CO-Operation Agreement (2006)Full Document 

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                                                               EXECUTION VERSION





                              Dated 31 January 2006


                   PHILIPPINE LONG DISTANCE TELEPHONE COMPANY

                                       and

                          FIRST PACIFIC COMPANY LIMITED

                                       and

                            METRO PACIFIC CORPORATION

                                       and

                         METRO ASIA LINK HOLDINGS, INC.

                                       and

                          METRO PACIFIC RESOURCES, INC.

                                       and

                                  LAROUGE B.V.

                                       and

                       METRO PACIFIC ASSETS HOLDINGS, INC.

                                       and

                         NTT COMMUNICATIONS CORPORATION

                                       and

                                NTT DOCOMO, INC.


                             CO-OPERATION AGREEMENT

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                                    Contents


Clause        Heading                                                       Page

1      Interpretation............... ..........................................2

2      Effective date and notice...............................................4

3      Principles of co-operation; Exercise of rights..........................4

4      Exercise of rights by DoCoMo and NTT....................................7

5      Permitted Transfers of PLDT Shares......................................8

6      Certain corporate undertakings under Existing Agreements upon Transfer
       of PLDT Shares amounting to the First Minimum Shareholding Threshold
       from NTT to DoCoMo.....................................................10

7      Amendments to Existing Agreements......................................13

8      Further amendments to Existing Agreements - DoCoMo holds the Second
       Minimum Shareholding Threshold.........................................13

9      Additional rights in favour of DoCoMo..................................15

10     Restriction on share acquisitions......................................18

11     Support................................................................20

12     Provision of PLDT's financial information..............................20

13     Termination............................................................21

14     General................................................................23


                                       i






This Agreement is made on 31 January 2006 by and among:

(1)     PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, a company established under
        the laws of the Philippines and having its principal office at Ramon
        Cojuangco Building, Makati Avenue, Makati City, Metro Manila,
        Philippines ("PLDT");

(2)     FIRST PACIFIC COMPANY LIMITED, a company incorporated under the laws of
        Bermuda and having its principal place of business at 24th Floor, Two
        Exchange Square, 8 Connaught Place, Central, Hong Kong ("FPC");

(3)     METRO PACIFIC CORPORATION, a corporation established under the laws of
        the Republic of the Philippines and having its principal place of
        business at 10th Floor, MGO Building, Legazpi Corner Dela Rosa Street,
        Legazpi Village, Makati City, Metro Manila, Philippines ("Metro");

(4)     METRO ASIA LINK HOLDINGS, INC, a corporation established under the laws
        of the Republic of the Philippines and having an office at 10th Floor,
        MGO Building, Legazpi Corner Dela Rosa Street, Legazpi Village, Makati
        City, Metro Manila, Philippines ("MALH");

(5)     METRO PACIFIC RESOURCES, INC., a corporation established under the laws
        of the Republic of the Philippines and having an office at 18th Floor,
        Liberty Centre, 104 H.V. de la Costa Street, Salcedo Village, Makati
        City, Metro Manila, Philippines ("MPRI");

(6)     LAROUGE B.V., a company incorporated under the laws of the Netherlands
        and having its registered office at Rokin 55, 1012 KK Amsterdam, the
        Netherlands ("LBV");

(7)     METRO PACIFIC ASSETS HOLDINGS, INC., a corporation incorporated under
        the laws of the Republic of the Philippines and having its principal
        place of business at 18th Floor, Liberty Centre, 104 H.V. de la Costa
        Street, Salcedo Village, Makati City, Metro Manila, Philippines
        ("MPAH");

(8)     NTT COMMUNICATIONS CORPORATION, a corporation established under the
        laws of Japan and having its principal place of business at 1-6
        Uchisaiwai-cho, 1-Chome, Chiyoda-ku, Tokyo 100-8019, Japan ("NTT"); and

(9)     NTT DOCOMO, INC, a company incorporated under the laws of Japan and
        having its principal place of business at 11-1 Nagata-cho 2-Chome,
        Chiyoda-Ku, Tokyo 100-6150 Japan ("DoCoMo").

Recitals:

(A)     FPC, Metro, MALH, MPRI, LBV, MPAH, NTT Communications Capital (UK)
        Limited ("NTT Capital") and NTT were the original parties to a
        Shareholders Agreement made on 24 March 2000 ("Shareholders Agreement")
        and FPC, Metro, MALH, MPRI, LBV, MPAH and NTT remain parties to the
        Shareholders Agreement. PLDT, FPC, Metro, MALH, MPRI and NTT are
        parties to a Stock Purchase and Strategic Investment Agreement dated 28
        September 1999, as amended by the First Amendment thereto dated 8 March
        2000 and the Second Amendment thereto dated 24 March 2000 ("Strategic
        Agreement"). NTT and PLDT are parties to an Advisory Services Agreement
        dated 24 March 2000, as amended by an Amendment thereto dated 31 March
        2003 and a Second Amendment thereto dated 31 March 2005 (the "Advisory
        Services Agreement").

(B)     The Shareholders Agreement and Strategic Agreement, among other things,
        regulate the relationship among the Parties (other than DoCoMo) in
        relation to their respective shareholdings (if any) in PLDT.



                                       1


(C)     NTT Capital has transferred all of its PLDT Shares to NTT and has not
        retained any rights or obligations under the Shareholders Agreement and
        has been liquidated and dissolved, and as such, the Parties hereto
        acknowledge and agree that NTT Capital shall not be a party to this
        Agreement to effect the purposes herein.

(D)     DoCoMo is in negotiation with NTT to acquire PLDT Shares from NTT, and
        is in discussion with PLDT and SMART to study the possibility and
        feasibility of entering into certain strategic business relationships
        in the field of mobile communication services.

(E)     PLDT, FPC, Metro, MALH, MPRI, LBV, MPAH and NTT agree that, in
        connection with DoCoMo's acquisition of PLDT Shares from NTT, they will
        grant DoCoMo certain benefits on the terms and subject to the
        conditions set out in this Agreement.

It is agreed as follows:

1       Interpretation

        In this Agreement (including the Recitals), unless the context
        otherwise requires, the provisions in this Clause 1 apply:

1.1     Definitions

        "Acting Party" means (i) until the Handover Date, NTT and (ii) from and
        after the Handover Date, DoCoMo;

        "Advisor" has the meaning given to it in the Advisory Services
        Agreement;

        "Affiliate" has the meaning given to it in the Strategic Agreement;

        "Business Day" has the meaning given to it in the Shareholders
        Agreement;

        "COA" has the meaning given to it in the Advisory Services Agreement;

        "Committee" shall mean any committee established or to be established
        by resolutions of the board of directors of PLDT or SMART or
        administrative orders issued by the chief executive officer of PLDT or
        SMART or otherwise;

        "Competing Business" has the meaning given to it in the Strategic
        Agreement;

        "Effective Date" has the meaning given to it in Clause 2.2;

        "Existing Agreements" means the Shareholders Agreement and the Strategic
        Agreement;

        "Existing Encumbrances" has the meaning given to it in Clause 9.2.1;

        "First Minimum Shareholding Threshold" means ownership of full legal
        and beneficial title to not less than 12,633,486 PLDT Shares;

        "FPC Parties" means FPC, Metro, MALH, MPRI, LBV and MPAH;

        "GAAP" means, with respect to any jurisdiction, the generally accepted
        accounting  principles in such jurisdiction;

        "Handover Date" means 1 July 2006;

        "Joint Mancom" means the management committee comprising senior members
        of the management of each of PLDT and SMART, which is appointed by the
        president of PLDT for the purpose of co-ordinating management functions
        within the PLDT Group, and in particular to facilitate communication
        between management of the PLDT Group companies;


                                       2



        "NTT Holding" means Nippon Telegraph and Telephone Corporation, a
        corporation organised and existing under the laws of Japan;

        "Parties" means the parties to this Agreement and "Party" means any one
        of them;

        "Person" has the meaning given to it in the Strategic Agreement;

        "PLDT Advisory Board" means the advisory board comprised of PLDT
        Advisory Board Members;

        "PLDT Advisory Board Member" means an individual who has been appointed
        as such by the board of directors of PLDT and who is given the right to
        attend and participate in, but not the right to cast any vote at, the
        meetings of the board of directors of PLDT;

        "PLDT Group" means PLDT and its Subsidiaries;

        "PLDT Mancom" means the management committee comprised of senior
        members of the management of PLDT, which is appointed by the president
        of PLDT for the purpose of overseeing operational matters of PLDT and
        ePLDT, Inc.;

        "PLDT MRSB" means the Major Requisition Screening Body established to
        review and approve the capital expenditures and operational expenses of
        PLDT which exceed thresholds specified by the board of PLDT, and to
        evaluate and endorse items that require higher approval authority as
        stipulated by the board of PLDT;

        "PLDT Shares" means shares of common capital stock of PLDT;


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