1
Exhibit 2(a)
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT, dated as of March 30, 2001, by and among (a)
Grupo Iusacell, S.A. de C.V., a corporation organized under the laws of Mexico
with its principal office located at Prolongacion Paseo de la Reforma 1236
(Penthouse), Colonia Santa Fe, Delegacion Cuajimalpa, Mexico, D.F. 05348 (the
"Corporation"), (b) Xxxx Atlantic Latin America Holdings, Inc., a Delaware
corporation with its principal office located at 0000 Xxxxx Xxxxx Xxxxx Xxxx,
Xxxxxxxxx, XX 00000 ("BALAH"), (c) Xxxx Atlantic International, Inc., a Delaware
corporation with its principal office located at 0000 Xxxxx Xxxxx Xxxxx Xxxx,
Xxxxxxxxx, XX 00000 ("BAII"), (d) Xxxx Atlantic New Zealand Holdings, Inc., a
Delaware corporation with its principal office located at 0000 Xxxxx Xxxxx Xxxxx
Xxxx, Xxxxxxxxx, XX 00000 ("BANZHI"), and (e) Vodafone Americas B.V., a limited
liability company duly organized under the laws of the Netherlands with its
principal office located at Max Xxxxxxxx 00, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx
("Vodafone"). Capitalized terms not otherwise defined shall have the meanings
set forth in Section 1.1 hereof.
W I T N E S S E T H:
WHEREAS, pursuant to the terms and conditions of the Purchase and Sale
Agreement, Vodafone is to purchase shares representing thirty-four and
fifty-three hundredths percent (34.53%) of the corporate capital (capital
social) of the Corporation for a purchase price in excess of US$250,000; and
WHEREAS, it is a condition precedent to Vodafone's obligations under
the Purchase and Sale Agreement that Vodafone enter into a joint venture,
shareholders or similar agreement with BALAH, BAII, BANZHI and any other
Affiliate of Verizon that owns shares in the Corporation, in order to establish
certain governance rights of the parties in the Corporation, as well as certain
other agreements among them; and
WHEREAS, the parties hereto desire to enter into this Shareholders
Agreement in order to set forth their rights, duties and obligations with
respect to the control and management of the Corporation and to set forth
certain other agreements; and
WHEREAS, by the Effective Date of this Agreement, the bylaws of the
Corporation and of each of its Subsidiaries will have been amended to the extent
possible under Mexican law and/or regulation to reflect the governance and
managerial provisions hereof.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the meanings set forth for them below
when used herein:
"Accountants" means (whether one or more) such firm or firms of
independent certified public accountants as shall be engaged from time to time
by the Corporation or any Subsidiary.
"Affiliate" means, when used with reference to a specific Person, any
Person that at the time of determination of Affiliate status directly or
indirectly, whether through one or more intermediaries, controls, is controlled
by or is under common control with such specific Person; provided, however, that
without limiting the
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Exhibit 2(a)
foregoing, for purposes of this Agreement the Corporation, the Subsidiaries and
Vodafone are deemed to be Affiliates of each other, and the Corporation, the
Subsidiaries, BALAH, BAII and BANZHI are deemed to be Affiliates of each other.
For purposes of this Agreement, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by Contract or otherwise.
"Agreement" means this Shareholders Agreement, as originally executed
and as the same may be amended, modified or supplemented from time to time in
accordance with its terms.
"Annual Plan" means, collectively, the annual operating and capital
budgets and business plan of the Corporation and the Subsidiaries.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day other than a Saturday, Sunday or federal
holiday for national banks in Mexico.
"Bylaws" means the estatutos sociales of the Corporation, as in effect
on the Effective Date and as thereafter amended from time to time.
"Committee" means any committee of the Board of Directors.
"Concession" means any concession, permit, license, approval or
authorization granted by any Governmental Entity to the Corporation or any of
its Subsidiaries, or any amendment to or renewal of any of the foregoing, that
permits the Corporation or such Subsidiary to engage in the Telecommunications
Business or a related business.
"Contract" means (a) any written lease, agreement, contract, commitment
or license or (b) any enforceable understanding or enforceable oral lease,
agreement, contract, commitment or license.
"Corporation Officer" means an Officer of the Corporation (including,
without limitation, the Chairman of the Board of Directors, the Chief Executive
Officer, the President, the Director General and the Chief Operating Officer of
the Corporation). For purposes of this Agreement, an individual shall be deemed
a "Corporation Officer" or an "Officer of the Corporation" if he meets the
definition of "Officer" with respect to the Corporation, notwithstanding the
fact that he is not formally elected as an officer within the meaning of the
Bylaws or the LGSM.
"Covered Obligations" means the obligations of the Vodafone Shareholder
Group set forth in Section 3.1(a) hereof to (a) elect the Vodafone Series A
Director, if applicable, from among those Persons proposed to the Vodafone
Shareholder Group by the Verizon Shareholder Group in writing and remove and
replace the Vodafone Series A Director as and when, and only as and when,
directed in writing by Verizon in the event that the Vodafone Shareholder Group
beneficially owns Series V Shares representing less than ten percent (10%) of
the Corporation's total capital, and (b) elect the Verizon Series V Director
from among those Persons proposed to the Vodafone Shareholder Group by the
Verizon Shareholder Group in writing and remove and replace the Verizon Series V
Director as and when, and only as and when, directed in writing by Verizon in
the event that the Vodafone Shareholder Group beneficially owns Series V Shares
representing ten percent (10%) or more of the Corporation's total capital.
"Directors" means the Series A Directors and/or the Series V Directors.
"Effective Date" means the date the Closing (as defined in the Purchase
and Sale Agreement) takes place.
"estatutos sociales" means the corporate organizational and governance
documents bearing such name under Mexican legal principles.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended.
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Exhibit 2(a)
"Executive Committee" means the Executive Committee of the Board of
Directors established pursuant to Section 3.1(c) hereof or pursuant to the
Bylaws.
"Extraordinary Shareholders Meeting" means an asamblea general
extraordinaria de accionistas of the Corporation, held in accordance with
Articles 182, 190, 191 and any other applicable provisions of the LGSM, as well
as the applicable provisions of the Bylaws.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis.
"Governmental Entity" means any nation or sovereign entity, or any
state, territory, possession, county, municipality or other subdivision thereof,
or any court, tribunal, department, commission, ministry, agency, board, bureau,
dependency or other instrumentality thereof (including, without limitation, all
functionaries and representatives thereof acting in their official or authorized
capacity).
"Indebtedness" of any Person means all obligations, contingent or
otherwise, which in accordance with GAAP should be classified upon a Person's
balance sheet as liabilities (other than trade payables and operating lease
payables, tax liabilities, employee profit sharing and seniority premium
liabilities, and commitments and contingencies (as determined in accordance with
GAAP)) and shall include, in any event and without limitation, (a) indebtedness
for borrowed money, (b) indebtedness incurred or assumed in connection with the
acquisition of assets, (c) liabilities secured by any Lien on property owned or
acquired by such Person, whether or not the liability secured thereby shall have
been assumed by such Person, (d) capitalized lease obligations and (e) all
guarantees by such Person of Indebtedness of another Person.
"LGSM" means the Ley General de Sociedades Mercantiles of Mexico, as
amended from time to time.
"Lien" means, whether absolute, accrued, contingent or otherwise, any
mortgage, lien, lease, pledge, encumbrance, charge, restriction, security
interest, judgment lien, claim, license, easement, purchase option, call or
similar right of a third party, preemptive right of a third party, right of a
third party under any voting or shareholder agreement or other restriction,
proxy, limitation on voting rights or adverse claim.
"Material" as to any matter relating to the Corporation or any
Subsidiary means a matter (including, without limitation, any act, omission,
occurrence, transaction, event, obligation, breach of obligation, situation or
governmental action) the effect of which to the Corporation and the Subsidiaries
(taken as a whole, and including the business, assets, operations, results of
operations or financial condition thereof) in the event of the occurrence or
non-occurrence of such matter (whether individually or together with any related
or similar matters) is, or could reasonably be expected to be, more than
U.S.$5,000,000.
"Mexican GAAP" means GAAP, as applied in Mexico.
"Mexico" means the United Mexican States.
"Officer" (whether or not such term is capitalized) means an individual
with significant responsibilities for operations or policy making duties for any
Person that is not an individual.
"Person" (whether or not such term is capitalized) means any
individual, partnership, corporation, limited liability company, joint venture,
trust, business trust, Governmental Entity, union, association, instrumentality,
commission or other entity.
"Prospectus" means a prospectus within the meaning of the Securities
Act or its closest equivalent under the securities laws of a country other than
the United States.
"Purchase and Sale Agreement" means that certain Conditional Purchase
and Sale Agreement dated as of January 5, 2001, by and among Vodafone Group Plc
and certain other Persons pursuant to which Vodafone is to purchase shares of
the Corporation's corporate capital, as the same may be amended from time to
time.
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Exhibit 2(a)
"Region" means each of the nine geographic regions in Mexico for which
concessions to provide wireless telephony services have been granted.
"Registrable Securities" means any and all of (a) the Shares
beneficially owned as of the Effective Date by the Verizon Shareholder Group and
Vodafone, for so long as such Shares are held (i) by BAII, BALAH, BANZHI or
Vodafone or (ii) by any Affiliate of Verizon or Vodafone to which such Shares
are Transferred pursuant to Section 6.2 hereof, and (b) any other securities
issued or issuable with respect to any such Registrable Securities by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise
which are held by a Person described in clause (a) above; provided, however,
that to the extent such securities to be received are convertible or exercisable
into stock of the issuer thereof, then any such shares of stock as are issued or
issuable upon conversion or exercise of said convertible or exercisable
securities also shall constitute Registrable Securities; provided further that
securities shall cease to be Registrable Securities when they are Transferred
pursuant to an effective Registration Statement, in a public offering, or
otherwise Transferred pursuant to a transaction effected over the Bolsa Mexicana
de Valores, S.A. de C.V. or the New York Stock Exchange, Inc.
"Registration Rightsholder" means any beneficial owner of outstanding
Registrable Securities.
"Registration Statement" means a registration statement within the
meaning of the Securities Act or its closest equivalent under the securities
laws of a country other than the United States.
"Required Shareholding" means the beneficial ownership of Shares which
in the aggregate represent at least twenty-five percent (25%) of the
Corporation's total corporate capital, provided that such Shares include (i)
Series A Shares representing at least ten percent (10%) of the Corporation's
total corporate capital, and (ii) Series V Shares representing at least eleven
percent (11%) of the Corporation's total corporate capital.
"SEC" means the United States Securities and Exchange Commission, or
any successor agency thereto.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Series A Directors" means those members of the Board of Directors who,
pursuant to the Bylaws or this Agreement, are nominated and elected by the
beneficial owners of the Series A Shares; provided, however, that such term does
not include the Series V Directors.
"Series A Shares" means the ordinary, nominative Series A Shares of the
Corporation that are authorized by the Bylaws and outstanding from time to time.
"Series V Directors" means those members of the Board of Directors who,
pursuant to the Bylaws or this Agreement, are nominated and elected by the
beneficial owners of the Series V Shares; provided, however, that such term does
not include the Series A Directors.
"Series V Shares" means the ordinary, nominative Series V Shares of the
Corporation that are authorized by the Bylaws and outstanding from time to time.
"Shareholder" means each member of the Verizon Shareholder Group and of
the Vodafone Shareholder Group.
"Shares" means the Series A Shares and the Series V Shares.
"Subsidiaries" means the Persons in which the Corporation shall at any
time, directly or indirectly, beneficially own an equity interest equal to or
greater than fifty percent (50%), or which the Corporation shall, at any time,
directly or indirectly control.
"Subsidiary Officer" means an Officer of a Subsidiary.
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Exhibit 2(a)
"Supermajority Vote" means (a) with respect to action by the Board of
Directors, the affirmative vote of a majority of the Directors present at a
meeting at which a quorum is present, which majority includes the affirmative
vote of (i) a majority of the Series A Directors and (ii) the Vodafone Series A
Director for so long as Vodafone has the right pursuant to the applicable
provisions of the LGSM and the Bylaws to appoint a Series A Director, (b) with
respect to action by any Committee, the affirmative vote of a majority of the
Committee members present at a meeting at which a quorum is present, which
majority includes the affirmative vote of (i) a majority of the Committee
members designated by the holders of the majority of the Series A Shares and
(ii) for so long as Vodafone maintains the Required Shareholding, at least one
Committee member designated by Vodafone, and (c) with respect to action by the
shareholders, the affirmative vote of a majority of the outstanding Shares at an
Extraordinary Shareholders Meeting at which a quorum is present, which majority
includes the affirmative vote of at least seventy-five percent (75%) of the
outstanding Series A Shares.
"Taxes" means all federal, state, local or foreign net income,
alternative or add-on minimum, assets, gross income, gross receipts, sales, use,
ad valorem, value-added, franchise, profits, license, withholding,
communications, payroll, employment, excise, severance, stamp, occupation,
premium, profit-sharing payments, property, social benefits contribution,
windfall profits or similar taxes, duties, assessments, fees, levies or other
similar governmental charges of any kind whatsoever, together with any interest,
penalties, additions to tax or additional amounts imposed thereon or imposed
with respect to any such interest, penalties, additions to tax or other
additional amounts.
"Telecom Act" means the Telecommunications Act of 1996 enacted by the
United States Congress.
"Telecommunications Business" means any of the following: (a) the
ownership, management, operation or maintenance of a network for the
transmission, by any means, of data, voice or video signals, (b) the provision
of transmission services, by any means, of data, voice, or video signals, (c)
the provision of customer premises equipment, and (d) the provision of value
added services. The marketing of such goods and services on a wholesale, retail
or reseller basis shall constitute the operation of the Telecommunications
Business.
"Transfer" means any transfer, assignment or sale, or any pledge,
hypothecation or other encumbrance, or any other change of ownership of any
kind. For purposes of this Agreement, any event, transaction or proposed
transaction which results or would result in a Shareholder no longer being an
Affiliate of Verizon or Vodafone, as applicable, shall be deemed to constitute a
Transfer or proposed Transfer, as applicable, of all of the Series A Shares held
by such Shareholder.
"U.S. GAAP" means GAAP as applied in the United States.
"United States" and "U.S." mean the United States of America.
"Verizon" means Verizon Communications Inc., a Delaware corporation
with its principal office located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
"Verizon Series A Designated Director" means the Series A Director
designated by the Verizon Shareholder Group, as beneficial owner of the majority
of Series A Shares, to serve in such capacity. The initial Verizon Series A
Designated Director is Fares X. Xxxxxxx.
"Verizon Series V Director" has the meaning assigned to it in Section
3.1(a).
"Verizon Shareholder Group" means BALAH, BAII, BANZHI and any of their
respective transferees or successive transferees, pursuant to the terms of
Section 6.2 or Section 6.4(f) hereof.
"Verizon Subject Transfer" means a Transfer of Series A Shares by any
member of the Verizon Shareholder Group which is not proposed to be consummated
with an Affiliate of Verizon and which would result in (a) Verizon and its
Affiliates collectively owning less than a majority of the Series A Shares, or
(b) Verizon losing the ability to report the earnings and results of operations
of the Corporation on a consolidated basis to the same extent as it did
immediately prior to the proposed Transfer.
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Exhibit 2(a)
"Vodafone Officer" means any one of the following four Officers of the
Corporation and/or any applicable Subsidiary as determined from time to time by
the Board of Directors or the Executive Committee: (a) Chief Operating Officer
(or in the absence of such position, the Chief Sales Officer), (b) Chief
Financial Officer, (c) Chief Marketing Officer, or (d) Chief Technical Officer.
"Vodafone Series A Director" means the Series A Director (including,
where applicable, his or her alternate) elected by the Vodafone Shareholder
Group in exercise of the rights granted to it pursuant to Article 144 of the
LGSM and the applicable provisions of the Bylaws.
"Vodafone Shareholder Group" means Vodafone and any of its respective
transferees or successive transferees, pursuant to the terms of Section 6.2 or
Section 6.4(f) hereof.
"Vodafone Subject Transfer" means a Transfer of Series A Shares by any
member of the Vodafone Shareholder Group which is not proposed to be consummated
with an Affiliate of Vodafone.
1.2 Construction. As used in this Agreement, (a) each term defined in
this Agreement has the meaning assigned to it, (b) each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in accordance
with Mexican GAAP, if any, and if such term has no meaning under Mexican GAAP,
then under U.S. GAAP, (c) as the context may require, words in the singular
include the plural and words in the plural include the singular, (d) as the
context may require, words in the masculine or neuter gender include the
masculine, feminine and neuter genders, (e) all references to Schedules or
Exhibits refer to Schedules or Exhibits delivered herewith or attached hereto
(each of which is deemed to be a part of this Agreement), (f) all references to
Sections or Articles refer to Sections or Articles of this Agreement, (g) all
references to "U.S.$", "$" or "dollars" refer to United States dollars, (h) any
amount to be paid in "$" or "dollars" shall be paid in United States dollars,
but any amount to be measured for purposes of determining compliance with a
standard set forth in this Agreement in "$" or "dollars" may be so measured in a
foreign currency and shall be translated into United States dollars on the basis
of the then prevailing exchange rates applicable to the discharge of obligations
denominated in foreign currency and payable in the Mexican Republic (tipo de
cambio para solventar obligaciones denominadas en moneda extranjera pagaderas en
la Republica Mexicana), as published by the Banco de Mexico in the Diario
Oficial de la Federacion, (i) the terms "herein," "hereunder," "hereby,"
"hereto" and terms of similar import refer to this Agreement in its entirety,
and not to any particular Article, Section, paragraph or subparagraph. No
provision of this Agreement will be construed in favor of, or against, any of
the parties hereto by reason of the extent to which such party or its counsel
participated in its drafting or by reason of the extent to which this Agreement
or any provision hereof is inconsistent with any prior draft hereof or thereof.
All references in this Agreement to the beneficial ownership of Shares shall be
deemed to include Shares deposited into any trust the beneficiary interest in
which is held by any member of the Verizon Shareholder Group or the Vodafone
Shareholder Group, as well as any Shares held of record by any member of the
Verizon Shareholder Group or the Vodafone Shareholder Group and, with respect to
references to other Persons being a beneficial owner, the parties agree that
such term shall be translated into Spanish as "beneficiario". For purposes of
this Agreement, references to the office of President and/or Director General of
the Corporation are deemed to be references to the office of the Corporation
currently held by Ing. Xxxxxx Xxxxxx del Xxxxx.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 Establishment of Shareholders Agreement. The Shareholders hereby
establish and enter into this Agreement for the purpose of making certain
agreements stated herein regarding, among other things, the control and
management of the Corporation and the Subsidiaries, limitations on the
activities of the parties in the Telecommunications Business in Mexico, and the
sale of Shares.
2.2 Term of Agreement. The term of this Agreement shall commence on the
Effective Date and shall terminate as of the date on which either the Verizon
Shareholder Group or the Vodafone Shareholder Group ceases to beneficially own
any Shares; provided that Section 5.6, Article IX and Section 10.3 shall survive
the termination of this Agreement indefinitely. The terms of Articles III (other
than Sections 3.1 and 3.4), IV and V (other than Section 5.6) shall terminate
upon the first date on which either (i) Verizon and its Affiliates in the
aggregate beneficially own Shares which in the aggregate represent less than
twenty-five percent (25%) of the Corporation's
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Exhibit 2(a)
total corporate capital, or (ii) Vodafone and its Affiliates in the aggregate
beneficially own less than the Required Shareholding. The terms of Section 3.1
shall terminate upon the first date on which Verizon and its Affiliates in the
aggregate cease to beneficially own a majority of the outstanding Series A
Shares. The terms of Article VII shall terminate as to any Registration
Rightsholder whose Registrable Securities represent less than five percent (5%)
of the outstanding capital stock of the Corporation. No Person shall have any
obligations of any kind under this Agreement in the event that the Closing (as
defined in the Purchase and Sale Agreement) does not take place.
ARTICLE III
GOVERNANCE OF THE CORPORATION
3.1 Board of Directors, Committees and Certain Officers.
(a) The Board of Directors will consist of twelve (12)
Directors, seven (7) of whom shall be Series A Directors and five (5) of whom
shall be Series V Directors.
The Verizon Shareholder Group shall nominate all of the Series
A Directors and their alternates other than the Vodafone Series A Director if
applicable, and both the Verizon Shareholder Group and the Vodafone Shareholder
Group shall vote their Series A Shares to elect such nominees. In order to
induce the members of the Verizon Shareholder Group to enter into this
Agreement, the Vodafone Shareholder Group agrees that if at any time the Series
V Shares beneficially owned by the Vodafone Shareholder Group represent less
than ten percent (10%) of the Corporation's total corporate capital, the
Vodafone Shareholder Group shall elect the Vodafone Series A Director, if
applicable, from among those Persons proposed to the Vodafone Shareholder Group
by the Verizon Shareholder Group in writing.
Without prejudice to the rights accorded to the Corporation's
shareholders pursuant to Article 144 of the LGSM and the applicable provisions
of the Bylaws, the Vodafone Shareholder Group shall nominate all of the Series V
Directors and their alternates; provided, however, that in the event
non-Shareholders having a right pursuant to the applicable provisions of the
LGSM and the Bylaws to elect one or more Series V Directors exercise such right,
then the Vodafone Shareholder Group shall nominate all remaining Series V
Directors and their alternates. In order to induce the members of the Verizon
Shareholder Group to enter into this Agreement, the Vodafone Shareholder Group
agrees that in any case, at any time when the Series V Shares beneficially owned
by the Vodafone Shareholder Group represent ten percent (10%) or more of the
Corporation's total corporate capital, the Vodafone Shareholder Group shall
elect as the Series V Director (or as one of the Series V Directors) which it
has the right to elect pursuant to Article 144 of the LGSM and the applicable
provisions of the Bylaws (the "Verizon Series V Director") from among those
Persons proposed to the Vodafone Shareholder Group by the Verizon Shareholder
Group in writing. Both the Verizon Shareholder Group and the Vodafone
Shareholder Group shall vote their Series V Shares to elect all such nominees
nominated by the Vodafone Shareholder Group (including the Verizon Series V
Director).
The Series A Directors shall serve at the pleasure of the
beneficial owners of the Series A Shares (the majority of which shall have the
right to remove and replace the Series A Directors in accordance with applicable
law); provided that the Vodafone Series A Director, if any, shall serve at the
pleasure of the Vodafone Shareholder Group (which shall have the right to remove
and replace the Vodafone Series A Director in accordance with applicable law);
provided further that in order to induce the members of the Verizon Shareholder
Group to enter into this Agreement, the Vodafone Shareholder Group agrees that
if the Vodafone Series A Director shall have been nominated pursuant to the last
sentence of the second paragraph of Section 3.1(a), the Vodafone Shareholder
Group shall remove and replace the Vodafone Series A Director as and when, and
only as and when, directed in writing by Verizon. The Series V Directors shall
serve at the pleasure of the beneficial owners of the Series V Shares (the
majority of which shall have the right to remove and replace the Series V
Directors in accordance with applicable law) or at the pleasure of such
shareholders of the Corporation as shall have elected them in accordance with
Article 144 of the LGSM and the applicable provisions of the Bylaws, as
applicable; provided that in order to induce the members of the Verizon
Shareholder Group to enter into this Agreement, the Vodafone Shareholder Group
agrees that the Vodafone Shareholder Group shall remove and replace the Verizon
Series V Director as and when, and only as and when, directed in writing by
Verizon. Alternate Directors for each such member of the Board of Directors
shall be appointed as set forth above (which alternates shall serve in place of
any Director or Directors for whom such alternate has been elected as an
alternate) and, in the event that for any reason whatsoever a Director
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Exhibit 2(a)
ceases to or is unable to continue or perform in his capacity as Director, he
will be replaced by an alternate so appointed. The quorum for meetings of the
Board of Directors held following any call shall be one-half (1/2) of all
Directors, which must include at least a majority of the Series A Directors.
(b) Subject to the other provisions of this Agreement and the
Bylaws, the Board of Directors, by majority vote of the Directors present at a
meeting at which a quorum is present, shall elect or appoint, or cause to be
elected or appointed, the Corporation Officers, Subsidiary Officers (to the
extent not restricted by law, Contract or otherwise) and employees or agents of
the Corporation or any Subsidiary in any manner it deems appropriate; provided,
however, that the Chairman of the Board of Directors shall be Fares X. Xxxxxxx
until his resignation or retirement from such position, disability or death
(provided that in any such case his successor or any successive successor shall
be designated by a majority of the Series A Directors or by the holders of the
majority of the Series A Shares). The Chairman of the Board of Directors or his
alternate, as the case may be, shall have the right and power to cast an
additional vote to break a tie or deadlock, except on any matter which requires
a Supermajority Vote.
The number and types of employees hired, retained or dismissed
by the Corporation and the Subsidiaries shall be consistent with the scope of
the operations of the Corporation and the Subsidiaries and the Annual Plan.
(c) The Shareholders or, if so authorized, the Board of
Directors shall appoint such Committees as they deem appropriate, with authority
to act on all matters delegated to each such Committee in accordance with the
Bylaws. Each Committee shall have an even number of members. Such Committees
shall include an Executive Committee, a finance and audit Committee, a human
resources and compensation Committee, and a strategic planning and technology
Committee, the duties and functions of which Committees are set forth in the
Bylaws.
The Executive Committee shall be comprised of eight (8)
members, six (6) of whom shall be designated by the holders of a majority of the
Series A Shares voting at a duly constituted shareholders meeting and two (2) of
whom shall be designated by the holders of a majority of the Series V Shares
voting at a duly constituted shareholders meeting. A majority of the members of
each other Committee shall be designated by a majority vote of the Series A
Shares, and the remaining members shall be designated by a majority vote of the
Series V Shares. The foregoing notwithstanding, for so long as Vodafone and its
Affiliates maintain the Required Shareholding, it shall be entitled to designate
one (1) member of each Committee (which member shall be one of the members who
is, or who otherwise would be, designated by majority vote of the Series V
Shares).
The Verizon Shareholder Group and the Vodafone Shareholder
Group shall each vote the Shares beneficially owned by them in favor of all
nominees and their alternates nominated by the Vodafone Shareholder Group or the
Verizon Shareholder Group pursuant to this Section 3.1(c).
The quorum for meetings of any Committee held following any
call shall be one-half (1/2) of the members of such Committee. Subject to any
Supermajority Vote requirements, Committee action will be effective only if
approved by a majority of the members present at a meeting at which a quorum is
present, which majority includes a majority of the members designated by the
holders of the Series A Shares.
(d) The power to appoint (without prejudice to Section 3.1(e))
and dismiss the Chief Executive Officer, the President, the Director General,
the Chief Operating Officer, the Vice President of Commercial Operations, the
Vice President of Marketing and the Vice President of Technical Operations of
the Corporation shall reside with Fares X. Xxxxxxx or any of his successors as
Chairman of the Board of Directors, provided that the Verizon Series A
Designated Director must agree in writing to such appointment or dismissal. The
power to appoint (without prejudice to Section 3.1(e)) and dismiss all other
Officers shall reside with the Chief Executive Officer.
(e) For so long as Vodafone and its Affiliates in the
aggregate maintain the Required Shareholding, Vodafone shall be entitled to (i)
appoint a Vodafone Officer of the Corporation, (ii) designate a statutory
examiner (comisario) of the Corporation, and (iii) determine the manner in which
the Corporation votes the shares it holds in each Subsidiary with respect to the
following matters: (A) in the case of each Subsidiary in which
E-31
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Exhibit 2(a)
the Corporation is entitled to designate at least two (2) members of the board
of directors or other managing body, the election of one (1) regular and
alternate member of such board of directors or other managing body; and (B) in
the case of each Subsidiary in which the Corporation beneficially owns a greater
than fifty percent (50%) voting interest, (1) the appointment of a Vodafone
Officer, provided that the legal entity in question has one or more Officers
serving the functions of a Chief Operating Officer (or, if applicable, Chief
Sales Officer), Chief Financial Officer, Chief Marketing Officer or Chief
Technical Officer, and (2) the designation of a statutory examiner (comisario).
3.2 Actions of Board of Directors, Committees and Shareholders.
(a) Except as otherwise expressly provided herein, by law or
in the Bylaws, all actions of the Board of Directors, any Committee or the
shareholders of the Corporation shall be taken upon or pursuant to a majority
vote of the Board of Directors, Committee members or of the beneficial owners of
Shares entitled to vote, respectively, who are present at the corresponding
meeting (provided a quorum exists).
(b) The Corporation, the Board of Directors, each Committee
and the Shareholders shall not (and (subject to any rights of other shareholders
in such Subsidiaries) the Corporation shall cause its Subsidiaries to not, and
shall use its best efforts to cause any other entity in which it holds an equity
interest to not) take any of the actions, enter into any commitment to take any
of the actions, or otherwise agree to take any of the actions, specified below,
unless such action has been first approved by a Supermajority Vote:
(i) the acquisition of any business which is not a
Telecommunications Business for a purchase price in excess of U.S.$30,000,000 in
the aggregate;
(ii) the entering into or approval of any joint
venture, partnership or merger plan or transaction within the Telecommunications
Business which involves the investment of more than, or the merger with a
business with assets which exceed, U.S.$100,000,000 in the aggregate (other than
any plan to merge or consolidate with the properties controlled by Affiliates of
Motorola, Inc. or its successors in interest in Regions 1, 2, 3 and 4 or any
investment in any Subsidiary or a joint venture established to provide wireless
telephony services in the 1.8 GHz frequency band in Regions 1 and 4);
(iii) any sale or sales of assets (other than sales
of inventory or superseded or obsolete equipment in the ordinary course of
business) or businesses for consideration exceeding U.S.$30,000,000 in the
aggregate during any fiscal year;
(iv) the incurrence, in any single or any series of
related transactions, of Indebtedness in an amount exceeding U.S.$100,000,000 in
the aggregate during any fiscal year (other than Indebtedness which constitutes
the refinancing or successive refinancing of existing Indebtedness, Indebtedness
which constitutes vendor financing and Indebtedness which constitutes project
financing);
(v) the issuance of capital stock, in any single or
any series of related transactions, in an amount exceeding U.S.$50,000,000 in
the aggregate during any fiscal year (other than capital stock issued pursuant
to any plan to merge or consolidate with the properties controlled by Affiliates
of Motorola, Inc. or its successors in interest in Regions 1, 2, 3 and 4 or any
investment in any Subsidiary or a joint venture established to provide wireless
telephony services in the 1.8 GHz frequency band in Regions 1 and 4);
(vi) the entering into, amending the terms of or
terminating Contracts or transactions with or for the benefit of: (A) any
Affiliate of the Corporation (other than Contracts or transactions solely
between or among the Corporation or a Subsidiary and one or more other
Subsidiaries that are at least ninety percent (90%) owned by the Corporation);
or (B) any of the signatories to this Agreement or any of their respective
Affiliates; provided, however, that no Supermajority Vote approval shall be
required for any renewal, extension, successive renewal or successive extension,
on substantially similar terms and conditions (provided that the parties thereto
may be Affiliates of the current parties), or assignment in whole or in part to
another Subsidiary, of (x) the Master Technical Services Agreement by and
between BAII and Sistecel, S.A. de C.V. effective as of January 1, 1997, and (y)
the Agreement for the Reimbursement of Compensation Expense (Secondment
Agreement) by and between
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Exhibit 2(a)
BAII and Sistecel, S.A. de C.V. effective as of January 1, 1997; provided
further, however, that the aggregate payments to BAII or one of its Affiliates
in any one calendar year under the Master Technical Services Agreement referred
to in clause (x) above or any renewal, extension, successive renewal or
successive extension thereof cannot exceed U.S.$3,000,000 without a
Supermajority Vote and that the aggregate payments to BAII or one of its
Affiliates in any one calendar year under the Agreement for the Reimbursement of
Compensation (Secondment Agreement) referred to in clause (y) above or any
renewal, extension, successive renewal or successive extension thereof cannot
exceed U.S.$10,000,000 without a Supermajority Vote;
(vii) the termination or disposition of the cellular,
fixed wireless, long distance or satellite transmission business in which the
Corporation or any Subsidiary is engaged (or the related network assets) in any
contiguous geographic area from which consolidated annual revenues from the
service proposed to be terminated in each of the two most recent fiscal years
exceeded U.S.$10,000,000, including the termination of the provision of
cellular, fixed wireless local telephony, long distance or satellite
transmission services in any Region;
(viii) the making of any request or application or
the taking of any other action to terminate any Concession relating to cellular,
fixed wireless local telephony, long distance or satellite transmission service,
including without limitation any application to eliminate radio spectrum
licensed or granted for such services;
(ix) the determination of the manner in which shares
or other equity interests held by the Corporation in any other legal entity in
which the Corporation beneficially owns at least a ten percent (10%) equity
interest are voted in connection with any of the matters set forth in (A)
clauses (i) - (x) of this Section 3.2(b), and/or (B) Section 3.2(d)(i)-(iii), as
well as the issuance of proxies for the voting of such shares or other equity
interests in connection with such matters; and
(x) any authorization or grant of any general or
limited power of attorney to any Person with respect to, or any delegation of
authority in connection with, any of the foregoing matters.
(c) The Corporation, the Board of Directors, each Committee
and the Shareholders shall not (and (subject to any rights of other shareholders
in such Subsidiaries) the Corporation shall cause its Subsidiaries to not, and
shall use its best efforts to cause any other entity in which it holds an equity
interest to not) take any of the actions, enter into any commitment to take any
of the actions, or otherwise agree to take any of the actions, specified below,
unless such action has been first approved (either in writing or by the casting
of an affirmative vote at a duly constituted meeting of the Board of Directors
or an authorized Committee) by the Verizon Series A Designated Director:
(i) the issuance of capital stock or any
recapitalization or other change in capital or capital structure (including,
without limitation, any stock split or conversion of stock to another Series),
or any determination that additional financial support is required from the
Shareholders, whether by means of additional capital contributions,
Indebtedness, guarantees or otherwise, or any granting of registration rights
with respect to the capital stock;
(ii) the acquisition of any securities, including the
securities of any other Person;
(iii) the declaration or payment of dividends or
other distributions either (A) in any fiscal year, in excess of twenty-five
percent (25%) of consolidated net income for the prior fiscal year (consolidated
net income shall be calculated in accordance with Mexican GAAP provided that if
such amount is more than one hundred and ten percent (110%) of consolidated net
income under U.S. GAAP for the same period, then consolidated net income shall
be calculated in accordance with U.S. GAAP for purposes of subclause (A) of this
clause (iii) and for purposes of Section 3.7) or (B) except as otherwise
contemplated in Section 3.7, which would trigger a Mexican Tax upon payment to
any Shareholder;
(iv) the declaration or payment of dividends (except
as otherwise required by any future Contract approved by a Supermajority Vote or
by the Verizon Series A Designated Director pursuant to this
E-33
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Exhibit 2(a)
Section 3.2(c)) or other distributions to any security holder (other than the
Corporation or a wholly-owned Subsidiary of the Corporation) of any Subsidiary;
(v) the increase or decrease of the number of
Directors comprising the Board of Directors, or any such change to the board of
directors of any Subsidiary;
(vi) the termination or disposition of a business or
a line of business (or the related assets), including the termination of the
provision of goods or services in a geographic area; provided, however, that the
termination of a line of business from which consolidated annual revenues in
each of the two most recent fiscal years of the Corporation were less than
U.S.$1,000,000 shall not require approval of the Verizon Series A Designated
Director;
(vii) the commencement of any business or line of
business (by start-up, acquisition, expenditure or otherwise), or the expansion
of the scope of any business or line of business into any country other than
Mexico, except for the following businesses or lines of business in the
following countries: (A) the ownership, management, operation and maintenance of
networks for the transmission by the Corporation or any Subsidiary, wholly
within the national borders of Mexico, of data and voice signals using cellular
technology and spectrum in the 825-835 MHz and 870-880 MHz ranges, and (B) any
action or transaction in any country contemplated under an Annual Plan approved
in accordance with clause (xx) of this Section 3.2(c);
(viii) the incurrence, in a transaction or series of
related transactions, of any Material Indebtedness, the incurrence within any
twelve-month period beginning on the Effective Date of Indebtedness which in the
aggregate exceeds U.S.$20,000,000, the extension of any loan or guaranty, or
series of related loans or guaranties, in an amount exceeding U.S.$5,000,000 or
the extension, within any twelve-month period beginning on the Effective Date,
of loans or guaranties which in the aggregate exceed U.S.$20,000,000;
(ix) the making, in a transaction or series of
related transactions, of any Material sale of assets or sale of business or any
Material acquisition of or investment in assets, or a business, or, whether or
not Material, any acquisition of or investment in equity securities (including
securities convertible into equity securities) issued by, or an equity interest
in, any Person;
(x) the making, within any twelve-month period
beginning on the Effective Date, of sales of assets (other than sales of
inventory or superseded or obsolete equipment in the ordinary course of
business) or businesses for consideration which, in the aggregate, exceeds
U.S.$20,000,000, or of acquisitions of or investments in assets (other than
inventory acquired in the ordinary course of business) or businesses for
consideration which, in the aggregate, exceeds U.S.$20,000,000;
(xi) entering into, amending the terms of or
terminating Contracts or transactions with or for the benefit of (A) any
Affiliate (other than transactions solely between or among Subsidiaries in which
the Corporation, directly or indirectly, holds ninety percent (90%) or more of
the capital stock or solely between or among the Corporation and one or more of
such Subsidiaries), or (B) any of the signatories hereto or their Affiliates;
(xii) the entering into or approval of any
transaction or plan of merger, consolidation, dissolution or liquidation;
(xiii) the subjection of any Concession to any Lien
or, except in the ordinary course of business to secure an obligation that is
not for a Material amount, the subjection of any other property or assets to any
Lien;
(xiv) the making of any request or application to
obtain, modify or terminate any Concession including, without limitation, any
application to eliminate, add to or modify radio spectrum, or the taking of any
other action to obtain, modify or terminate any Concession or the willful
failure to take any action necessary to maintain or protect any such Concession;
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Exhibit 2(a)
(xv) the amendment or modification of the Bylaws or
the estatutos sociales of any Subsidiary, or the amendment or modification, or
consent or approval thereto or thereof, to the organizational or governing
documents (including, without limitation, estatutos sociales) of any Person in
which the Corporation or any Subsidiary has a direct or indirect equity interest
(including, without limitation, the amendment or modification of the stated
purpose of any such Person as stated in any such documents);
(xvi) the appointment, nomination, election, removal,
dismissal or replacement of the Corporation's Officers or any Subsidiary Officer
(subject to the terms of, and except as otherwise provided in, Section 3.1), or
a change in the remuneration of the Chairman of the Board of Directors, the
Chief Executive Officer, any other executive officer of the Corporation or a
Subsidiary, and any other employee who would be compensated, following the
taking of such action, at a rate in excess of U.S.$50,000 on an annualized basis
(which amount shall be calculated to include the value of any fringe benefits
not given to substantially all employees of the Corporation and the
Subsidiaries);
(xvii) any appointment or removal of Accountants or
any approval of financial statements;
(xviii) the entering into of any Material Contract
(or series of related Contracts that together are Material);
(xix) the making of any Tax election or the adoption
of any Tax accounting method for Tax purposes, or any agreement or settlement
with any Governmental Entity in connection with the Tax returns or Tax
obligations;
(xx) the approval or modification of the annual
three-year strategic plan or the Annual Plan or any deviation from actions
required to be taken under the Annual Plan;
(xxi) (A) the approval of the terms or the making of
any private or public offering or sale of securities or (B) the approval of any
documentation or communication prepared or otherwise made for any private or
public offering or sale of securities;
(xxii) the authorization or granting of any general
power of attorney for acts of administration or negotiable instruments or of any
general or limited power of attorney for acts of dominion to any Person;
(xxiii) the sharing with any Person or disposition of
any non-public or proprietary technology;
(xxiv) the making of any gift or donation, or series
of related gifts or donations, in an amount exceeding U.S.$5,000 in any calendar
year to any Person;
(xxv) any institution, settlement or default with
regard to any Material (or potentially Material) litigation, or any settlement
or default with regard to any litigation (whether or not Material) in which any
Shareholder, any of the signatories hereto or their Affiliates have interests
adverse to the Corporation or any Subsidiary; and
(xxvi) the agreement to be bound by any Contract to
not compete with another Person or otherwise not engage in any business.
(d) If any of the actions specified in Section 3.2(b) or
3.2(c) is presented for approval at a shareholders meeting, such action shall
not be taken by the Corporation or its Subsidiaries (and (subject to any rights
of other shareholders in such Subsidiaries) the Corporation shall cause its
Subsidiaries to not, and shall use its best efforts to cause any other entity in
which it holds an equity interest to not, take such action, enter into any
commitment to take such action, or otherwise agree to take such action), unless
such action has been approved by a Supermajority Vote of the Extraordinary
Shareholders Meeting or shall previously have been approved by a
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Exhibit 2(a)
Supermajority Vote of the Board of Directors or of a Committee or approved by
the Verizon Series A Designated Director, as applicable.
The Corporation and the Shareholders shall not (and (subject
to any rights of other shareholders in such Subsidiaries) the Corporation shall
cause its Subsidiaries to not, and shall use its best efforts to cause any other
entity in which it holds an equity interest to not) take any of the actions,
enter into any commitment to take any of the actions, or otherwise agree to take
any of the actions specified below, unless such action has been approved by a
Supermajority Vote of the Extraordinary Shareholders Meeting:
(i) any anticipatory dissolution and the designation
of liquidators in connection therewith;
(ii) any fixed or variable capital increases in an
aggregate amount exceeding US$50,000,000 during any fiscal year, other than
capital increases whose proceeds will be used (A) to implement or effect any
plan to merge or consolidate with the properties controlled by Affiliates of
Motorola, Inc. or its successors in interest in Regions 1, 2, 3 or 4, or (B) to
make an investment in any Subsidiary or joint venture established to provide
wireless telephone services in Regions 1 and 4 using 1.8 GHz frequency band; and
(iii) any amendment to that provided in Articles
Three, Five, Six, Seven, Eleven, Section II of Article Thirteen, Fifteen,
Sixteen, Seventeen, Eighteen, Nineteen, Twenty, Twenty-One, Twenty-Two,
Twenty-Three, Twenty-Four, Twenty-Five, Twenty-Six, Twenty-Seven, Twenty-Eight,
Twenty-Nine, Thirty-One or Thirty-Two of the Bylaws.
3.3 Annual Plan and Three-Year Strategic Plan. The Shareholders will
cooperate to cause the majority of the Directors to agree upon an annual
three-year strategic plan and an Annual Plan that is acceptable to the
Shareholders. The approval of an Annual Plan which contemplates an action that
requires a Supermajority Vote and/or the approval of the Verizon Series A
Designated Director shall not constitute the requisite approval of such action
(and such shall not be implemented by the Corporation unless separately approved
by Supermajority Vote and/or by the Verizon Series A Designated Director, as
applicable), unless (a) the action was clearly and accurately described in the
Annual Plan, (b) the Annual Plan presented to the Board of Directors and
approved by it explicitly stated that such action is a "Supermajority Action
Item," and (iii) the Annual Plan so presented was approved by Supermajority Vote
and/or by the Verizon Series A Designated Director, as applicable.
3.4 Contracts with Affiliates. The Corporation will not, and will not
permit any Subsidiary to, enter into any Contract or transaction with or for the
benefit of any of their Affiliates (other than transactions with, between or
among wholly-owned Subsidiaries) or any of the signatories hereto or their
Affiliates, which is not at prices and on other terms at least as favorable to
the Corporation or the Subsidiary as those which could be obtained on an
arms-length basis from an unaffiliated third party.
3.5 Limitation on Acts of Shareholders. Except to the extent expressly
provided herein, no Shareholder in such capacity shall have the power to bind or
commit the Corporation or any other Shareholder to any obligation or Contract
with any third party.
3.6 Conditions to Offerings. The parties acknowledge and agree that,
among other conditions that the Series A Directors may establish from time to
time in connection with their vote on any matter, the majority of Series A
Directors shall have the right to condition any approval regarding any private
or public offering or sale of securities of the Corporation or any Subsidiary
upon the timely receipt prior to the closing of any such transaction by the
Verizon Shareholder Group of a "comfort letter" from the Accountants relating to
such transaction in form and substance reasonably acceptable to the Verizon
Shareholder Group, and upon the satisfaction of the majority of Series A
Directors with the form and substance of any documentation or communication
proposed to be used in connection with any such offering or sale.
3.7 Dividends. Each of the Verizon Shareholder Group and the Vodafone
Shareholder Group shall have the right to unilaterally require that the
Corporation pay dividends during any fiscal year in an amount of up to
twenty-five percent (25%) of the Corporation's consolidated net income
(calculated in accordance with Section
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Exhibit 2(a)
3.2(c)(iii)) for the prior fiscal year; provided that such payment of dividends
is not prohibited by applicable law or any Contract of the Corporation and does
not adversely affect the reasonably foreseeable cash flow or capital
requirements of the Corporation; provided further that the Subsidiaries of the
Corporation are not prohibited or otherwise restricted by applicable law or
Contract from upstreaming sufficient dividends to the Corporation to pay such
dividends. Each time that the Verizon Shareholder Group or the Vodafone
Shareholder Group exercises its rights pursuant to this Section 3.7, the
Shareholders shall vote, and shall cause the Series A Directors and Series V
Directors to vote, in favor of the prompt payment of the required dividend.
ARTICLE IV
ACCOUNTS, REPORTS, RIGHT OF INSPECTION
AND OTHER FINANCIAL MATTERS
4.1 Fiscal Year. The fiscal year of the Corporation and each Subsidiary
shall end on December 31 of each year.
4.2 Books, Records and Reports.
(a) The Corporation shall maintain, and shall cause each
Subsidiary to maintain, proper books and accounts on an accrual basis and in
accordance with Mexican GAAP. Such books and records shall also be maintained in
such a manner as to permit the preparation of quarterly and annual reports in
accordance with U.S. GAAP. The books and records of the Corporation and the
Subsidiaries shall be kept in the Spanish language, except that books and
records maintained in a country other than Mexico in connection with the
Corporation's or a Subsidiary's conduct of business in such country may be
maintained in the official language of such country. The minute books, the
reports referenced in Section 4.2(b) below and any special report a Shareholder
shall from time to time request shall be kept in both the Spanish and English
languages and as between the Shareholders, or as between the Shareholders and
the Corporation or any Subsidiary, the English language version of any such
documents, other than the minute books, shall govern and be controlling. As to
the minute books, as between the Shareholders, or as between the Shareholders
and the Corporation or any Subsidiary, the Spanish language version shall govern
and be controlling. Annually upon the close of the year (and at such other times
as shall be approved by the Board of Directors), all such books and accounts
shall be audited by the Accountants.
(b) Each of the Vodafone Shareholder Group and the Verizon
Shareholder Group shall be furnished with the following:
(i) within 21 days after the end of each calendar
month, unaudited monthly consolidated and consolidating statements of income and
of sources and uses of cash, and an unaudited consolidated and consolidating
month-end balance sheet for the Corporation and each Subsidiary;
(ii) within 30 days after the end of each of the
first three quarters of each fiscal year, an unaudited consolidated and
consolidating balance sheet of the Corporation and each Subsidiary as of the end
of such quarter and the related unaudited statements of income, shareholders'
equity and changes in financial situation for such quarter and for the year to
date, in each case prepared in accordance with Mexican GAAP, setting forth all
adjustments necessary to convert to U.S. GAAP, and setting forth in comparative
form the figures as at the end of and for the comparable period in the previous
fiscal year and such other unaudited financial and operating information as may
be reasonably requested by any Shareholder;
(iii) within 120 days after the end of each fiscal
year, audited consolidated and consolidating financial statements, including a
consolidated and consolidating balance sheet of the Corporation and each
Subsidiary as at the end of such year, and the related statements of income,
shareholders' equity and changes in financial situation for such year, in each
case prepared in accordance with each of Mexican GAAP and U.S. GAAP and setting
forth in each case in comparative form the figures as at the end of and for the
previous fiscal year, together with all necessary footnotes, and the report of
the Accountants on such financial statements; and
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Exhibit 2(a)
(iv) upon written request, promptly after the sending
or receipt thereof, copies of all communications between the Corporation or any
Subsidiary and any Governmental Entity that relate to any Concession or to
compliance with applicable securities laws.
4.3 Right of Inspection. Each of the Vodafone Shareholder Group and the
Verizon Shareholder Group or any of their respective duly authorized
representatives shall have full and complete access, at any time during normal
business hours and upon reasonable notice, to the books and records, accounts,
properties and/or operations of the Corporation and each Subsidiary for the
purposes of inspection, examination or copying or for any other purpose
including, without limitation, an audit of the Corporation or any Subsidiary.
The full cooperation of the Corporation, each Subsidiary, its respective
directors, officers and employees and the Accountants will be extended for such
purposes. Such examination and inspection may be conducted by a Shareholder's
employees, by its independent certified public accountants and/or by its other
agents. The Corporation shall also furnish, and shall cause each Subsidiary to
furnish, to each of the Vodafone Shareholder Group and the Verizon Shareholder
Group (or any of their respective duly authorized representatives) such other
records, reports and data as such Shareholder or Shareholder representative may
reasonably require for compliance with legal and contractual obligations,
including Mexican and U.S. tax reporting requirements.
4.4 Financial Policy Control.
(a) Overall Policy. The overall financial policy of the
Corporation and each Subsidiary shall be established by the Board of Directors
in accordance with the provisions of Section 3.2.
(b) Annual Operating and Capital Budgets. The Annual Plan and
a three-year strategic plan forecasting annual financial performance for such
period will be prepared by the Director General pursuant to policies established
by the Board of Directors and submitted to the Board of Directors for approval
pursuant to Section 3.2. All plans and budgets will be divided by Region for
Mexico and by country elsewhere. The Director General shall circulate successive
drafts of each year's Annual Plan and three-year strategic plan to the Vodafone
Shareholder Group and the Verizon Shareholder Group for review prior to
submission to the Board of Directors. The President shall submit to the Board of
Directors no later than November 15 of each year his final proposed Annual Plan
and three-year strategic plan for the period beginning on the next January 1st.
The President shall consult with, and shall afford the Vodafone Shareholder
Group and the Verizon Shareholder Group reasonable opportunity to comment on,
each successive draft as well as the final version of the Annual Plan and the
three-year strategic plan to be submitted to the Board of Directors.
4.5 Dividend Instructions. The Corporation shall comply with any and
all lawful instructions of any Shareholder as to the method of making any
dividend payment or payments to or on behalf of said Shareholder or of
depositing or utilizing such payment or payments.
ARTICLE V
NON-COMPETITION; CERTAIN CORPORATE
OPPORTUNITIES; CONFIDENTIALITY
5.1 Certain Definitions. For purposes of this Article V only:
(a) The term "Acquisition" means the acquisition, in a single
transaction or series of related transactions, of some or all of the equity
securities or assets of a Person or a Group (as hereinafter defined), if such
Person or Group (in the case of an acquisition of securities) engages in the
Telecommunications Business in Mexico or if such assets (in the case of an
acquisition of assets) are used and/or are contemplated to be used following
such acquisition to engage in the Telecommunications Business in Mexico.
(b) The term "Merger" means the merger or consolidation with
or into a Person or Group if such Person or Group engages in the
Telecommunications Business in Mexico.
(c) The term "Group" means a group of Persons who are
Affiliates of each other.
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Exhibit 2(a)
(d) To "engage in" the Telecommunications Business means: (i)
actively engaging in, supervising or managing such business; or (ii) entering
into or attempting to enter into such business, either alone or with any other
Person or Group.
(e) The term "Publicly Traded" shall mean, as to securities,
securities listed on the Bolsa Mexicana de Valores, registered under the
Exchange Act, or listed or traded on any European or Asian stock exchange.
5.2 Non-Competition. Except as otherwise set forth in this Section 5.2,
each Shareholder covenants and agrees that neither it nor any of its Affiliates
(other than the Corporation and the Subsidiaries) will, directly or indirectly,
on behalf of itself or on behalf of any other Person, engage in the
Telecommunications Business in Mexico. Notwithstanding anything to the contrary
contained in this Article V (other than the immediately succeeding paragraph
except for subparagraph (d)), each Shareholder covenants and agrees that neither
it nor any of its Affiliates (other than the Corporation and the Subsidiaries)
shall (i) provide consulting services, advisory services or software with
respect to the Telecommunications Business in Mexico to Telefonos de Mexico,
S.A. de C.V., its successors, or any of its or their Affiliates or subsidiaries,
or any other major direct competitor of the Corporation in Mexico, or (ii)
directly or indirectly market, on a wholesale, retail or reseller basis, any
services with respect to the Telecommunications Business in Mexico provided by
Telefonos de Mexico, S.A. de C.V., its successors, or any of its or their
Affiliates or subsidiaries, or any other major direct competitor of the
Corporation in Mexico. Except as stated in the preceding sentence, nothing in
this Section 5.2 shall be deemed to prohibit a Shareholder or any of its
Affiliates from providing consulting services, advisory services or software
with respect to the Telecommunications Business in Mexico.
The preceding paragraph of this Section 5.2 shall not prohibit the
Shareholders from directly or indirectly engaging in the Telecommunications
Business in the following instances:
(a) A Shareholder and/or any of its Affiliates may own, in the
aggregate, not more than five percent (5%) of any Publicly Traded securities of
a Person, provided that such ownership represents a passive investment and
neither such Shareholder nor its Affiliates in any way, either directly or
indirectly, manages or exercises control over any such Person, guarantees any of
such Person's financial obligations, otherwise takes any part in such Person's
business (other than exercising the rights of the Shareholder or Affiliate as a
passive shareholder), or seeks to do any of the foregoing, except as otherwise
permitted under this Article V.
(b) Subject to Section 5.5, a Shareholder or any of its
Affiliates may engage in a Telecommunications Business in Mexico if such
engagement in a Telecommunications Business results from an Acquisition by, or
Merger involving, such Shareholder or any of its Affiliates, unless a
significant part of the assets directly or indirectly acquired in such
Acquisition or Merger are used to engage in Telecommunications Businesses in
Mexico. Such test for significance shall be met only if both of the following
conditions are met: (i) the net book value of any such assets directly or
indirectly acquired in such Acquisition or Merger that are used primarily to
engage in the Telecommunications Business in Mexico exceeds ten percent (10%) of
the net book value of all assets directly or indirectly acquired in such
Acquisition or Merger; and (ii) the total revenues derived in the calendar year
immediately preceding such Acquisition or Merger primarily from the
Telecommunications Business in Mexico acquired in such Acquisition or Merger
exceeds ten percent (10%) of the total revenues during such year of the Person
or Group whose assets or securities the Shareholder (or any Affiliate) acquired
in any such Acquisition or with or into which the Shareholder (or any Affiliate)
merged or consolidated with or into as a result of such Merger.
(c) The Shareholders and their respective Affiliates may
provide telecommunications goods in Mexico.
(d) Subject to the first paragraph of this Section 5.2, a
Shareholder or any of its Affiliates may engage in a Telecommunications Business
in Mexico if the Opportunity (as hereinafter defined) was brought to the
Corporation in accordance with Section 5.3 and the terms of such Section permit
such Shareholder or Affiliate to engage in such Telecommunications Business.
E-39
17
Exhibit 2(a)
(e) Vodafone or its Affiliates may engage in a
Telecommunications Business in Mexico if and to the extent the Verizon
Shareholder Group has determined that the Corporation and the Subsidiaries may
not engage in such Telecommunications Business pursuant to Section 10.2(c).
(f) The Shareholders and their Affiliates may provide to, or
purchase from, any Person tariffed services and any other services which must be
provided by virtue of the provider's status as a common carrier or by virtue of
a legal or regulatory requirement.
(g) A Shareholder's Affiliate that, at the time hereof or in
the future, provides telecommunications services in countries outside of Mexico
(i) may provide transit to or through Mexican carriers, (ii) may provide
facilities for the termination of traffic outside of Mexico that originates
within Mexico, (iii) may provide facilities for the origination of traffic
outside of Mexico that terminates in Mexico, and (iv) may freely obtain transit
facilities within Mexico. A Shareholder's Affiliate may also freely contract for
and provide roaming services for its own subscribers in Mexico, and may provide
roaming services within its own service area for subscribers of other cellular
carriers.
(h) Subject to Section 5.2(a) and Section 5.5, a Shareholder
and/or any of its Affiliates may continue to own and hold (and need not Transfer
in whole or in part) any interest in a Person which has Publicly Traded equity
securities if, at the time such interest was acquired, such Person did not
engage, and to the knowledge of the Shareholder or its Affiliates did not intend
to engage, in the Telecommunications Business in Mexico but after such interest
was acquired such Person began to engage in the Telecommunications Business in
Mexico.
(i) Subject to Section 5.5, the applicable Vodafone Affiliates
may continue to participate in the ownership and management of Globalstar de
Mexico, S. de X.X. de C.V., a Mexican variable capital limited liability company
incorporated pursuant to Public Instrument No. 65,914 dated September 4, 1996,
granted before Lic. Xxxx Xxxxxx del Xxxxx, Public Notary No. 92 of Mexico City,
Federal District and recorded in the Public Commercial Registry of said Federal
District under Mercantile Folio No. 212857 which is a provider of
satellite-based digital telecommunications services.
(j) Subject to Section 5.5, (i) the applicable Verizon
Affiliates may continue to participate in the ownership and management of (A)
Aerocomunicaciones, S.A. de C.V., a provider of in-air telecommunications
services, and (B) Mexfone, S.A. de C.V., a provider of maintenance, billing and
other services to providers of in-air telecommunications services; and (ii) the
applicable Verizon Affiliates may continue to own a no greater than 10% equity
interest in Movitel del Noroeste, S.A. de C.V., the A-Band cellular
concessionaire in the Mexican states of Sonora and Sinaloa, Movicelular, S.A. de
C.V., the commercializer of the services of Movitel del Noroeste, S.A. de C.V.,
and Moviservicios, S.A. de C.V., the provider of human resources to Movitel del
Noroeste, S.A. de C.V. and Movicelular, S.A. de C.V.
(k) The applicable Verizon Affiliates may continue to own a no
greater than 10% equity interest in Genuity Inc. ("Genuity"), a facilities-based
provider of managed Internet infrastructure services to enterprises and service
providers, and may exercise their rights to increase their ownership interests
in Genuity and thereafter to hold such increased interests and participate in
the management of Genuity; provided that if following the date, if any, when
Verizon or its Affiliates increase their ownership interests in and assume
control of the management of Genuity, Genuity shall enter into new lines of
business or expand its then-existing businesses in such a way that it becomes a
major direct competitor of the Corporation, Verizon shall be required to comply
with Section 5.5 with respect to its investment in Genuity.
5.3 Corporate Opportunities. Each Shareholder agrees that it shall
bring to the Corporation any and all opportunities in respect of the
Telecommunications Business in Mexico (each an "Opportunity") available to it or
its Affiliates other than the Opportunities described in Sections 5.2(a)-(c) and
(e)-(k) above.
Once an Opportunity is brought to the Corporation by written notice to
the Chairman of the Board of Directors and the Director General of the
Corporation describing the terms of such Opportunity in reasonable detail, the
Shareholder and/or any Affiliate shall be free to engage in the
Telecommunications Business to which such Opportunity relates either (a) to the
full extent of such Opportunity, if the Corporation declines to participate in
such Opportunity pursuant to this Section 5.3 and Section 5.4 or, (b) in the
event the Corporation elects to participate only
E-40
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Exhibit 2(a)
in part in such Opportunity, to the extent of any interest the Corporation does
not take pursuant to this Section 5.3 and Section 5.4.
If with respect to an Opportunity that the Shareholder is required to
bring to the Corporation pursuant to this Section 5.3, the investment
Opportunity available to the Shareholder (or Affiliate of the Shareholder) is
not at the corporate or entity level of the Telecommunications Business in
Mexico (but is rather at the parent company level or at another level between
the parent company level and the corporate or entity level of such
Telecommunications Business in Mexico), the Shareholder shall offer to sell the
required interest to the Corporation at the corporate or entity level of such
Telecommunications Business in Mexico unless, in the opinion of the Shareholder,
it is impracticable to make such offer at such level, in which case such offer
shall be made at the level at which the Opportunity is available to the
Shareholder (or Affiliate). If such offer is made at the level at which the
Opportunity is available to the Shareholder (or Affiliate), the offered interest
shall equal one hundred percent (100%) of the quotient of the value of such
Telecommunications Business in Mexico divided by the total value of the
Opportunity available to the Shareholder (or Affiliate), determined as of the
date of such Acquisition or Merger. The price to be paid by the Corporation for
any such interest offered to it shall equal the proportional price paid for such
Opportunity by the Shareholder (or Affiliate), if readily determinable from the
total Acquisition or Merger price or, if not readily determinable therefrom,
shall equal the fair market value of the Opportunity presented to the
Corporation.
5.4 Special Vote. The Chairman of the Board of Directors or the
Director General of the Corporation shall promptly call a special meeting of the
Executive Committee or of the Board of Directors to be held within 15 days
following receipt of the written notice of any Opportunity offered by a
Shareholder pursuant to Section 5.3. At such meeting, the Executive Committee or
the Board of Directors, acting pursuant to a Special Vote (as hereinafter
defined), shall determine whether the Corporation wishes to pursue such
Opportunity (in whole or in part or not at all) and shall give written notice of
such determination to such Shareholder. If the Corporation gives notice that it
does not wish to pursue such Opportunity or accept such offer, if it gives no
notice within the 15-day period following receipt of the written notice of any
Opportunity, or if it gives notice of intention to pursue the Opportunity or
accept such offer but then fails to do so within a reasonable period of time,
then the Shareholder may engage in the Telecommunications Business described in
its notice without regard to the terms of Section 5.3. A "Special Vote" means
(a) the affirmative vote of a majority of the total Series V Directors and the
Vodafone Series A Director, if any, in the case of Opportunities brought by the
Verizon Shareholder Group or an Affiliate thereof, or (b) the affirmative vote
of a majority of the Series A Directors (excluding the Vodafone Series A
Director, if any) in the case of Opportunities brought by the Vodafone
Shareholder Group; for purposes of this Section, a Special Vote may occur at a
meeting of the Board of Directors that does not meet the quorum requirements if
such quorum requirements are not met due to the absence of (i) any Series A
Director in the case of Opportunities brought by the Verizon Shareholder Group
or an Affiliate thereof or (ii) any Series V Director and/or the Vodafone Series
A Director, if any, in the case of Opportunities brought by the Vodafone
Shareholder Group or an Affiliate thereof.
5.5 Disposition Requirement. If a Shareholder or any of its Affiliates
shall engage in the Telecommunications Business in Mexico as permitted by
Sections 5.2(b), 5.2(h), 5.2(i), 5.2(j) or (to the extent provided therein)
5.2(k), and the Person engaging in such Telecommunications Business becomes a
major direct competitor of the Corporation, the Corporation may notify the
Shareholder of such fact. If such notice is given, the Shareholder shall, within
60 days of receipt of such notice, either (a) offer (or cause the relevant
Affiliate to offer) the Corporation the opportunity to purchase a one hundred
percent (100%) interest in the Shareholder's or such Affiliate's share of such
Telecommunications Business in Mexico at a price equal to one hundred percent
(100%) of the fair market value of the Shareholder's (or its Affiliate's)
interest and otherwise on the same terms and conditions as are then applicable
to the Shareholder or such Affiliate, (b) if the Telecommunications Business in
Mexico is not at the corporate or entity level of the Person in whom the
Shareholder or its Affiliate owns an interest, but is rather at a subsidiary
level, and it is impractical for the Shareholder to offer to sell the required
interest to the Corporation at the corporate or entity level of such
Telecommunications Business in Mexico, offer (or cause the relevant Affiliate to
offer) the Corporation the opportunity to purchase an interest at the level at
which the opportunity is available to the Shareholder or Affiliate (in which
case the offered interest shall equal one hundred percent (100%) of the quotient
of the value of such Telecommunications Business in Mexico divided by the total
value of the interest owned by and opportunity available to the Shareholder (or
Affiliate), determined as of the date of the proposed sale, and the price shall
be the fair market value of the offered interest), (c) agree to divest itself of
its interest in such Telecommunications Business in Mexico within one year of
the date of the Corporation's notice, or (d) in the case
E-41
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Exhibit 2(a)
of the Vodafone Shareholder Group, offer to sell to the Verizon Shareholder
Group or its designee all of its Shares and, in the case of the Verizon
Shareholder Group, offer to sell to any one or more members of the Vodafone
Shareholder Group all of its Shares, in each case, at a price equal to the then
current market value of such Shares, or if no market exists for such Shares, at
the then fair market value thereof, in which case the Vodafone Shareholder Group
or the Verizon Shareholder Group, as the case may be, shall have 15 days
following written notice of such offer to accept such offer. The fair market
value of any Series A Shares for which no market exists shall be the average
closing market price on the New York Stock Exchange of the Series V American
Depositary Share over the ten trading days immediately preceding the date of the
written notice of such offer divided by the number of shares represented by such
American Depositary Share.
5.6 Confidentiality.
(a) For purposes of this Agreement, "Confidential Information"
shall mean any financial, technical, operational or other information
(including, without limitation, trade secrets, inventions, processes, customer
lists and know-how) which (i) originates from the Corporation or a Subsidiary in
the course of its business activities and is conspicuously marked
"confidential", "proprietary" or words of similar meaning, (ii) is provided to
the Corporation or a Subsidiary by a Shareholder or its Affiliates, and is
conspicuously marked "confidential," "proprietary" or words of similar meaning,
(iii) is orally disclosed to a Shareholder or its Affiliates by the Corporation
or a Subsidiary and is identified at the time of disclosure as being
confidential or (iv) is orally disclosed to the Corporation or its Subsidiary by
a Shareholder or its Affiliates and is identified at the time of disclosure as
being confidential.
(b) Any Confidential Information provided to the Corporation
or a Subsidiary by a Shareholder, regardless of whether such information
originates from the Shareholder or any of its Affiliates, shall be and remain
the disclosing Shareholder's exclusive property. For the three (3) year period
following the date of disclosure (or such longer period as the Shareholder
making such disclosure shall reasonably require prior to any such disclosure),
any recipient Shareholder and the Corporation and the Subsidiaries shall (i)
keep such Confidential Information confidential and provide the same to their
respective employees and agents only on a need-to-know basis, (ii) not publish
or disclose such Confidential Information to others without the prior consent of
the disclosing Shareholder, (iii) use such Confidential Information only in
connection with the business of the Corporation and the Subsidiaries, and (iv)
promptly return such Confidential Information to the supplying Shareholder upon
the latter's written request.
(c) For the three-year period after the disclosure by the
Corporation or any Subsidiary to a Shareholder or Affiliate of a Shareholder of
its Confidential Information (or such longer period as the Corporation shall
reasonably require prior to any such disclosure), the recipient Shareholder and
its Affiliates shall (i) keep such Confidential Information confidential, (ii)
not publish or disclose such Confidential Information to anyone other than its
Affiliates without the prior written consent of the Corporation, (iii) not
publish or disclose such Confidential Information to any Affiliate without the
prior written consent of the ultimate parent entity of the other Shareholder
Group (namely Vodafone for the Vodafone Shareholder Group, and Verizon for the
Verizon Shareholder Group) if such Affiliate, or any beneficial owner of such
Affiliate other than such Shareholder, is a direct or indirect competitor of the
Corporation or of any Person in which the ultimate parent entity of the other
Shareholder Group owns a direct or indirect beneficial interest, and (iv)
promptly return such Confidential Information to the Corporation or the
appropriate Subsidiary upon the written request therefor by the Corporation or
such Subsidiary.
Notwithstanding anything herein to the contrary, a recipient
Shareholder shall have the right to disclose Confidential Information of the
Corporation or any Subsidiary to unaffiliated third parties retained by it
(including, without limitation, attorneys, accountants and consultants) for the
internal purposes of the recipient Shareholder; provided, however, that such
unaffiliated third party shall execute a written agreement with the recipient
Shareholder or its Affiliate in which it agrees to keep such Confidential
Information confidential, and provided further that such recipient Shareholder
shall be responsible to the Corporation or the disclosing Subsidiary, as the
case may be, for any breach by the unaffiliated third party of the
confidentiality of the Confidential Information.
(d) The restrictions set forth in clauses (b) and (c) shall
cease to apply or shall not apply, as the case may be, to any Shareholder,
Shareholder's Affiliate or the Corporation, as the case may be, regarding any
E-42
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Exhibit 2(a)
Confidential Information which or whose substance (i) is already in the
possession of such recipient Person without accompanying use or disclosure
restrictions prior to such Person's receipt thereof from the supplying
Shareholder, Shareholder's Affiliates or the Corporation or a Subsidiary, as the
case may be; (ii) becomes or has been made publicly available by any Person
other than the recipient Shareholder, Shareholder's Affiliate or the Corporation
or a Subsidiary; or (iii) has been independently developed by the recipient
Shareholder, Shareholder's Affiliate or the Corporation or a Subsidiary prior to
such Person's receipt of the related Confidential Information. Additionally,
neither any Shareholder or Shareholder's Affiliate nor the Corporation or any
Subsidiary shall be deemed in breach of this Section 5.6 if it discloses
Confidential Information in the course of any legal or regulatory proceeding or
to any Governmental Entity pursuant to lawful demand made therein or thereby or
if such disclosure is otherwise required by law (including applicable securities
laws) or applicable stock exchange regulation; provided, however, that if a
Shareholder, such Shareholder's Affiliate or the Corporation or a Subsidiary
receives any such demand or otherwise believes it is compelled by law to
disclose Confidential Information of the other Shareholder or the Corporation or
any of its Subsidiaries, such recipient shall give written notice thereof to the
party (the Shareholder, Shareholder's Affiliates, the Corporation or the
applicable Subsidiary) which supplied the Confidential Information sought by
such demand, so as to afford the supplying party an opportunity to contest the
demand or legal requirement.
ARTICLE VI
TRANSFERS OF SHARES AND OTHER INTERESTS
6.1 Prohibited Transfers.
(a) Notwithstanding anything to the contrary herein, no
Shareholder may Transfer any Shares to a Governmental Entity that is not Mexican
at any time hereafter if such Transfer is not permissible under Mexican law or
regulations.
(b) Any Transfer of Shares made without full compliance with
the provisions of this Article VI shall be null, void and of no force or effect,
and the Corporation shall not record any such Transfer on its books or
shareholders register.
6.2 Transfers to and Purchases by Affiliates. The Verizon Shareholder
Group may at any time after the Effective Date Transfer any of the Shares
beneficially owned by it to any Affiliate of Verizon, and the Vodafone
Shareholder Group may at any time after the Effective Date Transfer any of the
Shares beneficially owned by it to any Affiliate of Vodafone; provided, however,
that any such transferee must agree in writing to be bound by all of the
provisions of this Agreement as a member of the Transferring Shareholder's
Shareholder Group before such Transfer may occur or be committed to, and such
transferee shall be deemed a Shareholder, a member of the Transferring
Shareholder's Shareholder Group and a party hereto immediately upon such
Transfer.
6.3 Reporting Obligations Upon Transfers of Shares. Promptly after any
Transfer of Shares (a) by any Shareholder to any of its Affiliates, or (b) by
any Person to any Shareholder or Affiliate of a Shareholder, the transferring
Shareholder, the acquiring Shareholder or the Shareholder whose Affiliate
acquired Shares shall (i) notify the Corporation and the other Shareholders in
writing of the number of Shares Transferred, the Series of such Transferred
Shares and the date of the Transfer, and (ii) file any required disclosure
document relating to the Transfer or any amendment thereto with the SEC.
6.4 Right of First Refusal.
(a) In the event that a member of the Verizon Shareholder
Group desires to make a Verizon Subject Transfer, or in the event that a member
of the Vodafone Shareholder Group desires to make a Vodafone Subject Transfer
(each such member of the Verizon Shareholder Group and the Vodafone Shareholder
Group in such circumstance a "Transferring Shareholder") (i) it must have
received, prior to making or agreeing to make such Transfer, a bona fide written
offer for such Series A Shares from a Person not Affiliated with such
Transferring Shareholder or (ii) it must have irrevocably decided to make a sale
of such Series A Shares in one or more public securities markets on which such
Series A Shares are traded (a "Market Sale") and, before making or agreeing to
make such Transfer, shall give notice to each member of the Verizon Shareholder
Group, in the case of a Vodafone Subject Transfer, or to each member of the
Vodafone Shareholder Group, in the case of a Verizon Subject Transfer
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Exhibit 2(a)
(such intended recipient or recipients of such notice are referred to as the
"Offeree Shareholders", whether one or more) and to the Corporation of the
number of Series A Shares proposed to be Transferred (the "Offered Shares"), of
the proposed transferee thereof (or, in the case of a proposed Market Sale, that
a Market Sale is intended) and of the price and all other material terms and
conditions of the proposed Transfer (such notice shall include a copy of any
bona fide written offer and is hereinafter referred to as the "Offer Notice");
provided, however, that in the case of a Verizon Subject Transfer, the Offer
Notice shall also separately include a two percent (2%) premium on the purchase
price to be paid by the Vodafone Shareholder Group in the event it exercises its
rights of first refusal under this Section 6.4. The price specified in the Offer
Notice with respect to a Market Sale shall be the average price at which the
Series A Shares last traded during the preceding five trading days on the
principal exchange or in the principal market on or in which such Market Sale is
proposed to be effected (the "Market Price"). The Offer Notice shall constitute
an irrevocable offer (the "Right of First Refusal Offer") subject to the
provisions of this Article VI by the Transferring Shareholder to sell to the
Offeree Shareholders (and their respective designates, if any) all (but not less
than all) of the Offered Shares, upon the terms set forth in the Offer Notice
or, at the option of the Offeree Shareholders (and such designates), pursuant to
the all cash alternative purchase price established pursuant to Section 6.4(c)
hereof.
(b) The Offer Notice shall be considered to be delivered to
each Offeree Shareholder and the Corporation when deemed delivered pursuant to
Article IX hereof. The date on which the Offer Notice is delivered to the
Verizon Shareholder Group is referred to herein as the "Notice Date."
(c) In the event that the bona fide written offer transmitted
with the Offer Notice provides for consideration to be paid by the proposed
transferee other than wholly in cash, the Transferring Shareholder shall, in
good faith, specify in the Offer Notice an all cash alternative purchase price
of equivalent value (discounted to present value). In the event that the Offeree
Shareholders and/or their respective designates representing a majority of the
number of Series A Shares beneficially owned by all Offeree Shareholders shall
determine by vote or consent on or before fifteen (15) days after the Notice
Date that the all cash alternative purchase price proposed by the Transferring
Shareholder is not acceptable, they shall so notify the Transferring Shareholder
in writing on or before such fifteenth day, specifying in such notice their
proposed all cash alternative purchase price of equivalent value (discounted to
present value), stating in such notice the name, address and telecopier number
of the Offeree Shareholder or Offeree Shareholder designate who shall be the
notice party for the Offeree Shareholders and such designate(s) for purposes of
communications relating to this Section 6.4(c) for the duration of the
then-current Right of First Refusal Offer and designating in such notice an
evaluator who is a member of an investment banking firm of national reputation
in the United States or Mexico who they reasonably believe to be expert in such
valuations. If for whatever reason no such notice is delivered to the
Transferring Shareholder by the Offeree Shareholders and/or Offeree Shareholder
designates on or before such fifteenth day, the all cash alternative purchase
price specified in the Offer Notice by the Transferring Shareholder shall be the
all cash alternative purchase price. If such notice is timely delivered to the
Transferring Shareholder, the Transferring Shareholder shall on or before the
fifth day after receipt of such notice designate in writing to the Offeree
Shareholders as a second evaluator another investment banker meeting such
description (unless the Transferring Shareholder agrees in writing within such
five day period to the all cash alternative purchase price specified, or to
abide by the decision of the evaluator specified, by the Offeree Shareholders
and/or Offeree Shareholder designates). If the Transferring Shareholder does not
designate such second evaluator in writing to the Offeree Shareholders (or does
not agree in writing to the cash alternative purchase price specified, or to
abide by the decision of the evaluator specified, by the Offeree Shareholders
and/or the Offeree Shareholder designates) on or before such fifth day, the
Transferring Shareholder shall be deemed to have agreed to the all cash
alternative purchase price specified by the Offeree Shareholders and/or such
designates. If a second evaluator is timely designated by the Transferring
Shareholder, the two evaluators shall each specify a fair all cash equivalent
purchase price on or before the tenth day after the appointment of the second
evaluator. If such two cash equivalent purchase prices vary by less than ten
percent (10%) of the higher of such prices, the average of such two prices shall
be the all cash equivalent purchase price. If such two prices vary by such
percentage or more than such percentage, the two evaluators shall on or before
the third day after such determination designate a third evaluator meeting the
above description for evaluators. If the first two evaluators cannot agree in a
timely manner on the choice of a third evaluator, they shall so notify the
parties and any party may request the appropriate official of the International
Chamber of Commerce to appoint an impartial third Person to act as the third
evaluator. Once designated, the third evaluator shall specify a fair all cash
equivalent purchase price on or before the tenth day after the designation of
such third appraiser. The determination of two of the three evaluators shall be
binding and shall be the all cash alternative; provided, however, that, if no
two evaluations agree as to the
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Exhibit 2(a)
fair all cash equivalent purchase price, the average of the two closest all cash
equivalent purchase prices shall be the all cash equivalent purchase price. The
expenses of the evaluators shall be shared one-half each by the Transferring
Shareholder and the Offeree Shareholders who (directly or through their
respective designates) voted that the all cash alternative purchase price
proposed by the Transferring Shareholder was not acceptable.
(d) The Offeree Shareholders and/or Offeree Shareholder
designates may at their option accept the Right of First Refusal Offer on the
terms of the Offer Notice or, if so determined by Offeree Shareholders and/or
Offeree Shareholder designates representing a majority of the number of Series A
Shares beneficially owned by all Offeree Shareholders wishing to acquire (or to
have its designates acquire) Offered Shares, at the all cash alternative
purchase price. The Right of First Refusal Offer may be accepted on such terms,
but only in whole, by delivering written notice (the "Acceptance Notice") to the
Transferring Shareholder on any date on or before the 30th day (or 10th day in
the case of a Market Sale) following the later of the Notice Date or the date
the all cash alternative purchase price is finally determined pursuant to
Section 6.4(c). The number of Offered Shares to be acquired by each Offeree
Shareholder or Offeree Shareholder designate shall be determined as agreed to in
writing prior to the delivery of the Acceptance Notice among the Offeree
Shareholders and Offeree Shareholder designates electing to accept such Right of
First Refusal Offer.
(e) Acceptance of Offer; Closing. If the Offeree Shareholders
and/or Offeree Shareholder designates accept the Right of First Refusal Offer in
a timely manner, the Transfer of the Offered Shares shall close at the principal
office of the Corporation on or before the 30th day (or second Business Day in
the case of a Market Sale) after receipt of all necessary governmental or
regulatory approvals (or if no such approvals are necessary, on or before the
30th day after the delivery of the Acceptance Notice); provided, however, that
no such Transfer of Series A Shares shall be required of the Transferring
Shareholder if such Transfer would result in a transaction that would be
substantially less favorable, from a financial point of view (including due to
differences in tax results), to the Transferring Shareholder than the Transfer
contemplated in the Offer Notice (it being understood and agreed that if the
Transferring Shareholder declines to make such Transfer, any proposed Verizon
Subject Transfer or Vodafone Subject Transfer, as applicable, by the
Transferring Shareholder, including without limitation the Transfer contemplated
in the Offer Notice, shall again be subject to the provisions of this Section
6.4). At such closing, the Transferring Shareholder shall, against payment,
execute and deliver to the Offeree Shareholders and Offeree Shareholder
designates participating in the transaction contemplated by the Offer Notice all
documents required to effectuate the transfer of the Offered Shares free of any
security interests, Liens or other encumbrances whatsoever (other than the
preemptive rights provided in the Bylaws or by law).
(f) Transfer to Third Party; Subsequent Transfers. If the
Offeree Shareholders and/or Offeree Shareholder designates do not accept the
Right of First Refusal Offer in a timely manner, the Transferring Shareholder
shall, subject to the terms and conditions set forth in this Article VI, be
permitted to Transfer all (but not less than all) of the Offered Shares if it
still desires to do so. Such Transfer must (i) be made to the proposed
transferee identified in the Offer Notice (except in the case of a Market Sale),
and shall only be made in strict accordance with the price (which, in the case
of a Market Sale, must be at least ninety percent (90%) of the Market Price
specified in the Offer Notice) and other terms of the proposed Transfer
described in the Offer Notice, and (ii) be consummated not later than the 90th
day (or the 45th day in the case of a Market Sale) following the later of (A)
the Notice Date and (B) the date on which the all cash alternative purchase
price, if any, is determined. Except in the case of a Market Sale, the
transferee in any such Transfer must agree in writing (by execution and delivery
to the Company and the non-Transferring Shareholders of a written agreement in
form and substance reasonably satisfactory to the Company and the
non-Transferring Shareholders) to be bound by all of the provisions of this
Agreement as a member of the Transferring Shareholder's Shareholder Group before
such Transfer may occur or be committed to, and such transferee shall be deemed
a Shareholder, a member of the Transferring Shareholder's Shareholder Group and
a party hereto immediately upon such Transfer. The Transferring Shareholder
shall give the Offeree Shareholders at least ten days prior written notice of
the date, time and place of such consummation, and the Offeree Shareholders may
designate an individual, whom the Transferring Shareholder must permit to attend
the closing of such Transfer, to confirm compliance with the terms hereof
(including by examination of the documents implementing such Transfer). In the
event the Transferring Shareholder fails, prior to the date provided for above,
to consummate such proposed Transfer on the terms set forth herein, then such
Transfer may not be made and, prior to any subsequent Transfer of all or any
portion of the Transferring Shareholder's Series A Shares, the Transferring
Shareholder again shall be required to give the other Shareholders and the
Corporation notice thereof in accordance
E-45
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Exhibit 2(a)
with this Section 6.4, and the restrictions on Transfer and the procedures
regarding a Right of First Refusal Offer shall again be applicable with respect
thereto.
ARTICLE VII
REGISTRATION RIGHTS
7.1 Demand Registration.
7.1.1 Demand Registration. At any time and from time to time
on or after the Effective Date, (a) BALAH, BAII or BANZHI may request on behalf
of any member of the Verizon Shareholder Group or any Affiliate of the Verizon
Shareholder Group beneficially owning Registrable Securities that the
Corporation on two separate occasions file a Registration Statement with the SEC
and/or any other Governmental Entity for a bona-fide underwritten public
offering and on one occasion a "shelf" registration for sale in a bona-fide
public offering for a period not to exceed 180 days and (b) Vodafone may request
on behalf of any member of the Vodafone Shareholder Group or any Affiliate of
the Vodafone Shareholder Group beneficially owning Registrable Securities that
the Corporation on two separate occasions file a Registration Statement with the
SEC and/or any other Governmental Entity for a bona-fide underwritten public
offering and on one occasion a "shelf" registration for sale in a bona-fide
public offering for a period not to exceed 180 days; provided, however, that an
"occasion" shall be deemed to have occurred for purposes of this sentence only
if such offering went effective and closed or failed to close after going
effective because of the failure by the Registration Rightsholder that requested
the subject registration to satisfy a closing condition that was in its sole
control. In case the Corporation shall receive from either BALAH, BAII, BANZHI
or Vodafone, at any time on or after the Effective Date, a written request that
the Corporation file a Registration Statement with the SEC and/or any other
Governmental Entity and effect any registration, qualification or compliance
with applicable federal, state or other securities laws, with respect to all or
a part of the Registrable Securities, the Corporation will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all Registration Rightsholders; and
(ii) use its diligent good faith efforts to effect,
as soon as practicable, all such registrations, qualifications and compliances
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under the applicable state
or other securities laws and appropriate compliance with exemptive regulations
issued under any law (including, without limitation, the Securities Act) and any
other governmental requirements or regulations) as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion of
such Registrable Securities as is specified in such request, together with all
or such portion of the Registrable Securities of any other Registration
Rightsholder or Registration Rightsholders joining in such request as is
specified in a written request received by the Corporation within 30 days after
such written notice by the Corporation is delivered.
Subject to the foregoing, the Corporation shall prepare and
file a Registration Statement with the SEC and/or any other Governmental Entity
covering the Registrable Securities so requested to be registered as soon as
practicable and, in any event, within 90 days after such request is received.
7.1.2 Underwriting. BALAH, BAII, BANZHI and Vodafone shall
include in each of their respective requests for any underwritten public
offering made pursuant to Section 7.1.1 the name of the managing underwriter or
underwriters that the requesting parties propose to employ in connection with
the public offering proposed to be made pursuant to the registration requested.
The Corporation shall include in the written notice referred to in Section 7.1.1
the name or names of such underwriter or underwriters to be employed. If any
sale proposed pursuant to Section 7.1.1 is to be effected pursuant to an
underwritten public offering, the right of any Registration Rightsholder to
registration pursuant to Section 7.1 shall be conditioned upon such Registration
Rightsholder's participation in such underwriting and the inclusion of such
Registration Rightsholder's Registrable Securities in the underwriting to the
extent provided herein. The Corporation shall (together with all Registration
Rightsholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form (which form
must be reasonably acceptable to the Shareholders requesting such registration)
with the underwriter or underwriters selected for such underwriting in the
manner set forth above. Notwithstanding any other provisions of Section 7.1, if
the managing underwriter advises the Corporation in writing
E-46
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Exhibit 2(a)
that marketing factors require a limitation of the number of Registrable
Securities to be underwritten, then the Corporation shall so advise all
beneficial owners of Registrable Securities which would otherwise be registered
and underwritten pursuant hereto, and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated first among the Shareholders requesting such registration in
proportion, as nearly as practical, to the respective amounts of Registrable
Securities that were proposed to be sold by such Registration Rightsholders and
second, to the extent that the limitation established by the managing
underwriter is not exhausted by the Shareholders which requested the
registration, among the Corporation and other Persons that are not members of
such group of Shareholders which requested the registration in proportion, as
nearly as practical, to the respective amounts of Registrable Securities that
were proposed to be sold by such Persons. No Registrable Securities excluded
from the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration. If any Registration Rightsholder disapproves
of the terms of the underwriting, he may elect to withdraw therefrom by written
notice to the Corporation and the managing underwriter. The Registrable
Securities so withdrawn shall also be withdrawn from registration; provided,
however, that, if by the withdrawal of such Registrable Securities a greater
number of Registrable Securities beneficially owned by other Registration
Rightsholders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Corporation shall offer to all
Registration Rightsholders who have included Registrable Securities in the
registration the right to include additional Shares in the same proportion used
in effecting the limitation referred to above in this Section 7.1. The
Corporation shall undertake any reasonable measures within its control to cause
the Registrable Securities sold in any underwritten public offering to be widely
disseminated.
7.2 Piggyback Registration.
7.2.1 Right to Inclusion. If at any time or from time to time
on or after the Effective Date, the Corporation shall determine to register any
of its equity securities (including securities that are convertible into equity
securities) pursuant to a Registration Statement filed with the SEC and/or any
other Governmental Entity in a bona-fide underwritten public offering, whether
for its own account or the account of a security holder or security holders,
then the Corporation will:
(i) promptly deliver to each Registration
Rightsholder written notice thereof (which shall include a list of the
jurisdictions in which the Corporation intends to attempt to qualify the offer
and sale of such securities under the applicable state or other securities
laws); and
(ii) include in such registration (and any related
qualification under state or other securities laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities specified in
any written request or requests by any Registration Rightsholder or Registration
Rightsholders received by the Corporation within 30 days after such written
notice by the Corporation is delivered.
7.2.2 Underwriting. If the applicable sale of securities is to
be effected pursuant to an underwritten public offering, the right of any
Registration Rightsholder to registration pursuant to Section 7.2 shall be
conditioned upon such Registration Rightsholder's participation in the
underwriting and the inclusion of such Registration Rightsholder's Registrable
Securities in the underwriting to the extent provided herein. All Registration
Rightsholders proposing to distribute their securities through such underwriting
(together with the Corporation and other beneficial owners distributing their
securities through such underwriting) shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting.
Notwithstanding any other provisions of Section 7.2, if the
managing underwriter advises the Corporation in writing that marketing factors
require a limitation of the number of shares to be underwritten, the Registrable
Securities and the other securities to be included in any registration and
underwriting may be limited. In such event, the Corporation shall so advise all
Registration Rightsholders and all beneficial owners of such other securities
which would otherwise be registered and underwritten pursuant hereto, and the
number of shares of Registrable Securities and such other outstanding securities
(if any) that may be included in the registration and underwriting shall be
allocated among all Registration Rightsholders and other beneficial owners
thereof in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities and such other securities that were proposed to be sold
by such Registration Rightsholders and other beneficial owners. In the event of
any conflict between the terms of Section 7.1.2 and the terms of this Section
7.2.2, the terms of Section 7.1.2 shall prevail.
E-47
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Exhibit 2(a)
No Registrable Securities excluded from the underwriting by
reason of the managing underwriter's marketing limitation shall be included in
such registration. If any Registration Rightsholder disapproves of the terms of
the underwriting, he may elect to withdraw therefrom by written notice to the
Corporation and the managing underwriter. The Registrable Securities so
withdrawn shall also be withdrawn from registration; provided, however, that, if
by the withdrawal of such Registrable Securities a greater number of Registrable
Securities beneficially owned by other Registration Rightsholders may be
included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Corporation shall offer to all Registration
Rightsholders who have included Registrable Securities in the registration the
right to include additional shares in the same proportion used in effecting the
limitation referred to above in this Section 7.2. The Corporation shall
undertake any reasonable measures within its control to cause the Registrable
Securities sold in any underwritten public offering to be widely disseminated.
7.3 Expenses of Registration. To the fullest extent permitted by law,
all expenses incurred by the Registration Rightsholders in connection with any
registration, qualification or compliance pursuant to this Article VII other
than fees and disbursements of counsel to the Registration Rightsholders,
including, without limitation, all registration, filing and qualification fees,
printing expenses, escrow fees, underwriters' expenses (but not underwriters'
fees or discounts, which shall be borne by the Registration Rightsholder), fees
and disbursements of counsel for the Corporation and fees and expenses of
accountants incidental to or required by such registration, shall be borne by
the Corporation.
7.4 Registration Procedures. In the case of such registration,
qualification or compliance effected by the Corporation pursuant to this Article
VII, the Corporation will keep each Registration Rightsholder participating
therein advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. At its expense,
the Corporation will:
(a) Keep such registration, qualification or compliance
pursuant to Sections 7.1 or 7.2 effective until the Registration Rightsholder or
Registration Rightsholders have completed the distribution described in the
Registration Statement relating thereto or for a period of at least 180 days for
any underwritten public offering, whichever occurs first; and
(b) Furnish such number of Prospectuses and other documents
incident thereto as any Registration Rightsholder from time to time may
reasonably request.
7.5 Related Registration Matters. The Corporation shall enter into an
underwriting agreement in connection with any registration of an underwritten
public offering subject to the provisions of Sections 7.1 and 7.2, which
agreement shall contain such terms, provisions and agreements as are customary
and appropriate for such registration. In connection with the registration, to
the extent not provided in the underwriting agreement related to such
registration, the Corporation also shall:
(a) List the Registrable Securities included in such
registration on any national securities exchange on which the Registrable
Securities are approved for listing;
(b) Engage a bank or other company to act as transfer agent
and registrar for the Registrable Securities;
(c) Cause customary opinions of counsel, comfort letters of
accountants and other appropriate documents to be delivered by representatives
of the Corporation; and
(d) As soon as practicable after the effective date of the
Registration Statement, and, in any event, within 45 days after the end of the
12-month period beginning with the first day of the Corporation's first fiscal
quarter commencing after the effective date of the Registration Statement, make
"generally available to its security holders" (within the meaning of Rule 158
under the Securities Act) an earnings statement complying with Section 11(a) of
the Securities Act and covering the 12-month period set forth above.
E-48
26
Exhibit 2(a)
7.6 Indemnification and Contribution. In connection with any
registration of Registrable Securities pursuant to this Article VII, the
Corporation and each Registration Rightsholder (and the underwriters, if any)
will enter into an agreement (which shall be the underwriting agreement in the
case of an underwritten offering) containing mutual indemnification and
contribution rights and procedures in form and substance satisfactory to the
beneficial owner or owners of at least a majority of the Registrable Securities
to be included in the registration; provided, however, that in any event the
liability of each seller of Registrable Securities pursuant to such
indemnification and contribution provisions shall be limited to the net proceeds
(after all expenses are paid by such seller) from the disposition of the
Registrable Securities disposed of by such seller pursuant to such registration.
7.7 Information by Registration Rightsholders. Each Registration
Rightsholder requesting to be included in any registration shall furnish to the
Corporation such information regarding such Registration Rightsholder and the
distribution proposed by such Registration Rightsholder as the Corporation may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Article VII.
7.8 Transfer of Registration Rights. The rights to cause the
Corporation to register Registrable Securities under Sections 7.1 and 7.2 may be
assigned by any Registration Rightsholder of Registrable Securities to an
Affiliate of such Registration Rightsholder to whom Registrable Securities are
transferred pursuant to Section 6.2 hereof; provided that the Corporation shall
be given written notice by such Registration Rightsholder of Registrable
Securities at the time of or within 60 days after said Transfer, setting forth
the name and address of said transferee or assignee and identifying the
Registrable Securities with respect to which such registration rights are being
assigned.
7.9 Restrictions on Public Sale by the Corporation; Future Rights. The
Corporation agrees not to effect any public sale or distribution of any
securities similar to those being registered, or any securities convertible into
or exchangeable or exercisable for such securities, during the 21 days prior to,
and during the 90 days following, the effective date of any Registration
Statement in which the Registration Rightsholders are participating (except
pursuant to such Registration Statement). The Registration Rightsholders agree
not to exercise their rights under Section 7.1 for 90 days after the effective
date of any Registration Statement filed by the Corporation pursuant to which
the Corporation is selling shares of its capital stock for its own account and
the gross proceeds to the Corporation exceed, or are expected to exceed,
U.S.$30,000,000.
The Corporation represents and warrants that it has not on or prior to
the date of this Agreement granted any registration rights to any Person (other
than the registration rights granted pursuant to this Article VII) and, after
the date of this Agreement, the Corporation will not grant to any Person any
registration rights with respect to securities of the Corporation other than
registration rights that (a) are subordinate to and of a lesser priority than
the registration rights granted herein, (b) are approved in writing by the
Verizon Series A Designated Director and the Vodafone Series A Director, if any,
and (c) are not inconsistent with this Agreement.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES; COVENANTS
8.1 The Verizon Shareholder Group. Each member of the Verizon
Shareholder Group represents and warrants that (a) it is duly organized, validly
existing and in good standing in the jurisdiction of its incorporation and it
has full power and authority to enter into this Agreement and to perform its
obligations hereunder, (b) the execution of this Agreement by it has been duly
authorized by all necessary action, (c) this Agreement constitutes its legal,
valid and binding obligation, enforceable against it in accordance with the
terms hereof, except as may be limited by bankruptcy, insolvency and the
availability of equitable remedies and (d) the execution of this Agreement and
performance of its obligations hereunder will not conflict with, or result in a
breach of or default under, any agreement or instrument to which it is a party
or by which it is bound, or any order, decree or judgment of any Governmental
Entity.
8.2 Vodafone. Vodafone represents and warrants that (a) it is duly
constituted, validly existing, and in good standing under the laws of the
Netherlands, it is an indirect wholly-owned subsidiary of Vodafone Group Plc,
and it has full power and authority to enter into this Agreement and to perform
its obligations hereunder, (b) the execution of this Agreement by it has been
duly authorized by all necessary action, (c) this Agreement constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
the terms hereof, except as may be
E-49
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Exhibit 2(a)
limited by bankruptcy, insolvency and the availability of equitable remedies and
(d) the execution of this Agreement and performance of its obligations hereunder
will not conflict with, or result in a breach of or default under, any agreement
or instrument to which it is a party or by which it is bound, or any order,
decree or judgment of any Governmental Entity.
8.3 Covenant. In the event that Article 144 of the LGSM is repealed, or
is amended in such a manner that the Vodafone Shareholder Group's right to elect
the Vodafone Series A Director is adversely affected (for purposes of this
Section, a "Change in Law"), the Verizon Shareholder Group shall continue to
honor such right in the Vodafone Shareholder Group as if such Change of Law had
not occurred and, if necessary, the Verizon Shareholder Group and the Vodafone
Shareholder Group shall to the fullest extent permitted by applicable law cause
the Bylaws to be amended so as to preserve that right on the same terms on which
it existed prior to such Change in Law.
ARTICLE IX
NOTICES
All notices, requests, demands, and other communications (herein
collectively called a "Notice") under this Agreement shall be in writing and
shall be delivered personally, sent by overnight courier or mailed by certified
mail, postage prepaid and return receipt requested, or by telegram or
telecopier, as follows:
To the Corporation: GRUPO IUSACELL, S.A. DE X.X.
Xxxx. Paseo de la Reforma 1236 (Penthouse)
Col. Santa Fe, Deleg. Cuajimalpa
Mexico, D.F. 05348
Attn.: Director General
and Attn.: General Counsel
Telecopy No.: 00-0-000-0000
With a copy (which shall not itself constitute notice) to:
De Xxxxxx x Xxxxxxxx del Xxxxx
Bosque de Alisos 00-X, Xxxxxxxx 000
Xxxxxxx Xxxxxxx xx xxx Xxxxx
Xxxxxx, D.F. 05120
Attn: Xxxxxx Xxxxxxxx del Xxxxx
Telecopy No.: 52-5-259 5259
With a copy (which shall not itself constitute notice) to:
XXXX ATLANTIC LATIN AMERICA HOLDINGS, INC.
XXXX ATLANTIC INTERNATIONAL, INC.
XXXX ATLANTIC NEW ZEALAND HOLDINGS, INC.
0000 Xxxxx X'Xxxxxx Xxxxxxxxx
Mail Stop HQL06C03
Xxxxxx, XX 00000
Attn: Fares X. Xxxxxxx
Telecopy No. 0-000-000-0000
With a copy (which shall not itself constitute notice) to:
Xxxxx Xxxxxxxxxx, Esq.
0000 Xxxxx X'Xxxxxx Xxxxxxxxx, Sixth Floor
Mail Stop HQL06B06
Xxxxxx, XX 00000
Telecopy No. 0-000-000-0000
E-50
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Exhibit 2(a)
With a copy (which shall not itself constitute notice) to:
VODAFONE AMERICAS B.V.
Max Xxxxxxxx 00
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attn: Xxxx de Rijk and Xxx xx Xxxx
Telecopy No. 00-00-000 7722
With a copy to: Pillsbury Winthrop LLP
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx, Esq.
Telecopy No. 1-415-983-1200
To the Verizon XXXX ATLANTIC LATIN AMERICA HOLDINGS, INC.
Shareholder Group: XXXX ATLANTIC INTERNATIONAL, INC.
XXXX ATLANTIC NEW ZEALAND HOLDINGS, INC.
0000 Xxxxx X'Xxxxxx Xxxxxxxxx
Mail Stop HQL06C03
Xxxxxx, XX 00000
Attn: Fares X. Xxxxxxx
Telecopy No. 0-000-000-0000
With a copy (which shall not itself constitute notice) to:
Xxxxx Xxxxxxxxxx, Esq.
0000 Xxxxx X'Xxxxxx Xxxxxxxxx, Sixth Floor
Mail Stop HQL06B06
Xxxxxx, XX 00000
Telecopy No. 0-000-000-0000
To Vodafone: VODAFONE AMERICAS B.V.
Max Xxxxxxxx 00
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attn: Xxxx de Rijk and Xxx xx Xxxx
Telecopy No. 00-00-000 7722
With a copy (which shall not itself constitute notice) to:
Legal Department
Vodafone Americas Asia Inc.
0000 Xxx Xxxx
00xx Xxxxx
Xxxxxx Xxxxx, XX 00000
Telecopy No. 0-000-000-0000
With a copy (which shall not itself constitute notice) to:
Pillsbury Winthrop LLP
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx, Esq.
Telecopy No. 1-415-983-1200
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Exhibit 2(a)
Notice given by personal delivery, mail or overnight courier shall be
effective upon actual receipt. Notice given by telegram or telecopier shall be
effective upon actual receipt if received before 5:00 p.m., local time, or at
8:00 a.m., local time, on the beginning of the next Business Day after receipt
if not received before 5:00 p.m. All Notices by telegram or telecopier shall be
confirmed promptly after transmission in writing by certified mail, overnight
courier or personal delivery. Any party may change any address to which Notice
is to be given to it by giving Notice as provided above of such change of
address. The above-named counsel for the parties should be provided with a copy
of all Notices given to their respective clients, but the failure to provide
such a copy to counsel does not affect the validity of any Notice given.
Any notice required or desired to be given under this Agreement shall
be in the English language, unless the parties hereto in any specific case
otherwise agree.
ARTICLE X
GENERAL PROVISIONS
10.1 Compliance with Laws - Generally. The signatories to this
Agreement acknowledge that the Verizon Shareholder Group is subject to the laws
of the United States and agree to use their reasonable efforts not to cause the
Verizon Shareholder Group to fail to be in compliance with the provisions of any
national, federal, state, provincial and local laws, rules, ordinances and
regulations of the United States, including without limitation, all provisions
of the U.S. Foreign Corrupt Practices Act, the U.S. Trading With the Enemy Act,
the U.S. Cuban Democracy Act, the U.S. Cuban Assets Control Regulations, the
Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996, the Securities
Act and the Exchange Act (all as amended from time to time), and all U.S. Export
Control regulations and licenses issued thereunder covering, for example, the
export or reexport of technical data. In addition, each party agrees to comply
with the provisions of all applicable national, federal, state, provincial and
local laws, rules, ordinances and regulations of Mexico, the United States and
any other country in which activities are being carried out under this Agreement
or by the Corporation or any Subsidiary, including without limitation, all
provisions of the Mexican Ley Federal de Competencia Economica, the Mexican Ley
del Xxxxxxx de Valores, the U.S. Foreign Corrupt Practices Act, the U.S. Trading
With the Enemy Act, the U.S. Cuban Democracy Act, the U.S. Cuban Assets Control
Regulations, Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996, the
Securities Act and the Exchange Act (all as amended from time to time), and all
U.S. Export Control regulations and licenses issued thereunder covering, for
example, the export or reexport of technical data. Each party agrees to advise
all of its and its Affiliates' employees and representatives engaged in
implementing this Agreement of the terms of such laws, rules, ordinances and
regulations, and to take appropriate steps to ensure that it and its Affiliates,
and their respective employees and representatives, comply with such laws,
rules, ordinances and regulations with respect to the subject matter of this
Agreement and the activities of the Corporation or any Subsidiary.
10.2 Telecommunications Act of 1996.
(a) Each member of the Vodafone Shareholder Group and the
Corporation acknowledges that the Verizon Shareholder Group and their parent
Verizon are subject to the terms of the Telecom Act, and that the activities of
the Corporation, the Subsidiaries, entities in which the Corporation or any
Subsidiary has an equity interest, and entities over which the Corporation or
any Subsidiary has, directly or indirectly, the power or ability to influence or
control the management thereof, may be attributed to the Verizon Shareholder
Group and Verizon under the Telecom Act. Accordingly, the parties shall cause
the Corporation and each Subsidiary to act in conformity and compliance with the
Telecom Act, and to not undertake any activities, or own any assets, that would
be prohibited to any member of the Verizon Shareholder Group under the Telecom
Act.
(b) The Verizon Shareholder Group shall provide to the
Corporation and the Subsidiaries advice and direction with respect to compliance
with the Telecom Act. Such advice and direction shall include written guidelines
("Guidelines"), to be provided by the Verizon Shareholder Group from time to
time, setting forth a description of those assets in which the Corporation
should not acquire a direct or indirect interest, and those activities in which
the Corporation should not directly or indirectly engage, without first
receiving "Guidance." "Guidance" shall mean (i) a written memorandum, opinion or
similar writing, prepared by counsel to the Verizon Shareholder Group, stating
that the Corporation may acquire the asset, or engage in the activity, in
question; or (ii) the affirmative vote by the "Telecom Act Board Member," in his
capacity as a Director, approving the
E-52
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Exhibit 2(a)
acquisition of the asset, or the undertaking of the activity, in question,
unless he is given inaccurate information with respect to such acquisition or
undertaking in connection with such affirmative vote. The "Telecom Act Board
Member" shall mean a Series A Director who is designated from time to time by
the holders of the majority of Series A Shares as the "Telecom Act Board
Member"; provided, however, that such Person shall be the Verizon Series A
Designated Director until such time as the holders of the majority of Series A
Shares designate otherwise and so notify in writing the Corporation and the
Vodafone Shareholder Group.
(c) In the event that any member of the Verizon Shareholder
Group or Verizon determines that the Corporation or any Subsidiary is directly
or indirectly engaging in any activity or owns any asset which could cause any
member of the Verizon Shareholder Group or Verizon to not be in compliance with
the Telecom Act, or which could cause a Governmental Entity to so allege,
members of the Verizon Shareholder Group may require that the Corporation's
shareholders and Board of Directors cause the Corporation or the relevant
Subsidiary to rescind or otherwise cancel the transaction which constitutes a
violation of the Telecom Act or take such other action as may be required to
assure compliance. Alternatively, if in the Verizon Shareholder Group member's
sole discretion, such cancellation or rescission will not adequately cure the
potential or alleged Telecom Act violation, the Verizon Shareholder Group member
may require the Corporation or relevant Subsidiary to immediately divest itself
of the Corporation's or Subsidiary's ownership interest in the assets which gave
rise to the potential or actual Telecom Act violation. If the Corporation or any
Subsidiary, or any Person in which the Corporation or any Subsidiary owns an
equity interest or has the power to control, shall acquire an asset or engage in
an activity in reliance upon the Guidelines or Guidance, and such Guidelines or
Guidance were in error, the Verizon Shareholder Group shall reimburse the
Corporation for any direct damages caused by such a rescission, cancellation or
divestiture described in the preceding two sentences, including any indemnity
payments the Corporation must make to any member of the Vodafone Shareholder
Group. If two or more actions that would effect a cure of an actual or potential
Telecom Act violation equally meet the Verizon Shareholder Group's needs for
speed and completeness in cure, the action which is in the best economic
interest of the Corporation shall be taken.
If in the written opinion of the General Counsel to Verizon none of the
actions set forth in the preceding paragraph would remedy the alleged Telecom
Act violation or satisfy the relevant Governmental Entities, the Verizon
Shareholder Group may Transfer the Shares without compliance with any of the
provisions of Article VI. In the event of such a proposed Transfer, BALAH, BAII
and BANZHI shall have the rights set forth in Section 7.1 without regard to
whether it shall have already exhausted the number of demand registrations
provided for therein.
10.3 Dispute Resolution. Except as provided in the last sentence of
this Section 10.3, any controversy or claim arising out of or relating to this
Agreement or any document or instrument delivered in connection herewith, or any
breach hereof or thereof, that is not resolved within thirty (30) days after any
Shareholder gives notice to the other Shareholders involved in the dispute shall
be resolved in final and binding arbitration as set forth in this Section 10.3.
The arbitration shall be held in the city and state of New York and, except to
the extent inconsistent with this Agreement, shall be conducted in accordance
with the International Rules of the American Arbitration Association ("AAA").
The arbitration shall be conducted in the English language, although documentary
evidence and/or testimony may be submitted in either English or Spanish. The
arbitration proceedings, all documents and all testimony, written or oral,
produced in connection therewith, and the arbitration award shall be
confidential. The arbitration panel shall consist of three arbitrators. The
party or parties initiating the arbitration (whether one or more, the
"Claimant") shall appoint its or their arbitrator in its or their demand (the
"Demand"). The other party or parties (whether one or more, the "Respondent")
shall appoint its or their arbitrator within thirty (30) days after receipt of
the Demand and shall notify the Claimant of such appointment in writing. If the
Respondent fails to appoint an arbitrator within such thirty (30) day period,
the arbitrator named in the Demand shall decide the controversy or claim as a
sole arbitrator. Otherwise, the two arbitrators appointed by the parties shall
appoint a third arbitrator with experience in international commercial disputes
within forty-five (45) days after the Respondent has notified the Claimant of
the appointment of the Respondent's arbitrator. When the arbitrators appointed
by the Claimant and the Respondent have appointed a third arbitrator and the
third arbitrator has accepted such appointment, the two arbitrators shall
promptly notify the parties and the AAA of the appointment of the third
arbitrator. If the two arbitrators appointed by the parties fail or are unable
to appoint a third arbitrator within the time period provided above, they shall
so notify the parties, and any party may request the appropriate official of the
AAA to appoint an impartial third arbitrator with experience in international
commercial disputes. That official shall appoint the third arbitrator within
thirty (30) days after such request and shall notify the parties of the
appointment. The third arbitrator shall act as chairman of the panel. In
addition to the authority conferred on the
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Exhibit 2(a)
arbitrators by the Rules of the AAA, which the parties agree governs, the
arbitrators shall have the authority to order such discovery and to make such
orders for interim relief, including temporary and preliminary injunctive
relief, as they may deem just and equitable. The arbitral award may grant any
relief deemed by the arbitrators to be just and equitable, including without
limitation, injunctive relief and/or specific performance, together with
damages. The arbitral award shall state the reasons for the award and relief
granted, shall be final and binding upon the parties to the arbitration, and may
include an award of costs, including reasonable attorney's fees and
disbursements. Any award rendered by the arbitration panel may be confirmed,
judgment upon any award rendered may be entered, and such award or the judgment
thereon may be enforced in any court of any state or country having jurisdiction
over the parties and/or their assets. Each Shareholder hereby irrevocably
consents to the personal jurisdiction over it, for purposes of enforcement of
any such award and for any claim brought pursuant to the last sentence of this
Section 10.3, of each and every Federal court, and each state court of
appropriate subject matter jurisdiction, located in the State of New York. Any
claim by Verizon for liquidated damages as provided for in Section 10.6(b)
hereof, or for specific performance or injunctive relief to enforce the
provisions of clause (y) of Section 10.6(b) hereof, may be brought by Verizon
directly in any court having jurisdiction, and in the event Verizon brings any
such claim directly in court, Vodafone shall have the right to plead in such
action any mandatory counterclaim which would be barred if not pleaded in such
action.
10.4 Legend. In addition to any other legend that may be required under
applicable law or by Contract, each certificate representing any of the Series A
Shares shall be stamped or otherwise imprinted with a legend substantially in
the following form:
"NO SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT
PURSUANT TO THE TERMS AND CONDITIONS OF A SHAREHOLDERS
AGREEMENT DATED AS OF MARCH [__], 2001 AMONG GRUPO IUSACELL,
S.A. de C.V. AND CERTAIN OF ITS SHAREHOLDERS. GRUPO IUSACELL,
S.A. de C.V. SHALL NOT BE REQUIRED TO RECORD ANY SUCH SALE,
TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE UNLESS MADE AS
AFORESAID. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF GRUPO IUSACELL, S.A. de C.V."
10.5 Severability. If any term or provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect and such invalid, illegal or unenforceable term
or provision shall be reformed automatically so as to comply with the applicable
law or public policy and to effect the original intent of the parties as closely
as possible.
10.6 Specific Performance and Other Remedies.
(a) The obligations of the parties hereto under this Agreement
are unique. If any party should default in its obligations under this Agreement,
the defaulting party acknowledges that it would be extremely impracticable to
measure the resulting damages. Accordingly, in addition to any other available
rights or remedies, the nondefaulting party or parties may make a claim in
equity for specific performance and each defaulting party expressly waives the
defense that a remedy in damages will be adequate.
(b) The parties acknowledge and agree that the Covered
Obligations constitute a fundamental basis for this entire Agreement and
inducement for the Verizon Shareholder Group to enter into this Agreement; that
Verizon would be substantially injured by any breach of the Covered Obligations;
and that it would be extremely difficult and impracticable to determine the
amount of the damages suffered by Verizon as a result of any such breach, but
that such breach could result in Verizon having less control of the Corporation
than it otherwise would have, and that accordingly a fair measure of such
damages would be one-half of the control premium attributable to possession of
full control of the Corporation. The parties agree for purposes hereof that a
fair measure of such full control premium would be thirty percent (30%) of the
trading value of that number of Series V Shares equal to the
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Exhibit 2(a)
total number of Shares owned by the Verizon Shareholder Group, or approximately
U.S.$200,000,000 as of the date of this Agreement. Accordingly, the Vodafone
Shareholder Group agrees that if the Vodafone Shareholder Group, or any member
thereof, shall breach any of the Covered Obligations and Vodafone shall fail to
(i) within five (5) days after written notice of such breach from Verizon to
Vodafone, provide Verizon with a written undertaking to cure such breach as
promptly as possible, or (ii) after having provided such an undertaking, cure
such breach within ten (10) days after such notice from Verizon to Vodafone, or
if cure of such breach requires the convening of a shareholders meeting of the
Corporation, then at the next shareholders meeting of the Corporation:
(x) Vodafone shall be liable to Verizon for
liquidated damages in the amount of One Hundred Million Dollars
(U.S.$100,000,000) (the "Liquidated Damages"); and
(y) Verizon shall have the right (the "Option"),
exercisable by notice (the "Option Notice") from Verizon to Vodafone
given at any time after any failure of Vodafone to take an action
required by clause (i) or (ii) above and while such breach remains
uncured, to purchase from Vodafone or any transferee member of the
Vodafone Shareholder Group, that number of Series A Shares (the "Option
Shares") which would result in the Vodafone Shareholder Group, after
giving effect to such purchase, owning nine and nine-tenths percent
(9.9%) of the Corporation's total corporate capital in the form of
Series A Shares. The per share purchase price for any such purchase
shall be equal to one percent (1%) of the average closing price for the
Corporation's Series V ADRs on the New York Stock Exchange (or if not
then traded on the New York Stock Exchange, then on the principal
exchange or principal market on which the Series V ADRs are then
traded) during the five trading days preceding the date of the Option
Notice, or if the Series V ADRs are not then traded on any exchange or
market, then ten percent (10%) of the average closing price for the
Series V Shares on the principal exchange or principal market on which
the Series V Shares were traded during the five trading days preceding
the date of the Option Notice, or if the Series V Shares were not then
traded on any exchange or market, then ten percent (10%) of the
quotient of (i) the Corporation's net asset value, as determined on the
basis of its most recent quarterly financial statements, divided by
(ii) the total number of shares of capital stock of the Corporation
outstanding on the date of the Option Notice. The aggregate purchase
price so determined for the Option Shares (the "Option Purchase Price")
shall be paid in cash by wire transfer of immediately available U.S.
funds. The closing of the purchase and sale of the Option Shares shall
take place at the Corporation's principal office on the fifth Business
Day following the date of the Option Notice, or if Verizon determines
that any regulatory approvals are required for such purchase and sale,
then on the fifth Business Day following the receipt of all such
regulatory approvals. Vodafone agrees to cooperate and use its best
efforts to obtain any such regulatory approvals. Vodafone hereby grants
to Verizon an irrevocable proxy to vote all of its Series A Shares,
which proxy shall become effective on the date of any Option Notice,
and which proxy shall automatically expire upon the closing of the
purchase and sale of the Option Shares pursuant to Verizon's exercise
of the Option. Vodafone agrees to take any other action requested by
Verizon to perfect such proxy. If at the time of the Option Notice the
Vodafone Shareholder Group includes Persons other than Vodafone,
Verizon shall have the right to purchase the Option Shares from any one
or more members of the Vodafone Shareholder Group in such respective
amounts as shall be determined by Verizon. The Option shall not be
exercisable if Vodafone shall have paid the Liquidated Damages to
Verizon and waived all rights to contest or appeal such payment. If
such payment shall not have been made at the time of the closing of the
purchase of the Option Shares pursuant to the Option, Vodafone shall
have the right, exercisable not later than the sixtieth (60th) day
following such closing, to repurchase the Option Shares from Verizon
for an amount equal to the sum of (A) the Option Purchase Price plus
(B) One Hundred Million Dollars (U.S.$100,000,000), which payment shall
be made in cash by wire transfer of immediately available U.S. funds.
10.7 Rights of Parties. No Person not a party hereto will have any
rights hereunder, except that any provision hereof which is expressly stated to
be for the benefit of, or in which an obligation is expressly undertaken to, an
Affiliate of a party, a transferee of a party or a Registration Rightsholder is
intended to be enforceable by them.
10.8 Assignment. The provisions of this Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided that the terms of this Section 10.8 shall not limit or
modify the terms of Section 6.2.
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Exhibit 2(a)
10.9 Headings. The subject headings of the Articles, Sections,
paragraphs and subparagraphs of this Agreement are included for purposes of
convenience only, and shall not affect the construction or interpretation of any
of its provisions.
10.10 Modification and Waiver. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter contained herein
and supersedes all prior agreements, representations and understandings of the
parties, whether written or oral. No supplement to, or modification or amendment
of, this Agreement shall be binding unless it is in writing and executed by all
of the parties hereto. No waiver shall be binding unless executed in writing by
the party against whom the waiver is to be effective. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. Except as expressly provided in this Agreement, no failure or
delay by any party in exercising any right, power or privilege hereunder will
operate as a waiver thereof nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
10.11 Remedies Cumulative. The remedies provided in this Agreement
shall be cumulative and shall not preclude assertion by any party hereto of any
other rights or the seeking of any other remedies against any other party
hereto.
10.12 Further Assurances. The signatories hereto shall promptly take
the necessary actions, execute such further or other documents and exercise all
voting rights conferred upon them by any stock of the Corporation, whether
currently beneficially owned by them or acquired subsequent to the execution of
this Agreement, in such manner as to ensure that the provisions, intent and
spirit of this Agreement shall be complied with and carried into full effect.
10.13 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
10.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date and year first written above.
GRUPO IUSACELL, S.A. DE C.V.
Witness:
By:
------------------------------- -----------------------------------
Name:
Title:
XXXX ATLANTIC LATIN AMERICA
HOLDINGS, INC.
Witness:
By:
------------------------------- -----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
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Exhibit 2(a)
XXXX ATLANTIC NEW ZEALAND HOLDINGS,
INC.
Witness:
By:
------------------------------- -----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: President
XXXX ATLANTIC INTERNATIONAL, INC.
Witness:
By:
------------------------------- -----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Witness: VODAFONE AMERICAS B.V.
By:
------------------------------- -----------------------------------
Name:
Title:
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