign Corrupt Practices Act (the "FCPA"), and/or (b)
promptly (but, in any event, within five business days) after the discovery
or receipt of notice of any Event of Noncompliance, any noncompliance with
the FCPA, any default under any material agreement to which it or any of
its subsidiaries is a party which is not cured within five days, any
condition or event which is reasonably likely to result in any material
liability under any federal, state or local statute or regulation relating
to public health and safety, worker health and safety or pollution or
protection of the environment or any other material adverse change, event
or circumstance affecting the Company or any subsidiary (including, without
limitation, the filing of any material litigation against the Company or
any subsidiary or the existence of any dispute with any Person which
involves a reasonable likelihood of such litigation being commenced), an
officer's certificate specifying the nature and period of existence thereof
and what actions the Company and its subsidiaries have taken and propose to
take with respect thereto;
(v) within 90 days after the end of each fiscal year (with respect to
financial statements prepared in accordance with Mexican generally accepted
accounting principles) and 120 days after the end of each fiscal year (with
respect to United States generally accepted accounting principles),
consolidating and consolidated statements of income and cash flows of the
Company and its subsidiaries for such fiscal year, and consolidating and
consolidated balance sheets of the Company and its subsidiaries as of the
end of such fiscal year, setting forth in each case comparisons to the
Approved Plan and to the preceding fiscal year, all prepared in accordance
with both Mexican and United States generally accepted accounting
principles (together with a reconciliation thereof) and accompanied by (a)
with respect to the consolidated portions of such statements, an opinion of
BDO International S.C. or another independent accounting firm acceptable to
the Requisite Investors (which contains no qualifications that relate to
limitations on the scope of the audit or an adverse condition with respect
to the Company or an adverse act by the Company, excluding currency
devaluations, force majeure events and acts of god), (b) a certificate from
such accounting firm, addressed to the Board, stating that in the course of
its examination nothing came to its attention that caused it to believe
that there was an Event of Noncompliance in existence or that there was any
other default by the Company or any subsidiary in the fulfillment of or
compliance with any of the terms, covenants, provisions or conditions of
any other material agreement to which the Company or any subsidiary is a
party or, if such
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accountants have reason to believe any Event of Noncompliance or other
default by the Company or any subsidiary exists, a certificate specifying
the nature and period of existence thereof, and (c) a copy of such firm's
annual management letter to the Board;
(vi) promptly upon receipt thereof, any additional reports, management
letters or other detailed information concerning significant aspects of the
Company's operations or financial affairs given to the Company by its
independent accountants (and not otherwise contained in other materials
provided hereunder);
(vii) within ten days after transmission thereof, copies (in English)
of all financial statements, proxy statements, reports and any other
general written communications which the Company sends to its shareholders
and copies of all registration statements and all regular, special or
periodic reports (other than those related solely to routine technical
matters) which it files, or any of its officers or directors file, with
respect to the Company, with the Bureau, the National Banking and
Securities Commission and the Ministry of Communications and Transportation
or the U.S. Securities and Exchange Commission or with any securities
exchange on which any of its securities are then listed, and copies of all
press releases and other statements made available generally by the Company
to the public concerning material developments in the Company's and its
subsidiaries' businesses; and
(viii) with reasonable promptness, such other information and
financial data concerning the Company and its subsidiaries as any Person
entitled to receive information under this Section 5(a) may reasonably
request in connection with the monitoring of their investment in the
Company or their activities as a member of the Board.
Each of the financial statements referred to in Sections 5(a)(iii) and 5(a)(v)
shall be true and correct in all material respects as of the dates and for the
periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end adjustments for recurring
accruals (none of which would, alone or in the aggregate, be materially adverse
to the condition (financial or otherwise), operating results, assets, operations
or business prospects of the Company and its subsidiaries taken as a whole).
All financial statements and other deliveries required under this
Section 5(a) shall be expressed in both U.S. dollars and Mexican pesos (or the
then current Mexican currency).
(b) Certain Affirmative Covenants. The Company shall, and shall cause
each of its subsidiaries to: (i) at all times cause to be done all things
necessary to maintain, preserve and renew its corporate existence and all
material licenses, concessions, authorizations and permits necessary to the
conduct of its businesses; (ii) maintain and keep its properties in good repair,
working order and condition, and from time to time make all necessary repairs,
renewals and replacements, so that its businesses may be properly conducted at
all times; (iii) continue to operate its business, carry on its activities and
enter into transactions only in the ordinary course of business as is customary
for the Company and each such subsidiary and consistent with the Company's and
each such subsidiary's past practices; (iv) if a dividend is declared or paid on
any one series or class of shares of the Company, declare or pay (on a pro rata
basis) the same dividend on each other series and class of shares of the Company
(other than with respect to dividends declared or paid in shares of the Company
which shall be declared or paid in the series or class of shares on which they
are made) and (v) comply with (and from time to time, including without
limitation, upon request, provide evidence to the Investors of the compliance
with) the Guidelines and all applicable laws, rules, regulations and policies
(as they may be amended from time to time) of: (A) the United States of America,
including, without limitation, the FCPA, the export controls imposed by the U.S.
Department of Commerce, the International Traffic in Arms Regulations, the
restrictions imposed by the U.S. Office of Foreign Assets Control and the
anti-boycott regulations administered by the U.S. Department of Commerce and the
U.S. Department of the Treasury, in each case to the extent compliance with such
laws does not violate any applicable Mexican or other laws, and (B) Mexico,
including all Mexican telecommunications, foreign investment, corporate and tax
laws, rules, regulations and policies and all Mexican reporting requirements;
provided that the Company shall effect such compliance with United States and
Mexican laws in a manner consistent with the terms of this Agreement.
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(c) Qualified Public Offering. Without prejudice to the provisions of
Section 2A above requiring the consent of the Requisite Directors for certain
actions, (i) prior to May 21, 2002 (the fourth anniversary of the date of the
Original Shareholders Agreement), the Company and the Existing Securityholders
shall use their reasonable best efforts to cause the Company to consummate a
Qualified Public Offering as promptly as practicable after the date of this
Agreement and, (ii) on and after May 21, 2002, the Company and the Existing
Securityholders shall use their best efforts to cause the Company to consummate
a Qualified Public Offering as promptly as practicable after such date (provided
that in neither case shall the Existing Securityholders be obligated to incur
any material out-of-pocket expenses in connection therewith).
(d) No U.S. Activities. The Company and the Securityholders understand
and acknowledge that the Regulated Investors are regulated under Regulation K
promulgated under the U.S. Bank Holding Company Act, as amended. In this
respect, the Company shall not, and shall not permit its subsidiaries to,
directly or indirectly engage in or transact any business or activities in, or
carry on or maintain a place of business, or invest in or own any entity engaged
in or transacting any business in, the United States without the prior written
consent of each Regulated Investor (provided that this shall not prohibit the
Company from providing long distance telephone service from Mexico to the United
States). In the event that the Company desires to engage in any activity which
would violate this Section 5(d), the Regulated Investors agree to cooperate and
work with the Company to develop (if reasonably feasible) an alternate
arrangement or structure which would be permissible under Regulation K
promulgated under the U.S. Bank Holding Company Act, as amended.
(e) Inspection of Property. The Company shall permit any
representative designated by a member of the Board at such times as any such
Person may reasonably request during regular business hours after prior written
notice of at least two business days, to (i) visit and inspect any of the
properties of the Company and its subsidiaries, (ii) examine and copy the
corporate and financial records of the Company and its subsidiaries and (iii)
discuss the affairs, finances and accounts of the Company and its subsidiaries
with the directors, officers, key employees and independent accountants of the
Company and its subsidiaries.
(f) Preemptive Rights. Except for issuances of (i) Company Shares
pursuant to an underwritten public offering registered under the securities laws
of Mexico and/or the United States of America, (ii) options to acquire Company
Shares pursuant to the Management Option Plan (as defined in the Subscription
Agreement), the Operating Agreement and the Strategic Assistance Agreement
(each, as in effect on the date hereof), the Engagement Letter (which shall not
exceed (i) 24,425 Series N Shares in the aggregate prior to giving effect to the
Restructuring and (ii) 12,213 Series C Shares and 12,213 Series N Shares in the
aggregate after giving effect to the Restructuring)), the Nissho Stock Option
Agreement) (which Company Shares issued under the Nissho Stock Option Agreement
shall not exceed (i) 337,471 Series N Shares in the aggregate prior to giving
effect to the Restructuring and (ii) 168,736 Series C Shares and 168,736 Series
N Shares in the aggregate after giving effect to the Restructuring), or other
share option plans approved by the Board in accordance with Section 2 (and
issuances of Company Shares upon the exercise of such options), (iii) shares of
the Company to Regulated Investors pursuant to Section 7 below, and (iv) Company
Shares upon the exercise of the options or warrants outstanding on the date
hereof and described on the Schedule of Capitalization of the Company attached
hereto on the terms specified in the Subscription Agreement, if the Company
proposes to issue any (x) Company Shares or (y) any of its other equity
securities, debt securities containing equity features or other securities
convertible into or containing options or rights to acquire any such debt or
equity securities ("Other Securities" and, together with the securities referred
to in clause (x), "Securities"), the Company shall deliver written notice to all
of the Securityholders, including the Common Representative (the "Preemptive
Rights Notice"), and shall (in addition to all other rights and obligations
under applicable law, and in addition to any required approvals under Section 2A
above) first offer to sell to each holder of the series or class of Company
Shares being issued (only in the case of the issuance of Company Shares) (and
including the NIT Trustee in the case of any issuance or sale of Series C Shares
or Series N Shares) or each shareholder (including the NIT Trustee) of the
Company (only in the case of the issuance of Other Securities), a portion of
such Securities equal to the quotient determined by dividing (1) the sum of the
number of Company Shares of the series or class being issued (only in the case
of the issuance of Company Shares) ("Specific Shares") or Company Shares (only
in the case of the issuance of Other Securities) held by such shareholder
(including with respect to the NIT Trustee, all of the Series C Shares and
Series N Shares in the Neutral Investment Trust), by (2) the sum of the total
number of Specific Shares or Company Shares, as applicable, outstanding on a
fully diluted basis. Each such shareholder (each, an "Eligible Shareholder")
shall (subject to the remainder of this Section 5(f)) be entitled to purchase
such Securities at the most favorable price and on the most favorable terms as
such Securities
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are to be offered to any other Persons by delivering written notice to the
Company within 30 days after the delivery of the Preemptive Rights Notice;
provided that, at the request of the NIT Trustee or any Regulated Investor that
is an Eligible Shareholder, the Company shall offer to the NIT Trustee and/or
such Regulated Investor Securities with terms (satisfactory to the NIT Trustee
and/or such Regulated Investor) that are identical to such Securities being
offered except that such Securities shall have no voting rights and shall be
convertible: (i) in the case of Series N Shares, into limited voting Securities
(to the extent permitted by applicable law), and (ii) in the case of Series C
Shares, into Securities (to the extent permitted by applicable law) of which the
voting rights shall be restricted in such a manner that such Securities must be
voted in the same manner as the majority vote of the Series A Shares; and
provided further that if the Company issues or sells any shares of any series or
class of its equity securities, it shall issue and sell (on a pro rata basis and
at the same price and on the same terms described above) shares of each other
series and class of its equity securities.
Any Securities elected to be subscribed to by Eligible Shareholders in
accordance with the foregoing shall be sold to such Eligible Shareholders on the
terms specified in the Preemptive Rights Notice. If any Eligible Shareholders do
not elect to subscribe to the Securities, the Company may issue and sell such
Securities to the electing Eligible Shareholders and other Persons on the terms
set forth in the Preemptive Rights Notice for a period of 90 days after the
expiration of the 30 day period after the delivery of the Preemptive Rights
Notice. Any Securities not sold within such 90 day period shall be reoffered to
Eligible Shareholders in accordance with the provisions of this Section 5(f)
(including the time periods contained herein). Notwithstanding the foregoing, in
the event that an electing Eligible Shareholder is not permitted under Mexican
law to hold the amount or type of Securities to which such electing Eligible
Shareholder would be entitled upon exercise of its rights under this Section
5(f), then the electing shareholder shall have the right to designate another
purchaser who would be qualified under Mexican law to purchase such securities
or, at the election of the electing shareholder, the Company shall instead give
to such electing Eligible Shareholder the right (to the extent permitted under
Mexican law) to subscribe to (i) Series N Shares or other Securities which have
identical rights as the Securities being offered except that voting rights shall
be limited to the minimum extent necessary to effect such compliance, and (ii)
Series C Shares that must be voted in the same manner as the majority vote of
the Series A Shares.
(g) Confidentiality. Each Securityholder agrees that it shall use its
reasonable efforts to, and shall use its reasonable efforts to cause its
respective directors, officers, employees, former employees, advisors and
Affiliates to, keep any information or materials which (i) pertain to the
Company or its subsidiaries or their respective businesses or (ii) pertain to
matters designated as proprietary and confidential by the Company (collectively,
"Confidential Information") confidential; provided that (A) any Confidential
Information required by law, regulators or legal or administrative process to be
disclosed may be disclosed without violating the provisions of this Section
5(g), (B) the Securityholders may disclose Confidential Information to their
respective directors, officers, employees, former employees, advisors,
investors, partners and Affiliates ("Affiliated Parties") and their respective
Affiliated Parties if the disclosing party believes that such disclosure is
necessary or desirable in connection with the transactions contemplated hereby,
(C) the Securityholders (or any of their Affiliated Parties and their respective
Affiliated Parties) may disclose Confidential Information in connection with the
sale or transfer of any portion of Company Securities so long as such Person's
transferee agrees in writing to be bound by the provisions hereof (provided that
such sale or transfer does not violate any provisions of this Agreement, and (in
the case of CPOs), the Neutral Investment Trust Agreement) and (D) this Section
5(g) shall not prohibit the Securityholders from disclosing any Confidential
Information that is available to the public on the Closing Date, or which
thereafter becomes available to the public other than as a result of a breach of
this Section 5(g).
(h) UBTI. Notwithstanding any provision of this Agreement to the
contrary the Company shall not undertake any activity, operate any trade or
business, or take any action, including without limitation the borrowing of
money or the incurring of any other indebtedness, obligation, or liability, that
would cause any Securityholder, any partner of any Securityholder, or any Person
owning, directly or indirectly, any interest in a Securityholder or the Company,
whose income is exempt from United States federal income tax (each, an "Affected
Person"), to have or incur any unrelated business taxable income (as defined in
Sections 511 through 514 of the United States Internal Revenue Code) on account
of such activity or action without the express prior written consent of each
Securityholder who is (or is acting on behalf of) an Affected Person, which
consent may be granted, withheld or conditioned in such Securityholder's
respective sole and absolute discretion.
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(i) By-Laws. The Company covenants and agrees to take all actions
necessary to cause the the By-laws of the Company substantially in the form
attached hereto as Exhibit C (with any such changes thereto subject to the
written approval of all of the Investors and the Company) to be approved and
adopted by the Shareholders of the Company, including without limitation, within
30 days of the date hereof to cause a Shareholders' Meeting for the purpose of
approving and adopting the By-laws of the Company in the form attached hereto as
Exhibit C (with any such changes thereto subject to the written approval of a
majority of the Investors and the Company) to be held and the Company shall file
within 10 days thereof such By-laws with the Public Registry of Property and
Commerce of Mexico, Federal District. Each Securityholder hereby approves the
form of the Company's By-laws attached hereto as Exhibit C (the "Company's
By-Laws") and covenants to vote (or cause to be voted) the Shares beneficially
owned by such Securityholder in favor of the adoption of such form of such
By-laws (including any such changes thereto that are approved by a majority of
the Investors and the Company) at the Special Shareholders' Meeting contemplated
by this Section 5(i).
(j) Bureau of Foreign Investment. Within ten (10) days after the
approval of any amendments to or restatements of the Company's By-laws by the
shareholders of the Company (including the amendment contemplated by Section
5(i) hereof), the Company shall file with the Bureau for approval all provisions
of such By-laws, as amended, which differ from the form of the Company's By-laws
submitted previously to the Bureau for approval, to the extent that such
approval is necessary with respect to any such provisions.
(k) Termination of Neutral Investment Trust. Neither the Company
(including any of the Company's officers, directors, employees and agents) nor
any CPO Holder shall consent to a termination of the Neutral Investment Trust if
such termination would result in a liquidation of the Neutral Investment Trust
unless this Agreement is amended pursuant to the terms hereof to address the
anticipated post-termination capital structure of the Company and
post-termination relationship of the Securityholders and (i) the CPO Holders
receive a certificate of participation in a successor neutral investment trust
or other instrument, in form and substance reasonably satisfactory to a majority
of the CPO Holders, on a one-for-one basis for the liquidated CPOs, or (ii) the
Company's By-laws are amended to either (1) permit the ownership of the Series C
Shares and Series N Shares directly by the CPO Holders or (2) create one or more
series of stock of the Company (A) which may be held directly by the CPO Holders
and (B) into which the Series C Shares and Series N Shares held by the NIT
Trustee shall be converted prior to the liquidation of the Neutral Investment
Trust. In connection with a proposed termination of the Neutral Investment
Trust, at the written request of a majority of the CPO Holders, the Company and
the Existing Securityholders agree to use their best efforts to cause such an
amendment to the Company's by-laws to be adopted and approved.
6. Restrictions on Transfer of Company Securities.
(a) Transfer of Securities. No Securityholder shall directly or
indirectly Transfer any interest in its Company Securities except pursuant to
the provisions of this Section 6 (other than a Transfer pursuant to Sections 7,
8, 9, 10 or 11 (an "Exempt Transfer")), and also, in the case of CPOs, the
Neutral Investment Trust Agreement. With respect to the CPOs, to the extent that
any restriction on transfer contained in the Neutral Investment Trust Agreement
is inconsistent with the restrictions on transfer contained herein, the
Securityholders agree that both transfer restriction provisions shall apply.
(b) Retention. Notwithstanding anything to the contrary contained in
this Agreement, except with respect to Exempt Transfers and Transfers permitted
by Section 6(f) below, no holder of Series A Shares or Series B Shares shall
Transfer any Company Shares until the first to occur of (i) January 1, 2001 and
(ii) a Qualified Public Offering.
(c) First Refusal Rights. Subject to Section 6(b), at least 30 days
prior to the Transfer of an interest in any Company Securities (other than
pursuant to an Exempt Transfer), each Securityholder who is not an Investor (the
"Transferring Securityholder") shall deliver to the Secretary of the Board (and,
in the case of a proposed Transfer of CPOs, to the Common Representative and
each CPO Holder), and the Secretary of the Board or the Common Representative,
as the case may be, shall then promptly (but in any event within 5 days) deliver
to the other Securityholders a notice (the "Offer Notice") disclosing the number
of Company Securities to be transferred, the proposed price, terms and
conditions of the Transfer and the identity of the prospective transferee(s) who
submitted the offer. The other Securityholders (on a pro rata basis) may elect
to purchase all (but not less than
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all) of the Company Securities to be transferred on the same terms and
conditions as those set forth in the Offer Notice by giving written notice to
the Transferring Securityholder within 30 days after the Offer Notice has been
given to the Secretary of the Board or Common Representative, as the case may
be. If the other Securityholders elect to purchase all such Company Securities
hereunder, the Transfer of such Company Securities shall be consummated as soon
as possible after the delivery of the election notice(s) to the Transferring
Securityholder, but in any event within 15 days after the expiration of such
30-day period. If the other Securityholders do not elect to purchase all of the
Company Securities specified in the Offer Notice, the remaining Company
Securities shall be reoffered on a pro rata basis to those Securityholders
electing to purchase offered Company Securities by delivery of an additional
written notice. If within 10 days of the delivery of such additional notice the
other electing Securityholders have not elected to purchase all of the Company
Securities specified in the Offer Notice, the Transferring Securityholder may
transfer the Company Securities specified in the Offer Notice to the
transferee(s) specified in the Offer Notice at a price and on terms no more
favorable to the transferee(s) than specified in the Offer Notice for a period
of no more than 60 days after the 45 days after delivery of the Offer Notice.
Any Company Securities not transferred within such 60-day period shall remain
subject to the provisions of this Section 6(c).
Notwithstanding the foregoing, in the event that an electing
Securityholder is not permitted under Mexican law to hold the amount or type of
Company Securities to which such electing Securityholders would be entitled upon
the exercise of its rights under this Section 6(c), then the electing
Securityholder shall have the right to designate another purchaser who would be
qualified under Mexican law to purchase such Company Securities or, at the
election of the electing Securityholder, the Company shall agree (to the extent
permitted under Mexican law) to exchange such Company Securities to be purchased
by the electing Securityholder (pursuant to the exercise of its rights under
this paragraph Section 6(c)) for other securities of the Company which have
identical rights as such Company Securities being transferred except that, in
order to comply with applicable law, the voting rights of such securities shall
be limited to the minimum level necessary to effect such compliance. In the
event of a substitution for such securities of Series C Shares and Series N
Shares, the electing Securityholder agrees to deposit (or cause to be deposited)
all of such Series C Shares and Series N Shares into the Neutral Investment
Trust in exchange for CPOs.
(d) Participation Rights. After the required delivery by a
Transferring Securityholder of an Offer Notice to the Secretary of the Board (or
to the Common Representative and each CPO Holder, as the case may be), the other
Securityholders may elect to participate in the contemplated Transfer (other
than an Exempt Transfer but including a Transfer pursuant to Section 6(c)) by an
Existing Securityholder or an Other Securityholder at the same price per share
and on the same terms by giving written notice to the Transferring
Securityholder within 20 days after delivery of the Offer Notice to the Company.
Each participating other Securityholder may sell in the contemplated Transfer,
at the same price and on the same terms specified in the Offer Notice, a number
of Company Securities (whether Series A, Series B, Series C or Series N Shares
or CPOs) equal to the product of (i) the quotient determined by dividing the
percentage of Company Securities (including any CPOs) owned by such Person by
the aggregate percentage of Company Securities (including any CPOs) owned by the
Transferring Securityholder and the other participating Securityholders and (ii)
the Company Securities (including any CPOs) to be sold in the contemplated
Transfer. For the purposes of such calculation, each CPO owned by a
Securityholder shall count as two Company Shares (as adjusted for any stock
splits or reverse-stock splits of the Series C Shares or Series N Shares).
For example, if the Offer Notice contemplated a sale of 100 Company Shares
by the Transferring Securityholder, and if the Transferring Securityholder
at such time owns 30% of all of the Company Shares outstanding and the sole
other participating Securityholder elects to participate and owns 20% of
all of the Company Shares outstanding, the Transferring Securityholder
would be entitled to sell a total 60 shares (30%, 50% x 100 shares) and
such other Securityholder would be entitled to sell a total of 40 shares
(20%, 50% x 100 shares).
No Transferring Securityholder shall transfer any of its Company
Securities to any prospective transferee if such prospective transferee(s)
decline to allow the participation on the terms provided in this Section 6(d) of
the other Securityholders who have elected to so participate.
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15
(e) Right of First Offer on Transfers of CPOs by Investors. Subject to
Section 6(b), in the event that any Investor desires to Transfer any CPOs (other
than pursuant to an Exempt Transfer), such Investor shall first offer to sell
such CPOs by delivering to the Common Representative (who shall deliver a copy
of such notice to the Secretary of MAXCOM and such Secretary shall then promptly
(but in any event within 5 days) deliver a copy thereof to the Company's
shareholders) and each of the other CPO Holders written notice thereof (the
"Investor Transfer Notice") disclosing the number of CPOs sought to be
Transferred, the proposed price of the Transfer and the other material economic
terms of the proposed Transfer. The other Securityholders (including the
Investors) holding greater than five percent (5%) of the Company Shares (whether
Series A, Series B, Series C or Series N Shares, and assuming for such
calculation that the ownership of a CPO shall count as the ownership of two
Company Shares (as adjusted for any stock splits or reverse-stock splits of the
Series C Shares or Series N Shares)) on a fully-diluted basis may elect to
purchase all (but not less than all) of the CPOs to be Transferred on a pro rata
basis and at the same price specified in the Investor Transfer Notice by giving
written notice to such transferring Investor within 30 days after the Investor
Transfer Notice has been given to the Common Representative. If such other
Securityholders elect to purchase all such CPOs hereunder, the Transfer of such
CPOs shall be consummated as soon as possible after the delivery of the election
notice(s) to the transferring Investor, but in no event within 15 days after the
expiration of such 30-day period. If such other Securityholders do not elect to
purchase all of the CPOs specified in the Investor Transfer Notice, the
remaining CPOs shall be reoffered on a pro rata basis to those Securityholders
electing to purchase offered CPOs by delivering an additional written notice via
facsimile, with a copy of such notice sent by overnight mail. If within 10 days
of the delivery of such additional notice the other electing Securityholders
have not elected to purchase all of the CPOs specified in the CPO Transfer
Notice, the transferring Investor may, for a period of 180 days after the
expiration of such period, Transfer the CPOs specified in the Investor Transfer
Notice to one or more parties at a price and on other material economic terms no
more favorable to the transferees thereof than the price per share and other
material economic terms offered to such other Investors in the CPO Transfer
Notice. Notwithstanding the foregoing, a transferring Investor shall have the
right to deliver one or more subsequent Investor Transfer Notices if no Transfer
has occurred in accordance with the terms hereof after the expiration of any
such 180-day period. For purposes of this Section 6(e) only, the term "Investor"
shall include CTGT with respect to its CPOs only.
(f) Permitted Transfers. The restrictions set forth in this Section 6
shall not apply to any Transfer of Company Securities by any Securityholder (i)
in the case of an individual Securityholder, pursuant to applicable laws of
descent or (other than in the case of Adri
