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Redacted portions have been marked with asterisks (****). Confidential treatment
has been requested for the redacted portions. The confidential redacted portions
have been filed separately with the Securities and Exchange Commission.
CONFIDENTIAL TREATMENT
EXHIBIT 10.8
SHAREHOLDERS AGREEMENT
BY AND AMONG
METROGAS ▇.▇.
▇▇▇▇▇▇▇▇ INTERNATIONAL TELECOM (CHILE) LIMITED
AND
METROCOM S.A.
MARCH 30, 1999
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SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT ("Agreement") is made and entered into in
Santiago, Chile, on this 30th day of March 1999, by and among (1) METROGAS S.A.,
a corporation duly organized under the laws of the Republic of Chile
("Metrogas"), (2) ▇▇▇▇▇▇▇▇ INTERNATIONAL TELECOM (CHILE) LIMITED, a company duly
organized under the laws of the Cayman Islands, and a wholly-owned subsidiary of
▇▇▇▇▇▇▇▇ International Company ("▇▇▇▇▇▇▇▇"); and (3) METROCOM S.A., a company
duly organized under the laws of the Republic of Chile ("Company").
RECITALS:
1. WHEREAS, Metrogas intends to develop and build an infrastructure
consisting of a network of ducts and associated ▇▇▇▇▇▇▇▇ for communications (the
"Communications Infrastructure") parallel to and together with the natural gas
distribution network that Metrogas has built and is building within the
Metropolitan Region of ▇▇▇▇▇▇▇▇, Chile. Metrogas created the Company as the
legal entity that shall own the Communications Infrastructure, the Concession,
and all other rights and obligations related thereto.
2. WHEREAS, Metrogas and the Company have executed a Communications
Infrastructure Purchase Agreement dated March 30, 1999 ("CIPA") pursuant to
which Metrocom purchased the Communications Infrastructure from Metrocom.
3. WHEREAS, in order to now ensure the successful development of the
Company into a communications company ("Project"), Metrogas wishes to join with
a reputable, international telecommunications operator that will provide
technical experience and know-how, as well as strategic investors that will
provide additional financial resources.
4. WHEREAS, ▇▇▇▇▇▇▇▇ wishes to expand its Latin American
telecommunications operations into the Republic of Chile, views the
Communications Infrastructure and the Project as an attractive business, and
consequently wishes to contribute its technical skills, experience and know-how
in the telecommunications industry, as well as financial resources, to the
Project.
5. WHEREAS, the mutually-agreed objectives of the Parties for the time
period prior to commencement of roll-out of the network referred to in Whereas 1
and commercial operations of the Company are to actively seek and negotiate
vendor financing for the Project and to seek acquisitions in order to both
accelerate attainment of the goals and profitability of the Project.
6. WHEREAS, as at the date of this Agreement, the authorized capital of
the Company is Ch$31,041,118,060, divided into 128,160 Shares. 64,080 Shares
have been issued and subscribed by Metrogas, and 15,920 Shares have been issued
and subscribed by ▇▇▇▇▇▇▇▇, all of which have been fully paid up on
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or prior to the Closing Date (as defined herein). 48,160 Shares are authorized,
but have not yet been issued, subscribed or paid-up, and each of which is
subject to the warrant described in Section 3.6.
7. WHEREAS, in order to provide for the stability of the Company and to
promote continuity of its management and policies, the Shareholders have agreed
to execute this Agreement setting forth their mutual understanding with respect
to the organization, operation, objectives and mission of the Company, and with
respect to the respective rights and obligations of the Parties.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
SECTION 1
DEFINITIONS
1.1. Affiliate. Unless otherwise defined herein, an "Affiliate" of a Person
shall mean any of the following: (i) a Person is affiliated with another Person
if one of them is the subsidiary of the other or both of them are subsidiaries
of the same Person. For this purpose, (a) a Person is a subsidiary of another
Person if it is directly or indirectly controlled by that other Person; (b) a
Person is directly controlled by another Person if securities of the Person to
which are attached more than fifty percent (50%) of the votes that may be cast
to elect directors of the Person are held, other than by way of security only,
by or for the benefit of that other Person, and the votes attached to those
securities are sufficient if exercised, to elect a majority of the directors of
the Person; and (c) a Person is indirectly controlled by another Person if
control, as described in Clause 1.1(b), is exercised through one or more other
Persons which are Affiliates or subject to a voting agreement, whether oral or
in writing; and (ii) a Person is affiliated with a partnership if the Person, or
another Person with which the Person is affiliated, is a member of the
partnership and owns more than fifty percent (50%) of that partnership interest.
1.2. Agreement. The "Agreement" shall mean this Shareholders' Agreement, as the
same may be amended from time to time hereafter, compliance with which shall be
binding upon the Parties and shall inure to the benefit of and be binding upon
any successors and assigns (including Transfers to an Affiliate) of any Party
that purchases Shares in accordance with Clauses 10.2 or 10.4, but not Clause
10.3 of this Agreement.
1.3. Board of Directors. The "Board of Directors" shall mean the Board of
Directors of the Company, as the same may be constituted from time to time
hereafter pursuant to applicable law and the By-Laws.
1.4. Bona Fide Offer. A "Bona Fide Offer" shall mean an offer in writing to a
Shareholder, offering to purchase all or any part of the Shares owned by such
Shareholder or any interest of the Shareholder therein and setting forth all the
relevant terms and conditions of the proposed purchase, from an offeror who is
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ready, willing and able to consummate the purchase and who is neither the
Company nor an Affiliate of such Shareholder.
1.5. Budget. The "Budget" shall mean the approved annual operating and capital
budgets of the Company, which forms part of the approved Business Plan.
1.6. Business. The "Business" shall mean the areas and scope of business of the
Company, which are the direct or indirect provision of local and long distance
telephony, cable television, internet, data, and other facilities-based wireline
and wireless and non-facilities based telecommunications and multimedia services
in both the Primary Territory and the Secondary Territory, as well as to hold
investments in communications businesses in both the Primary Territory and the
Secondary Territory, as the same may be modified from time to time by the mutual
agreement of the Shareholders.
1.7. Business Plan. The "Business Plan" shall mean the approved annual and long
term business plan of the Company, as detailed further in Section 5.1 of this
Agreement, and draft copies of which are attached as Annex A to this Agreement.
1.8. By-Laws. The "By-Laws" shall mean the by-laws of the Company in effect as
of the date hereof, a copy of which are attached as Annex B to this Agreement,
and as the same may be modified from time to time hereafter pursuant to
applicable law.
1.9. Ch$. "Ch$" shall mean the domestic currency of the Republic of Chile.
1.10. CIPA. The "CIPA" shall mean the Communications Infrastructure Purchase
Agreement that shall be executed on and dated March 30, 1999 between Metrogas
and the Company, under which Metrogas agrees to sell and the Company agreed to
purchase the existing and future Communications Infrastructure, in each case, on
the terms and conditions specified therein. A copy of the **** CIPA is attached
hereto as Annex C, which all Parties hereto acknowledge and agree as being the
final version, and agree to and accept all terms and conditions thereof.
1.11. Closing Date. The "Closing Date" shall mean Wednesday, March 30, 1999.
1.12. Concession. The "Concession" shall mean the authorization granted to the
Company in Supreme Decree No. 51 of February 19, 1997 by the Undersecretary of
Telecommunications, Ministry of Transport and Telecommunications, under which
the Company is authorized to install, operate and use an underground,
high-capacity, fiber-optic cable network within the Metropolitan Region of Chile
for a period of thirty (30) years from June 23, 1997. The authorized network has
a length of 155 kilometers, with a service zone corresponding to the provinces
of Santiago, Maipo and Cordillera, consisting of a principal network of two
rings, with some derivations, and a secondary network which is joined to the
principal network.
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1.13. Company. The "Company" shall mean the legal entity called Metrocom S.A.,
organized and existing in accordance with the laws of the Republic of Chile,
with Tax No. 96,790,850-9, incorporated under a public deed dated April 9, 1996
granted before Notary Public ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Pefaur, the extract of which was
registered on Folio 87,776 No. 7159 of the Commercial Registry of 1996,
published in the Official Gazette dated April 22, 1996, and protocolized on May
6, 1996 before Notary Public ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Pefaur. Throughout this Agreement,
any reference to "Company" or "Metrocom" shall also mean, interchangeably, any
subsidiary, as defined in Clause 1.1(i)(a), hereof.
1.14. Fair Market Value. The "Fair Market Value" of the Shares shall mean the
price at which the Shares would be exchanged between a willing buyer and a
willing seller, each having reasonable knowledge of all relevant facts
concerning the purchase and sale, neither acting under compulsion to consummate
the purchase and sale.
1.15. GAAP. "GAAP" shall have the meaning set forth in Section 7.1(b) of this
Agreement.
1.16. Metrogas. "Metrogas" shall mean the legal entity called Metrogas S.A.,
organized and existing in accordance with the Republic of Chile, with Tax No.
▇▇.▇▇▇.▇▇▇-▇, incorporated under a public deed dated May 26, 1994 granted before
Notary Public ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, the extract of which was
registered on Folio 8,420 No. 9,401 of the Commercial Registry of 1994,
published in the Official Gazette dated June 8, 1994.
1.17. Metrogas Shareholders. The "Metrogas Shareholders" shall mean,
collectively, Compania de Consumidores de Gas de ▇▇▇▇▇▇▇▇ ▇.▇., Compania de
Petroleos de Chile S.A., Nova Gas Distribuidora de Chile S.A., Lone Star Gas
Chile S.A., Gener S.A., and Trigas S.A.
1.18. Party or Parties. The "Party" (if in the singular) or "Parties" (if in the
plural) shall mean each of Metrogas, ▇▇▇▇▇▇▇▇ and the Company.
1.19. Person. A "Person" shall mean any entity, corporation, company,
association, joint venture, joint stock company, partnership, limited liability
company, trust, organization, individual (including personal representatives,
executors and heirs of a deceased individual), nation, state, government
(including agencies, departments, bureaus, boards, divisions and
instrumentalities thereof), trustee, receiver or liquidator.
1.20. Primary Territory. The "Primary Territory" shall mean the Republic of
Chile.
1.21. Public Offering. A "Public Offering" shall mean a public offering of
Shares or securities of the same class as the Shares pursuant to an effective
registration statement under the applicable securities law legislation that
allows the sale of Shares through a stock exchange.
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1.22. Rights of Way. The "Rights of Way" shall mean the rights of way which have
been or shall, in the future, be granted to the Company by virtue of: (i) the
agreements described in Annex D to this Agreement, and (ii) any other
authorization or permission that granted by any Person to Metrogas and/or the
Company for the purpose of granting rights of way, building permits, rights of
access, or other similar rights.
1.23. Secondary Territory. The "Secondary Territory" shall mean each of
Argentina, Bolivia, Brazil, Colombia, Ecuador, Paraguay, Peru, and Uruguay.
1.24. Shareholder. A "Shareholder" shall mean each of ▇▇▇▇▇▇▇▇, Metrogas, each
other Person who succeeds to the interest of such named Shareholders in and to
any Shares in a manner permitted by the provisions of this Agreement; and each
other Person who subscribes to new Shares in the Company.
1.25. Shares. The "Shares" shall mean the common shares of the capital stock of
the Company specified in Recital 6 above, together with any other shares of the
capital stock of the Company hereafter acquired by any Shareholder and any other
shares or securities thereafter issued in respect of such shares in any
reorganization, recapitalization, reclassification, readjustment or other change
in a capital structure of the Company.
1.26. Technical Services Agreement. The "Technical Services Agreement" shall
mean the technical services agreement that executed on March 30, 1999 between
the Company and ▇▇▇▇▇▇▇▇ International Services Company, a wholly-owned
subsidiary of ▇▇▇▇▇▇▇▇ International Company, under which ▇▇▇▇▇▇▇▇ agreed to
provide for technical services to the Company on the terms and conditions
specified therein. A copy of the Technical Services Agreement is attached hereto
as Annex E, which all Parties hereto acknowledge and agree as such final
version, and agree to and accept all terms and conditions thereof.
1.27. Telecommunications Operator. A "Telecommunications Operator" shall mean
any Person that operates telecommunications and communications networks and/or
renders any telecommunications or communications services and/or conducts any
business anywhere in the world which is related or similar to the Business of
the Company.
1.28. Transfer. A "Transfer" of Shares or any interest of a Shareholder therein
shall mean and include any sale, assignment, transfer, disposition, pledge,
hypothecation or encumbrance, whether direct or indirect, voluntary, involuntary
or by operation of law, and whether or not for value, of such Shares or such
interest of a Shareholder therein.
1.29. USD. A "USD" shall mean United States Dollars. Where, throughout this
Agreement, a USD amount is required to be paid in Ch$, the amount to be paid in
Ch$ shall be calculated in accordance with the exchange rate known as the "dolar
observado", established by the Central Bank of Chile and published in the
Official Gazette on the date of payment.
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1.30. ▇▇▇▇▇▇▇▇. "▇▇▇▇▇▇▇▇" shall mean the legal entity called ▇▇▇▇▇▇▇▇
International Telecom (Chile) Limited organized and existing in accordance with
the laws of the Cayman Islands, with a Certificate of Incorporation dated
September 29, 1998, and Memorandum and Articles of Association dated September
29, 1998.
SECTION 2
ORGANIZATION OF THE COMPANY
2.1. Organization. The Company is organized under the laws of the Republic of
Chile for the principal business purpose set forth in Section 2.6 below, and is
a party to this Agreement.
2.2. Name. The corporate designation of the Company is METROCOM S.A., as such
designation may be amended from time to time as may be mutually agreed to in
writing by the Shareholders.
2.3. Principal Office. The principal office and place of business of Company
shall be located in Santiago, Chile, or at such other place as may be mutually
agreed to by the Shareholders.
2.4. By-Laws. The By-Laws of Company shall be as attached hereto as Annex B, and
such By-Laws may be amended from time to time as may be mutually agreed to by
the Shareholders.
2.5. Fiscal Year. The fiscal year of the Company shall be from January 1 to
December 31, inclusive.
2.6. Business Purpose. The principal business purpose of the Company shall be to
engage in the Business by whatever lawful means, and to do all things necessary,
appropriate or advisable in furtherance thereof.
SECTION 3
CAPITALIZATION AND FINANCING OF THE COMPANY
3.1. Authorized and Actual Capital. The Company has an authorized capital of
Ch$31,041,118,060, divided into 128,160 Shares of common stock.
3.2. Subscription of Shares.
(a) 64,080 Shares have been issued and subscribed by Metrogas, of which 19,999
were subscribed and fully paid-up upon incorporation of the Company; 44,080 were
subscribed in accordance with the terms of the Stock Subscription Agreement
dated March 30, 1999 executed by Metrogas and the Company, all of
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which were fully paid-up in cash on the Closing Date; and 1 was purchased from
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (hereinafter referred to as "Gazmuri") in accordance
with the terms of the Stock Purchase Agreement dated March 30, 1999 executed by
Metrogas and Gazmuri;
(b) 15,920 Shares have been issued and subscribed by ▇▇▇▇▇▇▇▇ in accordance with
the terms of the Stock Subscription Agreement dated March 30, 1999 executed by
▇▇▇▇▇▇▇▇ and the Company, all of which were fully paid-up in cash on **** the
Closing Date; and
(c) 48,160 Shares have been authorized, but have not yet been issued, subscribed
or paid-up, and each of which is subject to the warrant described in Section
3.6.
3.3. Future Capital Contributions, Shareholders' Loans, and/or Subordinated
Debt.
(a) No additional capital stock may be issued by Company other than by the
mutual written consent of the Shareholders. The Shareholders hereto shall meet
no less frequently than annually following the date of this Agreement to
determine the capital needs of the Company for the next succeeding year.
(b) The Shareholders may, but shall not be obligated to, mutually agree to make
additional equity capital contributions and/or shareholders' loans to the
Company in equal proportion to their respective shareholdings. Upon written
notification by the Board of Directors to the Shareholders that the Company does
not have sufficient capital to fund the activities of Company, the Shareholders
shall promptly meet with management of Company to ascertain the amount of
funding reasonably required by Company under the circumstances. The Shareholders
shall thereafter enter into a mutually acceptable agreement with respect to such
additional capital contributions, if any.
3.4. Withdrawals of Capital. Except as otherwise provided in this Agreement or
the By-Laws, no Shareholder shall have the right to withdraw or to demand a
return of all or any part of its capital contribution to the Company. In the
event of any conflict or discrepancy between this Agreement and the By-Laws on
this matter, the By-Laws shall take precedence.
3.5. Material Breach. Notwithstanding Section 13.1 of this Agreement, the
failure of any Shareholder to make a capital contribution or shareholders' loan
as required pursuant to this Section 3 shall constitute a material breach of
this Agreement.
3.6. ▇▇▇▇▇▇▇▇' Warrant. For these purposes, ▇▇▇▇▇▇▇▇, the Company and Metrogas
have entered into a Warrant Agreement dated March 30, 1999, pursuant to which
▇▇▇▇▇▇▇▇ may, if it so decides, subscribe to the 48,160 Shares, referred to in
Section 3.2(c) above, that have been authorized, but have not yet been issued,
subscribed, or paid-up.
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SECTION 4
MANAGEMENT AND CONTROL OF THE COMPANY
4.1. Resolutions requiring Special Majority of Directors or Shareholders
(a) Subject to the provisions of Clause 4.1(b), the Board of Directors or the
Shareholders must pass resolutions for the purpose of determining the following
matters, as and when necessary for the proper functioning and operation of the
Company.
(b) Notwithstanding anything contained in the By-laws or this Agreement to the
contrary, the Company must not take any of the following actions or take any
action with respect to any of the following matters without obtaining the prior
authorization of no less than six (6) members of the Board of Directors (in the
event that the By-laws provide that such actions are to be decided by the Board
of Directors) or 80.2% of the total issued Shares of the Company (in the event
that the By-laws provide that such actions are to be decided by the
Shareholders):
(i) Approval of Business Plan, which includes the Budget.
(ii) Approval of accounting policies to be applied and used by the
Company on a consistent basis, provided always that such accounting policies are
within the generally accepted accounting principles within the Republic of
Chile.
(iii) Any material changes, modifications, extensions to or reductions
of the scope of the Business.
(iv) Debt and financing policies of the Company, including debt
securities, indebtedness or pledges that are not included in the approved
Business Plan or Budget.
(v) The maximum ratio of debt to equity of the Company.
(vi) The minimum level of working capital available or liquidity ratio
of the Company.
(vii) Any action or inaction which would involve a variation of the
aforementioned debt to equity ratio and/or the minimum level of working capital
available or liquidity ratio above or below, as applicable, the levels
authorized by the Board of Directors or the Shareholders.
(viii) Capital expenditure of more than five percent (5%) of the
capital budget within the Budget, unless such expenditure is already included in
the approved Business Plan or Budget.
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(ix) Any Public Offering of all or part of the Shares.
(x) Any purchase, sale, lease, exchange or other acquisition or
disposition for a total value of more than five percent (5%) of all or
substantially all of the non-essential assets of the Company, unless such
purchase, sale, lease, exchange or other acquisition or disposition of all or
substantially all of the non-essential assets of the Company for a total value
of more than five percent (5%) of non-essential assets is already included in
the approved Business Plan or Budget.
Furthermore, any purchase, sale, lease, exchange or other
acquisition or disposition of any essential assets of the Company must be
approved by the Board of Directors or the Shareholders in accordance with this
Clause 4.1(b). For the purposes of this Clause 4.1(b), the term "essential
assets" shall mean any asset without which the Company would be unable to
conduct the Business.
(xi) Any material changes to or transfers of the Concession, or the
acquisition of new telecommunications concessions, excluding applications for
new licenses pursuant to the laws of the Republic of Chile.
(xii) Related party transactions. For this purpose, the term "related
party transaction" shall include the entering into or modification of the CIPA,
the Technical Services Agreement, and any other agreement or transaction between
the Company and any Shareholder, affiliate of the Company or any Shareholder, or
director, officer or employee of the Company, as well as the placing by the
Company of any Orders (as defined under the Technical Services Agreement) under
the Technical Services Agreement for more than US$100,000 per Order. For the
purposes of this Clause 4.1(b)(xii) only, an "affiliate" of a Person shall mean
a Person directly or indirectly controlling, controlled by or under common
control with such Person; or a Person owning or controlling 10% or more of the
outstanding voting securities of such Person.
(xiii) Appointment of external auditors of the Company.
(xiv) Appointment of the members of and delegation of powers to the
committees constituted by the Board of Directors in accordance with Clauses 4.4,
4.5, and 4.6 of this Agreement.
(xv) Any increase or decrease of the capital of the Company.
(xvi) The execution of any agreement which involves or implies the
Transfer, lease, rent, or use without payment of the existing and/or future
telecommunications infrastructure described in the CIPA.
(xvii) All matters specified in Article 67 of Law No. 18.046 of 1981
(Corporations Law) (Ley de Sociedad Anonimas N(0)18.046 de 1981).
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4.2. Board of Directors
(a) The By-laws shall provide that the Board of Directors shall consist of seven
(7) permanent directors and seven (7) alternate directors, of which two (2)
permanent and alternate director shall be nominated by ▇▇▇▇▇▇▇▇ (one of which
shall be nominated by ▇▇▇▇▇▇▇▇ through the use of its own voting rights, and one
of which shall be nominated by Metrogas, through the voting rights of Metrogas,
upon express instruction by ▇▇▇▇▇▇▇▇) and five (5) permanent and alternate
directors shall be nominated by Metrogas. For the purposes of Section 4.2(d) of
this Agreement, ▇▇▇▇▇▇▇▇ shall be deemed to have nominated two (2) directors. In
the event, however, that the shareholding percentages in the Company of each of
▇▇▇▇▇▇▇▇ and Metrogas vary in any manner, the number of directors which each of
▇▇▇▇▇▇▇▇ and Metrogas are entitled to nominate to the Board of Directors and the
relevant quorum and voting percentages for both meetings of the Board of
Directors and Shareholders of the Company shall also vary in accordance with the
relevant change of shareholding percentages.
(b) For as long as ▇▇▇▇▇▇▇▇ holds 19.9% or more of the Shares of the Company,
▇▇▇▇▇▇▇▇ shall be entitled to nominate the Chairman of the Board of Directors.
In the event that ▇▇▇▇▇▇▇▇ does not hold 19.9% or more of the Shares of the
Company, the Chairman of the Board of Directors shall be nominated by a simple
majority of the members of the Board of Directors.
(c) In the event of a tie at any meeting of the Board of Directors, the chairman
shall have a second or casting vote.
(d) If a vacancy in any directorship should occur, for whatever reason, the
Shareholder who had nominated the former director shall nominate his
replacement. The Shareholders agree to vote their respective shares for the
election of such nominee. Vacancies shall be filled by vote of the Shareholders
as provided in the By-laws. A Shareholder may remove any director nominated by
such Shareholder, with or without cause, and may replace such director with his
or its nominee and the other Shareholder shall vote its shares to effect such
removal and replacement.
(e) The Board of Directors shall manage the business of Company and may exercise
all powers normally exercised by a Board of Directors, except for such powers as
are required to be exercised by Shareholders, all in accordance with the By-laws
and applicable statutes. All actions by the Board of Directors shall require the
affirmative vote of a majority of the total members of Board of Directors at a
meeting at which a quorum is present, except for such actions as to which a
higher than majority vote is required pursuant to the provisions of Clause
4.1(b) above of this Agreement, the By-laws or applicable law.
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(f) The initial seven (7) directors of the Company and their alternates shall be
the following:
(i) Nominated by ▇▇▇▇▇▇▇▇:
Permanent Directors:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Bravo
Alternate Directors:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Aresti
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
(ii) Nominated by Metrogas:
Permanent Directors:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Irarrazabal
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ Claro
Alternate Directors:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Montt
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
(g) The composition of the board of directors of the Company may be modified
from time to time considering the new percentage allocated to the Parties during
a period.
4.3. Senior Officers and Managers.
(a) The senior officers of the Company, including, but not limited to the Chief
Executive Officer, Chief Operating Officer, Director of Engineering and
Construction, Chief Technology Officer, Director of Finance and Administration,
Chief Financial Officer, Chief Legal Officer, Company Secretary, and the
managers of the audit, regulatory, human resources and customer services
divisions of the Company shall be appointed by the Board of Directors having
regard to cost efficiency considerations, shall be remunerated by the Company in
accordance with prevailing market rates and employment arrangements as may be
required by the Company.
(b) Any two or more senior officer positions may be held by the same person.
(c) Notwithstanding Clause 4.3(a), the senior officers and managers of the
Company shall be nominated by ▇▇▇▇▇▇▇▇ and appointed upon the affirmative vote
of any six (6) members of the Board of Directors. The removal of any senior
officer or manager of the Company shall be jointly approved by the Chief
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Executive Officers of Metrogas and ▇▇▇▇▇▇▇▇, prior to such removal being
effected. If the Chief Executive Officers are unable to reach mutual agreement,
the matter shall be referred to the Board of Directors for resolution, where the
decision to remove or not to remove the senior officer or manager in question
shall be resolved upon the affirmative vote of any six (6) members of the Board
of Directors.
(d) In the event that any senior officer or manager of the Company is removed in
accordance with Clause 4.3(c) above, it is expressly agreed that such senior
officer or manager may only be re-appointed to any senior officer or manager
position within the Company upon the affirmative vote of any four (4) members of
the Board of Directors.
4.4. Management Committee. Subject to review by the Board of Directors, a
Management Committee consisting of any number of directors, senior officers
and/or managers of the Company as are deemed necessary by the Board of Directors
shall be constituted with authority to decide such matters as may be delegated
to it from time to time by resolution of the Board of Directors, including the
following:
(a) Compensation, including salaries, bonuses and incentive compensation to be
received by the employees of the Company, other than officers;
(b) The appointment and removal of any employee of the Company;
(c) The establishment or modification of the Company's proposed annual budget
for consideration by the Board of Directors; and
(d) The recommendation to the Board of Directors of appropriate bookkeeping and
accounting policies, including the selection of the Company's bookkeeper.
Regular meetings of the Management Committee may be held at such time and place
as shall from time to time be fixed by such Management Committee and no notice
thereof shall be required.
4.5. Audit and Compliance and other Committees. Subject to review by the Board
of Directors, an Audit and Compliance Committee consisting of three (3)
Directors shall be constituted with authority to decide such audit and
compliance matters as may be delegated to it from time to time by resolution of
the Board of Directors.
SECTION 5
BUSINESS ACTIVITIES OF THE COMPANY
5.1. Business Plan.
(a) Following the execution of this Agreement, the Shareholders shall mutually
develop and agree upon the final Business Plan (both annual and long
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term) for the Company, the initial draft of which is attached as Annex A to this
Agreement. The Shareholders shall, by December 31 of each calendar year, adopt
the annual Business Plan corresponding to the subsequent calendar year.
(b) Without limitation, the Business Plan shall set forth in reasonable detail
the plans, goals and objectives of the Company, including the development plan,
operating plan, financing plan, marketing and sales plan, any capital and
operating expense budgets, cash flow statements, projected balance sheets and
profit and loss statements for each month and for the end of such year itemized
in such detail as the Shareholders may reasonably determine, the maximum ratio
of debt to equity of the Company, the minimum level of working capital available
or liquidity ratio of the Company, and such other matters as may be determined
by the Shareholders. The Shareholders shall meet no less frequently than
annually to review the approved Business Plan and develop and agree upon
subsequent Business Plans for the Company during the term of this Agreement.
5.2. Budget. The Budget, comprising the operating and capital budgets shall be
adopted by the Shareholders every twelve (12) months during the term of this
Agreement. Following the execution of this Agreement, the Shareholders shall
mutually develop and agree upon the final Budget for the Company for the 1999
calendar year.
5.3. Additional Business Activities. The Shareholders contemplate that there may
be additional opportunities for mutual development of other areas of interest by
the Company. At any time either of the Shareholders may suggest that further
discussions be conducted regarding such other opportunities. As a result of such
development of other areas of interest, the Company may be required to have a
capital increase which may dilute the interest of some shareholders and request
a reconstitution of the Board.
5.4. Compliance with Business Plan. The Company shall conduct the Business in
accordance with the Business Plan, unless prior authorization to vary the terms
of the Business Plan has been obtained under Clause 4.1 of this Agreement.
SECTION 6
OPERATIONAL ACTIVITIES OF THE COMPANY
Each of the Shareholders covenants and agrees to cause the management of the
Company to conduct the business of the Company in the following manner:
6.1. Corporate Existence. The Company shall maintain its corporate existence in
good standing and comply with all applicable laws and regulations of the
Republic of Chile or of any political subdivisions thereof and of any government
authority where failure to so comply would have a material adverse impact on the
continuation of the Company and/or its business or operations.
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6.2. Preparation of and Compliance with Budget. To the extent that it is
required to do so, the Company shall prepare the Budget in accordance with the
terms and within the framework of the Business Plan. Further, the Company shall
conduct the Business in strict accordance with the financial and other terms,
specifications, and limits specified in the Budget, unless prior authorization
to exceed such terms, specifications and limits has been obtained under Clause
4.1 of this Agreement.
6.3. Operation to Public Listing Standards. Unless provided otherwise in the
By-laws or this Agreement, and notwithstanding that the Company may not, at the
relevant time, be listed on one of the public stock exchanges in the Republic of
Chile or any other stock exchange, the Company shall conduct the Business at all
times in accordance with the regulations and legislation which are applicable to
companies that are listed on one of the public stock exchanges in the Republic
of Chile.
6.4. Accounting and Internal Controls.
(a) The Company shall conduct the Business at all times in accordance with high
standards of business ethics and to maintain Company's accounts in accordance
with generally accepted accounting principles consistently applied and,
specifically, shall:
(i) Maintain full and accurate books, records, and accounts which shall, in
reasonable detail, accurately and fairly reflect all transactions of Company and
shall be kept according to generally accepted accounting principles,
consistently applied, employing standards, procedures and forms conforming to
established practice internationally and in the Republic of Chile; and
(ii) Devise and maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in accordance
with general or specific authorizations, (B) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles, all tax returns and to maintain
accountability for assets, (C) access to assets is permitted only in accordance
with general or specific authorizations, and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(b) The Company shall have its annual financial and accounting books and records
reviewed by the external auditors, appointed by the Board of Directors in
accordance with Clause 4.1(b)(xiii) of this Agreement, in accordance with
generally accepted auditing standards internationally and in the Republic of
Chile.
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6.5. Payment of Taxes and Maintenance of Properties.
The Company shall:
(a) pay and discharge promptly, or cause to be paid and discharged promptly when
due and payable, all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or upon any of its properties, other than
such taxes, assessments, charges or levies as the Company is contesting in good
faith through appropriate proceedings; and
(b) maintain and keep, or cause to be maintained and kept, its properties in
good repair, working order and condition.
6.6. Insurance. The Company will obtain and maintain in force such property
damage, public liability, business interruption, worker's compensation, and
other types of insurance as the Company's senior officers shall determine to be
necessary or appropriate, in accordance with insurance standards from time to
time existing within the Republic of Chile, to protect the Company from the
insurable hazards or risks associated with the conduct of the Company's
business. The senior officers shall periodically report to the Board of
Directors on the status of such insurance coverage. All such insurance policies
shall be maintained in at least such amounts and to such extent as shall be
determined to be reasonable by the Board of Directors. All such insurance shall
be effected and maintained in force under a policy or policies issued by
insurers of recognized responsibility, except that the Company may effect
worker's compensation or similar insurance in respect of operations in any other
jurisdiction either through an insurance fund operated in other jurisdiction or
by causing to be maintained a system or systems or self-insurance which is in
accord with applicable laws.
SECTION 7
FINANCIAL INFORMATION
7.1. Financial Information. The Company will furnish the following information
to the Board of Directors and each Director:
(a) As soon as practicable after the end of each fiscal year, and in any event
within 120 days thereafter, a balance sheet of the Company, as of the end of
such fiscal year, and a statement of income and a statement of changes in
financial position of the Company for such year, prepared in accordance with
generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and with an audit opinion thereon from independent auditors of recognized
international standing selected in accordance with Section 4.1(b)(xiii).
(b) As soon as practicable after the end of the first, second and third
quarterly accounting periods in each fiscal year of the Company, and in any
event within forty-five (45) days thereafter, a balance sheet of the Company as
of the end of each such quarterly period, and a statement of income and a
statement of changes in financial position of the Company for such period and
for the current fiscal year to date, prepared in accordance with United States
or international and Republic of Chile generally accepted accounting principles
consistently applied ("GAAP"), with the exception that no notes need be attached
to such
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statements and year-end audit adjustments may not have been made. Said financial
statements shall be signed by an officer of the Company who shall state that
such financial statements are in accordance GAAP, with the exception that no
notes need be attached to such statements and year-end audit adjustments may not
have been made.
(c) As soon as practicable after the end of each fiscal month, and in any event
within fifteen (15) days thereafter, a balance sheet of the Company as at the
end of such month, and a statement of income of the Company for such month, and
for the current fiscal year to date, in each case setting forth in comparative
form the Company's projected balance sheets and projected statements of income
for the corresponding periods (as prepared pursuant to Section 5.1), prepared in
accordance with GAAP, all in reasonable detail and certified subject to changes
resulting from year-end audit adjustments, by the Chief Financial Officer of the
Company; provided, however, that any financial statements provided hereunder
need not contain any footnotes. To such financial statements there shall be
appended a discussion and analysis, in reasonable detail, of such financial
statements and the general business condition and prospects of the Company by
management of the Company so as to assist the recipients in understanding and
interpreting such financial statements.
(d) All such information and/or documents as may be required to permit the Board
of Directors and/or the Shareholders, as the case may be, to make informed
judgments with respect to the Company's annual Business Plan and all other
matters of interest to them.
(e) Each Shareholder agrees that it shall cause and ensure that any
confidential, proprietary or secret information which the Directors nominated by
such Shareholder to the Board of Directors may obtain from the Company, and
which the Company has prominently marked 'confidential', 'proprietary' or
'secret' or has otherwise identified as being such, pursuant to financial
statements, reports and other materials submitted by the Company as required
hereunder, or pursuant to visitation or inspection rights granted hereunder,
shall be deemed to be Confidential Information (as defined in Section 9 below).
SECTION 8
INDEPENDENT ENTERPRISE
8.1. Independent Enterprise. The Shareholders agree to cause Company at all
times to be conducted as an independent enterprise for profit. Except as
otherwise provided herein, all commercial transactions between Company and
either of the Shareholders (or their Affiliates) shall be conducted on an
arm's-length basis with neither granting to the other terms or conditions more
favorable than would be accorded non-related third-parties, except as the
Shareholders may otherwise mutually agree prior to such transaction.
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SECTION 9
SHAREHOLDER RIGHTS, DUTIES AND OBLIGATIONS
9.1. Ownership Participation. The Shareholders expressly agree that the
ownership participation of ▇▇▇▇▇▇▇▇ and Metrogas in the Company may be direct or
indirect through one or more of such Party's Affiliates; however,
notwithstanding the foregoing, ▇▇▇▇▇▇▇▇ and Metrogas, respectively, shall remain
fully bound by and subject to the provisions of this Agreement both before and
after any Transfer to an Affiliate (if applicable), and the rights and
obligations herein.
9.2. Cooperation and Support. Each of the Shareholders agrees to cooperate fully
with each other to realize the purposes of the Company and the objectives
otherwise set forth in this Agreement, and shall assist the Company in complying
with all applicable state and local regulations with regard to the development
and scope of the Business.
9.3. Fiduciary Duties. The Shareholders, the officers and the directors of the
Company shall all have fiduciary responsibility for the safekeeping and use of
all of the funds and assets (including records) of the Company, whether or not
such funds or assets are in their immediate possession or control, for exclusive
benefit of the Company and the Shareholders.
9.4. Shareholder Obligations.
(a) Metrogas must fulfill its obligations under this Agreement and the CIPA;
however, any disputes arising between Metrogas and the Company with respect to
the CIPA or performance thereunder shall be resolved in accordance with the
provisions of such CIPA, and shall be subject to the remedies contained therein.
(b) ▇▇▇▇▇▇▇▇ must fulfill or cause to be fulfilled its obligations under this
Agreement and the Technical Services Agreement; however, any disputes arising
between ▇▇▇▇▇▇▇▇ and the Company with respect to the Technical Services
Agreement or performance thereunder shall be resolved in accordance with the
provisions of such Technical Services Agreement, and shall be subject to the
remedies contained therein.
(c) The Shareholders shall be obligated to undertake or cause to be undertaken
all acts necessary in order for the Business to be developed in accordance with
the terms of the Business Plan, unless otherwise prevented by reasons of Force
Majeure.
(d) The Shareholders shall be obligated to disclose to each other the existence
of any agreement, fact or situation of any nature whatsoever, whether such
agreement, fact or situation exists or has taken place within or outside of the
Republic of Chile, which has or may have any effect on the use or operation of
the Communications Infrastructure (as defined in the CIPA).
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(e) In the event that ▇▇▇▇▇▇▇▇ has not exercised the warrant referred to in
Section 3.6 of this Agreement by the third anniversary of the Closing Date, the
Shareholders shall be obligated to cause a special meeting of the Shareholders
to be held on such third anniversary of the Closing Date, or the next Business
Day thereafter, at which the Shareholders must (i) attend in order to form the
necessary quorum; (ii) use their voting rights to both annul the 48,160 Shares
that were authorized but not issued or subscribed at the Special Shareholders'
meeting held on March 1, 1999; and (iii) further authorize 48,160 new Shares,
over which ▇▇▇▇▇▇▇▇ shall have the same right to subscribe as specified in
Section 3.6 of this Agreement, effective however only until the fourth
anniversary of the Closing Date.
(f) In the event however that, by the fourth anniversary of the Closing Date,
▇▇▇▇▇▇▇▇ has not subscribed the 48,160 authorized Shares referred to in Section
9.5(e)(iii) above, the Shareholders shall be obligated to cause a new special
meeting of the Shareholders to be held on such fourth anniversary of the Closing
Date, or the next Business Day thereafter, at which the Shareholders must (i)
attend in order to form the necessary quorum; (ii) use their voting rights to
annul the 48,160 authorized Shares referred to in Section 9.5(e)(iii) above; and
(iii) modify the By-Laws as required so as to be consistent with the following,
effective on and after the fourth anniversary of the Closing Date:
(i) Section 4.1(b) to be deleted in its entirety, and replaced with the
following: "All resolutions by the Board of Directors or the Shareholders shall
be passed by a simple majority of its members.".
(ii) ▇▇▇▇▇▇▇▇ shall be entitled to nominate one (1) permanent director
and one alternate director.
(iii) The voting quorums specified in Sections 4.3(c) and (d) of this
Agreement that are required for the appointment, removal and re-appointment of
the senior officers and managers of the Company shall be a simple majority of
the members of the Board of Directors of the Company.
(iv) The following sentence from Section 4.2(a) to be deleted: "For the
purposes of Section 4.2(d) of this Agreement, ▇▇▇▇▇▇▇▇ shall be deemed to have
nominated two (2) directors.".
(g) For the purposes of Sections 9.4(e) and (f), the Company Secretary of the
Company shall, no later than January 30, 2002 and also, if ▇▇▇▇▇▇▇▇ has not
exercised the warrant referred to in Section 3.6 of this Agreement by the third
anniversary of the Closing Date, issue a written reminder notice no later than
January 30, 2003 to ▇▇▇▇▇▇▇▇. Notwithstanding the foregoing, the Parties
expressly acknowledge and agree that failure by the Company Secretary of the
Company to issue, or the failure by ▇▇▇▇▇▇▇▇ to receive, such written reminder
notice shall not entitle ▇▇▇▇▇▇▇▇ to any additional time period within which to
exercise the warrant referred to in Section 3.6 of this Agreement, nor shall it
entitle ▇▇▇▇▇▇▇▇ to have any recourse, in any manner whatsoever, against the
Company or the officers, directors, or other shareholders thereof.
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9.5. Referral of Opportunities.
(a) Within the Primary Territory, all telecommunications, communications and
entertainment projects and opportunities, which are in competition to and/or
within the Business of the Company, must be referred by the Shareholders to the
Company only. In the event that the Board of Directors or the Shareholders
decide that the Company shall not pursue the referred projects or opportunities,
any Shareholder who voted affirmatively or whose directors voted affirmatively
in favor of the Company pursuing the referred project or opportunity shall be
entitled to itself pursue such project or opportunity, independently of the
Business of the Company.
(b) Within the Secondary Territory, the Shareholders shall be obligated to
comply with Clause 9.5(a) above only where such new projects and opportunities
consist of telecommunications and/or other communications projects and
opportunities that are being developed "piggy back" with another natural gas
infrastructure or service.
(c) With respect to any new project or opportunity which consists of
telecommunications and/or other communications projects and opportunities that
are being developed "piggy back" with another utility infrastructure or service
(other than natural gas), the Shareholders shall only be obligated to comply
with Clause 9.5(a) above where such new project or opportunity is in the
Republic of Argentina and/or Peru.
9.6. Sale of Affiliate Shares. No Shareholder who holds ultimate, beneficial
ownership of its Shares through an Affiliate may Transfer its ownership interest
in such Affiliate to another Person without obtaining prior written permission
of the other Shareholders.
9.7. Entering into and Disclosure of Voting Agreements. Each Shareholder shall
be permitted to enter into any type of agreement, whether orally or in writing,
with another Shareholder, under which such Shareholder has a mutual
understanding with another Shareholders to use their votes in conjunction with
each other in any meeting of Shareholders or to cause the directors nominated by
such Shareholder, to use their votes in conjunction with each other in any
meeting of the Board of Directors, regardless of the subject matter of such
agreement. Notwithstanding the foregoing, if any Shareholder enters into any
type of voting agreement with another Shareholder, then such agreeing
Shareholders must immediately disclose as such to the other Shareholders.
9.8. Confidentiality and Non-Disclosure Obligation.
(a) The Shareholders agree, and each Shareholder agrees to cause its own
officers, directors, employees or representatives and the Company and the
officers, directors, employees or representatives of the Company, to preserve,
protect and keep secret all financial, technical, operating and other
information relating to (a) this Agreement and any aspect thereof, (b) the
Business, (c) the
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CIPA and the Technical Services Agreement, (d) any basic proprietary technology
developed or acquired by any of the Shareholders, and (d) any other matter that
is of a proprietary or confidential nature, and which has not previously been
made generally available to the public ("Confidential Information").
(b) The Shareholders agree, and each Shareholder agrees to cause the Company,
not to use the Confidential Information for any purpose unrelated to this
Agreement, the Business or the CIPA and the Technical Services Agreement, other
than as required by applicable laws. Further, the Shareholders agree, and each
Shareholder agrees to cause the Company, to safeguard and strictly control the
dissemination of the Confidential Information and not to disclose the
Confidential Information to any Person, other than as required by applicable
laws.
9.9. Employee Confidentiality Agreements. The Shareholders agree, and each
Shareholder agrees to cause the Company, to enter into with the respective
employees and consultants such proprietary information and confidentiality,
trade secret protection and non-competition agreements as are reasonably
determined to be appropriate from time to time by their respective Boards of
Directors.
SECTION 10
RESTRICTIONS ON TRANSFERABILITY OF SHARES
10.1. Third Party Shareholders. The Parties expressly agree that no Person other
than ▇▇▇▇▇▇▇▇, Metrogas, the Metrogas Shareholders or their respective
Affiliates thereof, shall be entitled to hold, directly or indirectly, more than
thirty percent (30%) of the total issued capital stock of the Company.
10.2. Transfers to Affiliates.
(a) Notwithstanding anything to the contrary contained in this Section 10, any
Shareholder shall be entitled to effect a Transfer of its Shares to an Affiliate
at any time during the term of this Agreement. In the case of Metrogas, the
Shareholders expressly agree that Metrogas shall be entitled to effect a
Transfer of its Shares to one or more Metrogas Shareholders or any Affiliate of
any of the Metrogas Shareholders. For the purpose of this Section 10.2(a), an
Affiliate of a Shareholder shall also include a Person directly or indirectly
controlling, controlled by or under common control with such Shareholder; or a
Person owning or controlling 10% or more of the outstanding voting securities of
such Shareholder.
(b) Further, in the event that any Shareholder wishes to effect a Transfer of
its Shares to an Affiliate during the After Lock Up Period (as defined in Clause
10.4 below), such Shareholder shall be not be obligated to comply with the right
of first notice provisions contained in Clause 10.4 or the "tag-along"
provisions contained in Clause 10.5.
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(c) Any purchasing Affiliate must agree in writing to be bound jointly and
severally with the Shareholder effecting the Transfer by the terms and
conditions of this Agreement.
10.3. No Sale or Transfer for Five Years ("Lock Up Period").
(a) Without the prior written consent of the other Shareholders, and subject to
the exceptions specified in Clause 10.3(b), no Shareholder shall be entitled to
effect a Transfer of its Shares for a period of five (5) years from the date of
this Agreement (the "Lock Up Period"). Unless such prior written consent is
given, the proposed Transfer may not take place, and any attempted Transfer in
breach of this Clause 10.3(a) shall be deemed null and void, with the
Shareholders expressly agreeing that such attempted Transfer shall immediately
render the Shareholder that made such attempt in material breach of this
Agreement, and subject to the provisions of Clause 10.7 of this Agreement and
the respective consequences thereof.
(b) Notwithstanding Clause 10.3(a), any Shareholder may, during the Lock Up
Period, effect a Transfer of its Shares to any Person who is a financial
investor. For the purposes of this Agreement, the term "financial investor"
shall be understood to mean any Person which (i) is not a Telecommunications
Operator or utility company, or (ii) directly, or indirectly through Affiliates,
does not hold more than 50% of the issued shares of a Telecommunications
Operator, provided always, however, that where applicable, ▇▇▇▇▇▇▇▇ and Metrogas
(whether directly or indirectly through Affiliates) together maintain ownership
of no less than 50.1% of the Shares of the Company.
(c) It is expressly stated by the Parties that any such financial investor shall
not be a Party to this Agreement, and that the financial investor shall not be
bound by the terms and conditions of this Agreement and, furthermore, that the
Shareholder effecting the Transfer to the financial investor shall not be
obligated to provide either a first notice or "tag-along" option referred to in
Clauses 10.4 and 10.5, respectively, to the other Shareholders.
10.4. Right of First Notice ("After Lock-Up Period").
(a) If, after five (5) years from the date of this Agreement ("After Lock Up
Period"), ▇▇▇▇▇▇▇▇ or Metrogas shall desire to sell all or part of its Shares
other than in connection with a Public Offering (herein referred to as the
"selling Shareholder"), then the selling Shareholder shall first provide the
other Shareholders (hereinafter referred to as the "non-selling Shareholders")
with written notice ("First Notice") of its desire to sell, such notice which
shall include a description of the number of Shares to be sold, the sale price,
and the financial terms of sale.
(b) The non-selling Shareholders shall, for a period of ninety (90) days from
the date of receipt of the First Notice, be entitled to exercise the right to
purchase the Shares included in the First Notice, and on the same terms therein,
by delivering written acceptance to the selling Shareholder. If the more than
one
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non-selling Shareholder wishes to exercise such right to purchase, the Shares
included in the First Notice shall be divided among the non-selling Shareholders
in accordance with their then-current shareholdings.
(c) If the non-selling Shareholders exercise such right of purchase, they shall
have an additional period of ninety (90) days after such exercise within which
to make payment for, and take title to, such Shares.
(d) If the non-selling Shareholders do not exercise such right of purchase
within the aforementioned period of ninety (90) days, the selling Shareholder
shall, for a period of 180 days be entitled to sell the Shares to any Person,
provided that the sale price and financial and other terms are no less favorable
than those specified in the First Notice. If no sale is effected during the
aforementioned period of 180 days, the selling Shareholder shall be obligated to
provide a new First Notice to the non-selling Shareholders in the event that the
selling Shareholder still wishes to sell its Shares.
(e) Any Person purchasing Shares under this Clause 10.4 must agree in writing to
be bound, jointly and severally with the selling Shareholder effecting the
Transfer, by the terms and conditions of this Agreement.
(f) In the event that any Shareholder receives a Bona Fide Offer from any Person
for its Shares, then the selling Shareholder shall first provide the non-selling
Shareholders with a copy of the Bona Fide Offer received, upon which the same
procedure as contained in Clauses 10.4(a) to (e) above must be carried out.
10.5. "Tag Along" Option for Metrogas and ▇▇▇▇▇▇▇▇.
(a) In the event that either ▇▇▇▇▇▇▇▇ or Metrogas owns less than 50% of the
Shares of the Company, and the other Party (referred to in this Section 10.5 as
the "Transferring Party") wishes to effect a Transfer of all or part of its
Shares under Clause 10.4 during the After Lock Up Period, the non-Transferring
Party shall be entitled to a "tag along" option for all or part of its Shares,
at the sole option of the non-Transferring Party, on the same financial and
other terms and conditions as the Shares being sold by the Transferring Party.
(c) In this case, the Transferring Party shall first provide to the
non-Transferring Party written notice (the "Tag Along Notice") of either its
desire to sell or receipt of a Bona Fide Offer, including a description of the
number of Shares to be offered or purchased, their proposed or offered price,
the financial terms on which they will be offered or purchased and, in the case
of receipt of a Bona Fide Offer, the identity of the third party offeror.
(d) The non-Transferring Party may, not later than fifteen (15) days after
receipt of the Tag Along Notice, deliver to the Transferring Party notice in
writing irrevocably binding on the Transferring Party (to the extent and in a
manner consistent with applicable law) to sell all (not part) of the Shares
owned by the non-Transferring Party (the "Tag Along Shares") in accordance with
the
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provisions of this Clause 10.5. If the non-Transferring Party deliver such
written notice, the Transferring Party shall cause the third party offeror to
deliver to the non-Transferring Party a Bona Fide Offer in writing (the "Tag
Along Offer") to purchase the Tag Along Shares from the non-Transferring Party.
(e) The Tag Along Offer shall be binding upon the third party offeror and shall
contain only such terms and conditions as are identical to those upon which the
Transferring Party proposes to sell to the third party offeror.
(f) The closing date and other closing arrangements for the purchase and sale
transaction between the non-Transferring Party and the third party offeror shall
be specified in the Tag Along Offer and shall be the same as those specified
between the Transferring Party and the third party offeror.
(g) In the event that (i) the third party offeror does not deliver a Tag Along
Offer to the non-Transferring Party, (ii) the terms and conditions of the Tag
Along Offer are less favorable than those specified between the Transferring
Party and the third party offeror, or (iii) the third party offeror only wishes
to purchase part but not all of the Shares of the non-Transferring Party (where
the non-Transferring Party has elected to sell all of its Shares), then the
Transferring Party shall not be entitled to effect the proposed Transfer of its
own Shares to the third party offeror.
(h) Any Transfer by the Transferring Party of part or all of its Shares in
breach of the provisions of this Clause 10.5 shall be deemed null and void, with
the Shareholders expressly agreeing that such attempted Transfer shall
immediately render the Transferring Party in material breach of this Agreement,
and subject to the provisions of Clause 10.7 of this Agreement and the
respective consequences thereof.
(i) The Parties expressly acknowledge and agree that neither Metrogas nor
▇▇▇▇▇▇▇▇, as the case may be, shall be entitled to the "tag along" option
specified in this Section 10.5 if it owns 50% or more of the Shares of the
Company.
10.6. Recording of Transfers; Endorsement of Certificates. The Company shall not
record the transfer of Shares by a Shareholder in violation of this Section 10,
and shall affix the following legend on any stock certificate representing
Shares subject to this Section 10:
"Any sale, assignment, transfer, pledge, bequest or other disposition
of the shares of stock represented by this Certificate is restricted by and
subject to the terms and provisions of a Shareholders Agreement dated September
30, 1998 by and among this Company, ▇▇▇▇▇▇▇▇ International Telecom (Chile)
Limited and Metrogas S.A., a copy of which Agreement is on file in the principal
office of this Company, which Agreement may from time to time hereafter be
amended."
10.7. Option to Purchase Shares Upon Certain Events.
(a) Upon the occurrence of any of the following events:
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(i) the judicial declaration of bankruptcy of one of the Shareholders in
accordance with the General Law of Bankruptcy of the Republic of Chile and the
designation of a bankruptcy syndicate; or
(ii) the presentation to the courts of justice of an application for a judicial,
preventative agreement in accordance with the General Law of Bankruptcy of the
Republic of Chile;
then the Shareholders which have not suffered the event shall have the right,
exercisable in writing within sixty (60) days after the later of (A) receipt of
written notice of the occurrence of such event or (B) the conclusion of the
appraisal contemplated in Section 10.7(c) below, to purchase all of the Shares
held by the other Shareholder on the terms set forth below. Each Shareholder
agrees to promptly notify the other Shareholder in writing of the occurrence of
any of the events specified above.
(b) The purchase price for any Shares to be purchased hereunder shall be the
Fair Market Value of the Shares of the Shareholder, which has suffered the
event, as determined in accordance with Clause 10.7(c) below.
(c) Within sixty (60) days after the occurrence of the event described in (a)
above, the Shareholders either (A) shall jointly appoint an internationally
recognized investment banking firm, or (B) failing this joint action, each
separately shall designate an investment banking firm and, within thirty (30)
days after their appointment, the designated internationally recognized
investment banking firms shall designate an internationally-recognized
investment banking firm which shall make the final determination of value
('Neutral Investment Banker'). The failure by either of the Shareholders to
appoint an investment banking firm within the time allowed shall be deemed
equivalent to appointing the other Shareholder's investment banking firm as the
Neutral Investment Banker. Within sixty (60) days after the appointment of the
Neutral Investment Banker, the Neutral Investment Banker shall render its
appraisal of the fair market value of the Shares to be purchase, which appraisal
shall be binding and conclusive. The Company shall bear all costs and expenses
associated with the valuation and appraisal procedure specified herein.
(d) The payment date of the purchase price pursuant to this Section 10.7 shall
not be later than sixty (60) days after the final determination of value of the
Shares by the Neutral Investment Banker. Any purchase of Shares pursuant to this
Section 10.7 shall take place on the payment date thereof and the certificates
representing all of the Shares so purchased shall be duly endorsed and delivered
to the purchasing Shareholders on the payment date.
(e) If, upon the occurrence of one of the events specified in (a) above, a
Shareholder having the right to purchase the Shares of the other Shareholder
does not exercise such right within the sixty (60) day period specified above,
then this Company shall be liquidated and dissolved in the manner specified in
Section 14.
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10.8. Ownership through intermediaries. In accordance with Section 10.2 of this
Agreement, in the event that any Shareholder owns, whether presently or in the
future, Shares through an intermediary Person, and such Shareholder wishes at
any time to Transfer any or all of such Shares to one or more third parties that
do not fall within the definition of "Affiliate", the Shareholder or
Shareholders, as the case may be, must, previously to such Transfer, transfer
the Shares held such the intermediary Person back to the Shareholder or to the
controlling parent company of the Shareholder, in order to ensure continued
ownership of the Shares by the Shareholder or an Affiliate thereof.
SECTION 11
DISTRIBUTIONS OF DIVIDENDS AND APPLICATION OF FUNDS
11.1. Distributions of Dividends. Subject to the terms of any other contractual
agreement between the Shareholders, distributions of dividends shall be made to
the Shareholders on the basis of annual and retained profits, upon the
affirmative vote of a simple majority of the members of the Board of Directors.
SECTION 12
TERM AND TERMINATION
12.1. Term. This Agreement shall come into effect as of the date hereof and,
unless otherwise provided herein, shall remain in full force and effect until
the earlier of the following:
(a) the mutual written consent of eighty percent point two (80.2%) of the Shares
subject to this Agreement to terminate this Agreement;
(b) if either Metrogas or ▇▇▇▇▇▇▇▇, or their respective Affiliates, each hold
less than 19.9% of the total issued Shares of the Company; or
(c) the election of the non-breaching Shareholder to terminate this Agreement
upon the occurrence of one of the events specified in Sections 10.7(a) and
13.1(b).
12.2. Effect of Termination of the Agreement. The termination of this Agreement
shall not in any way operate to impair or destroy any of the rights or remedies
of either Shareholder, or to relieve any Shareholder of its obligations to
comply with any of the provisions of this Agreement, which shall have accrued
prior to the effective date of termination. Furthermore, the Shareholders
expressly agree that Clauses 10.7, 13.1 and any other Clauses of this Agreement,
which may, from time to time, be determined by mutual agreement of the
Shareholders, shall survive any termination for any reason whatsoever of this
Agreement. In the event that the Shares of the non-terminating Shareholder are
not purchased by the terminating Shareholder in the manner set forth in Section
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10.7, the Shareholders shall vote their respective Shares and cause the Board of
Directors to take such actions as are necessary to liquidate and dissolve the
Company in accordance with all applicable laws.
SECTION 13
MATERIAL BREACH
13.1. Material Breach.
(a) If any Shareholder claims that another Shareholder is in material breach of
this Agreement, the non-breaching Shareholder shall be entitled to submit its
claim for determination by the arbitration panel referred to in Clause 15.12 of
this Agreement.
(b) In the event that the aforementioned arbitration panel determines that any
Shareholder is in material breach of this Agreement, the Parties agree that any
damage caused by such material breach would be impracticable or extremely
difficult to fix and, accordingly, agree that the non-breaching Shareholder or
Shareholders shall be entitled to elect to (i) receive payment of an amount of
liquidated damages ("Liquidated Damages"), as determined by the arbitration
panel, or (ii) purchase all of the Shares of the breaching Shareholder at the
Fair Market Value of the Shares, as determined in accordance with Clause 10.7(c)
above, minus the amount of Liquidated Damages determined by the arbitration
panel, and terminate this Agreement.
(c) For the purposes of this Agreement, no Shareholder may invoke or exercise
any rights which it has due to or as a result of any material breach of this
Agreement by any other Shareholder until the existence or occurrence of such
material breach has been determined by the arbitration panel specified in Clause
15.12 of this Agreement.
SECTION 14
DISSOLUTION AND LIQUIDATION OF COMPANY
14.1. Financial Accounting and Tax Returns. Upon the dissolution of the Company,
a complete and accurate accounting shall be made by the Company's independent
auditing firm from the date of the last previous audit to the date of
dissolution and all required tax returns shall be timely filed in connection
therewith.
14.2. Dissolution and Liquidation Procedures. Upon the dissolution of Company,
the Shareholders shall each appoint one (1) individual who shall jointly act as
liquidator to wind up Company (collectively 'Liquidator'). The Liquidator shall
have full power and authority to take full account of Company's assets and
liabilities and to wind up and liquidate the affairs of Company in an orderly
and business-like manner as is consistent with obtaining the fair value thereof
upon dissolution. Company shall engage in no further business thereafter other
than
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as necessary to operate on an interim basis, collect its receivable, pay its
liabilities and liquidate its assets. All proceeds from liquidation shall be
distributed in the following order of priority: (i) first, to the payment of all
creditors of Company and the expenses of liquidator; and (ii) second, to the
establishing of a reserve which the Liquidator deems reasonably necessary for
any contingent, known or unforeseen liabilities or obligations of Company.
14.3. Cancellation of Certificates. Upon the completion of the distributions in
liquidation of the Company as provided in this Section 14, the Liquidator shall
cause the cancellation of all share certificates and shall take such other
actions as may be appropriate to finally dissolve and liquidate the Company.
SECTION 15
MISCELLANEOUS PROVISIONS
15.1. Notices. All notices, requests, demands and other communications required
or permitted to be given under this Agreement shall be in writing and shall be
mailed to the Party to whom notice is to be given, by telex or facsimile, and
confirmed by first class mail, registered or certified, return receipt
requested, postage prepaid, and properly addressed as follows (in which case
such notice shall be deemed to have been duly given on the third day following
the date of such sending):
If to ▇▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇▇ International Company
Attn. ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Facsimile No. (▇▇) ▇▇▇ ▇▇▇ ▇▇▇▇
with a copy to
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Cruzat, Ortuzar & MacKenna
Nueva Tajamar 481, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile No. (▇▇▇▇) ▇▇▇-▇▇▇▇
If to Metrogas:
Metrogas S.A.
Attn. ▇▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
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Facsimile No. (▇▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Attn. ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile No. (▇▇▇▇) ▇▇▇-▇▇▇▇
If to Metrocom:
Metrocom S.A.
Attn. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile No. (▇▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Attn.: ▇▇. ▇▇▇▇▇▇▇▇ Montt ▇▇▇▇▇▇
Montt, Iruarrizaga y Cia. S.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile No. (▇▇▇▇) ▇▇▇-▇▇▇▇
Any Party by giving notice to the others in the manner provided above may change
such Party's address for purposes of this Section 15.1.
15.2. Publicity and Disclosure. Subject to limitations placed upon ▇▇▇▇▇▇▇▇,
Metrogas and the Company by any applicable securities laws, the timing and
content of any announcements, press releases and public statements concerning
the transactions contemplated herein will be by mutual agreement of the
Shareholders and the Shareholders hereby agree, to the extent reasonable, to
keep the terms of this Agreement, the CIPA, the Technical Services Agreement and
any other agreements contemplated hereby confidential.
15.3. Entire Agreement. This Agreement (together with all Exhibits attached
hereto and all documents and instruments delivered in connection herewith) and
the By-Laws constitute the full and complete agreement and understanding between
the Shareholders and shall supersede any and all prior written and oral
agreements concerning the subject matter contained herein (including the
Memorandum of Agreement) provided, however, that any obligations of the
Shareholders contained in any confidentiality or non-disclosure agreement shall,
to the extent they are not inconsistent with this Agreement or any other
agreement contemplated hereby, remain in full force and effect.
15.4. Amendment or Modification. This Agreement may not be modified or amended
except in writing, duly signed by the authorized representatives of each of the
Shareholders, which are or become a Party hereto. Any condition or
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provision of or in any document or communication whatsoever, other than a
writing amending or modifying this Agreement in accordance with the first
sentence of this Section 15.4, shall be deemed inapplicable to the obligations
between the Shareholders.
15.5. Severability. In the event any one or more of the non-material provisions
contained in this Agreement shall be invalid, illegal, or unenforceable in any
respect, the validity, legality, and/or enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. In such event such non-material invalid provision or provisions shall
be validly reformed so as to approximate as nearly a possible the intent of the
Shareholders and, if unreformable, shall be severed and deleted from this
Agreement. In the event any one or more of the material provisions contained in
this Agreement shall be invalid, illegal or unenforceable in any material
respect, the Shareholders shall promptly meet to renegotiate the material
provisions of this Agreement.
15.6. Waiver. No failure or delay by any Shareholder to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement, or
to exercise any right, power or remedy hereunder or thereunder or consequent
upon a breach hereof or thereof shall constitute a waiver of any such term,
condition, covenant, agreement, right, power or remedy or of any such breach or
preclude such Shareholder from exercising any such right, power or remedy at any
later time or times.
15.7. Enforcement. The Shares are unique and cannot be readily purchased or sold
in the open market. For this reason, among others, the Shareholders hereto will
be irreparably damaged in the event that this Agreement is not deemed to be
specifically enforceable, and the Shareholders hereby agree that this Agreement
shall be specifically enforceable. Such remedy shall be cumulative and not
exclusive and shall be in addition to any other remedy that the Shareholders may
have.
15.8. Remedies. No right, power or remedy herein conferred upon or reserved to
any Shareholder is intended to be exclusive of any other right, power or remedy
or remedies, and each and every right, power and remedy of any Shareholder
pursuant to this Agreement or now or hereafter existing at law or in equity or
by statute or otherwise shall to the extent permitted by law be cumulative and
concurrent, and shall be in addition to every other right, power or remedy
pursuant to this Agreement, or now or hereafter existing at law or in equity or
by statute or otherwise and the exercise or beginning of the exercise by any
Shareholder of any one or more of such rights, powers or remedies shall not
preclude the simultaneous or later exercise by any Shareholder of any or all
such other rights, powers or remedies.
15.9. Headings. Headings in this Agreement are included herein for the
convenience of reference only and shall not constitute a part of this Agreement
for any purpose.
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15.10. Attorneys' Fees and Costs. In the event of any action at law or in equity
between the Shareholders to enforce any of the provisions hereof, the
unsuccessful party or parties to such litigation shall pay to the successful
party or parties all costs and expenses, including actual attorneys' fees,
incurred therein by such successful party or parties; and if such successful
party or parties shall recover judgment in any such action or proceeding, such
costs, expenses and attorneys' fees may be included in and as part of such
judgment. The successful party shall be the party who is entitled to recover his
costs of suit, whether or not the suit proceeds to final judgment. A party not
entitled to recover his costs shall not recover attorneys' fees.
15.11. Governing Law and Domicile. This Agreement shall be construed in
accordance with the internal laws, and not the law of conflicts, of the Republic
of Chile applicable to agreements made and to be performed in such jurisdiction.
For all legal purposes, the Parties establish domicile as the city of ▇▇▇▇▇▇▇▇,
Chile.
15.12. Disputes.
(a) In the event of any dispute arising out of or in relation to this Agreement,
or its complementary documents or amendments thereto, amongst the Parties,
whether with regard to its interpretation, fulfillment, validity, termination or
other cause related to this Agreement, the matter in question shall be submitted
firstly to the respective Presidents or Chief Executive Officers of the Parties
for resolution.
(b) If the Parties do not reach an agreement in accordance with paragraph (a)
the dispute shall be referred to the International Chamber of Commerce ("ICC")
for mediation which is to be conducted in accordance with the Mediation
Guidelines in force at the date of this Agreement (which set out the procedures
to be adopted, the process of selection of the mediator and the costs involved
in the mediation all of which are incorporated into this Agreement) provided
that such mediation must be completed within 45 Business Days. Failing
resolution as provided above the dispute shall be submitted to arbitration
before the ICC by a single arbitrator agreed to by the parties and failing
agreement within 30 days then appointed by the ICC. All mediation and
arbitration proceedings shall take place in New York, New York in the English
and Spanish languages.
15.13. Exhibits. All exhibits attached hereto and referred to herein are hereby
incorporated herein as though fully set forth in this Agreement.
15.14. Number and Gender. Words in the singular shall include the plural, and
words in a particular gender shall include either or both additional genders,
when the context in which such words are used indicates that such is the intent.
15.15. Counterparts. This Agreement may be executed in one or more counterparts
by the Parties hereto. All counterparts shall be construed together and shall
constitute one agreement.
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15.16. Agreement to Perform Necessary Acts. Each Shareholder agrees to perform
any further acts and to execute and deliver any and all further documents and/or
instruments, which may be reasonably necessary to carry out the provisions of
this Agreement and to carry out the Business of the Company.
15.17. Force Majeure. Any Shareholder shall be excused for failures and delays
in performance of its respective obligations under this Agreement that are
caused by Force Majeure. This provision shall not, however, release such
Shareholder from using its best efforts to avoid or remove such cause and such
Shareholder shall continue performance hereunder with the utmost dispatch
whenever such causes are removed. Upon claiming any such excuse or delay for
non-performance, such Shareholder shall give prompt written notice thereof to
the other Shareholders. Notwithstanding the foregoing, should an event of Force
Majeure remain in effect for a period of three (3) months, then, in such event,
the Shareholders hereby agree to promptly renegotiate the terms of this
Agreement, and if no such agreement can be reached within sixty (60) days of
such three (3) month period, then this Agreement may be terminated automatically
upon notice by any unaffected Shareholder to the affected Shareholder and be of
no further force or effect. Nothing contained herein or elsewhere shall impose
any obligation on any Party to settle any labor difficulty. For the purposes of
this Section 15.17, the definition of the term "force majeure" shall, in
substitution of the definition under the Chilean Civil Code, mean acts of God,
fires, casualties, strikes, wars, riots, civil disorders, earthquakes,
volcanoes, lockouts, labor disturbances, slow downs, insurrections, any law,
order, proclamation, decree, regulation, ordinance, demand or requirement of any
governmental agency; failure to obtain necessary government approvals after
using reasonable best efforts; freight embargoes; or any similar condition or
occurrence beyond the reasonable control of a Party.
15.18. Costs and Expenses. The Shareholders shall each bear and pay for their
respective costs and expenses regarding the negotiation and preparation of this
Agreement and all documents, instruments and agreements related thereto. Costs
and expenses incurred by the Company after the date of this Agreement shall be
paid by the Company.
15.19. Representations. Each of the Parties to this Agreement represents that it
is duly organized and existing in accordance with the laws of the applicable
jurisdiction, and that the legal representative or representatives executing
this Agreement on its behalf are duly and fully authorized to do so.
15.20. Conflict with By-Laws. In the event of any conflict or discrepancy
between this Agreement, or the terms thereof, and the By-Laws, the terms of this
Agreement shall prevail. Within ninety (90) days of the receipt of written
notice from any Shareholder to the other Shareholders, notifying the latter of
such conflict or discrepancy, the Shareholders must (a) cause a special meeting
of the Shareholders to be held, (b) attend such special meeting in order to form
the necessary quorum, and (c) vote to modify the By-Laws as required so as to be
consistent with this Agreement, or the terms thereof.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by
their duly authorized representatives in the manner legally binding upon them.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ INTERNATIONAL TELECOM
(CHILE) LIMITED
/s/ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MONTT
----------------------------------- -----------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Montt
Chairman of the Board Managing Director
METROGAS S.A. METROGAS S.A.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------- -----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Managing Director Director
METROCOM S.A. METROCOM S.A.
32
34
ANNEX A
DRAFT BUSINESS PLAN
****
33
35
STOCK SUBSCRIPTION AGREEMENT
BY AND AMONG
▇▇▇▇▇▇▇▇ INTERNATIONAL TELECOM (CHILE) LIMITED
METROCOM, S.A.
AND
METROGAS S.A.
MARCH 30, 1999
36
STOCK SUBSCRIPTION AGREEMENT
This STOCK SUBSCRIPTION AGREEMENT, entered into in Santiago, this 30th day
of March 1999, by and between METROCOM S.A., a company duly incorporated and
organized under the laws of the Republic of Chile, with its corporate domicile
at ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("the Company");
▇▇▇▇▇▇▇▇ INTERNATIONAL TELECOM (CHILE) LIMITED, a limited partnership duly
established and organized under the laws of Cayman Islands, British West
Indies, with its corporate domicile at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America (the "Subscriber"); and METROGAS S.A., a
corporation duly incorporated and organized under the laws of the Republic of
Chile, with its corporate domicile at ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("Metrogas") (hereinafter all of the aforementioned to be
referred collectively as the "Parties").
WITNESSETH:
WHEREAS, the Special Shareholders' Meeting of the Company held on March
19th, 1999 (hereinafter the "Shareholders' Meeting"), has agreed to increase the
capital of the Company from Ch$1,118,060 divided into 20,000 (twenty thousand)
single-series, non-par-value shares of common stock to Ch$31,041,118,060,
divided into 128,160 single-series, non-par-value shares of common stock,
through the increase of Ch$31,040,000,000 divided into 108,160 single-series,
non-par-value shares of common stock.
WHEREAS, the Shareholders' Meeting authorized the issue of the new 108,160
shares in the manner and in accordance with the resolutions passed at the
Shareholders' Meeting.
WHEREAS, 60,000 (sixty thousand) of the new 108,160 single-series,
non-par-value, paid-up shares of common stock, were authorized to be issued at
the minimum subscription value of the Chilean peso equivalent, calculated in
accordance with the observed exchange rate of the day of payment, of U.S.
$404.90 per share, and in any event not less than Ch$196,376.50 per share.
WHEREAS, for the purposes of this Stock Subscription Agreement, the
"observed exchanged rate" shall mean the exchange rate parity established by
the Central Bank of Chile for the purposes of No. 6, Chapter 1, Title I of the
Compendium of Foreign Exchange Regulation, as published in the Official Gazette
on March 29, 1999.
WHEREAS, at the aforementioned Shareholders' Meeting, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ entirely waived his preemptive right, to which he is entitled under
Article 25 of the Chilean Corporations Law No. 18,046 of 1981, to subscribe for
shares under this new issue.
WHEREAS, METROGAS S.A., at this same Shareholders' Meeting, partially
waived its preemptive right, to which it is entitled under Article 25 of the
1
37
Chilean Corporations Law No. 18.046 of 1981, to subscribe for shares under this
new issue in excess of 44,080 shares.
WHEREAS, the Company engages in the communications business in the
Republic of Chile (the "Business").
NOW, THEREFORE, in consideration of the above premises, the parties agree
as follows:
1. - SUBSCRIPTION AND PAYMENT. The Subscriber hereby subscribes for 15,920
(fifteen thousand nine hundred and twenty) single-series, non-par-value shares
of common stock under the new stock issue, which are hereby fully paid-up by
the Subscriber and received by the Company, to its full and final satisfaction.
As agreed at the Shareholders' Meeting, these 15,920 shares are subscribed for a
total minimum subscription value of the Chilean peso equivalent of
US$15,000,000, to be calculated in accordance with the observed exchange rate
published in the Official Gazette on March 29, 1999, and in any event not less
than Ch$7,275,000,000.
The total subscription value of the Chilean peso equivalent of US$15,000,000
comprises (a) the minimum subscription value of the Chilean peso equivalent of
US$404.90 per share, and in any event not less than Ch$196,376.50 per share,
plus (b) the premium payable by the Subscriber in addition to such minimum
subscription value of US$404.90 per share, of the Chilean peso equivalent of
US$537.31 per share, and in any event not less than Ch$260,595.35 per share, all
as calculated in accordance with the observed exchange rate published in the
Official Gazette on March 29, 1999.
2. - ACCEPTANCE OF BYLAWS AND SHAREHOLDERS' RESOLUTIONS. In accordance with the
provisions of Article 22 of the Chilean Corporations Law No. 18,046 of 1981,
the Subscriber hereby accepts the Bylaws of the closed company known as
"METROCOM S.A.". The Subscriber further represents that it accepts the
resolutions adopted by the Regular and Special Shareholders' Meetings held to
date, as well as the balance sheets of the Company as of the date hereof.
3. - CORPORATE DOCUMENTATION. The Company hereby represents and warrants that
the copy of the Bylaws hereby delivered to the Subscriber are its Bylaws as
currently in effect.
4. - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND METROGAS. The Company
and Metrogas hereby represent and warrant the following (which representations
and warranties shall survive beyond the effective term of this instrument):
(a) Organization and Existence of the Company: The Company has been duly
incorporated and is validly existing in accordance with the laws of the
Republic of Chile, and it has met all corporate and other requirements in order
to
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hold, operate and lease its assets and to conduct the Business substantially in
the manner that it has been held, operated and conducted through the date
hereof. The Company meets all requirements and holds all the faculties and
authorizations necessary to execute and deliver this agreement and to execute
and deliver all the documents and instruments required hereunder, and this
Agreement constitutes and each and every one of such documents and instruments,
when duly executed by the Company, shall constitute a valid and binding
obligation for the Company, in each case, enforceable against the Company in
accordance with its terms.
(b) Subsidiaries. The Company has no subsidiaries and does not hold any
right, title or interest in any capital shares, rights or investments in any
corporation, partnership, association or other business organization.
(c) Corporate Capital of the Company. The authorized capital of the
Company consists of 128,160 single-series, non-par-value shares of common
stock. Other than as provided for in the Warrant Agreement dated March 30, 1999
executed by and among the Company, the Subscriber, and Metrogas, neither
present nor past shareholders of the Company were or are entitled to demand
termination or to file any claim in respect of the Company's paid-up capital,
and all its shares have been offered, issued and extended by the Company free
and clear of liens, preferential rights, rights of first refusal, or other
encumbrances.
(d) Execution, Delivery and Performance. Neither the execution nor the
delivery of or performance under this agreement shall be in conflict with, or
shall result in attachments or liens under, the bylaws of the Company, nor
shall they affect any lease, license, mortgage, agreement, covenant, order or
judgment to which the Company is a party or to which the Company or its assets
may be bound. All corporate action required by the Company to authorize the
execution, delivery and performance of this agreement and all documents and
instruments in connection herewith have been duly adopted and no prior or later
consent is required from any governmental or state entity, institution or
authority with State involvement.
(e) Title to Assets. The Company holds good and marketable title, free
and clear of any and all liens and other encumbrances, to each and every one of
its assets (hereinafter collectively referred to as the "Assets"), including,
but not limited to, the following: (i) all the accounting and financial books
and documentation of the Company; (ii) the tangible and intangible assets,
including, but not limited to, all bank accounts, vehicles, equipment, cash and
other similar assets, inventories, office furniture and property repair
equipment, used or usable in accordance with the Company's current operating
capacities.
A detailed list of all assets of the Company is included in Exhibit I hereto.
(f) Contracts. All contracts in excess of USD 50,000 per contract, or USD
100,000 in aggregate, to which the Company is a party or in respect of
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39
which it has furnished security are detailed in Exhibit II hereto and each of
these contracts is fully in effect and binding, valid and enforceable against
each party thereto. To the best of the Company's knowledge, no event has
occurred that has resulted in or is reasonably likely to result in a default
under any such contract. The Company has met all the provisions necessary, and
to the best of its knowledge, none of the other parties is in breach of such
contracts. Except for the contracts indicated in Exhibit II, the Company is
not a party to nor has it furnished security in any manner whatsoever in
connection with any written or oral agreement or contract in excess of USD
50,000 per contract, or USD 100,000 in aggregate.
(g) Taxes or Tax Refunds. The Company has paid all income, withholding,
and sales and services taxes, unemployment insurance and other taxes including
penalties and surcharges of any kind, if any, and fees due through this date in
the Republic of Chile or in any other jurisdiction required in connection with
the conduct of the Business. The Company has duly met all requirements to
secure all applicable tax refunds from governmental agencies and has paid to
this date or shall hereafter pay all the taxes as indicated in the respective
documents. No tax authority has filed any tax challenges.
(h) Litigation. There are no claims, actions, allegations or proceedings
pending against the Company in excess of USD 1,000 per claim or action, or USD
5,000 in aggregate, except as described in Exhibit III hereto. The Company is
not subject to any judgment, order, requirement, challenge or decree of any
court or other governmental agency.
(i) Compliance with the Law. The Company has complied with all the rules,
regulations, codes and laws affecting the Company and the Business, and the
Company is not in violation or breach of any provision or rule, regulation,
code or law in effect in the Republic of Chile.
(j) Licenses. The Company holds all the licenses, permits and other
authorizations from all governmental authorities such as are necessary or
appropriate to allow the same to engage in the Business as it is currently
operated and in all places and locations where it currently operates. All the
licenses, permits and other authorizations indicated in Exhibit IV are valid,
in full force and enforceable and not subject to any pending claim, action or
procedure.
(k) Balance Sheet. A copy of the financial statements (including the
balance sheet) of the Company as of December 31, 1998 is attached as Exhibit V
and forms part of this instrument. The audited financial statements (including
the balance sheet) of the Company for the periods up to December 31, 1996 and
December 31, 1997 have been delivered to the Subscriber for its review and
fairly reflect the financial position of the assets and liabilities of the
Company at their date of issuance.
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40
(l) No Material Adverse Effect. There has been no material adverse change
in the business, conditions (financial or otherwise), operations, prospects or
properties of the Company since December 31, 1998.
(m) No Implicit Liabilities. Except for the litigation indicated in
Exhibit III and the liabilities mentioned in Exhibit V, as of the date hereof
the Company is not aware of any obligations or debts in excess of USD 50,000
per obligation or debt, or USD 50,000 in aggregate, secured or otherwise
(absolute, fixed, accrued, contingent or otherwise or enforceable or likely to
be enforceable).
(n) No Default. The Company has met and continues to meet its obligations
in all material respects and is not in default (nor is aware to the best of its
knowledge of any events or circumstances which could result in a default) in
respect of any note, debt instrument, security, purchase option, lease,
fiduciary obligation or mortgage or any other contract enforceable against the
Company, as the case may be, or the credits or properties thereunder, the
breach or default of which could have a material effect on the condition
(financial or otherwise), the Business, net worth, assets, properties,
operations or prospects of the Company.
(o) Insurance. The Company has taken out all insurance in connection with
its services and operations to the extent deemed reasonable for the type of
Business in which the Company engages.
(p) Leases. The Company enjoys peaceful and undisturbed possession over
all the tangible goods it leases or tangible personal property in respect of
which the Company is lessee; all such leases are legal, valid, binding and
enforceable in respect of the lessors in accordance with their terms; and the
Company is not in breach under any of these leases in any material respect.
(q) Employees. There are no strikes or material labor conflicts, claims
or disputes pending or threatened against the Company, and there are no pending
or threatened matters before any governmental or regulatory authority in the
Republic of Chile in connection with Company employees or practices, in excess
of USD 10,000 per dispute, claim, controversy or litigation, or USD 10,000 in
aggregate.
(r) Employee Benefits, Plans and Agreements. Exhibit VI attached hereto
contains a complete listing and an accurate summarized description of the
employees earning a gross annual salary in excess of USD 40,000 per employee,
or 40,000 in aggregate, including all employment and consultation agreements,
executives' compensation, severance pay, bonuses, deferred compensation,
retirement pension, profit sharing, performance units, stock purchase options
for employees or stock purchases and any other plan or agreement for additional
benefits, whether formal or informal, written or oral, contingent or fixed, and
any plan or agreement for whole-life, health or casualty insurance to which the
Company is bound and which provide benefits for the Company's employees. The
Company has no other benefit or retirement
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41
agreements with any employee, shareholder or agent of the Company or any former
employee, shareholder or agent.
(s) Accounts Receivable: Exhibit VII provides a listing of all accounts
receivable in excess of USD 10,000 per debtor, or USD 10,000 in aggregate, due
and payable to the Company as of January 21, 1999. All such accounts receivable
are valid, authentic and in existence, and none of them may be objected to or
counterclaimed.
(t) Registered Trademarks: The Company owns or has applied for the
ownership of all the patents, registered trademarks, industrial secrets,
formulas, service marks, trade names, copyrights, franchises, licenses and
rights in connection herewith (collectively defined as "registered
trademarks"), deemed reasonably necessary to conduct its Business as it is
presently conducted. A detailed listing of all the registered trademarks
registered or applied for is included in Exhibit I and there are no conflicting
rights of which the Company is aware other than those indicated in each case in
Exhibit I and, in each case, not subject to any sublicense, lien, pledge,
lease, encumbrance, security interest, title retention agreement or option. No
event whatsoever has occurred such as would, or following notice or the passage
of time or both may, result in the revocation or expiration of said registered
trademarks, or which has or would hereafter have a material adverse effect on
any of these registered trademarks. No other registered trademark is necessary
for the conduct of the Company's Business such as it is currently conducted.
(u) Disclosure: The Company has disclosed all the information, documents
and records deemed material in connection with its Business, and all such
information delivered to the Subscriber, whether written or oral, is true and
complete in all material respects, and does not contain any untrue statement of
a material fact or omit to state any material fact necessary to make such
information not misleading. All information provided by the company to the
Subscriber with respect to the Company was prepared in good faith and, to the
best of the Company's knowledge, was true and complete when received by the
Subscriber.
(v) Dividends: The Company has not declared or paid any dividend of any
kind since its date of incorporation and accepts not to declare or pay any
dividend starting on the date hereof through the date on which this Agreement
is executed.
4. APPLICABLE LEGISLATION. This Agreement shall be governed by and interpreted
in accordance with the internal laws (except for applicable conflict of laws
rules) of the Republic of Chile.
5. ARBITRATION.
(a) In the event of any dispute arising out of or in relation to this
Agreement, or its complementary documents or amendments thereto, amongst the
Parties,
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42
whether with regard to its interpretation, fulfillment, validity, termination
or other cause related to this Agreement, the matter in question shall be
submitted firstly to the respective Presidents or Chief Executive Officers of
the Parties for resolution.
(b) If the Parties do not reach an agreement in accordance with paragraph (a)
the dispute shall be referred to the International Chamber of Commerce ("ICC")
for mediation which is to be conducted in accordance with the Mediation
Guidelines in force at the date of this Agreement (which set out the procedures
to be adopted, the process of selection of the mediator and the costs involved
in the mediation all of which are incorporated into this Agreement) provided
that such mediation must be completed within 45 Business Days. Failing
resolution as provided above the dispute shall be submitted to arbitration
before the ICC by a single arbitrator agreed to by the parties and failing
agreement within 30 days then appointed by the ICC. All mediation and
arbitration proceedings shall take place in New York, New York in the English
and Spanish languages.
6. EXHIBITS. All exhibits attached hereto and referred to throughout this
Agreement are hereby incorporated as though fully set forth in this Agreement.
7. EXPENSES AND FEES. The Parties shall pay for their own expenses which are
associated with the preparation and execution of the transactions contemplated
herein, including all accountants' and attorneys' fees and expenses, regardless
of whether the transactions contemplated hereby are consummated or not.
8. BINDING EFFECT. This Agreement shall be binding on and inure to the benefit
of the Parties and their respective successors and assigns.
9. AMENDMENTS. The contents of this Agreement shall not be modified, other than
through a written amendment signed by both Parties.
10. NO ASSIGNMENT. None of the Parties may totally or partially assign this
Agreement without the prior, written consent of the other Parties.
11. NOTICES. All notices, requests, demands and other communications required
or permitted to be given under this Agreement shall be in writing and shall be
mailed to the Party to whom notice is to be given, by telex or facsimile, and
confirmed by first class mail, registered or certified, return receipt
requested, postage prepaid, and properly addressed as follows (in which case
such notice shall be deemed to have been duly given on the third day following
the date of such sending):
If to ▇▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇▇ International Company
Attn. ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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43
United States of America
Facsimile No. (▇▇) ▇▇▇ ▇▇▇ ▇▇▇▇
with a copy to:
Cruzat, Ortuzar & MacKenna
Attn. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Nueva Tajamar ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile No. (▇▇▇▇) ▇▇▇-▇▇▇▇
If to Metrogas:
Metrogas S.A.
Attn. ▇▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile No. (▇▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Metrogas S.A.
Attn. ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile No. (▇▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Metrocom S.A.
Attn. ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile No. (▇▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Montt, Iruarrizaga y Cia. S.A.
Attn. ▇▇. ▇▇▇▇▇▇▇▇ Montt Vicuna
Los ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile No. (▇▇▇▇) ▇▇▇-▇▇▇▇
Any Party by giving notice to the others in the manner provided above may
change such Party's address for purposes of this Section 11.
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12. ENTIRE AGREEMENT. This Agreement, and its Exhibit delivered in connection
herewith, contain the entire understanding between the Parties in connection
with the subject matter hereof, and there are no representations, warranties,
covenants or understandings other than those expressly provided herein.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
by their duly authorized representatives in the manner legally binding upon
them.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ INTERNATIONAL TELECOM
(CHILE) LIMITED
/s/ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MONTT
------------------------------------ -----------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Montt
Chairman of the Board Managing Director
METROGAS S.A. METROGAS S.A
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ RAFINOFF /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------ -----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Rafinoff ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Managing Director Director
METROCOM S.A. METROCOM S.A
9