-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ukr7y221CEGXME6RRQaujzKsyrSvRVfjqr3VRG686bRjcgW6PRsgzq3Jvif+PG9w HTUtVQ+InBqLnC65xNyPqA== 0000950172-06-000085.txt : 20060206 0000950172-06-000085.hdr.sgml : 20060206 20060206122251 ACCESSION NUMBER: 0000950172-06-000085 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20060206 DATE AS OF CHANGE: 20060206 GROUP MEMBERS: NTT COMMUNICATIONS CORPORATION SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PHILIPPINE LONG DISTANCE TELEPHONE CO CENTRAL INDEX KEY: 0000078150 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43643 FILM NUMBER: 06580507 BUSINESS ADDRESS: STREET 1: RAMON CONJUANGCO BLDG STREET 2: MAKATI AVE CITY: MAKATI METRO MANILA STATE: R6 ZIP: 0721 BUSINESS PHONE: 0116328143552 MAIL ADDRESS: STREET 1: RAMON CONJUANGCO BLDG STREET 2: MAKATI AVE CITY: MAKATI METRO MANILA STATE: R6 ZIP: 0721 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NIPPON TELEGRAPH & TELEPHONE CORP CENTRAL INDEX KEY: 0000769594 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 000000000 STATE OF INCORPORATION: M0 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 3-1 OTEMACHI 2-CHOME STREET 2: CHIYODA-KU CITY: TOKYO JAPAN STATE: M0 ZIP: 100-8116 BUSINESS PHONE: 2128082203 MAIL ADDRESS: STREET 1: C/O 101 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10178 SC 13D/A 1 was5318.txt FORM SC 13D-A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 2)(1) Philippine Long Distance Telephone Company (Name of Issuer) Common Capital Stock, 5 Philippine Pesos par value (Title of Class of Securities) 718252109 (CUSIP Number) Haruhiko Yamada NTT Communications Corporation 1-6, Uchisaiwai-cho 1-chome Chiyoda-ku, Tokyo 100-8019 Japan (81-3) 6700-4601 with a copy to: Alec P. Tracy, Esq. Skadden, Arps, Slate, Meagher & Flom 30/F Tower Two Lippo Centre 89 Queensway Central, Hong Kong Telephone: (852) 2820-0700 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 31, 2006 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 718252109 - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) NTT Communications Corporation No I.R.S. Identification - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS N/A - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS / / REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION JAPAN - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY -0- OWNED BY ------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON -25,266,973- WITH ------------------------------------------------------- 9 SOLE DISPOSITIVE POWER -0- ------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -25,266,973- - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 25,266,973 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES / / CERTAIN SHARES - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.0% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO CUSIP No. 718252109 - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Nippon Telegraph and Telephone Corporation No I.R.S. Identification - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS N/A - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS / / REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION JAPAN - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY -0- OWNED BY ------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON -25,266,973(1)- WITH ------------------------------------------------------- 9 SOLE DISPOSITIVE POWER -0- ------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -25,266,973- - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 25,266,973 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES / / CERTAIN SHARES - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) - --------------------- (1) After the Common Shares are transferred pursuant to the Stock Sale and Purchase Agreement (as defined herein), Nippon Telegraph and Telephone Corporation will beneficially own (i) 12,633,487 shares through NTT Communications Corporations, its wholly-owned subsidiary, and (ii) 12,633,486 shares through NTT DoCoMo, Inc., its majority-owned publicly-traded subsidiary. 14.0% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON HC This Amendment No. 2 (this "Amendment No. 2") amends and restates the Schedule 13D dated March 24, 2000 (the "Schedule 13D"), which was filed in paper format with the Securities and Exchange Commission (the "SEC") on behalf of the Reporting Persons (as defined herein) and NTT-UK (as defined herein), relating to the Common Shares (as defined herein) of Philippine Long Distance Telephone Company, a corporation organized under the laws of the Philippines (the "Company" or "PLDT"). The Schedule 13D was amended and restated by Amendment No. 1 dated December 11, 2002 (as amended, "Amendment No. 1"). The purpose of this Amendment No. 2 is to amend and restate items 4, 5, 6 and 7 with respect to the proposed Transfer (as defined herein) of the Common Shares from NTTC (as defined herein) to DoCoMo (as defined herein) and certain changes to the strategic and shareholder arrangements between NTTC, DoCoMo and the FPC Parties (as defined herein). Item 1. Security and Issuer. The title of the class of equity securities to which this Amendment No. 2 relates is the common capital stock, par value five Philippine Pesos per share, of PLDT (the "Common Shares"). The principal executive offices of the Company are located at the 7th floor, Ramon Cojuangco Building, Makati Avenue, Makati City, Metro Manila, Philippines. Item 2. Identity and Background. (a) - (c) and (f) This Amendment No. 2 is being filed on behalf of: Nippon Telegraph and Telephone Corporation ("NTT"), a corporation organized under the laws of Japan, has its principal executive offices at 3-1, Otemachi 2-chome, Chiyoda-ku, Tokyo 100-8116, Japan. NTT's principal business is serving as a holding company for subsidiaries engaged in providing telecommunications services. These services fall into seven major classes: telephone services, telegraph services, leased circuit services, data communication facility services, Integrated Services Digital Network services, sale of telecommunication equipment and other services; and NTT Communications Corporation, a corporation organized under the laws of Japan ("NTTC"), has its principal executive offices at 1-6 Uchisaiwai-cho 1-chome, Chiyoda-ku, Tokyo 100-8019, Japan. NTTC is a wholly-owned direct subsidiary of NTT and its principal business is providing inter-prefectural telecommunications, multimedia network services and related services including, providing local, long distance and other telecommunications services outside of Japan. NTT and NTTC are hereinafter referred to as the "Reporting Persons". The name, present principal occupation, business address and citizenship of each of the directors and executive officers of the Reporting Persons are set forth on the following schedules to this Amendment No. 2: Schedule A...............Nippon Telegraph and Telephone Corporation Schedule B...............NTT Communications Corporation This Amendment No. 2 contains information with respect to NTT Communications Capital (UK) Limited ("NTT-UK"), a corporation that was organized under the laws of England and Wales and was an indirect wholly-owned subsidiary of NTT, had its principal executive offices at 3rd Floor, Devon House, 58-60 St. Katherine's Way, London E1 9LB, United Kingdom. NTT-UK was a Reporting Person in the Schedule 13D but is no longer required to report its beneficial ownership of the Common Shares of PLDT as a result of NTT-UK transferring all of the Common Shares to NTTC as part of a reorganization of NTTC's holdings, as described in Item 3. Prior to its dissolution and liquidation on July 10, 2003, NTT-UK was a direct wholly-owned subsidiary of NTTC and its principal business was acting as an investment holding company. (d) and (e) Neither of the Reporting Persons nor, to the best knowledge of each Reporting Person, any of their directors or executive officers has, during the last five years, been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration March 2000 Transaction On March 24, 2000, the transactions contemplated by the Stock Purchase and Strategic Investment Agreement dated as of September 28, 1999, as amended (the "Strategic Agreement"), among First Pacific Company Limited ("FPC"), Metro Pacific Corporation, Metro Asia Link Holdings, Inc., Metro Pacific Resources, Inc. (collectively with FPC, the "FPC Group"), the Company and NTTC, were consummated. Pursuant to the Strategic Agreement, NTT-UK acquired: (a) 13,068,509 newly issued and fully paid Common Shares (the "NTT PLDT Exchange Shares") in exchange for 1,017,222,294 of common stock of SMART Communications, Inc., a Philippine cellular telecommunications company ("SMART"), which were held by NTT-UK prior to the transaction. The NTT PLDT Exchange Shares were issued at an issue price of 1,080 Philippine Pesos per share, or an aggregate issue price of 14,113,989,720 Philippine Pesos. (b) 12,198,462 newly issued and fully paid Common Shares (the "NTT PLDT Cash Shares" and together with the NTT PLDT Exchange Shares, the "PLDT Shares") for a purchase price of 14,662,551,324 Philippine Pesos. All of the funds used to pay for the NTT PLDT Cash Shares were provided through NTT-UK from NTTC's available cash resources. In addition, simultaneous with the closing under the Strategic Agreement, NTT-UK purchased two newly issued Common Shares, one of which is owned of record by each of the two persons nominated by NTTC to serve as directors of PLDT. The aggregate purchase price for the PLDT Shares was 28,776,541,044 Philippine Pesos. For a more detailed summary of the Strategic Agreement, see Item 4 and Item 6. The Strategic Agreement and the First and Second Amendments thereto were filed as Exhibits 2 through 4, respectively, to the Schedule 13D and are incorporated herein by reference. December 2002 Transfer from NTT-UK to NTTC On December 11, 2002, pursuant to the terms of an agreement for the transfer of shares in PLDT, dated December 11, 2002, by and between NTT-UK and NTTC, NTT-UK transferred the PLDT Shares to NTTC. As a result of the consummation of the transactions contemplated therein, NTT-UK was no longer the record or beneficial owner of any Common Shares and therefore was no longer required to report its beneficial ownership of the Common Shares of PLDT. January 2006 DoCoMo Transaction On January 31, 2006, NTTC and 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"), entered into an agreement (the "Stock Sale and Purchase Agreement") pursuant to which NTTC has agreed to transfer (the "Transfer"), 12,633,486 Common Shares (the "DoCoMo PLDT Shares") to DoCoMo. The aggregate purchase price of 52,102,815,772 Japanese Yen for the DoCoMo PLDT Shares will be paid to NTTC by DoCoMo in immediately available funds by wire transfer upon the closing of the Transfer. In connection with the Stock Sale and Purchase Agreement, the FPC Group, Larouge B.V., Metro Pacific Assets Holdings, Inc. (collectively, the "FPC Parties"), NTTC, DoCoMo and PLDT entered into a Co-Operation Agreement ("Co-Operation Agreement") dated January 31, 2006, pursuant to which, each of the FPC Parties, NTTC and PLDT agreed to grant DoCoMo certain benefits under the Strategic Agreement and the Shareholders Agreement, to amend the Registration Rights Agreement, to discuss the amendment of certain other existing agreements and to enter into certain business relationships in the field of mobile communications services. DoCoMo is a majority-owned, publicly-traded subsidiary of NTT. For a more detailed summary of the Stock Sale and Purchase Agreement and the Co-Operation Agreement, see Item 4 and Item 6. The Stock Sale and Purchase Agreement and the Co-Operation Agreement are filed herewith as Exhibit 7 and Exhibit 8, respectively, and are incorporated herein by reference. Item 4. Purpose of Transaction. The Reporting Persons have acquired the PLDT Shares and have agreed to transfer the DoCoMo PLDT Shares to DoCoMo with a view to (i) establishing and maintaining a strategic relationship among PLDT, NTTC and DoCoMo to enhance the global business development of NTT by, among other things, exploiting DoCoMo and NTTC's leadership in fixed-mobile convergence and enhancing PLDT's mobile business and (ii) together with DoCoMo, attaining and maintaining an equity interest in PLDT and influence over the management and policies of PLDT, including representation on PLDT's board of directors, that is at least commensurate with their aggregate direct and indirect interests in PLDT from time to time. The Reporting Persons have not yet made a determination as to the specific level of beneficial ownership they will seek to obtain, but as a result of the Stock Sale and Purchase Agreement described in this Item 4 and in Item 6, the Reporting Persons as of December 31, 2005, controlled approximately 14.0% of the voting power attached to the outstanding Common Shares. Following the closing of the sale of the DoCoMo PLDT Shares by NTTC to DoCoMo pursuant to the Stock Sale and Purchase Agreement described in this Item 4 and in Item 6, the Reporting Persons and DoCoMo will, in the aggregate, continue to beneficially own approximately 14.0% of the voting power attached to the outstanding Common Shares. Under the Co-Operation Agreement, upon the holdings of Common Shares by NTTC, DoCoMo and their respective subsidiaries collectively reaching 20% of the Common Shares then issued and outstanding, and for so long as NTTC and DoCoMo and their respective subsidiaries continue to hold at least 17.5% of the Common Shares then outstanding from time to time, DoCoMo will be entitled to exercise additional rights under the Strategic Agreement and the Shareholders Agreement. March 2000 Transaction Pursuant to the Strategic Agreement, PLDT acquired all of the shares of SMART owned by the FPC Group and NTT-UK in exchange for newly issued and fully paid Common Shares and NTT-UK subscribed for an additional 12,198,462 NTT PLDT Cash Shares (the "SMART Transaction"). PLDT also acquired the shares of the existing minority shareholders in SMART in exchange for newly issued and fully paid Common Shares. Upon consummation of the SMART Transaction, NTTC and PLDT established a strategic relationship to, among other things, coordinate the development and marketing of telecommunications products and services. As part of this strategic relationship, (i) NTTC and its subsidiaries are restricted in making investments in businesses that compete with PLDT; (ii) NTTC has certain approval rights over expenditures and investments made by PLDT as well as approval rights over actions PLDT takes with respect to Pilipino Telephone Corporation ("Piltel"), a majority-owned, publicly-traded subsidiary of PLDT and (iii) NTTC has certain rights in the event PLDT proposes (with certain exceptions) to issue additional Common Shares or securities convertible into or exchangeable for the Common Shares. The consummation of the SMART Transaction resulted in the following: (a) SMART becoming a wholly owned subsidiary of PLDT, (b) the FPC Group controlling voting rights attaching at that time approximately 31.4% of the outstanding Common Shares, (c) NTT-UK becoming the registered and beneficial owner of 25,266,973 Common Shares, representing approximately 15.0% of the outstanding Common Shares and (d) NTTC having the right to nominate: (i) two directors to the board of directors of PLDT, which was recently enlarged from eleven to thirteen members, (ii) two directors to the board of directors of SMART and (iii) one director to serve as a member of each of the boards of directors of the other subsidiaries of PLDT. For a more detailed summary of NTTC's rights to nominate directors to the board of directors In connection with the Strategic Agreement, the FPC Parties, NTT-UK and NTTC entered into a shareholders agreement as to certain corporate governance and other matters among those parties as shareholders of PLDT (the "Shareholders Agreement"). PLDT also entered into registration rights agreements with NTTC and NTT-UK with respect to the Common Shares held by them (the registration rights agreement between PLDT and NTTC is hereinafter referred to as the "Registration Rights Agreement"). NTTC (or certain of its subsidiaries) and PLDT also entered into agreements (the "Commercial Agreements") as to certain commercial and technical matters relating to PLDT's ongoing operations and as to certain advisory arrangements with respect to such Commercial Agreements (the "Services Agreements"). January 2006 DoCoMo Transaction Pursuant to the Stock Sale and Purchase Agreement, NTTC has agreed to transfer 12,633,486 DoCoMo PLDT Shares to DoCoMo upon the satisfaction or waiver of the closing conditions set forth therein. The Stock Sale and Purchase Agreement, provides, among other things, that: o upon and after DoCoMo's appointment of the Chief Operation Advisor (the "COA") on or before July 1, 2006, DoCoMo will cause the COA to consult with and act in accordance with the direction of NTTC's executive advisor in the Philippines regarding matters relating to fixed-line telecommunications, data or information and communications technology services. Prior to DoCoMo's appointment of the COA, NTTC will cause the COA to consult with and act in accordance with the direction of DoCoMo's senior technical advisor in the Philippines regarding matters relating to wireless telecommunications services; and o from the date of the Stock Sale and Purchase Agreement, each of NTTC and DoCoMo will (a) cause its representatives and advisors not to take any action that would amend or terminate the Commercial Agreements and Services Agreements between NTTC and PLDT or any rights and obligations DoCoMo will have under the Integrated i-mode Services Package Agreement between DoCoMo and SMART Communications, Inc., or any other agreements entered into between DoCoMo and PLDT or SMART Communications pursuant to the Co-Operation agreement, (b) use good faith efforts to discuss conflicts of interest between the two parties and (c) use good faith efforts to negotiate the exercise of any rights under the Registration Rights Agreement. In connection with the Stock Sale and Purchase Agreement, the FPC Parties, NTTC, DoCoMo and PLDT entered into the Co-Operation Agreement, pursuant to which the parties have agreed to add DoCoMo as a party under the existing agreements among the parties to share the benefit of certain rights thereunder with NTTC and to enter into certain strategic business relationships in the field of mobile communication services. In the Co-Operation Agreement, NTTC and DoCoMo have agreed to certain procedures relating to their respective exercise of such rights. NTTC and DoCoMo have agreed that NTTC, after completion of the Transfer of the DoCoMo PLDT Shares to DoCoMo, DoCoMo and their respective subsidiaries, in the aggregate, will not acquire more than 21% of the Common Shares then issued and outstanding and to support PLDT management to safeguard PLDT against certain Hostile Transferees (as defined herein). For brief summaries of the Strategic Agreement, the Shareholders Agreement, the Registration Rights Agreement and the Services Agreements, see Item 6. The Stock Sale and Purchase Agreement and the Co-Operation Agreement are filed herewith as Exhibit 7 and Exhibit 8, respectively, and are incorporated herein by reference. Item 5. Interest in Securities of the Issuer (a) As of December 31, 2005, the Reporting Persons beneficially owned 25,266,973 Common Shares, representing approximately 14.0% of the total number of the Common Shares outstanding. By virtue of NTT's ownership of all of the outstanding capital stock of NTTC and a majority of the common stock of DoCoMo and the terms of the Stock Sale and Purchase Agreement and Co-Operation Agreement, the Reporting Persons and DoCoMo constitute a "group" within the meaning of section 13(d)(3) of the Securities Exchange Act of 1934 and therefore, DoCoMo may be deemed to have acquired beneficial ownership of the 25,266,973 Common Shares beneficially held by the Reporting Persons. Given the terms of the Shareholders Agreement and the Co-Operation Agreement (as described herein), the Reporting Persons and DoCoMo and the other parties to the Shareholders Agreement might be deemed to constitute a "group". However, the Reporting Persons disclaim that they have agreed to act as a group with any other parties to the Shareholders Agreement (other than to the extent provided in the Shareholders Agreement and the Co-Operation Agreement) and the Reporting Persons disclaim beneficial ownership of the Common Shares other than the amounts of shares reported for the Reporting Persons herein. (b) As the registered owner, NTTC has the power to directly vote or dispose of the 25,266,973 Common Shares beneficially owned by the Reporting Persons. By virtue of its ownership of all of the issued and outstanding capital stock of NTTC, NTT has the power to direct the voting or disposition of the Common Shares beneficially owned by the Reporting Persons. (c) Except for the Transfer of DoCoMo PLDT Shares to DoCoMo contemplated by the Stock Sale and Purchase Agreement as described in Item 3, neither the Reporting Persons, nor to the knowledge of each Reporting Person, any of its directors or executive officers has effected any transaction in the Common Shares during the past sixty days. (d) None. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Reference is made hereby to Item 3 hereof which is incorporated by reference in this Item 6. 1) The following section describes the agreements giving rise to the filing of the Schedule 13D, Amendment No. 1, which amended and restated the Schedule 13D, and this Amendment No. 2, which amends and restates Amendment No. 1. A. The Strategic Agreement As described under Item 3, on March 24, 2000 the transactions contemplated by the Strategic Agreement were consummated. Pursuant to the Strategic Agreement, among other things: o PLDT acquired from the members of the FPC Group 1,597,814,621 SMART shares representing approximately 56% of the issued common capital stock of SMART in exchange for the issuance to members of the FPC Group 20,527,524 newly issued and fully paid Common Shares at a price of 1,080 Philippine Pesos per Common Share, or an aggregate issue price of 22,169,725,920 Philippine Pesos; o PLDT acquired from NTT-UK 1,017,222,294 SMART shares representing approximately 37% of the issued common capital stock of SMART, in exchange for the issue to NTT-UK of 13,068,509 newly issued and fully paid Common Shares at a price of 1,080 Philippine Pesos per Common Share, or an aggregate issue price of 14,113,989,720 Philippine Pesos; and o NTT-UK subscribed for an additional 12,198,462 NTT PLDT Cash Shares, which were issued to NTT-UK for an aggregate price of 14,662,551,324 Philippine Pesos in cash, or 1,202 Philippine Pesos per Common Share. The consummation of the SMART Transaction resulted in the following: (a) SMART becoming a wholly-owned subsidiary of PLDT, (b) the FPC Group controlling voting rights attaching at that time approximately 31.4% of the outstanding Common Shares, (c) NTT-UK becoming the registered and beneficial owner of 25,266,973 Common Shares, representing approximately 15.0% of the then outstanding Common Shares and (d) NTTC having the right to nominate: (i) two directors to the board of directors of PLDT, which was enlarged from eleven to thirteen members, (ii) two directors to the board of directors of SMART and (iii) one director to serve as a member of each of the boards of directors of the other subsidiaries of PLDT. For a more detailed summary of NTTC's rights to nominate directors to the board of directors of PLDT and its subsidiaries, see "The Shareholders Agreement" under this Item 6. The Strategic Agreement was amended by the Co-Operation Agreement, dated January 31, 2006, and the following summarizes certain of the principal terms of the Strategic Agreement, as amended by the Co-Operation Agreement. A copy of the Strategic Agreement and the first and second amendments thereto were filed as Exhibits 2 through 4 to the Schedule 13D, and the Co-Operation Agreement is filed as Exhibit 8 of this Amendment No. 2, and any description contained in this Amendment No. 2 relating to the Strategic Agreement does not purport to be complete and is qualified in its entirety by reference to the Strategic Agreement and the first and second amendments thereto filed as Exhibits 2 through 4 to the Schedule 13D and the Co-Operation Agreement filed as Exhibit 8 of this Amendment No. 2. The following provisions of the Strategic Agreement become effective as to DoCoMo after the completion of the Transfer of DoCoMo PLDT Shares to DoCoMo pursuant to the Stock Sale and Purchase Agreement. 1. Strategic Relationship PLDT, NTTC and DoCoMo have agreed to form a strategic relationship in the Philippines and, among other things, to establish a joint committee to explore the development and marketing of products and services between the parties. PLDT has agreed not to enter into another strategic alliance with another party without the consent of NTTC and DoCoMo, provided that PLDT may, subject to certain exceptions, designate as its "strategic partner" any person in which PLDT and its subsidiaries own 25% or more of its capital stock. 2. Limitations on Competition by NTTC and DoCoMo Without PLDT's consent, NTTC or DoCoMo and their respective subsidiaries may not invest in a business competing with PLDT in respect of customers principally located in the Philippines if such investment, when added to all prior investments by NTT and its majority owned and controlled subsidiaries (the "NTT Holding Company Group") in such business, is in excess of US$50 million (subject to certain adjustments for inflation) or if such investment, when added to all prior investments by NTTC and its subsidiaries in all such businesses for the past 12 months, is in excess of US$100 million (subject to certain adjustments for inflation). Similar limitations exist with respect to NTTC's and DoCoMo's use of assets in the Philippines in such businesses. 3. Committee Structure PLDT has agreed to maintain the Committee structure defined in Schedule 10 of the Strategic Agreement and to cause NTTC and DoCoMo to be entitled to appoint (i) two persons to serve as members or advisors of each Committee consisting of more than five members; and (ii) one person to serve as a member or as an advisor of each Committee consisting of not more than five members. 4. Certain Approval Rights of NTTC and DoCoMo (a) Capital Expenditures Subject to certain exceptions, PLDT and/or its subsidiaries may make any capital expenditures in connection with a single project if the total capital expenditures required for such project will or will likely exceed US$50 million (subject to certain adjustments for inflation), in each case only pursuant to the approval procedures described in paragraph (f) below and with the approval of NTTC and DoCoMo, given in the manner described in paragraph (f) below. (b) Investment in Existing Investees Subject to certain exceptions, PLDT and/or its subsidiaries may make any investments in or provide certain forms of financial support to any existing investee of PLDT, if the cumulative value of all investments by PLDT and its subsidiaries would exceed the sum of US$10 million (subject to certain adjustments for inflation), plus the aggregate book value of all investments made in such existing investee by PLDT and its subsidiaries as of July 31, 1999, or to any existing investee, if, for the past 12-month period, the cumulative value of all investments by PLDT and its subsidiaries would exceed US$25 million (subject to certain adjustments for inflation), in each case only pursuant to the approval procedures described in paragraph (f) below and with the approval of NTTC and DoCoMo, given in the manner described in paragraph (f) below. (c) Investments in New Investees Subject to certain exceptions, PLDT and/or its subsidiaries may make any investments in or provide certain forms of financial support to any new investee, if the cumulative value of all investments by PLDT and its subsidiaries in such new investee would exceed US$50 million (subject to certain adjustments for inflation), or to any new or existing investee, if, for the past 12-month period, the cumulative value of all investments by PLDT and its subsidiaries in new or existing investees would exceed US$100 million (subject to certain adjustments for inflation), in each case only pursuant to the approval procedures described in paragraph (f) below and with the approval of NTTC and DoCoMo, given in the manner described in paragraph (f) below. (d) Exception for Capital Expenditures for or Investments in a NTT Competing Business Neither NTTC nor DoCoMo may withhold its consent to any proposed capital expenditure or investment if (A) such proposed transaction would involve a person who is in direct competition for the same business opportunities with the NTT Holding Company Group, or involve a business in which the NTT Holding Company Group is, or is to be, engaged in, and (B) the board of directors of PLDT confirms in writing that proceeding with such transaction will not give rise to a right to accelerate or otherwise demand payment of material indebtedness of PLDT. (e) Limitation on Competition Where Consent is Withheld In the event NTTC and DoCoMo withhold their approval in connection with PLDT's proposed expenditure or investment, none of NTTC and DoCoMo and their respective subsidiaries may make a similar or competing investment for a period of nine months following notification by NTTC and DoCoMo of their decision to withhold such approval. (f) Approval Procedures PLDT, FPC Parties, NTTC and DoCoMo have agreed in the Strategic Agreement to certain discussion and written notification procedures in connection with the approval process by NTTC and DoCoMo in respect of the above-mentioned proposed expenditures or investments (each, a "Proposed Transaction"). Such procedures require, among other things, that NTTC and DoCoMo give their approval to a Proposed Transaction unless they reasonably conclude in good faith, having given proper consideration to all material factors identified by PLDT, the best interests of PLDT and its shareholders taken as a whole, and all other facts and circumstances that NTTC and DoCoMo deem relevant in making such decision, that the Proposed Transaction is not in the best interests of PLDT and its shareholders taken as a whole. NTTC and DoCoMo have agreed in the Co-Operation Agreement to discuss between themselves the manner in which the above rights shall be exercised. In the event of any dispute between PLDT, the members of the FPC Parties, NTTC and DoCoMo regarding whether NTTC and DoCoMo have acted in accordance with the above standard in withholding its consent to any Proposed Transaction, NTTC and DoCoMo shall be deemed for all purposes to have complied with the terms of the Strategic Agreement and not to have breached said agreement in withholding such approval, unless PLDT shows, by clear and convincing proof, that NTTC and DoCoMo did not act in accordance with the agreed standards in withholding its approval of such Proposed Transaction. Under the Co-Operation Agreement, NTTC and DoCoMo have agreed to discuss between themselves the manner in which their rights will be exercised. Prior to July 1, 2006, NTTC is responsible for notifying PLDT and the FPC Parties of decisions with respect to exercise of such rights. From and after July 1, 2006, DoCoMo is responsible for notifying PLDT and the FPC Parties of such decisions. In each case, PLDT and the FPC Parties are entitled to rely on any such notice as if it had been given by both NTTC and DoCoMo. 5. Approval Rights Relating to Piltel The Strategic Agreement provides that prior written approval of NTTC and DoCoMo is required with respect to certain corporate actions relating to Piltel, including matters relating to the integration of Piltel into the businesses of PLDT and its subsidiaries (the "Piltel Integration"). The Piltel Integration has been substantially completed. In addition, prior written approvals of NTTC and DoCoMo are required in connection with various corporate and business actions of Piltel to the extent such actions would be outside the Piltel Integration, including actions relating to any refinancing of Piltel's debt or any additional investment in Piltel in excess of US$150 million (in the aggregate), changes to Piltel's capital stock, capital expenditures, certain intercompany agreements and transactions, migration of Piltel customers to PLDT or its subsidiaries, marketing and material asset dispositions. The Strategic Agreement also provides that, except for certain agreed to parameters relating to the Piltel Integration, prior written approval of NTTC or DoCoMo is required for (i) Piltel or PLDT to issue, redeem, consolidate or split or otherwise reclassify or amend the terms of any capital stock of Piltel, (ii) PLDT and its subsidiaries (other than Piltel) shall not make any capital expenditure for any asset to be used in the Piltel business, (iii) PLDT and its subsidiaries (other than Piltel) shall not enter into any agreement with Piltel or its subsidiaries, other than arms-length transactions in the ordinary course of business, (iv) PLDT and its subsidiaries (other than Piltel) shall not seek the mitigation of Piltel customers to PLDT or any of its subsidiaries or market/or sell any product or service which depends in any material respect upon the use of assets owned or operated by Piltel or any of its subsidiaries, and (v) PLDT shall cause Piltel and its subsidiaries not to make any material asset disposition. Under the Co-Operation Agreement, NTTC and DoCoMo have agreed to discuss between themselves the manner in which their rights will be exercised. Prior to July 1, 2006, NTTC is responsible for notifying PLDT and the FPC Parties of decisions with respect to exercise of such rights to PLDT and the FPC Parties. From and after July 1, 2006, DoCoMo is responsible for notifying PLDT and the FPC Parties of such decisions. In each case, PLDT and the FPC Parties are entitled to rely on any such notice as if it had been given by both NTTC and DoCoMo. 6. Limitations on the Issuance of Common Capital Stock Subject to certain exceptions, under the terms of the Strategic Agreement, PLDT may not issue Common Shares or securities convertible into or exchangeable for the Common Shares without the prior written approval of NTTC and DoCoMo unless PLDT has first offered NTTC and DoCoMo the right to purchase a number of shares equal to its pro-rata portion of the number of shares proposed to be issued. By operation of Philippine law, holders of the Common Shares will, with certain exceptions, have preemptive rights with respect to issuances of new Common Shares, including issuances of the Common Shares to NTTC and DoCoMo pursuant to any exercise by NTTC and DoCoMo of the rights referred to above. Under the Co-Operation Agreement, NTTC and DoCoMo have agreed to discuss between themselves the manner in which their rights will be exercised. Prior to July 1, 2006, NTTC is responsible for notifying PLDT and the FPC Parties of decisions with respect to exercise of such rights to PLDT and the FPC Parties. From and after July 1, 2006, DoCoMo is responsible for notifying PLDT and the FPC Parties of such decisions. In each case, PLDT and the FPC Parties are entitled to rely on any such notice as if it had been given by both NTTC and DoCoMo. With respect to NTTC and DoCoMo's pre-emptive rights, DoCoMo will be entitled to purchase all, or some, of the Common Shares or PTIC Shares (as defined in the Shareholders Agreement) which may be purchased by NTTC or DoCoMo, however, if DoCoMo decides not to purchase some or all of the Common Shares or PTIC Shares, NTTC and DoCoMo have agreed that NTTC shall have the option to purchase some or all of the Common Shares or PTIC Shares. 7. Termination of Approval Rights NTTC's and DoCoMo's rights to the strategic arrangements summarized in paragraphs 1 through 6 above will terminate when the NTTC, DoCoMo and their respective subsidiaries cease to own, in aggregate, 10% of the Common Shares then issued and outstanding (subject to certain adjustments, including certain adjustments for dilution arising out of settlements with Piltel's creditors). 8. Competing Business in Japan In case PLDT intends to enter into any contractual arrangement with any person relating to any activity which involves, as its principal component, the provision of telephone, telecommunications, paging, Internet, data or voice transmission services, whether or not terrestrial (a "Competing Business") in Japan involving joint branding, the provision, production or marketing of telecommunications or multimedia products or services, or corporation in, or sharing of, research and development of technology or other Intellectual Property (as defined in the Strategic Agreement), PLDT will (a) from the date of the Co-Operation Agreement until June 30, 2006, first provide NTTC and if NTTC declines, then provide DoCoMo with the same opportunity to enter into such agreement with PLDT and (b) from July 1, 2006, first provide DoCoMo and if DoCoMo declines, then provide NTTC with the same opportunity to enter into such agreement with PLDT upon the same terms being considered by PLDT, provided that PLDT will not be obligated to contract with NTTC or DoCoMo if such arrangement will not fully realize its expected benefits in the reasonable opinion of PLDT. In case PLDT, SMART or SMART's subsidiaries intends to enter into any contractual arrangement on or after July 1, 2006 with any person who is engaged in a Competing Business in competition with DoCoMo, PLDT will and PLDT will use its reasonable efforts to procure that SMART or SMART's subsidiaries will first provide DoCoMo with the same opportunity to enter into such agreement with PLDT, SMART or SMART's subsidiaries. PLDT will not be obligated to contract with, or to cause SMART or SMART's subsidiaries to contract with, DoCoMo if (a) such arrangement will not fully realize its expected benefits in the reasonable opinion of PLDT, (b) PLDT needs to maintain a relationship with a person other than NTTC or DoCoMo pursuant to reasonable business arrangements in furtherance of PLDT's strategic objectives or (c) the board of PLDT, SMART or its subsidiaries determines that to be in the best interests of its company to enter into such arrangements with a person other than DoCoMo. DoCoMo and PLDT have agreed that they will, from time to time, discuss other strategic developments in their respective businesses. B. The Shareholders Agreement Simultaneously with the closing under the Strategic Agreement, the FPC Parties, NTT-UK, and NTTC (the "Party Shareholders") entered into the Shareholders Agreement. The Shareholders Agreement was amended by the Co-Operation Agreement, dated January 31, 2006, in which FPC Parties and NTTC agreed that DoCoMo will be added to the Shareholders Agreement as a Party Shareholder upon the Transfer of DoCoMo PLDT Shares to DoCoMo pursuant to the Stock Sale and Purchase Agreement. A copy of the Shareholders Agreement was filed as Exhibit 5 to the Schedule 13D, and a copy of the Co-Operation Agreement has been filed as Exhibit 8 to this Amendment No. 2, and any description contained in this Amendment No. 2 relating to the Shareholders Agreement does not purport to be complete and is qualified in its entirety by reference to the Shareholders Agreement filed as Exhibit 5 to the Schedule 13D and the Co-Operation Agreement filed as Exhibit 8 to this Amendment No. 2. The following summarizes certain of the principal terms of the Shareholders Agreement, as amended by the Co-Operation Agreement. The following provisions of the Shareholders Agreement become effective as to DoCoMo after the completion of the Transfer of DoCoMo PLDT Shares to DoCoMo pursuant to the Stock Sale and Purchase Agreement. 1. Board and Committee Representation In respect to NTTC's right to nominate two directors to the board of PLDT, NTTC and the FPC Parties have agreed to use reasonable efforts to procure a PLDT shareholders vote in favor of replacing one existing NTTC nominee on the board of PLDT with one DoCoMo nominee. Upon the holdings of the Common Shares by NTTC, DoCoMo and their respective subsidiaries reaching in aggregate 20% of the Common Stock then issued and outstanding, and so long as DoCoMo and NTTC continue to hold at least full legal and beneficial title to not less than 17.5% of the Common Shares then issued and outstanding from time to time, each of NTTC and the FPC Parties will cast its votes as a PLDT shareholder, lobby the directors of PLDT, and otherwise use reasonable efforts to procure a vote in favor of any resolution put to the meeting of the PLDT shareholders, for the purpose of effecting the election of one additional DoCoMo nominee as a director of PLDT. In respect to NTTC's right to nominate two directors to the board of SMART, NTTC and the FPC Parties have agreed to use reasonable efforts to procure a SMART shareholders vote in favor of replacing one existing NTTC nominee on the board of PLDT with one DoCoMo nominee. Upon the holdings of the Common Shares by NTTC, DoCoMo and their respective subsidiaries, reaching in aggregate 20% of the Common Stock then issued and outstanding, and so long as DoCoMo and NTTC continue to hold at least 17.5% of the Common Shares then issued and outstanding from time to time, each of NTTC and the FPC Parties have agreed to cast its votes as a PLDT shareholder, lobby the directors of PLDT, and otherwise use reasonable efforts to procure a vote in favor of any resolution put to the meeting of the SMART shareholders, for the purpose of effecting the election of one additional DoCoMo nominee as a director of SMART. 2. Committees and Subsidiary Committees Each of the FPC Parties, PLDT and NTTC have agreed to use reasonable efforts to procure that DoCoMo be entitled to appoint one individual, who may be replaced at any time, to attend any committee of PLDT or SMART as a member, advisor or observer. 3. Unanimous Consent The Party Shareholders and DoCoMo have agreed not to permit PLDT, without the prior written consent of all the other parties, to: (i) engage in any business other than the telecommunications and related activities currently engaged in by PLDT or cease to carry on any substantial part of the telecommunications and related activities currently engaged in by PLDT; (ii) merge or consolidate with or into any other company or entity; (iii) take any steps to effect the winding up of PLDT or pass any resolution to liquidate PLDT; or (iv) apply to any court, administrative agency or tribunal to order a meeting of creditors or any class of creditors or members or any class of members or to sanction any compromise or arrangement between creditors or shareholders of PLDT. Under the Co-Operation Agreement, NTTC and DoCoMo have agreed to discuss between themselves the manner in which their rights will be exercised. Prior to July 1, 2006, NTTC is responsible for notifying PLDT and the FPC Parties of decisions with respect to exercise of such rights to PLDT and the FPC Parties. From and after July 1, 2006, DoCoMo is responsible for notifying PLDT and the FPC Parties of such decisions. In each case, PLDT and the FPC Parties are entitled to rely on any such notice as if it had been given by both NTTC and DoCoMo. 4. Restrictions on Transfers of the Common Shares and PTIC Shares A Party Shareholder and DoCoMo may transfer its Common Shares only after offering to sell such Shares to the non-disposing Party Shareholders or with the prior written consent of the other Party Shareholders. Party Shareholders and DoCoMo may encumber their Common Shares provided that such encumbering Party Shareholder or DoCoMo provides certain information regarding the encumbrance to the non-encumbering Party Shareholders or DoCoMo. Similar restrictions apply to shares of Philippine Telecommunications Investment Corporation. Notwithstanding the foregoing, transfer of NTTC's remaining Common Shares after Transfer of the DoCoMo PLDT Shares to DoCoMo to any person is subject to a superior right of first offer granted to DoCoMo, subject to the limitations on share acquisitions described in paragraph (2)B(2)(b) below. In the event DoCoMo proposes to transfer any Common Shares which would result in NTTC and DoCoMo holding, in the aggregate, less than 10% of the Common Shares then issued and outstanding, then NTTC shall have a right of first offer to purchase such Common Shares from DoCoMo on terms and conditions no less favorable to DoCoMo than those on which DoCoMo proposes to transfer such Common Shares. Such right shall be superior to any right of first refusal which any of the FPC Parties may have in respect of such proposed transfer under the Shareholders Agreement. Any such transfer from DoCoMo to NTTC pursuant to the exercise by NTTC of this right will not give rise to a right of first offer by the FPC Parties under the Shareholder Agreement and shall constitute a transfer to a Permitted Transferee. Pursuant to the Co-Operation Agreement, NTTC and DoCoMo have agreed that within the time periods provided for giving a Preemption Reply (as defined in the Co-Operation Agreement), both parties will consult with each other regarding the exercise of the relevant rights. DoCoMo will be entitled to purchase all, or some, of the Common Shares or PTIC Shares which may be purchased from a Party Shareholder, however, if DoCoMo decides not to purchase some or all of the Common Shares or PTIC Shares, NTTC and DoCoMo have agreed that NTTC shall have the option to purchase some or all of the Common Shares or PTIC Shares. 5. Termination The Shareholders Agreement will terminate if NTTC, DoCoMo or their respective subsidiaries cease to own, in aggregate, full legal and beneficial title to 10% of the Common Shares then issued and outstanding, or if the FPC Parties and their respective subsidiaries cease to have effective voting power in respect to at least 18.5% of the Common Shares then issued and outstanding. C. The Registration Rights Agreement On March 24, 2000, PLDT entered into registration rights agreements with each of NTTC and the FPC Group in connection with the registration of their Common Shares. A copy of the Registration Rights Agreement among PLDT, NTT-UK and NTTC was filed as Exhibit 6 to the Schedule 13D, and any description contained in this Amendment No. 2 relating to the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Registration Rights Agreement filed as Exhibit 6 to the Schedule 13D. The Registration Rights Agreement provides for four demand registrations and unlimited piggy-back registration rights with respect to the Common Shares held by NTTC. The rights are subject to the rights of PLDT to delay or suspend registration upon the occurrence of certain events and certain holdback agreements. PLDT is responsible for all fees and expenses in connection with all but one of the demand registrations and all of the piggy-back registrations (other than fees and expenses of legal counsel for NTTC and the FPC Group). Pursuant to the Co-Operation Agreement, NTTC and PLDT have agreed as soon as possible, and in any event within 60 days of the completion of the Transfer of DoCoMo PLDT Shares to DoCoMo, to amend the Registration Rights Agreement to increase NTTC's present entitlement to require four Demand Registrations (as defined in the Registration Rights Agreement) to six Demand Registrations, and to review the provisions of the Registration Rights Agreement and hold discussions with DoCoMo to determine whether additional amendments are required. Pursuant to the Stock Sale and Purchase Agreement, NTTC and DoCoMo have agreed to use good faith efforts to negotiate their respective exercise of any rights under the Registration Rights Agreement, as amended pursuant to the Co-Operation Agreement, taking into account the respective interests of NTTC and DoCoMo. After the Transfer of DoCoMo PLDT Shares to DoCoMo, or if the Transfer occurs prior to July 1, 2006, then after July 1, 2006, NTTC and DoCoMo have agreed, pursuant to the Co-Operation Agreement, to negotiate in good faith any rights under the Registration Rights Agreement and the timing of exercising such rights. D. NTTC Commercial Agreements Ancillary to the SMART Transaction, PLDT and NTTC entered into various commercial agreements (the "NTTC Commercial Agreements") which provide for, among other things, the provision of mutual services on arm's length pricing terms, access to NTTC's telecommunications network services and joint marketing efforts. PLDT and NTTC also entered into an Advisory Services Agreement in connection with these commercial agreements. E. Service Provider Agreement NTTC, along with certain other service providers, operates global and international data managed telecommunications services marketed under the brand name "Arcstar" using the telecommunications network of NTTC and other service providers (the "Arcstar Network Services"). In connection with the appointment of PLDT as a service provider of the Arcstar Network Services, the parties agreed to the following: 1. NTTC, at its cost and expense, is required to design the system specification of the equipment through which PLDT will provide the Arcstar Network Services. PLDT agreed to pay for the installation, assembly and subsequent maintenance and modification of such equipment. 2. NTTC agreed to design and determine a global network topology for use in connection with the Arcstar Network Services and to the extent commercially practical, PLDT agreed to prepare, install, set-up, maintain, and modify, at its cost and expense, the facilities within its network and the international leased circuits to be used in connection with the provision of the Arcstar Network Services in the Philippines. 3. PLDT is required to procure, maintain, manage and operate, at its cost and expense, standard local access lines in the Philippines to be used for the purpose of providing the Arcstar Network Services, the establishment of which is subject to NTTC's acceptance. 4. PLDT is obligated, at its cost and expense, to procure the carrier management equipment and install and design the system-configuration of the carrier management equipment as specified by NTTC for rental or sale to its customers. 5. PLDT has agreed to promote, market and sell the Arcstar Network Services to its customers on a preferential basis over other competing services subject to customer suitability. F. Tradename and Trademark Agreement PLDT entered into an agreement with NTTC pursuant to which NTTC licenses to PLDT certain tradenames and trademarks to be used in connection with the marketing, promotion and selling of the Arcstar Network Services in the Philippines. G. Conventional International Telecommunications Services Agreement PLDT and NTTC agreed to certain mutually beneficial bilateral arrangements for conventional international telecommunications services as follows: 1. PLDT and NTTC provide each other with transit and refilling services of their respective international outgoing calls subject to various conditions, including having excess capacity, non-interference with existing bilateral arrangements, terms no less favorable than those offered to other carriers and overall strategic objectives. 2. PLDT and NTTC seek to agree upon the terms on which they terminate the outgoing calls to Japan and the Philippines. 3. Subject to certain terms and conditions, PLDT and NTTC agreed to cooperate in matters relating to international private leased circuit services, excess cable capacity and cable capacity swap and planning. H. Internet Agreement PLDT and NTTC agreed to coordinate their plans for deployment of Internet transmission capacity for access to and connectivity with the public Internet as follows: 1. PLDT and its subsidiaries may not construct or procure additional Internet capacity between the Philippines and destinations outside of the Philippines or increase the capacity of its existing access to and connectivity with the Internet without prior consultation with NTTC. 2. The parties have agreed to form a joint committee to discuss opportunities for use by PLDT and its subsidiaries of NTTC's international transport facilities providing access to and connectivity with the Internet. 3. Each of PLDT and its subsidiaries are required to inform NTTC of its plans to allow a third party to carry its capacity or plans to use or increase its capacity for its own use or use by a third party (other than capacity to the U.S.) and NTTC will be given a right of last bid to match the terms and conditions of such proposal. 4. Subject to certain conditions, NTTC will also be given a right of last bid in connection with PLDT's (or its subsidiaries') plans to introduce Internet-related and other value added services on the Internet, which require end-to-end arrangements with overseas providers. I. Advisory Services Agreement NTTC provides PLDT with technical consultants, who advise PLDT's finance group, strategy and support sector, information systems sector and corporate customer service group and the Arcstar Network Services. 2) The following describes the 2006 DoCoMo Transaction giving rise to the filing of this Amendment No. 2. Pursuant to the Co-Operation Agreement, after the Transfer of the DoCoMo PLDT Shares to DoCoMo, PLDT has agreed to use reasonable efforts to procure that, with respect to the Advisory Services Agreement, PLDT and SMART will receive at a minimum the specified aggregate number of Advisors (as defined in the Advisory Services Agreement) to be provided by NTTC and DoCoMo (together), in accordance with the timetable set out in the Co-Operation Agreement. PLDT, NTTC and DoCoMo have agreed to review these numbers from time to time. In addition and pursuant to the Co-Operation Agreement, as soon as possible and in any event within 60 calendar days immediately after the Transfer of the DoCoMo PLDT Shares to DoCoMo pursuant to the Stock Sale and Purchase Agreement, NTTC, DoCoMo and the FPC Group have agreed to review and hold discussions with one another in good faith with a view to determine whether the NTT Commercial Agreements need to be amended in light of the Co-Operation Agreement. A. The Stock Sale and Purchase Agreement. As briefly described above, on January 31, 2006, NTTC and NTT DoCoMo entered into the Stock Sale and Purchase Agreement pursuant to which NTTC has agreed to transfer the DoCoMo PLDT Shares to DoCoMo. The completion of the transfer of the DoCoMo PLDT Shares to DoCoMo is conditioned on the satisfaction or waiver of the closing conditions set forth in the Stock Sale and Purchase Agreement. Upon the satisfaction of the closing conditions set forth in the Stock Sale and Purchase Agreement: (a) DoCoMo will acquire from NTTC 12,633,486 Common Shares representing approximately 7.0% of the issued capital stock of the Company; and (b) NTTC will transfer to DoCoMo 12,633,486 Common Shares, reducing its shareholdings in the Common Shares to 12,633,487, representing approximately 7.0% of the issued capital stock of the Company, upon the satisfaction of the closing conditions set forth in the Stock Sale and Purchase Agreement. The purchase price for the DoCoMo PLDT Shares is fixed at 52,102,815,772 Japanese Yen, and is based on the volume-weighted average of the closing market prices of the Common Shares during the thirty calendar days immediately prior to the date of the Stock Sale and Purchase Agreement. The purchase price, fixed at a conversion rate of 2.26 Japanese Yen for 1 Philippine Peso, will be paid by DoCoMo in immediately available funds by wire transfer at the closing of the Transfer. A copy of the Stock Sale and Purchase Agreement is filed as Exhibit 7 of this Amendment No. 2, and any description contained in this Amendment No. 2 relating to the Stock Sale and Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Stock Sale and Purchase Agreement filed as Exhibit 7 of this Amendment No. 2. 1. Co-Investment Arrangements From the date of the Stock Sale and Purchase Agreement, and with respect to any matter primarily relating to the operation of wireless telecommunications services, including without limitation, matters relating to i-mode and the business of SMART Communications Inc., NTTC will cause the COA to use good faith effort to discuss with and act in accordance with the direction of DoCoMo's senior technical advisor. Upon the appointment of the COA by DoCoMo on or before July 1, 2006, from the date which the Closing occurs, or if the Closing occurs prior to July 1, 2006, then from July 1, 2006, DoCoMo will cause the COA to act in accordance with the direction of NTTC's executive advisor in the Philippines with respect to any matter primarily relating to the operation of fixed-line telecommunications, data or information and communications technology services. On and after the date of the Stock Sale and Purchase Agreement, each of NTTC and DoCoMo have agreed not to take any action that would have an effect of amending or terminating (i) any rights or obligations of NTTC under the Commercial Agreements and (ii) any rights or obligations of DoCoMo under any agreement between DoCoMo and PLDT or SMART. Each of NTTC and DoCoMo has agreed to use good faith efforts to discuss with each other any conflict of interest matters arising therefrom, taking into account each other's commercial and business interests. From the date on which the Closing occurs, or if the Closing occurs prior to July 1, 2006, then from July 1, 2006, NTTC and DoCoMo have agreed to use good faith efforts to negotiate their respective exercise of any rights under the Registration Rights Agreement, as amended pursuant to the Co-Operation Agreement, taking into account the respective interests of NTTC and DoCoMo. B. The Co-Operation Agreement As described under Item 3, on January 31, 2006, NTTC, DoCoMo and the FPC Parties entered into the Co-Operation Agreement to grant DoCoMo certain benefits and to amend the Shareholders Agreement and the Strategic Agreement in connection with DoCoMo's proposed acquisition of the Common Shares from NTTC. A copy of the Co-Operation Agreement is filed as Exhibit 8 of this Amendment No. 2, and any description contained in this Amendment No. 2 relating to the Co-Operation Agreement does not purport to be complete and is qualified in its entirety by reference to the Co-Operation Agreement filed as Exhibit 8 of this Amendment No. 2. 1. Provisions of the Co-Operation Agreement Effective on the Date of the Co-Operation Agreement (a) Permitted Transfer of the Common Shares Any transfer of the Common Shares from NTTC to DoCoMo is deemed to be a transfer to a Permitted Transferee (as defined in the Shareholders Agreement), and will not trigger FPC's right of first offer, or result in default or constitute ground for termination of the Shareholders Agreement or the Strategic Agreement. DoCoMo and NTTC have agreed that all the Common Shares held by DoCoMo and NTTC as a result of the Transfer shall be subject to the covenants of the Shareholders Agreement and Strategic Agreement, as amended by the Co-Operation Agreement, as if DoCoMo were NTTC and a party to such agreements. (b) Alliance PLDT has agreed not to enter into any contract, understanding or arrangement relating to preferred roaming or the lost inter operator tariff with any person carrying on a Competing Business in Japan for a period of six months from the date of the Co-Operation Agreement, without the prior consent of DoCoMo. 2. Provisions of the Co-Operation Agreement Effective Upon Closing of the Stock Purchase and Sale Agreement (a) Lock-up The Co-Operation Agreement provides that prior to and including the third anniversary of the Effective Date, DoCoMo shall not without the prior written consent of the FPC Parties, and FPC Parties shall not without the prior written consent of DoCoMo, transfer or create or permit to exist any Encumbrance (as defined in the Shareholders Agreement), except those set out the Co-Operation Agreement. (b) Restriction on Share Acquisitions NTTC and DoCoMo have warranted that they shall procure that their respective representatives, advisers, and subsidiaries and affiliates and their respective representatives and advisers shall not, directly or indirectly, together hold more than 21% of then issued and outstanding Common Shares. If such event does occur, the FPC Parties have the right to terminate their respective rights and obligations under the Co-Operation Agreement, the Shareholders Agreement and the Strategic Agreement by written notice to PLDT, NTTC and DoCoMo. The right of FPC to terminate the above agreements will terminate if FPC, its subsidiaries and affiliates hold less than 18.5% of the Common Shares then issued and outstanding. (c) Support Each of NTTC, DoCoMo and the FPC Parties have agreed that to the extent permissible under applicable laws and regulations of the Philippines and other jurisdictions, each of NTTC, DoCoMo and the FPC Parties will cast its vote as a PLDT shareholder in support of any resolution proposed by the PLDT board of directors for the purpose of safeguarding PLDT from a Hostile Transferee. If NTTC, DoCoMo, or a FPC Party reasonably determines such action would or might violate any applicable law or regulation, then NTTC, DoCoMo, or any of the FPC Parties will not be bound by the above obligation. A "Hostile Transferee" is defined under the Co-Operation Agreement to mean any person (other than NTTC, DoCoMo, FPC or any of their respective affiliates) determined to be so by the board of directors of PLDT and includes, without limitation, a person who announces an intention to acquire, seeks to acquire or acquires 30% or more of the Common Shares then issued and outstanding from time-to-time or having (by itself or together with itself) acquired 30% or more of such Common Shares announces an intention to acquire, seeks to acquire or acquires a further 2% of such Common Shares (a) at a price per share which is less than the fair market value of a Common Share as determined by the board of PLDT as advised by a professional financial advisor, (b) which is subject to conditions which are subjective or which could not reasonably be satisfied, (c) without making an offer for all the Common Shares not held by it and/or its affiliates and/or persons who, pursuant to an agreement or understanding (whether formal or informal), actively cooperate to obtain or consolidate control over PLDT, (d) whose offer for the Common Shares is unlikely to succeed or (e) whose intention is otherwise not bona fide; provided that, no person shall be a Hostile Transferee unless prior to making such determination, the board of directors of PLDT shall have used reasonable efforts to discuss with NTTC and DoCoMo in good faith regarding whether such person should be considered a Hostile Transferee. (d) Principle of Co-Operation, Exercise of Rights After NTTC and DoCoMo provide notice to PLDT and each of the FPC Parties that NTTC has transferred to DoCoMo the First Minimum Shareholding Threshold of not less than 12,633,248 Common Shares (the "Effective Date"), NTTC, DoCoMo and FPC Parties have agreed that references to "NTT Group" under the Shareholders Agreement and the Strategic Agreement shall include NTTC and its subsidiaries and DoCoMo and its subsidiaries. References to an NTT Party shall be construed as references to NTTC and DoCoMo and their respective Permitted Transferees (as defined in the Shareholders Agreement). (e) Exercise of Rights by DoCoMo and NTTC In respect to rights of NTTC and DoCoMo set forth in the Co-Operation Agreement, NTTC and DoCoMo have agreed to discuss between themselves the manner in which such rights shall be exercised. NTTC and DoCoMo have also agreed to consult with each other with respect to their first refusal rights. Both parties have agreed that each is entitled to purchase any or all of the Common Shares which the other party decides not to purchase. (f) Permitted Transfers of the Common Shares In the event DoCoMo proposes to transfer any Common Shares which would result in NTTC, DoCoMo or their respective subsidiaries holding, in aggregate, less than 10% of the Common Shares then issued and outstanding, NTTC will have the right of first offer to purchase the Common Shares from DoCoMo on terms and conditions no less favorable to DoCoMo than those on which DoCoMo proposes to transfer such Common Shares. (g) Board Appointments In respect of NTTC's right to nominate two directors to the board of PLDT, each of NTTC and the FPC Parties have agreed to use reasonable efforts to replace one existing NTTC nominee on the board of PLDT with one DoCoMo nominee. Upon the collective holdings of the Common Shares by NTTC and its subsidiaries and DoCoMo and its subsidiaries reaching 20% of the Common Shares then issued and outstanding, and so long as DoCoMo and NTTC and their respective subsidiaries continue to hold at least 17.5% of the Common Shares then issued and outstanding, each of NTTC and the FPC Parties have agreed to use reasonable efforts to effect the election of one additional DoCoMo nominee as a director of PLDT. In respect of NTTC's right to nominate two directors to the board of SMART, NTTC and the FPC Parties have agreed to use reasonable efforts to replace one existing NTTC nominee on the board of PLDT with one DoCoMo nominee. Upon the collective holdings of the Common Shares by NTTC and DoCoMo and their respective subsidiaries reaching 20% of the Common Shares then issued and outstanding, and so long as DoCoMo and NTTC continue to hold at least 17.5% of the Common Shares then issued and outstanding from time to time, each of NTTC and the FPC Parties have agreed to use reasonable efforts to effect the election of one additional DoCoMo nominee as a director of SMART. (h) DoCoMo Holds at Least 17.5% of All the Common Shares When NTTC and DoCoMo and their respective subsidiaries collectively hold 20% of the Common Shares then issued and outstanding and continue to hold at least 17.5% of the Common Shares then issued and outstanding from time to time, PLDT has agreed to consult DoCoMo prior to the first submission to the board of PLDT of any proposal of investment in an entity that would primarily engage in a business that would be in direct competition or substantially the same business opportunities, customer base, products or services with business carried on by DoCoMo, or which DoCoMo has announced publicly an intention to carry on. Each of NTTC, PLDT and the FPC Parties have agreed that it will use reasonable efforts to procure that SMART does not cease to carry on business, dispose of all of its assets, issue Common Capital Stock, merge or consolidate, or effect winding up or liquidation without PLDT first consulting with DoCoMo no later than thirty days prior to the first submission to the board of PLDT. (i) Additional Rights in Favor of DoCoMo NTTC, PLDT and the FPC Parties have agreed to cause SMART to execute an agreement between SMART and DoCoMo to implement i-mode. PLDT and DoCoMo have agreed in principle to collaborate with each other on the business development of W-CDMA mobile communication network. In addition, PLDT has agreed, to the extent of the power conferred by its direct or indirect shareholding of SMART: (a) to cause SMART to become a member of a strategic alliance group for international roaming and corporate sales and services; and (b) to negotiate in good faith with DoCoMo to enter into a business relationship concerning preferred roaming and inter-operator tariff discount between DoCoMo and SMART with a view to concluding a binding agreement as soon as possible but in any event not later than April 30, 2006. PLDT has agreed to use reasonable efforts to procure that PLDT and SMART receive at a minimum nine Advisors to be provided by NTTC and DoCoMo in accordance with the time schedule set out in the Co-Operation Agreement. (j) Non-Compete In case PLDT enters into any contractual arrangement with any person relating to the operation of a Competing Business in Japan, PLDT will from date of the Co-Operation Agreement until June 30, 2006, first provide NTTC, and if NTTC declines, then provide DoCoMo the same opportunity, and from July 1, 2006, provide DoCoMo, and if DoCoMo declines, then provide to NTTC the opportunity. In case PLDT, SMART or any of SMART's subsidiaries intends to enter into any contractual arrangement on or after July 1, 2006 with any person who is engaged in a Competing Business with DoCoMo in the Philippines, PLDT shall use its reasonable efforts to procure SMART and its subsidiaries to first provide DoCoMo with the same opportunity to enter into such an agreement with PLDT, SMART or any such SMART subsidiary. (k) Transitional Arrangements NTTC, DoCoMo and the FPC Parties have agreed that the COA, currently appointed by NTTC, will be replaced by a DoCoMo nominee on or before July 1, 2006. From the Effective Date, DoCoMo will have the right to appoint a senior technical advisor to SMART, and such advisor will assume the role of COA upon the replacement of the COA on or before July 1, 2006. Prior to becoming a COA, the senior technical advisor will be entitled to be an observer at meetings of the board of SMART, and advisor to each of SMART Mancom, PLDT Mancom and Joint Mancom, and director of the board of PLDT. The new COA will be entitled to be an observer at meetings of the board of SMART, an advisor to each of SMART Mancom, PLDT Mancom and Joint Mancom, and a direct of the board of PLDT. (l) Provision of PLDT's Financial Information If DoCoMo and/or NTT are required in preparation of its statutory financial statements in accordance with GAAP to reflect their respective interests in the Common Shares using the equity method, PLDT has agreed to provide DoCoMo with financial information in relation to PLDT that is necessary to satisfy such reporting obligations, including information specified in the Co-Operation Agreement. 3. Provisions of the Co-Operation Agreement Effective on and after July 1, 2006 NTTC and DoCoMo have agreed to discuss between themselves the manner in which their rights will be exercised. Prior to July 1, 2006, NTTC is responsible for notifying PLDT and the FPC Parties of decisions with respect to exercise of such rights to PLDT and the FPC Parties. From and after July 1, 2006, DoCoMo is responsible for notifying PLDT and the FPC Parties of such decisions. In each case, PLDT and the FPC Parties are entitled to rely on any such notice as if it had been given by both NTTC and DoCoMo. NTTC and DoCoMo have also agreed that NTTC will irrevocably assign to DoCoMo on July 1, 2006, all of NTTC's rights to nominate and provide the COA pursuant to the Advisory Services Agreement. Information about pledges or contingencies giving other persons voting or investment power over the Common Shares beneficially owned by the Reporting Persons. The Fernandez Petition On December 9, 1999, Victor C. Fernandez (a PLDT stockholder owning preferred shares), filed a petition (with an application for the issuance of a writ of preliminary injunction against the then incumbent directors of PLDT before the Philippine Securities and Exchange Commission (the "PSEC") questioning the validity of the resolutions of the Board of Directors of PLDT authorizing the acquisition of SMART. Fernandez claimed that he would suffer injury from dilution of his shares and the possible revocation of PLDT's franchise in view of the violation of the Philippine Constitution's foreign equity restrictions and anti-trust provision if said resolutions were implemented. Fernandez also claimed that NTTC's approval rights would constitute foreign intervention in the management and operation of a public utility and that the SMART shares being acquired by PLDT were overvalued. The request of Victor C. Fernandez for the issuance by the PSEC of a temporary restraining order to enjoin the holding of the special meeting of the stockholders of PLDT on December 10, 1999 was denied by the PSEC thereby allowing said meeting to proceed as scheduled. The stockholders approved the resolutions passed by the Board of Directors authorizing the acquisition of SMART. On June 20, 2000, the PSEC denied Fernandez's application for a writ of preliminary injunction. In view of the provisions of Republic Act No. 8799 enacted in July 2000, referred to as the Securities Regulations Code, transferring the jurisdiction of intra-corporate controversies to the Regional Trial Court, the PSEC transferred the case to the Regional Trial Court of Manila. Upon a motion filed by the respondents, the case was later ordered transferred to the Regional Trial Court of Makati City, the proper venue pursuant to the Rules of Procedure Governing Intra-Corporate Controversies because it has jurisdiction over the place where PLDT's principal office is located. After due proceedings, the Makati Court issued a February 21, 2003 Decision upholding the subject resolutions and dismissing Fernandez's petition. Fernandez then appealed to the Philippine Supreme Court in April 2003, but the Court dismissed his appeal (and also denied his motion to elevate the case to the Supreme Court en banc) and later denied his two motions for reconsideration on June 9, 2003 and November 22, 2004. The case's dismissal was confirmed to have become final and executory with the Supreme Court's issuance of an Entry of Judgment on December 21, 2004. The PLDT directors-respondents to Fernandez' petition have pursued counterclaims (consisting of attorney's fees and moral and exemplary damages) against him, in light of what they perceived to be his baseless suit. After hearing the respondents' evidence, the Makati Court denied their counterclaims on February 27, 2004. The respondents have elevated this issue to the Court of Appeals which, on May 3, 2005, after the parties exchanged pleadings, deemed the matter submitted for resolution. The parties are awaiting the Court of Appeals' decision. Item 7. Material to be Filed as Exhibits. Item 7 of the Schedule 13D is hereby amended and supplemented by adding the following exhibits: Exhibit No. Exhibit Name - ----------- ------------ 1 Joint Filing Agreement dated February 6, 2006. 2* Strategic Agreement, dated September 28, 1999, by and among PLDT, the FPC Group and NTTC. 3* First Amendment to the Strategic Agreement, dated March 8, 2000, by and among PLDT, the FPC Group and NTTC. 4* Second Amendment to the Strategic Agreement, dated March 8, 2000, by and among PLDT, the FPC Group and NTTC. 5* Shareholders Agreement, dated March 24, 2000, by and among NTT-UK, NTTC and the FPC Parties. 6* Registration Rights Agreement, dated March 24, 2000, by and among NTT-UK, NTTC and PLDT. 7 Stock Sale and Purchase Agreement dated January 31, 2006. 8 Co-Operation Agreement dated January 31, 2006. *Incorporated by reference from the Reporting Persons' Schedule 13D dated March 24, 2000 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: February 6, 2006 NIPPON TELEGRAPH AND TELEPHONE CORPORATION By: /s/ Kiyoshi Kousaka ----------------------------------- Name: Kiyoshi Kousaka Title: Senior Vice President SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: February 6, 2006 NTT COMMUNICATIONS CORPORATION By: /s/ Haruhiko Yamada ----------------------------------- Name: Haruhiko Yamada Title: Vice President and Executive Manager, Corporate Planning SCHEDULE A ---------- DIRECTORS AND EXECUTIVE OFFICERS OF NIPPON TELEGRAPH AND TELEPHONE CORPORATION ("NTT") The name, country of citizenship, residential or business address, present principal occupation or employment, and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the directors and executive officers of NTT is set forth below. All of the persons listed below are directors of NTT and unless otherwise indicated, each occupation set forth opposite a director's name refers to employment with NTT. If no address is given, the director's business address is 3-1, Otemachi 2-chome, Chiyoda-ku, Tokyo 100-8116, Japan. NTT's principal business is serving as a holding company for subsidiaries engaged in providing telecommunications services. These services fall into seven major classes: telephone services, telegraph services, leased circuit services, data communication facility services, Integrated Services Digital Network ("ISDN") services, sale of telecommunication equipment and other services. Directors - --------- Name Country of Citizenship Present Principal Occupation or Employment andPrincipal Business - -------------------------------------------------------------------------------- Norio Wada Japan President & CEO Satoshi Miura Japan Senior Executive Vice President Ryuji Yamada Japan Senior Executive Vice President Yuji Inoue Japan Senior Vice President Shin Hashimoto Japan Senior Vice President Hiroo Unoura Japan Senior Vice President Ken Yagi Japan Senior Vice President Akira Arima Japan Senior Vice President Kiyoshi Kousaka Japan Senior Vice President Haruki Matsuno Japan Senior Vice President Takashi Imai Japan Senior Vice President Chairman Emeritus and Executive Counselor of Nippon Steel Corporation, 6-3, Otemachi 2-chome, Chiyoda-ku, Tokyo 100-8017, Japan Yotaro Kobayashi Japan Senior Vice President Chairman and Representative Director of Fuji Xerox Co., Ltd., 17-22, Akasaka 2-chome, Minato-ku, Tokyo 107-0052, Japan Masamichi Tanabe Japan Corporate Auditor Johji Fukuda Japan Corporate Auditor Masao Iseki Japan Corporate Auditor Yoshio Miwa Japan Corporate Auditor Yasuchika Negoro Japan Corporate Auditor SCHEDULE B DIRECTORS AND EXECUTIVE OFFICERS OF NTT COMMUNICATIONS CORPORATION ("NTTC") The name, country of citizenship, residential or business address, present principal occupation or employment, and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the directors and executive officers of NTTC is set forth below. All of the persons listed below are directors of NTTC and unless otherwise indicated, each occupation set forth opposite a director's name refers to employment with NTTC. If no address is given, the director's business address is 1-6 Uchisaiwai-cho, 1-chome, Chiyoda-ku, Tokyo 100-8019, Japan. NTTC's principal business is providing international and long distance telecommunications services and data transmission services. Directors - --------- Name Country of Citizenship Present Principal Occupation or Employment andPrincipal Business - -------------------------------------------------------------------------------- Hiromi Wasai Japan President & CEO Masayuki Nomura Japan Senior Executive Vice President Masaki Mitsumura Japan Senior Executive Vice President Masae Tamura Japan Executive Vice President Osamu Inoue Japan Executive Vice President Yo Yusa Japan Executive Vice President Masayuki Nakagawa Japan Senior Vice President Koichi Maeda Japan Senior Vice President Akira Yabiki Japan Senior Vice President Sadao Maki Japan Senior Vice President Mitsuo Murakami Japan Senior Vice President Masanobu Suzuki Japan Senior Vice President Tatsuo Kawasaki Japan Senior Vice President Testuya Obata Japan Senior Vice President Yutaka Yamaga Japan Corporate Auditor Kenichi Shiraishi Japan Corporate Auditor Kikuo Mito Japan Corporate Auditor INDEX TO EXHIBITS Exhibit No. Exhibit Name - ----------- ------------ 1 Joint Filing Agreement dated February 6, 2006. 2* Strategic Agreement, dated September 28, 1999, by and among PLDT, the FPC Group and NTTC. 3* First Amendment to the Strategic Agreement, dated March 8, 2000, by and among PLDT, the FPC Group and NTTC. 4* Second Amendment to the Strategic Agreement, dated March 8, 2000, by and among PLDT, the FPC Group and NTTC. 5* Shareholders Agreement, dated March 24, 2000, by and among NTT-UK, NTTC and the FPC Parties. 6* Registration Rights Agreement, dated March 24, 2000, by and among NTT-UK, NTTC and PLDT. 7 Stock Sale and Purchase Agreement dated January 31, 2006. 8 Co-Operation Agreement dated January 31, 2006. *Incorporated by reference from the Reporting Persons' Schedule 13D dated March 24, 2000 EX-1 2 was5318ex99-3.txt JOINT FILING AGREEMENT EXHIBIT 1 --------- JOINT FILING AGREEMENT In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934, as amended, the undersigned agree to the joint filing on behalf of each of them of a statement on Schedule 13D with respect to the shares of common capital stock of Philippine Long Distance Telephone Company and further agree that this Joint Filing Agreement be included as an Exhibit to such joint filing. This Agreement may be executed in any number of counterparts all of which taken together shall constitute one and the same instrument. In evidence thereof, the undersigned, being duly authorized, hereby executes this Agreement on February 6, 2006. NTT TELEGRAPH AND TELEPHONE CORPORATION By: /s/ Kiyoshi Kousaka ----------------------------- Name: Kiyoshi Kousaka Title: Senior Vice President NTT COMMUNICATIONS CORPORATION By: /s/ Haruhiko Yamada ----------------------------- Name: Haruhiko Yamada Title: Vice President and Executive Manager Corporate Planning EX-7 3 was5318ex99-1.txt STOCK SALE AND PURCHASE AGREEMENT EXHIBIT 7 --------- EXECUTION COPY STOCK SALE AND PURCHASE AGREEMENT By and Between NTT COMMUNICATIONS CORPORATION and NTT DOCOMO, INC. Dated as of January 31, 2006 ------------------------------- SALE OF COMMON SHARES OF PLDT EXECUTION COPY STOCK SALE AND PURCHASE AGREEMENT _________________________________ This STOCK SALE AND PURCHASE AGREEMENT (this "Agreement"), dated as of --------- January 31, 2006, is made and entered into by and between NTT Communications Corporation ("Seller") and NTT DoCoMo, Inc. ("Purchaser"). ------ --------- RECITALS WHEREAS, Seller desires to sell, and Purchaser desires to purchase, 12,633,486 shares, each with a par value of PhP5.00, of common stock of Philippine Long Distance Telephone Company ("PLDT", and the common stock of ---- PLDT, the "Common Stock") owned by Seller on the terms and subject to the ------------ conditions hereinafter set forth (the "Transaction"); ----------- WHEREAS, Seller, Purchaser, the FPC Parties (as defined below) and PLDT have entered into a Co-Operation Agreement (the "Co-Operation Agreement") of ---------------------- even date herewith pursuant to which, among other things, the parties thereto have agreed that the sale of the Shares by Seller to Purchaser as contemplated in this Agreement will be deemed to be a transfer to a Permitted Transferee (as that term is defined in the Shareholders Agreement), and (i) will not trigger First Pacific Company Limited's right of first offer on any disposal of the Common Stock of PLDT pursuant to the Shareholders Agreement ("Shareholders ------------ Agreement") dated as of March 24, 2000 by and among NTT Communications Capital - --------- (UK) Limited, Seller, First Pacific Company Limited, Metro Pacific Corporation, Metro Asia Link Holdings, Inc., Metro Pacific Resources, Inc., Larouge B.V., and Metro Pacific Assets Holdings, Inc. (First Pacific Company Limited, Metro Pacific Corporation, Metro Asia Link Holdings, Inc., Metro Pacific Resources, Inc. Larouge B.V., and Metro Pacific Assets Holdings, Inc. are collectively referred to herein as the "FPC Parties"), (ii) will not result in a default or a ----------- ground for termination of the Shareholders Agreement or the Stock Purchase and Strategic Investment Agreement (the "SPSIA") dated as of September 28, 1999 by ----- and among PLDT, First Pacific Company Limited, Metro Pacific Corporation, Metro Asia Link Holdings, Inc., Metro Pacific Resources, Inc. and Seller, as amended, and (iii) will not provide a basis for the exercise by PLDT of its right to terminate certain strategic arrangements under the SPSIA; and WHEREAS, the Co-Operation Agreement further provides that Seller and Purchaser shall be severally bound by the covenants in the Shareholders Agreement and the SPSIA, both as amended by the Co-Operation Agreement, that apply to Seller (including, without limitation, First Pacific Company Limited's right of first offer on disposal) as if the transfer of the Shares from Seller to Purchaser had not occurred, and as if Purchaser were Seller (and a party to such agreements). NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I. PURCHASE AND SALE OF SHARES 1.1 Purchase and Sale of Shares. On the terms and subject to the --------------------------- conditions set forth in this Agreement, at the Closing (as herein defined), Seller shall sell, convey, assign, transfer and deliver to Purchaser 12,633,486 shares of Common Stock (the "Shares"), free and clear of all Encumbrances. ------ 1.2 The Purchase Price. On the terms and subject to the conditions of ------------------- this Agreement, in consideration of the aforesaid sale, conveyance, assignment, transfer and delivery to Purchaser of the Shares, Purchaser shall pay to Seller an amount (the "Purchase Price") equal to the product of 12,633,486 --------------- and the volume-weighted average of the closing market prices of the Common Stock in the Philippine Stock Exchange ("PSE") during the thirty (30) calendar days --- immediately prior to the date of this Agreement. For the avoidance of doubt, the aforesaid weighted average of the closing market prices in Philippine Peso shall be determined by rounding off the figure less than five or rounding up the figure not less than five in the third decimal points and fixed at second decimal points for the use of the above calculation. The Purchase Price shall be converted from Philippine Peso into Japanese Yen using TTM exchange rate at The Bank of Tokyo-Mitsubishi UFJ, Ltd. as of the Business Day immediately prior to the date of this Agreement and paid in Japanese yen, and in accordance with Section 2.3 of this Agreement. For the avoidance of doubt, the aforesaid conversion from Philippine Peso to Japanese Yen shall be calculated by rounding off the figure less than five or rounding up the figure not less than five in the first decimal point and fixed in Japanese Yen as counting number without any decimals. The aforesaid volume-weighted average of the closing market prices is hereby determined at Philippine Peso 1,824.86, and the applied TTM exchange rate for the conversion is fixed at Japanese Yen 2.26 for the equivelant value of one Philippine Peso. Accordingly, the Purchase Price based on the above calculation is hereby converted, fixed, and agreed by the Seller and Purchaser at Japanese Yen 52,102,815,772. ARTICLE II. THE CLOSING 2.1 The Closing. The closing (the "Closing") of the sale, purchase ----------- ------- and transfer by Seller to Purchaser of the Shares pursuant to this Agreement shall be effected as a block sale of the Shares, effected by means of a bilateral transfer through the PSE. Seller and Purchaser shall make any necessary arrangements to effect the sale, purchase and transfer through the PSE by engaging and procuring an identical broker (the "Broker") to facilitate and execute the Transaction. ------ Immediately after the satisfaction and/or waiver of all conditions to closing set forth in Article VIII, both of Seller and Purchaser shall instruct the Broker to obtain an approval from the PSE's Floor Trading and Arbitration Committee for the block sale of the Shares in favour of the Transaction (such date, the "Pre-Closing Date"). On or one (1) Business Day after the date of ---------------- PSE's approval in favor of the Transaction, the Broker shall execute the Transaction (the "Transaction Date"). Approximately three (3) Business Days ---------------- after the Transaction Date, the transfer of the Shares and the settlement of transaction proceeds shall be completed (the "Closing Date"). ------------ 2.2 Transacting the Shares on the PSE. On the Transaction Date, the --------------------------------- 3 Broker shall transact the Shares on the PSE in favor of Purchaser. Seller hereby agrees to execute all such agreements (including a Deed of Sale) and perform all such acts as may be reasonably required for the Broker to transact the Shares. Seller shall thereafter deliver to Purchaser written confirmation from the Broker that the Shares have been transacted on the PSE. 2.3 Payment of Purchase Price. On the Closing Date, the Purchase Price ------------------------- shall be paid by Purchaser in immediately available funds by wire transfer in accordance with written instructions to be given by Seller to Purchaser not less than five (5) Business Days prior to the Closing Date. ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Purchaser that all of the statements contained in this Article III are true and complete as of the date of this Agreement (or, if made as of a specified date, as of such date). 3.1 Organization and Good Standing. Seller is a company duly ------------------------------ organized and validly existing under the laws of Japan, and has the requisite corporate power and authority to carry on its business as it is now being conducted and proposed to be conducted, except where the failure to be so organized and existing or to have such power or authority would not have, individually or in the aggregate, a material adverse effect on Seller's ability to consummate the Transaction. 3.2 Authorization; Validity of Agreement. Seller has the corporate ------------------------------------ power and authority to execute and deliver this Agreement and to consummate the Transaction. The execution, delivery and performance by Seller of this Agreement and the consummation of the Transaction have been duly authorized by the board of directors of Seller, and no other corporate action on the part of Seller is necessary to authorize the execution and delivery by Seller of this Agreement or the consummation of the Transaction. No vote of, or consent by, the holders of any class or series of stock or voting debt issued by Seller is necessary to authorize the execution and delivery by Seller of this Agreement or the consummation by it of the Transaction. This Agreement has been duly executed and delivered by Seller, and, assuming the due and valid authorization, execution and delivery hereof by Purchaser, is a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors' rights generally and (ii) that the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. 3.3 Consents and Approvals; No Violations. Except for the filings, ------------------------------------- permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act and the Securities Regulation Code, the filing of the relevant tax returns and payment of taxes therefor to the Philippine Bureau of Internal Revenue (the "BIR"), the filing of the --- application for the transfer of the Bangko Sentral ng Pilipinas Registration Document (the "BSRD") from Seller to Purchaser after the Closing, and the ---- 4 approval by the PSE of the block sale of the Shares as contemplated in this Agreement, none of the execution, delivery or performance of this Agreement by Seller or the consummation by Seller of the Transaction or compliance by Seller with any of the provisions hereof will (i) conflict with or result in any breach of any provision of the certificate of incorporation or by-laws of Seller, (ii) require any filing with, or permit, authorization, consent or approval of, any Governmental Body, (iii) result in a violation or breach of, or constitute a default under, any of the terms, conditions or provisions of any agreement or instrument to which Seller is a party, or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Seller, excluding from the foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults which would not, individually or in the aggregate, have a material adverse effect on Seller's ability to consummate the Transaction. 3.4 Litigation. To the Knowledge of Seller, there is no claim, ---------- action, suit, audit, assessment, arbitration, inquiry or other proceeding in any jurisdiction pending or threatened against or involving Seller which, if adversely determined, would reasonably be expected to have a material adverse effect on its right or ability to perform any of its obligations under this Agreement, or consummate the Transaction. 3.5 Ownership of Shares. Seller is the record and beneficial --------------------- owner of the Shares, and free and clear of all Encumbrances. 3.6 Good Title Conveyed. Transacting the Shares on the PSE in favor ------------------- of Purchaser and other instruments to be executed and delivered by Seller to Purchaser at the Closing will effectively vest in Purchaser good, valid and marketable title to, and ownership of, all the Shares to be transferred to Purchaser pursuant to and as contemplated by this Agreement free and clear of all Encumbrances. 3.7 Warranties on PLDT. ------------------ (a) PLDT is a company duly organized and validly existing under the laws of the Philippines, and has the requisite corporate power and authority to carry on its business as it is now being conducted and proposed to be conducted; (b) To the Knowledge of Seller and except as has been Disclosed by PLDT, (i) the audited Philippine GAAP financial statements of PLDT as of and for the year ended December 31, 2004 and the unaudited Philippine GAAP financial statements of PLDT as of and for the period ended June 30, 2005 (the "Philippine ---------- GAAP Interim Financial Statements"), in each case fairly present in all material - --------------------------------- respects the financial position and results of operations of PLDT in accordance with Philippine GAAP, as of such date and for such periods, and the balance sheets included therein state and properly reflect all material liabilities (including contingent liabilities of PLDT) as of the respective dates thereof and (ii) the audited US GAAP financial statements of PLDT as of and for the year ended December 31, 2004 and the unaudited US GAAP financial statements of PLDT as of and for the period ended June 30, 2005 (the "U.S. GAAP Interim Financial --------------------------- Statements" and, together with the Philippine GAAP Interim Financial Statements, - ---------- the "Interim Financial Statements"), in each case fairly present in all material ---------------------------- respects the financial position and results of operations of PLDT in accordance with U.S. GAAP, as of such date and for such periods, and the balance sheets included therein state and properly reflect all material liabilities (including contingent liabilities of PLDT) as of the respective dates thereof; 5 (c) To the Knowledge of Seller and except as has been Disclosed by PLDT, since June 30, 2005, PLDT has not incurred any liability or obligation of any nature (absolute, accrued, contingent or otherwise) which is not fully reflected or reserved against in the Interim Financial Statements, which, in accordance with U.S. GAAP or Philippine GAAP, as applicable, would be required to be reflected on the balance sheet of PLDT, other than immaterial liabilities and liabilities incurred in the ordinary course of business; (d) To the Knowledge of Seller and except as has been Disclosed by PLDT, since June 30, 2005, PLDT has operated in the ordinary course of business consistent with past practice, and there has not been a material adverse change in the assets, liabilities, properties, business, results of operations or condition (financial or otherwise) of PLDT; (e) To the Knowledge of Seller and except as has been Disclosed by PLDT, PLDT has complied in all material respects with all applicable laws, statutes, ordinances, rules, regulations and orders applicable to PLDT and has not received any written notice alleging any material non-compliance of PLDT with such applicable laws, statutes, ordinances, rules, regulations and orders; (f) To the Knowledge of Seller and except as has been Disclosed by PLDT, there is no claim, action, suit, audit, assessment, arbitration, inquiry or other proceeding in any jurisdiction pending or threatened against or involving PLDT which, if adversely determined, would reasonably be expected to have a material adverse effect on the assets, liabilities, properties, business, results of operations or condition (financial or otherwise) of PLDT or result in any material liability or obligation on PLDT; and (g) To the Knowledge of Seller and except as has been Disclosed by PLDT, PLDT has filed all tax returns as required to be filed by it in the manner provided by law. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Seller that all of the statements contained in this Article IV are true and complete as of the date of this Agreement (or, if made as of a specified date, as of such date). 4.1 Organization and Good Standing. Purchaser is a company duly ------------------------------ organized and validly existing under the laws of Japan, and has the requisite corporate power and authority to carry on its business as it is now being conducted and proposed to be conducted, except where the failure to be so organized and existing or to have such power or authority would not have, individually or in the aggregate, a material adverse effect on Purchaser's ability to consummate the Transaction. 4.2 Authorization; Validity of Agreement. Purchaser has full ------------------------------------ corporate power and authority to execute and deliver this Agreement and to consummate the Transaction. The execution, delivery and performance by Purchaser of this Agreement and the consummation of the Transaction have been duly authorized by the board of directors of Purchaser, and no other corporate action on the part of Purchaser is necessary to authorize the execution and delivery by 6 Purchaser of this Agreement or the consummation of the Transaction. No vote of, or consent by, the holders of any class or series of stock or voting debt issued by Purchaser is necessary to authorize the execution and delivery by Purchaser of this Agreement or the consummation by it of the Transaction. This Agreement has been duly executed and delivered by Purchaser, and, assuming the due and valid authorization, execution and delivery hereof by Seller, is a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors' rights generally and (ii) that the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. 4.3 Consents and Approvals; No Violations. Except for the filings, ------------------------------------- permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act and the Securities Regulation Code, the filing of the relevant tax returns and payment of taxes therefor to the BIR, the filing of the application for the transfer of the BSRD from Seller to Purchaser after the Closing and the approval by the PSE of the block sale of the Shares as contemplated in this Agreement, none of the execution, delivery or performance of this Agreement by Purchaser, the consummation by Purchaser of the Transaction or compliance by Purchaser with any of the provisions hereof will (i) conflict with or result in any breach of any provision of the certificate of incorporation or by-laws of Purchaser, (ii) require any filing with, or permit, authorization, consent or approval of, any Governmental Body, (iii) result in a violation or breach of, or constitute a default under, any of the terms, conditions or provisions of any agreement or instrument to which Purchaser is a party, or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Purchaser, excluding from the foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults which would not, individually or in the aggregate, have a material adverse effect on Purchaser's ability to consummate the Transaction. 4.4 Investigation. Purchaser hereby acknowledges that it has had an ------------- opportunity to evaluate the business, affairs and current prospects of PLDT. Purchaser further acknowledges having had access to information about PLDT that is sufficient for it to make a decision on the investment pursuant to this Agreement. ARTICLE V. COVENANTS OF SELLER AND PURCHASER 5.1 Publicity. Neither Seller nor Purchaser shall issue any press --------- release or public announcement concerning this Agreement or the Transaction without obtaining the prior written approval of the other party hereto, which approval will not be unreasonably withheld or delayed, unless disclosure is otherwise required by applicable law or a Governmental Body or by the applicable rules of any stock exchange on which Purchaser's, Seller's or PLDT's securities are listed, provided that, to the extent required by applicable law or a Governmental Body, the party intending to make such release shall consult with the other party with respect to the text thereof. The parties also acknowledge and agree that copies of this Agreement may be required to be presented and/or submitted (i) to the PSE for purposes of obtaining the approval for the block sale contemplated by this Agreement, and (ii) to the US SEC, NYSE and/or PLDT 7 for the purpose of complying with the filing requirements under the Exchange Act and may be required to be publicly disclosed thereunder. 5.2 Reasonable Commercial Efforts. Upon the terms and subject to the ----------------------------- conditions set forth in this Agreement, each of the parties agrees to use its reasonable commercial efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Transaction, including the following: (i) the performing of all actions necessary to cause the conditions to the Closing to be satisfied as promptly as practicable; (ii) the obtaining of waivers, consents and approvals from Governmental Bodies and the PSE, the making of all necessary registrations and filings, if any (including filings with Governmental Bodies and the PSE), and the taking of all steps as may be necessary, proper or advisable to obtain an approval or waiver from or to avoid an action or proceeding by any Governmental Body and the PSE; (iii) the obtaining of all necessary consents, approvals or waivers from third parties; and (iv) the execution and delivery of any additional instruments necessary to consummate the Transaction and to fully carry out the purposes of this Agreement. 5.3 Notice. For the period from the date of this Agreement to the ------ Closing Date, each party shall notify the other in writing if such party becomes aware of any fact or condition that causes or constitutes a breach of any of such party's representations and warranties, and will promptly notify the other party of the occurrence of any breach of any covenant or any event that would materially impede or delay or make impossible the satisfaction of the conditions in Article VIII. 5.4 Block Sale of the Shares. Each of Seller and Purchaser agrees to ------------------------ assist and cooperate with the Broker to obtain the approval by the PSE's Floor Trading and Arbitration Committee of the block sale of the Shares as contemplated in this Agreement. ARTICLE VI. CO-INVESTMENT ARRANGEMENTS The following provisions shall have effect as of the date on which the Closing occurs; provided that, if the Closing occurs prior to July 1, 2006, the following provisions shall have effect only from and after July 1, 2006 (save for Section 6.1(b) below, which shall become effective as of the date of this Agreement): 6.1 Chief Operation Advisor. ----------------------- (a) Upon and after the appointment of the COA by Purchaser on or before 1 July 2006 pursuant to Section 9.1.5 of the Co-Operation Agreement, with respect to any matter primarily relating to the operation of fixed-line telecommunications, data or ICT services, including, without limitation, matters relating to the Conventional International Telecommunications Services Agreement dated 24 March 2000 between Seller and PLDT, the Internet Services Agreement dated 24 March 2000 between Seller and PLDT, the Tradename and Trademark Agreement dated 24 March 2000 between Seller and PLDT or the Arcstar Service Provider Agreement dated 24 March 2000 between PLDT and NTT Worldwide Telecommunications Corporation (and all agreements ancillary thereto), the Purchaser shall cause the COA to consult with and act in accordance with the 8 direction of the Seller's executive advisor in the Philippines regarding all such matters. (b) Prior to the appointment of the COA by Purchaser on or before 1 July 2006 pursuant to Section 9.1.5 of the Co-Operation Agreement, with respect to any matter primarily relating to the operation of wireless telecommunications services, including, without limitation, matters relating to i-mode and the business of SMART Communications Inc., including, without limitation, the i-mode Agreement by and between Purchaser and SMART Communications, Inc., the Seller shall cause the COA to consult with and act in accordance with the direction of the Purchaser's Senior Technical Advisor (as defined in the Co-Operation Agreement) in the Philippines regarding all such matters. (c) In the event of any uncertainty regarding how any matter should be classified for purposes of this Section 6.1, the parties shall discuss in good faith the treatment of such matter. 6.2 Commercial Agreements of the Seller. On and after the date ----------------------------------- hereof, each of Purchaser and Seller hereby agrees, and agrees to cause its respective representatives and advisors, not to take any action that (and agrees to take all actions the failure of which) would have an effect of amending or terminating any rights or obligations of Seller (or its affiliate, as applicable) under the Advisory Services Agreement, dated as of March 24, 2000, by and between Seller and PLDT, the Conventional International Telecommunications Services Agreement, dated as of March 24, 2000, by and between Seller and PLDT, the Internet Services Agreement, dated as of March 24, 2000, by and between Seller and PLDT, the Tradename and Trademark Agreement, dated as of March 24, 2000, by and between Seller and PLDT, or the Arcstar Service Provider Agreement, dated as of March 24, 2000, by and between PLDT and NTT Worldwide Telecommunications Corporation, or all ancillary agreements thereto. 6.3 Commercial Agreements of the Purchaser. On and after the date -------------------------------------- hereof, each of Purchaser and Seller hereby agrees, and agrees to cause its respective representatives and advisors, not to take any action that (and agrees to take all actions the failure of which) would have an effect of amending or terminating any rights or obligations of Purchaser (or its affiliate, as applicable) under any agreement, contract or arrangement by and between the Purchaser and PLDT or SMART Communications, Inc. entered into pursuant to Clause 9 of the Co-Operation Agreement, including, but not limited to, the Integrated i-mode Service Package Agreement and any agreement with respect to i-mode, W-CDMA or strategic alliances (and all ancillary agreements thereto). 6.4 Conflict of Interest. Notwithstanding the foregoing Sections 6.2 -------------------- and 6.3, in the event that either or both of Purchaser and Seller reasonably determines that a conflict of interest between Purchaser and Seller exists with respect to the actions described in Sections 6.2 and 6.3, each of Purchaser and Seller agrees to use good faith efforts to discuss the matter in order to resolve such conflict, taking into account each other's commercial and business interests. 9 6.5 Rights under the Registration Rights Agreement. Each of ---------------------------------------------- Purchaser and Seller hereby agrees, with respect to the amendment of the Registration Rights Agreement ("RRA") dated 24 March 2000 between Seller and --- PLDT pursuant to Clause 3.5 of the Co-Operation Agreement, to use good faith effort to negotiate any rights thereunder, taking into account, inter alia, the lock-up obligations of Purchaser pursuant to Clause 9.2 of the Co-Operation Agreement, the respective holdings of Common Stock as between Purchaser and Seller from time to time, and the effect of the timing of exercising such right on the ability of the other party to subsequently exercise any right thereunder. ARTICLE VII COVENANTS OF SELLER 7.1 Affirmative Covenants. For the period from the date of this --------------------- Agreement to the earlier of the Closing Date or the termination of this Agreement, Seller shall, to the extent permissible under Philippine laws and regulations, (i) cast its vote as a shareholder of PLDT, (ii) lobby the directors of PLDT, and (iii) otherwise use its commercially reasonable efforts to cause PLDT (x) to conduct its business only according to its ordinary and usual course of business, and (y) to substantially (A) maintain its current business organization as contemplated herein, and (B) maintain satisfactory relationships with licensors, suppliers, distributors, customers and others having business relationships with it. 7.2 Negative Covenants. For the period from the date of this ------------------ Agreement to the earlier of the Closing Date or the termination of this Agreement, Seller shall not take any action to, directly or indirectly encourage, initiate or engage in discussions or negotiations with, or provide any information to, any third party other than Purchaser and its advisors and counsel, concerning any sale and purchase or other transactions of the Shares owned by Seller, without prior written consent of Purchaser. 7.3 Filing of Transfer with the Central Bank; Approval for the Block ---------------------------------------------------------------- Sale of the Shares. Seller agrees to assist and cooperate with the Purchaser in - ------------------ doing, all things necessary, proper or advisable to cause the transfer of the BSRD issued in the name of Seller to Purchaser. ARTICLE VIII. CONDITIONS TO CLOSING 8.1 Conditions to the Obligations of Purchaser. The obligation of ------------------------------------------ Purchaser to consummate the Transaction shall be subject to the satisfaction, or the waiver thereof by Purchaser, of the following conditions precedent: (a) Seller shall have performed in all material respects its agreements and obligations contained in this Agreement required to be performed by it at or before the Pre-Closing Date, and the representations and warranties of Seller contained herein shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the Pre-Closing Date. Purchaser shall have received a certificate of Seller, 10 dated as of the Pre-Closing Date and signed by a senior officer of Seller (but without personal liability to such officer), certifying as to the fulfillment of the foregoing; (b) the Co-Operation Agreement shall have been executed by the parties thereto and delivered to Purchaser; (c) the Integrated i-mode Service Package Agreement ("i-mode ------ Agreement") between the Purchaser and SMART Communications, Inc. shall have duly - --------- executed, effectuated and delivered to each other; and (d) the receipt of all necessary consents and waivers in writing from all current creditors of PLDT to consummate the Transaction, if any. 8.2 Conditions to the Obligations of Seller. The obligation of --------------------------------------- Seller to consummate the Transaction shall be subject to the satisfaction, or the waiver thereof by Seller, of the following condition precedent: (a) Purchaser shall have performed in all material respects its agreements and obligations contained in this Agreement required to be performed by it at or before the Pre-Closing Date, and the representations and warranties of Purchaser contained herein shall have been true and correct when made and shall be true and correct as of the Pre-Closing Date. Seller shall have received a certificate of Purchaser, dated as of the Pre-Closing Date and signed by a senior officer of Purchaser (but without personal liability to such officer), certifying as to the fulfillment of the foregoing. 8.3 Conditions to the Obligations of Each Party. The respective ------------------------------------------- obligations of each party to consummate the Transaction shall be subject to the satisfaction of the following conditions precedent: (a) all authorizations, approvals, permits, consents, registration or filing, if any, of or with any Governmental Body and the PSE that are required in connection with the Transaction shall have been duly obtained or made and shall be effective on and as of the Closing Date; and (b) there shall be no pending or threatened lawsuit challenging the Transaction by any body or agency of the federal, state or local Governmental Body, the PSE or by any third party, and the consummation of the Transaction shall not have been enjoined by a court of competent jurisdiction as of the Closing Date. ARTICLE IX. INDEMNIFICATION 9.1 Indemnification and Payment of Damages by Seller. Seller shall ------------------------------------------------ indemnify and hold Purchaser harmless, and shall pay to Purchaser the amount of any Damages arising from or in connection with: (a) any breach of any representation or warranty made by Seller under this Agreement, or under any other certificate or document delivered by Seller pursuant to this Agreement; or (b) any breach by Seller of any covenant or obligation of Seller under Sections 5, 6 and 7 of this Agreement; or 11 (c) any breach by Purchaser of its obligations under Clause 10 of the Co-Operation Agreement which was triggered by and a direct result of the action of Seller. 9.2 Indemnification and Payment of Damages by Purchaser. Purchaser --------------------------------------------------- shall indemnify and hold Seller harmless, and shall pay to Seller the amount of any Damages arising from or in connection with: (a) any breach by Purchaser of any covenant or obligation of Purchaser under Section 6 of this Agreement; or (b) any breach by Seller of its obligations under Clause 10 of the Co-Operation Agreement which was triggered by and a direct result of the action of Purchaser. 9.3 Contribution for Breach of Clause 10 of the Co-Operation -------------------------------------------------------- Agreement Due to No Fault of Purchaser or Seller. In the event that either - ------------------------------------------------ Purchaser or Seller incurs any Damages to any of the FPC Parties due to a breach of Clause 10 of the Co-Operation Agreement which was triggered by and a direct result of an action by an affiliate of Nippon Telegraph and Telephone Corporation ("NTT Corporation") that is not the Purchaser, the Seller or any of --------------- their respective direct or indirect Subsidiaries, each of Purchaser and Seller shall discuss in good faith how such Damages incurred by each of Purchaser and Seller shall be contributed to the other, taking into account such proportion as their respective holding in the Common Stock as between Purchaser and Seller as of the date of the breach which resulted in such liability. 9.4 Limitation of Liability. Seller's liability for Damages (for ----------------------- indemnification or otherwise), taken together as a whole, with respect to Purchaser for matters described in Sections 9.1 and 9.3 shall in no event exceed the amount of the Purchase Price, and Purchaser's liability for Damages (for indemnification or otherwise), taken together as a whole, with respect to Seller for matters described in Sections 9.2 and 9.3 shall in no event exceed the amount of the Purchase Price. 9.5 Survival of Representations and Warranties and Covenants. -------------------------------------------------------- (a) The representations and warranties of Purchaser and Seller contained in this Agreement shall survive the Closing solely for purposes of this Article IX and such representations and warranties of the Parties in Article III of this Agreement shall terminate on the date that is eighteen (18) months after the Closing Date. Any claim for indemnification with respect to any of such matters which is not asserted by notice containing sufficient detail as to allow the claim to be evaluated (and including the amount of such claim) within such eighteen (18) months period may not be pursued and is hereby irrevocably and unconditionally released and waived after such time. (b) Unless a specified period is set forth in this Agreement (in which event such specified period will control), with respect to any particular covenant, the covenants in this Agreement will survive the Closing and remain in effect until the earlier of (i) the termination of the Co-Operation Agreement and (ii) when either the Purchaser or the Seller ceases to hold any Common Stock. Any claim for indemnification with respect to any of such matters which is not asserted by written notice containing sufficient detail as to allow the claim to be evaluated (and including the amount of such claim) within the 12 applicable survival period of such covenant may not be pursued and is hereby irrevocably and unconditionally released and waived after such time. ARTICLE X. TERMINATION 10.1 Termination. This Agreement may be terminated and the ----------- transactions contemplated herein may be abandoned at any time prior to the Closing Date: (a) by the mutual written consent of Purchaser and Seller; or (b) by either Purchaser or Seller if any Governmental Body or the PSE shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties shall use their reasonable efforts to lift), which permanently restrains, enjoins or otherwise prohibits the consummation of the transaction contemplated herein and such order, decree, ruling or other action shall have become final and non-appealable; or (c) by Purchaser if Seller shall have breached in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach cannot be or has not been cured within 30 days after the giving of written notice by Purchaser to Seller specifying such breach; (d) by Seller if Purchaser shall have breached in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach cannot be or has not been cured within 30 days after the giving of written notice by Seller to Purchaser specifying such breach; or (e) by either Purchaser or Seller if the Closing does not occur on or before April 30, 2006. 10.2 Termination of Certain Covenants. In addition to the termination -------------------------------- provisions set forth in Section 10.1 above, the respective rights and obligations of Purchaser and Seller under Sections 5.1, 5.2 and 5.3 shall terminate upon the Closing. For avoidance of doubt, any termination under this Section 10.2 of any of the rights and obligations of Purchaser and Seller shall have no effect as to the other rights and obligations of Purchaser and Seller under this Agreement. 10.3 Effect of Termination. In the event of the termination of this --------------------- Agreement pursuant to the terms of this Agreement, written notice thereof shall forthwith be given to the other party specifying the provision hereof pursuant to which such termination is made, and there shall be no liability or obligation thereafter on the part of Seller or Purchaser except (a) for fraud or for breach of this Agreement prior to such termination and (b) as set forth in Sections 12.4 and 12.5. ARTICLE XI. DEFINITIONS 11.1 Definitions. For all purposes of this Agreement, except as ----------- otherwise expressly provided or unless the context clearly requires otherwise: 13 "Business Day" shall mean a day on which banks in Tokyo, Japan and ------------ Manila, the Republic of the Philippines are open to the public for conducting banking business and are not required or authorized to close; "COA" has the meaning given to it in the Advisory Services Agreement --- dated 24 March 2000, by and between Seller and PLDT, as amended by an Amendment thereto dated as of 31 March 2003 and a Second Amendment thereto dated as of 31 March 2005; "Damages" shall mean, collectively, any loss, liability, claim, damage, ------- expense (including costs of investigation and defense and reasonable attorney's fees) or diminution of value, whether or not involving a third-party claim, actually suffered or incurred by a person; provided that Damages shall not include loss of profit, loss of revenue, loss of opportunity, indirect damages, incidental damages or consequential damages; "Deed of Sale" shall mean the deed of sale, conveying and transferring ------------ to Purchaser the Shares owned by Seller; "Disclosed" shall mean publicly disclosed pursuant to the requirements --------- of the PSE, NYSE, the Securities Regulation Code or the Exchange Act; "Encumbrance" shall mean any lien, charge, security interest, option, ----------- claim, mortgage, pledge, proxy, voting trust or agreement, obligation, understanding or arrangement or other restriction on title or transfer of any nature whatsoever, except for (i) any such lien or charge created by Purchaser or arising out of the ownership of Shares by Purchaser, and (ii) any restriction on transfer imposed by the SPSIA, the Shareholders Agreement, the Co-Operation Agreement, the RRA, the Securities Regulation Code, the Exchange Act, and any other applicable securities laws; "Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as ------------ amended, and the rules and regulations of the U.S. Securities and Exchange Commission promulgated thereunder; "Governmental Body" shall mean a court, arbitral tribunal, ----------------- administrative agency or commission or other governmental or other regulatory authority or agency having competent jurisdiction over any of Purchaser, Seller or PLDT; "Knowledge of Seller" shall mean (i) with respect to Seller's knowledge ------------------- of Seller as specified under Section 3.4, the actual knowledge of the General Manager of the Legal Department of Seller, and (ii) with respect to Seller's knowledge of PLDT as specified under Section 3.7, the actual knowledge of Shigeru Yoshida, COA of PLDT; "NYSE" shall mean the New York Stock Exchange, Inc.; ---- "Philippine GAAP" shall mean, at any time, the generally accepted --------------- accounting principles in the Philippines at such time; 14 "Securities Regulation Code" shall mean the Philippines' Republic Act -------------------------- No. 8799 and the rules and regulations of the Philippine Securities and Exchange Commission promulgated thereunder; "US SEC" shall mean the United States Securities and Exchange Commission ------ or its successor; and "U.S. GAAP" shall mean, at any time, the generally accepted accounting --------- principles in the United States of America at such time. ARTICLE XII. MISCELLANEOUS 12.1 Successors and Assigns. Except as otherwise provided herein, the ---------------------- terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Shares). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 12.2 Governing Law. This Agreement shall be governed by and construed ------------- under the laws of Japan without regard to its conflicts of laws principles. 12.3 Notices. All notices and other communications given or made ------- pursuant hereto shall be in writing and shall be deemed to have been given or made if in writing and (i) delivered personally, (ii) mailed by registered or certified mail (postage prepaid, return receipt requested) or (iii) sent by telecopier, with the written notice sent by mail as set forth in (ii) above, to the parties as follows: (a) if to Seller to: 1-6 Uchisaiwai-cho, 1-Chome Chiyoda-ku, Tokyo 100-8019, Japan Fax: +81-3-3539-3079 Attention: General Manager, Legal Department with copy to: Skadden, Arps, Slate, Meagher & Flom LLP 1-6-1 Roppongi, Minato-ku, Tokyo 106-6021 Fax: +81-3-3568-2626 Attention: Managing Partner (b) if to Purchaser to: 41st floor, 11-1 Nagata-cho 2-Chome, Chiyoda-Ku, Tokyo, Japan 100-6150 Fax: +81-3-5156-0204 Attention: Managing Director, Global Business Department 15 or at such other addresses as shall be furnished by the parties by like notice, and such notice or communication shall be deemed to have been given or made as of the date so delivered, mailed or sent. 12.4 Expenses. Except as otherwise provided in this Agreement, -------- Purchaser and Seller shall each bear their own costs and expenses (including any and all advisor fees and corresponding value added taxes in the Philippines) that each incurs with respect to the negotiation, execution, delivery and performance of this Agreement. 12.5 Payment of Taxes. In the course of this Transaction, Stock ---------------- Transaction Tax in the Philippines shall be borne by the Seller. Documentary Stamp Tax in the Philippines shall be borne by the Purchaser, if any. If any other taxes than the above arise in the Philippines from this Transaction, such taxes shall be borne by the party required to pay pursuant to the applicable laws and rules. 12.6 Amendments and Waivers. Any term of this Agreement may be ---------------------- amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of Purchaser and Seller. 12.7 Severability. If any one or more of the provisions of this ------------ Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected thereby. To the extent permitted by applicable law, each party waives any provision of law which renders any provision of this Agreement invalid, illegal or unenforceable in any respect. 12.8 Descriptive Headings. The descriptive headings herein are -------------------- inserted for convenience of reference only and shall in no way be construed to define, limit, describe, explain, modify, amplify, or add to the interpretation, construction or meaning of any provision of, or scope or intent of, this Agreement nor in any way affect this Agreement. 12.9 No Third Party Beneficiaries. This Agreement is solely for the ---------------------------- benefit of Seller and its successors and permitted assigns, with respect to the obligations of Purchaser under this Agreement, and for the benefit of Purchaser, and its successors and permitted assigns, with respect to the obligations of Seller, under this Agreement, and this Agreement shall not be deemed to confer upon or give to any other third party any remedy, claim of liability or reimbursement, cause of action or other right. 12.10 No Waivers. Except as otherwise expressly provided herein, no ---------- failure to exercise, delay in exercising, or single or partial exercise of any right, power or remedy by any party, and no course of dealing between the parties, shall constitute a waiver of any such right, power or remedy. No waiver by a party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No waiver shall be valid unless in writing and signed by the party against whom such waiver is sought to be enforced. 12.11 Specific Performance. The parties hereto agree that if any of -------------------- 16 the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the parties shall be entitled to specific performance of the terms hereof and immediate injunctive relief, without the necessity of proving the inadequacy of money damages as a remedy, in addition to any other remedy at law or equity. 12.12 Entire Agreement. This Agreement embodies the entire agreement ---------------- and understanding of the parties with respect to the Transaction and supersedes all prior written or oral commitments, arrangements or understandings with respect thereto. 12.13 Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed an original by the party executing the same, but all of which together shall constitute one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGE FOLLOWS.] 17 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. SELLER: ------ NTT COMMUNICATIONS CORPORATION By: /s/ Hiromi Wasai --------------------------- Name: Hiromi Wasai Title: President and CEO PURCHASER: --------- NTT DOCOMO, INC. By: /s/ Masao Nakamura ---------------------------- Name: Masao Nakamura Title: President and CEO 18 EX-8 4 was5318ex99-2.txt CO-OPERATION AGREEMENT EXHIBIT 8 --------- 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 Linklaters 10th Floor, Alexandra House Chater Road Hong Kong Telephone (852) 2842 4888 Facsimile (852) 2810 8133/2810 1695 Ref KMTM/CTD 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; "PLDT Shareholders" means the PLDT shareholders holding PLDT Shares; "Preemption Reply" means (i) the decision of NTT referred to in the final paragraph of Section 9.9 of the Strategic Agreement as notified to PLDT, (ii) a First Offer Reply (as defined in clause 9(A)(ii) of the Shareholders Agreement) or (iii) a PTIC Offer Reply (as defined in clause 10(B)(ii) of the Shareholders Agreement), as the case may be; "PTIC" has the meaning given to it in the Shareholders Agreement; "Registration Rights Agreement" means the agreement dated 24 March 2000 between NTT, NTT Capital and PLDT; "Second Minimum Shareholding Threshold" means ownership of full legal and beneficial title to not less than seventeen and a half per cent. (17.5%) of all PLDT Shares issued and outstanding from time to time; "SMART" means SMART Communications, Inc, a corporation organised and existing under the laws of the Philippines and having its principal office at SMART Tower, 6799 Ayala Avenue, Makati City, Metro Manila, Philippines; "SMART Mancom" means the management committee comprising senior members of the management of SMART, which is appointed by the president of SMART for the purpose of overseeing operational matters of SMART; "SMART MRP" means the Materials Requirement Planning body established to review and approve the capital expenditures and operational expenses of SMART which exceed thresholds specified by the board of SMART, and to evaluate and endorse items that require higher approval authority as stipulated by the board of SMART; 3 "SMART Shareholders" means the holders of shares of common capital stock of SMART; "Subsidiary" has the meaning given to it in the Shareholders Agreement; "Transaction Information" means: (i) the number of PLDT Shares Transferred from NTT to DoCoMo (or a Subsidiary or nominee); (ii) the date of each such Transfer; (iii) DoCoMo's direct and/or indirect voting power in respect of the PLDT Shares upon completion of such Transfer; and (iv) NTT's direct and/or indirect voting power in respect of the PLDT Shares upon completion of such Transfer; and "Transfer" has the meaning given to it in the Shareholders Agreement and "Transferred" shall be construed accordingly. Capitalized terms used in this Agreement and not otherwise defined herein shall be used as defined in the Existing Agreements. 1.2 Headings Headings shall be ignored in construing this Agreement. 2 Effective date and notice 2.1 Except Clauses 3.3, 5.1, 5.2, 9.1.3(ii), 13.1, 13.3 and 14 which shall become effective on and from the date of this Agreement, this Agreement is conditional upon the Transfer by NTT to DoCoMo of the full legal and beneficial title to PLDT Shares held as at the date of this Agreement by NTT amounting to the First Minimum Shareholding Threshold. 2.2 Each of NTT and DoCoMo undertakes to provide a written notice to PLDT and each of the FPC Parties at the same time, confirming that the condition in Clause 2.1 has been satisfied and stating the Transaction Information, within five (5) Business Days of such Transfer. For the avoidance of doubt, the rights and obligations of the Parties under this Agreement (except Clauses 3.3, 5.1, 5.2, 9.1.3(ii), 13.1, 13.3 and 14) will not be effective or enforceable until the date on which the written notice in accordance with this Clause 2.2 are provided by DoCoMo to PLDT and the FPC Parties (the "Effective Date"). 3 Principles of co-operation; Exercise of rights 3.1 Upon Clause 2.1 being satisfied, references in the Existing Agreements to NTT shall be construed to be references to NTT and DoCoMo, references in the Existing Agreements to NTT Group shall be construed to be references to NTT and its Subsidiaries and DoCoMo and its Subsidiaries, and references in the Existing Agreements to an NTT Party shall be construed as references to NTT and its Permitted Transferee (as that term is defined in the Shareholders Agreement) and DoCoMo and its Permitted Transferee, 3.1.1 except: (a) to the extent that the contrary is expressly stated in this Agreement; (b) with respect to the approvals, consents, waivers, decisions and other acts of NTT carried out before the Effective Date; or 4 (c) where such construction would produce an absurd result; and 3.1.2 provided that: (a) where a proper construction thereof so permits, such references shall, except to the extent of the obligations of PLDT and/or the FPC Parties expressly set forth in this Agreement or the Existing Agreements (as amended by this Agreement), be construed in a manner which does not (i) increase the combined rights of NTT and DoCoMo beyond those which NTT had prior to the Effective Date and (ii) increase the obligations of PLDT or the FPC Parties beyond those which they had respectively or collectively before the Effective Date; and (b) nothing in this Clause 3.1 shall restrict the Right of NTT or DoCoMo to enforce its indemnification rights or exercise any other available remedy provided in the Existing Agreements for breach of the Existing Agreements, except that neither NTT nor DoCoMo shall be entitled to recover from PLDT or any of the FPC Parties under this Agreement or any Existing Agreement more than once in respect of the same losses suffered; and (c) notwithstanding the foregoing: (i) references to NTT Group in Section 8.3(d) of the Strategic Agreement shall be construed in light of Clause 7.1.1; (ii) references to NTT in Section 11.4 of the Strategic Agreement shall be construed in light of Clause 7.1.3; (iii) references to NTT in Sections 11.5 and 11.6 of the Strategic Agreement shall be construed in light of Clause 3.4; (iv) references to NTT in Clause 3 of the Shareholders Agreement shall be construed in light of Clause 6.2; (v) references to NTT in Clause 4 of the Shareholders Agreement shall be construed in light of Clause 6.3; (vi) references to NTT is Clause 5(A) of the Shareholders Agreement and Section 8.4 of the Strategic Agreement shall be construed in light of Clause 7.1.2; (vii) references to NTT in Clauses 8, 9 and 10 of the Shareholders Agreement shall be construed in light of the provisions of Clauses 4.2, 5.4 and 5.5 and references to NTT Group in Clause 9(B) shall be construed as references to NTT and its Subsidiaries or DoCoMo and its Subsidiaries, whomever is proposing to sell PLDT Shares; (viii) references to NTT Parties in Clauses 11(C) and 11(F) of the Shareholders Agreement shall be construed to be references to NTT and its Permitted Transferee to which a transfer of Covered Shares has been made pursuant to Clause 11(B) or DoCoMo and its Permitted Transferee to which a transfer of Covered Shares has been made pursuant to Clause 11(B); 5 (ix) references to NTT in Clause 11(C) of the Shareholders Agreement shall be construed as references to NTT and its Subsidiaries or DoCoMo and its Subsidiaries, as the case may be; (x) references to NTT Group in Clause 8(A) and 11(D) of the Shareholders Agreement shall be construed as references to NTT and its Subsidiaries or DoCoMo and its Subsidiaries, as the case may be, and shall be construed in light of the provisions of Clauses 4.2, 5.4 and 5.5; (xi) references to NTT Party in Clause 11(F) of the Shareholders Agreement shall be construed as references to NTT and its Permitted Transferee or DoCoMo and its Permitted Transferee, as the case may be; and references to NTT Parties in Clause 20(B)(ii) of the Shareholders Agreement shall be construed as references to NTT and its Subsidiaries or DoCoMo and its Subsidiaries, as the case may be, and references to NTT in Clause 20(B)(ii) of the Shareholders Agreement shall be construed as references to NTT and its Subsidiaries in respect of rights exercised by NTT and to DoCoMo and its Subsidiaries in respect of rights exercised by DoCoMo. 3.2 Notwithstanding anything to the contrary in this Agreement and the Existing Agreements, the Parties hereby agree that in no event shall DoCoMo be bound by or become liable for or entitled to the benefit of, any of the representations, warranties, obligations or entitlements under clause 15 (Representations and Warranties) of the Shareholders Agreement and sections 2 (Purchase of SMART Shares), 3 (Subscription for NTT PLDT Cash Shares), 4 (Initial Closing; Initial Closing Actions), 5 (Final Closing; Final Closing Actions), 6 (Representations and Warranties), 7 (Covenants and Undertakings), 11.1 (Reorganization of SNMI's Business), 11.2 (Acquisition of Minority Interests on Infocom), 13 (Indemnification) to the extent the indemnification provisions therein apply to events, circumstances, representations, warranties or obligations which occurred, were given or accrued (as the case may be), and have ceased to have effect, before the Effective Date, and 14 (Taxes; Costs and Expenses) of the Strategic Agreement and any of schedules 1 through 9, 11 and 12 attached thereto. Without prejudice to the rights of PLDT or any of the FPC Parties to pursue any or all legal remedies for any breach by NTT or any other member of the NTT Group of the provisions of the Existing Agreements, PLDT and the FPC Parties hereby acknowledge and agree that DoCoMo shall not, solely as a consequence of its entering into and performing its obligations under this Agreement, be liable for any such breach accrued and not discharged on or before the Effective Date. 3.3 Except for NTT Capital no longer being a party to the Shareholders Agreement as described in Recital C herein and DoCoMo's addition as a party to each of the Existing Agreements pursuant to and on the terms and subject to the conditions set out in this Agreement, the parties to each of the Existing Agreements remain subject to the Existing Agreements, as modified, varied or amended by this Agreement. 3.4 As soon as possible and in any event within sixty (60) calendar days immediately after the Effective Date, DoCoMo and the other Parties who are respectively parties to the Advisory Services Agreement, the Conventional International Telecommunications Services Agreement dated 24 March 2000 between NTT and PLDT, the Internet Services Agreement 6 dated 24 March 2000 between NTT and PLDT, the Tradename and Trademark Agreement dated 24 March 2000 between NTT and PLDT and the Arcstar Service Provider Agreement dated 24 March 2000 between PLDT and NTT Worldwide Telecommunications Corporation (and all agreements ancillary thereto) will review and hold discussions with one another in good faith with a view to determining whether any such agreement need to be amended in light of the provisions of this Agreement, and if and only to the extent any such amendment is identified and agreed by the relevant parties to such agreement and DoCoMo, such relevant Parties will procure such amendment. 3.5 NTT and PLDT agree that as soon as possible and in any event within sixty (60) calendar days immediately after the Effective Date, NTT and PLDT will amend the Registration Rights Agreement to increase NTT's present entitlement to require four (4) Demand Registrations (as that terms is defined in the Registration Rights Agreement) to six (6) Demand Registrations, and will otherwise, together with DoCoMo, review and hold discussions with one another in good faith with a view to determining whether any additional amendment(s) to the Registration Rights Agreement are required to be made, and if and only to the extent any such further amendment(s) is/are identified and agreed by each of NTT, DoCoMo and PLDT, such relevant Parties will procure such amendment(s). 3.6 Notwithstanding any provisions in this Agreement or the Existing Agreements to the contrary, NTT and DoCoMo agree that NTT and DoCoMo will not both be entitled to claim in respect of any matter to the extent that a loss could only be properly incurred by one or the other of NTT and DoCoMo. 4 Exercise of rights by DoCoMo and NTT 4.1 Subject to Clause 3.2 and the other provisions of this Clause 4, NTT and DoCoMo agree, covenant and undertake with each other and with PLDT and each of the FPC Parties that on and from the Effective Date, in respect of any exercise of the rights of NTT and DoCoMo set forth in (i) sections 8.4, 9, 10.2, 10.3, 10.5, 10.6, 10.7, 11.2, 12.3 or 17.13 of the Strategic Agreement or (ii) clauses 3(B), 3(D), 4(A), 4(B), 5(D), 5(G), 5(H), 6, 9(A), 10(B), 11(A) or 13(A)(ii) of the Shareholders Agreement, NTT and DoCoMo shall discuss between themselves the manner in which such rights shall be exercised, whereupon the Acting Party shall give notice in accordance with the relevant provisions of the Existing Agreements to PLDT and the FPC Parties of the decision regarding the exercise of such rights. 4.2 Subject to Clause 3.2 and the successive provisions of this Clause 4, with respect to the exercise of rights under (i) section 9.9 of the Strategic Agreement granting NTT and DoCoMo pre-emptive rights in respect of certain new issuances of PLDT Shares, (ii) clause 9(A) of the Shareholders Agreement granting NTT and DoCoMo first refusal rights with respect to certain Transfers of PLDT Shares by the FPC Parties and PTIC and (iii) clause 10(B) of the Shareholders Agreement granting NTT and DoCoMo first refusal rights with respect to certain transfers of PTIC Shares by the PTIC Shareholders (as set out in the Shareholders Agreement), NTT and DoCoMo shall, within the time periods provided for giving a Preemption Reply, consult with each other regarding the exercise of the relevant rights. NTT and DoCoMo agree that DoCoMo shall be entitled to purchase all, or some only, of the PLDT Shares or PTIC Shares which may be purchased by NTT or DoCoMo pursuant to such clauses and section, and that if DoCoMo decides not to purchase some or all of such PLDT Shares or PTIC Shares, then NTT shall have the option to purchase some or all of the PLDT Shares or PTIC Shares not to be 7 acquired by DoCoMo. If a Preemption Reply is given, it shall be given by the Acting Party. 4.3 NTT and DoCoMo agree, covenant and undertake with each other and with PLDT and each of the FPC Parties that NTT shall unconditionally, fully and irrevocably assign and delegate to DoCoMo, on the Handover Date, NTT's rights to nominate and provide the COA pursuant to the provisions of the Advisory Services Agreement. 4.4 PLDT and the FPC Parties shall be entitled to rely on any notice referred to in Clause 4.1 or Clause 4.2 given in accordance with Clause 4.1, as if it had been provided by both NTT and DoCoMo and, regardless of any difference, disagreement, dissension or dispute between NTT and DoCoMo, the decision of the Acting Party, as notified in accordance with Clause 4.1 to PLDT and/or the FPC Parties, as the case may be, will be final and conclusive for purposes of this Agreement and the Existing Agreements, and each of PLDT and the FPC Parties shall be entitled to ignore any conflicting notice, action or inaction (express or implied) by DoCoMo or NTT (where it is not the Acting Party) and to assume, where no notice or no valid notice is received from the Acting Party in accordance with Clause 4.1, that NTT and DoCoMo have decided (i) not to exercise the relevant rights or (ii) to withhold their consent or approval (as the case may be). Each of NTT and DoCoMo agrees, solely for the benefit of the other, that in circumstances where DoCoMo or NTT (not being at the relevant time the Acting Party) must exercise rights or take action in order to give effect to a notice given by the Acting Party under Clause 4.1 or 4.2, it will use its reasonable commercial efforts to do so. Each of NTT and DoCoMo agrees, covenants and undertakes to the other and to PLDT and each of the FPC Parties to coordinate with each other in respect of the exercise of the rights of NTT and DoCoMo referred to in Clause 4.1 above, and to have regard to NTT's and DoCoMo's respective interests in relation to any exercise of such rights. 4.5 NTT and DoCoMo hereby agree and warrant to PLDT and each of the FPC Parties that none of PLDT and any of the FPC Parties will incur any liability whatsoever towards NTT and/or DoCoMo under this Agreement or any of the Existing Agreements or otherwise in taking or refraining from taking any action in accordance with any notice given to PLDT and the FPC Parties by the Acting Party in accordance with Clause 4.1. 4.6 Any obligation in the Existing Agreements for PLDT and/or any of the FPC Parties to notify, inform, consult, deliver, offer, provide, exercise, give, grant, discuss, show, disclose to, obtain the approval of or the consent of, NTT and/or DoCoMo, shall be deemed to be satisfied by PLDT and/or any of the FPC Parties (as the case may be) notifying, informing, consulting delivering, offering, providing, exercising, giving, granting, discussing, showing, disclosing to, obtaining the approval of or the consent of, the Acting Party in accordance with this Clause 4. Nothing in this Agreement shall operate to affect the right that each of NTT and DoCoMo may have independent of the Existing Agreement or this Agreement, including, without limitation, the right to receive, as a shareholder of PLDT, notice of shareholders meetings from PLDT. 4.7 References in this Clause 4.2 to the Shareholders Agreement and the Strategic Agreements are to such agreements as amended by this Agreement. 5 Permitted Transfers of PLDT Shares 5.1 Notwithstanding any provision in the Existing Agreements to the contrary, any Transfer of PLDT Shares from NTT to DoCoMo (including the initial transfer of PLDT Shares from NTT to DoCoMo to which this 8 Agreement (other than Clauses 3.3, 5.1, 5.2, 9.1.3(ii), 13.1, 13.3 and 14) is conditional as set out in Clause 2.1) will be deemed to be a Transfer to a Permitted Transferee, and will not trigger FPC's right of first offer pursuant to the Shareholders Agreement, or result in a default or constitute a ground for termination of any of the Existing Agreements, or provide a basis for the exercise by PLDT of its right to terminate the Strategic Arrangements under the Strategic Agreement, the Advisory Services Agreement, the Conventional International Telecommunications Services Agreement dated 24 March 2000 between NTT and PLDT, the Internet Services Agreement dated 24 March 2000 between NTT and PLDT, the Tradename and Trademark Agreement dated 24 March 2000 between NTT and PLDT or the Arcstar Service Provider Agreement dated 24 March 2000 between PLDT and NTT Worldwide Telecommunications Corporation (and all agreements ancillary thereto). Each of DoCoMo and NTT agrees to provide a written notice to PLDT and each of the FPC Parties at the same time, stating the Transaction Information, within five (5) Business Days of any such Transfer pursuant to this Clause 5.1. 5.2 Subject to Clause 3.2 above, DoCoMo and NTT hereby agree with and undertake to PLDT and each of the FPC Parties that all PLDT Shares held beneficially and legally by DoCoMo as a result of a Transfer contemplated in Clause 5.1 shall be subject to, and DoCoMo and NTT shall be severally liable for and bound by, the covenants in the Existing Agreements, as amended by this Agreement, that apply to NTT (including, without limitation, FPC's right of first offer on disposal) as if DoCoMo were NTT and a party to such agreements. 5.3 Subject to Clause 3.2 above, DoCoMo hereby agrees and undertakes to PLDT and each of the FPC Parties that any additional PLDT Shares acquired by DoCoMo other than from NTT shall be deemed to be subject to, and DoCoMo shall be severally liable for and bound by, the covenants in the Existing Agreements, as amended by this Agreement, as if such PLDT Shares were PLDT Shares held by NTT pursuant to the Shareholders Agreement and the Strategic Agreement, and that DoCoMo shall provide prompt written notice to NTT, PLDT and each of the FPC Parties at the same time, stating that such an acquisition has occurred and the number of PLDT Shares acquired by DoCoMo, DoCoMo's direct or indirect voting power in respect of the PLDT Shares on completion of the acquisition, and the date of completion of the acquisition, and in any event within five (5) Business Days of completion of such acquisition. 5.4 Notwithstanding any provision in the Existing Agreements to the contrary, the Parties agree that any Transfer of NTT's remaining PLDT Shares (after the transfer in Clause 2.1) to any Person shall be subject to a superior right of first offer hereby granted to DoCoMo, subject to Clause 10. Clause 9(B) of the Shareholders Agreement shall apply mutatis mutandis to the exercise of the right of first offer by DoCoMo on any Transfer of NTT's remaining PLDT Shares as provided for in this Clause 5.4. Each of DoCoMo and NTT agrees to provide a written notice to PLDT and each of the FPC Parties at the same time, stating the Transaction Information, within five (5) Business Days of completion of such Transfer. 5.5 Each of the Parties hereby agrees that in the event DoCoMo proposes to Transfer any PLDT Shares (subject to Clause 9.2) which would result in NTT and DoCoMo holding, in the aggregate, less than ten per cent. (10%) of the PLDT Shares then issued and outstanding, then NTT shall have a right of first offer to purchase such Shares from DoCoMo on terms and conditions no less favourable to DoCoMo than those on which DoCoMo proposes to Transfer such PLDT Shares. Such right shall be superior to any right of first refusal which any of the FPC Parties may have in 9 respect of such proposed Transfer under the Shareholders Agreement. Any Transfer from DoCoMo to NTT pursuant to the exercise by NTT of its rights under this Clause 5.5 shall not give rise to a right of first offer by the FPC Parties under the Shareholder Agreement and shall be a Transfer to a Permitted Transferee. 5.6 Upon any Transfer of PLDT Shares from NTT to DoCoMo, other than the initial transfer to which this Agreement is conditional as set out in Clause 2.1, the Parties shall discuss in good faith with a view to amending this Agreement as appropriate to effect the assignment of the right to nominate individuals for appointment as directors of PLDT and SMART in accordance with the new shareholding ratio of PLDT Shares as between NTT and DoCoMo on terms agreed in writing by all the Parties. 5.7 For the avoidance of doubt, in the event DoCoMo or NTT, as the case may be, does not exercise its right of first offer pursuant to Clause 5.4 or Clause 5.5, FPC shall have the right of first offer on NTT's Transfer of such PLDT Shares or DoCoMo's Transfer of such PLDT Shares, as the case may be, pursuant to Clause 9(B) of the Shareholders Agreement. 5.8 Each of NTT and DoCoMo hereby agrees, for the benefit of the FPC Parties, that any Transfer of PLDT Shares from DoCoMo and/or any of its Affiliates to NTT and/or any of its Affiliates, other than a Transfer pursuant to Clause 5.5, shall not be a Transfer to a Permitted Transferee. 6 Certain corporate undertakings under Existing Agreements upon Transfer of PLDT Shares amounting to the First Minimum Shareholding Threshold from NTT to DoCoMo 6.1 Each of NTT, PLDT and the FPC Parties hereby grants DoCoMo the rights specified in Clauses 6.2.1 through 6.2.5 and 6.3 and each of DoCoMo, PLDT and the FPC Parties hereby grants NTT the rights specified in Clause 6.2.6. 6.2 PLDT board appointment 6.2.1 In respect of NTT's right to nominate two (2) directors to the board of PLDT pursuant to the Existing Agreements, NTT and each of the FPC Parties shall, to the extent of the power conferred by the PLDT Shares owned, directly or indirectly, by it from time to time and to the extent permissible under Philippines laws or regulations: (i) cast (or refrain from casting as appropriate) its votes as a PLDT Shareholder, (ii) lobby (as a PLDT Shareholder) the directors of PLDT; and (iii) otherwise use its reasonable efforts as a PLDT Shareholder, to procure a vote in favour of any resolution put to the meeting of PLDT Shareholders for the purpose of replacing one (1) existing NTT nominee on the board of PLDT with one (1) DoCoMo nominee. 6.2.2 Upon the holdings of PLDT Shares by NTT, DoCoMo and their respective Subsidiaries reaching in aggregate twenty per cent. (20%) of the PLDT Shares then issued and outstanding, and thereafter for so long as DoCoMo, NTT and their respective Subsidiaries in the aggregate continue to hold PLDT Shares amounting to at least the Second Minimum Shareholding Threshold, NTT and each of the FPC Parties shall, to the extent of the power conferred by the PLDT Shares owned by it from time 10 to time and to the extent permissible under Philippines laws or regulations: (i) cast (or each of refrain from casting as appropriate) its votes as a PLDT Shareholder, (ii) lobby (as a PLDT Shareholder) the directors of PLDT; and (iii) otherwise use its reasonable efforts as a PLDT Shareholder, to procure a vote in favour of any resolution put to the meeting of PLDT Shareholders for the purpose of effecting the election of one (1) additional DoCoMo nominee (who must be a Philippines national) as a director of PLDT; provided that DoCoMo's rights under this Clause 6.2.2 shall not be extinguished for a twelve (12) month period where NTT, DoCoMo and their respective Subsidiaries in aggregate hold PLDT Shares amounting to less than the Second Minimum Shareholding Threshold but ownership of full legal and beneficial title to more than fifteen per cent. (15%) of all PLDT Shares issued and outstanding from time to time if (a) failure by NTT, DoCoMo and their respective Subsidiaries in aggregate to maintain at least the Second Minimum Shareholding Threshold arises from NTT, DoCoMo and/or their respective Subsidiaries not taking up or exercising any of their rights or entitlements in the event of any issue, offer for subscription, offer for sale, placing, rights issue, open offer, capitalisation issue, consideration issue, or exchange of PLDT Shares which is conducted on a basis which is pro rata for all holders of PLDT Shares and (b) NTT and DoCoMo take their respective reasonable efforts to restore promptly their aggregate holdings of PLDT Shares to the Second Minimum Shareholding Threshold, and provided that DoCoMo's rights under this Clause 6.2.2 shall be extinguished automatically if NTT and DoCoMo fail to restore their aggregate holdings of PLDT Shares to the Second Minimum Shareholding Threshold within twelve (12) months of their aggregate holdings of PLDT Shares falling below the Second Minimum Shareholding Threshold. 6.2.3 The DoCoMo nominee(s) to the board of PLDT under either or both of Clauses 6.2.1 and 6.2.2 may be the COA (if that position is filled by a nominee of DoCoMo at the time), or another senior representative of DoCoMo. 6.2.4 In the event that DoCoMo determines not to nominate the one (1) additional DoCoMo nominee (who must be a Philippines national) as a director of PLDT (as contemplated in Clause 6.2.2), DoCoMo shall have, as an alternative to the nomination of such a director, the right to appoint one (1) other individual to attend and participate in (but not vote at) the meetings of the board of PLDT as a PLDT Advisory Board Member; for the avoidance of doubt, DoCoMo shall have the right to terminate such appointment and/or replace the individual at any time. 6.2.5 In the event Philippines laws and regulations permit PLDT to have a higher number of non-Philippines nationals as directors of PLDT than is the case as at the Effective Date, then NTT, DoCoMo and FPC will discuss in good faith the manner by which a higher number of non-Philippines nationals may join as directors of the board of PLDT as between each of them. 6.2.6 In the exceptional event that the remaining NTT nominee on the board of PLDT is unable to attend (either in person or by telephone), for exceptional reasons, a meeting of the board of PLDT, NTT shall have the right to appoint one (1) other 11 individual, selected from its then existing Advisors to PLDT or SMART or among its senior employees, to attend such meeting as an observer; for the avoidance of doubt, NTT shall have the right to terminate such appointment and/or replace the individual at any time prior to the meeting. 6.3 SMART board appointments 6.3.1 In respect of NTT's right to nominate two (2) directors to the board of SMART pursuant to the Existing Agreements, NTT and each of the FPC Parties shall, to the extent of the power conferred by the PLDT Shares owned by it from time to time and to the extent permissible under Philippines laws or regulations: (i) cast (or refrain from casting as appropriate) its votes as a PLDT Shareholder, as applicable, (ii) lobby (as a PLDT Shareholder) the directors of PLDT; and (iii) otherwise use its reasonable efforts as a PLDT Shareholder, to procure that PLDT casts its vote in favour of any resolution put to the meeting of SMART Shareholders for the purpose of replacing one (1) existing NTT nominee on the board of SMART with one (1) DoCoMo nominee (who must be a Philippines national). 6.3.2 Upon the holdings of PLDT Shares by NTT, DoCoMo and their respective Subsidiaries reaching in aggregate twenty per cent. (20%) of the PLDT Shares then issued and outstanding, and thereafter for so long as DoCoMo, NTT and their respective Subsidiaries in the aggregate continue to hold PLDT Shares amounting to at least the Second Minimum Shareholding Threshold, NTT and each of the FPC Parties shall, to the extent of the power conferred by the PLDT Shares owned by it from time to time and to the extent permissible under Philippines laws or regulations: (i) cast (or refrain from casting as appropriate) its votes as a PLDT Shareholder, as applicable, (ii) lobby (as a PLDT Shareholder) the directors of PLDT; and (iii) otherwise use its reasonable efforts as a PLDT Shareholder, to procure that PLDT casts its vote in favour of any resolution put to the meeting of SMART Shareholders for the purpose of effecting the election of one (1) additional DoCoMo nominee (who must be a Philippines national) as a director of SMART; provided that DoCoMo's rights under this Clause 6.3.2 shall not be extinguished for a twelve (12) month period where NTT, DoCoMo and their respective Subsidiaries in aggregate hold PLDT Shares amounting to less than the Second Minimum Shareholding Threshold but ownership of full legal and beneficial title to more than fifteen per cent. (15%) of all PLDT Shares issued and outstanding from time to time if (a) failure by NTT, DoCoMo and their respective Subsidiaries in aggregate to maintain at least the Second Minimum Shareholding Threshold arises from NTT, DoCoMo and/or their respective Subsidiaries not taking up or exercising any of their rights or entitlements in the event of any issue, offer for subscription, offer for sale, placing, rights issue, open offer, capitalisation issue, consideration issue, or exchange of PLDT Shares which is conducted on a basis which is pro rata for all holders of PLDT Shares and (b) NTT 12 and DoCoMo take their respective reasonable efforts to restore promptly their aggregate holdings of PLDT Shares to the Second Minimum Shareholding Threshold, and provided that DoCoMo's rights under this Clause 6.3.2 shall be extinguished automatically if NTT and DoCoMo fail to restore their aggregate holdings of PLDT Shares to the Second Minimum Shareholding Threshold within twelve (12) months of their aggregate holdings of PLDT Shares falling below the Second Minimum Shareholding Threshold. 6.3.3 In the event that DoCoMo determines not to nominate the one (1) additional DoCoMo nominee (who must be a Philippines national) as a director of SMART (as contemplated in Clause 6.3.2), PLDT shall, upon receiving written notice of such determination from DoCoMo, use its reasonable efforts to procure that SMART creates a SMART advisory board whose structure would be substantially similar to that of the PLDT Advisory Board. On and from the establishment of the SMART advisory board, DoCoMo shall have the right to appoint one (1) individual to attend and participate in (but not vote at) the meetings of the board of SMART as a SMART advisory board representative; for the avoidance of doubt, DoCoMo shall have the right to terminate such appointment and/or replace the individual at any time. 6.3.4 In the event Philippines laws and regulations permit SMART to have a higher number of non-Philippines nationals as directors of SMART than is the case as at the Effective Date, then NTT, DoCoMo and FPC will discuss in good faith the manner by which a higher number of non-Philippines nationals may join as directors of the board of SMART as between each of them. 7 Amendments to Existing Agreements 7.1 The Parties who are parties to the Strategic Agreement and DoCoMo hereby agree to the following amendments to the Strategic Agreement: 7.1.1 Section 8.3(d) of the Strategic Agreement is hereby amended to provide that Investments made, or the use of Assets allowed, by DoCoMo and the members of the NTT Group in SMART, SNMI and the other members of the PLDT Group at any time shall not be treated as restricted Investments in the Philippines for purposes of the said section 8.3. 7.1.2 Section 8.4 of the Strategic Agreement and clause 5 of the Shareholders Agreement are hereby amended to provide that the relevant parties thereto will use reasonable efforts to procure that DoCoMo be entitled to appoint one (1) individual to attend any Committee of PLDT or SMART as a member, advisor or observer to the extent permitted under applicable laws, regulations and company articles; for the avoidance of doubt, DoCoMo shall have the right to terminate such appointment and/or replace the individual at any time. 7.1.3 Section 11.4 of the Strategic Agreement is hereby deleted in its entirety and replaced by the provisions set out in Schedule 2 hereto. 8 Further amendments to Existing Agreements - DoCoMo holds the Second Minimum Shareholding Threshold 8.1 The Parties who are parties to the Strategic Agreement and DoCoMo hereby agree to the following amendments to the Strategic Agreement, and the Parties who are parties to the Shareholders Agreement and DoCoMo agree to the following additional amendments to the Shareholders 13 Agreement; provided always that the obligations created pursuant to these amendments on PLDT or any of the FPC Parties, and the rights accruing to DoCoMo pursuant to these amendments shall only take effect upon the holdings of PLDT Shares by NTT and DoCoMo and their respective Subsidiaries reaching in aggregate twenty per cent. (20%) of the PLDT Shares then issued and outstanding, and thereafter for so long as DoCoMo and NTT and their respective Subsidiaries in aggregate continue to hold at least the Second Minimum Shareholding Threshold: 8.1.1 Section 9.5 of the Strategic Agreement be amended to provide additionally that to the extent any Proposed Transaction would be an Investment in a Person who engaged or proposes to engage primarily in a business which is or would be in direct competition for the same or substantially the same business opportunities or customer base for the same or substantially the same products or services with a Competing Business carried on by DoCoMo, or which DoCoMo has announced publicly an intention (and continues to intend) to carry on, PLDT will first consult with DoCoMo no later than thirty (30) calendar days prior to the first submission to the board of PLDT, Joint Mancom or PLDT Mancom for approval for any such Investment. In such event, an appropriate and duly authorised representative of DoCoMo shall be entitled to participate in internal discussions or meetings in PLDT with respect to such Investment. 8.1.2 Clause 6 of the Shareholders Agreement be amended to provide additionally that each of NTT, PLDT and each of the FPC Parties severally agrees and warrants to DoCoMo that, it shall, to the extent of the power conferred by the PLDT Shares owned by it from time to time and to the extent permissible under Philippines laws or regulations: (i) cast (or refrain from casting as appropriate) its votes as a PLDT Shareholder, as applicable, (ii) lobby (as a PLDT Shareholder) the directors of PLDT; and (iii) otherwise use its reasonable efforts as a PLDT Shareholder, to procure that SMART does not (a) cease to carry on its business, (b) dispose of all its Assets (as defined in the Strategic Agreement), or any substantial part thereof, (c) issue any Common Capital Stock (including any securities convertible to Common Capital Stock), (d) merge or consolidate with or into any entity, or (e) promote or take any step to effect winding up or liquidation, without PLDT first consulting with DoCoMo no later than thirty (30) calendar days prior to the first submission to the board of PLDT or SMART, or SMART Mancom for approval for any such action. In such event, an appropriate and duly authorised representative of DoCoMo shall be entitled to participate in the internal discussions or meetings in PLDT or SMART with respect to such intended action(s). 8.1.3 Section 11.2 of the Strategic Agreement be amended to provide additionally that in the event PLDT seeks to transfer, and seeks to cause any member of the PLDT Group to transfer, any SMART Common Capital Stock to any Person who is not a member of the PLDT Group, PLDT will first consult with DoCoMo no later than thirty (30) calendar days prior to the first submission to the board of PLDT, Joint Mancom or PLDT Mancom for approval for any such transfer. In such event, an appropriate and duly authorised representative of DoCoMo shall be entitled to participate in the 14 internal discussions or meetings in PLDT with respect to such intended transfer, provided that DoCoMo's rights under this Clause 8.1 shall not be extinguished for a twelve (12) month period where NTT, DoCoMo and their respective Subsidiaries in aggregate hold PLDT Shares amounting to less than the Second Minimum Shareholding Threshold but ownership of full legal and beneficial title to more than fifteen per cent. (15%) of all PLDT Shares issued and outstanding from time to time if (a) failure by NTT, DoCoMo and their respective Subsidiaries in aggregate to maintain at least the Second Minimum Shareholding Threshold arises from NTT, DoCoMo and/or their respective Subsidiaries not taking up or exercising any of their rights or entitlements in the event of any issue, offer for subscription, offer for sale, placing, rights issue, open offer, capitalisation issue, consideration issue, or exchange of PLDT Shares which is conducted on a basis which is pro rata for all holders of PLDT Shares and (b) NTT and DoCoMo take their respective reasonable efforts to restore promptly their aggregate holdings of PLDT Shares to the Second Minimum Shareholding Threshold, and provided that DoCoMo's rights under this Clause 8.1 shall be extinguished automatically if NTT and DoCoMo fail to restore their aggregate holdings of PLDT Shares to the Second Minimum Shareholding Threshold within twelve (12) months of their aggregate holdings of PLDT Shares falling below the Second Minimum Shareholding Threshold. 9 Additional rights in favour of DoCoMo 9.1 NTT, PLDT and the FPC Parties hereby grant DoCoMo the additional rights specified in this Clause 9.1. i-mode 9.1.1 Subject to necessary approval of, clearance of and registration with the DITTB (as defined in the Strategic Agreement), DoCoMo shall and PLDT shall procure that SMART will execute an agreement between SMART and DoCoMo to implement i-mode on the agreed terms. W-CDMA 9.1.2 PLDT and DoCoMo each agree in principle, to collaborate with each other in the business development, roll-out and use of W-CDMA mobile communication network ("W-CDMA") on the agreed terms as set out in Schedule 1 to this Agreement. Alliance 9.1.3 PLDT will, to the extent of the power conferred by its direct or indirect shareholding in SMART, procure that SMART will: (i) become a member of a strategic alliance group for the purpose of (a) international roaming, including preferred roaming and the lowest inter operator tariff ("IOT") and (b) corporate sales and services (the "Alliance") at or as soon as is reasonably practicable after the inception of the Alliance, provided that: (a) members of the Alliance include DoCoMo and a meaningful number of other international telecommunications operators; and 15 (b) the Alliance will have a reasonable prospect of generating meaningful commercial benefits for its members in the medium term, taking into account the criteria for entry into the Alliance, the continuing obligations of members and other terms of membership, the identity and geographical reach of the existing and likely future members, the likely scope and rate of expansion of membership, the likely growth and growth rates of roaming traffic and tariff, and other relevant factors; (ii) not enter into: (a) any contract, understanding or arrangement with any Person (and its Affiliates) carrying on a Competing Business in Japan; or (b) any material contract, understanding or arrangement with any Person (and its Affiliates) carrying on a Competing Business in the territories other than in Japan, relating to preferred roaming or the lowest IOT with any Person carrying on a Competing Business in Japan and its Affiliates for a period of six (6) months from the date of this Agreement, without the prior written consent of DoCoMo; and (iii) enter into a business relationship concerning preferred roaming and lowest IOT with DoCoMo as soon as possible, but in any event not later than 30 April 2006, on terms to be negotiated and agreed in good faith. Advisors 9.1.4 PLDT will, and will to the extent of the power conferred by its direct or indirect shareholding in SMART use reasonable efforts to procure that PLDT and SMART will, receive at a minimum the specified aggregate number of Advisors entitled to be provided by NTT and DoCoMo (together), in accordance with the timetable set out below in this Clause 9.1.4, and PLDT, NTT and DoCoMo agree to review these number and the time periods from time to time, having due regard to the status and requirements of the on-going projects in which the Advisors are engaged. The number of Advisors entitled to be provided by NTT and DoCoMo (together) hereunder includes the Advisors as at the date of this Agreement and the additional Advisors to be provided by NTT and DoCoMo (together) pursuant to this Clause 9.1.4 will be retained on terms and conditions (including as to cost) which are the same as, or substantially similar to, those set out in the Advisory Services Agreement.
Period (all dates inclusive) Aggregate minimum number of Advisors to be provided by NTT and DoCoMo (together) Effective Date to 30 June 2006 9 1 July 2006 to 31 March 2007 8 1 April 2007 to 31 March 2009 6 1 April 2009 and therafter 5
16 Transitional arrangements 9.1.5 The Parties hereby agree and acknowledge that: (i) the COA, who is currently appointed by NTT but shall be replaced by a nominee of DoCoMo on or before 1 July 2006 in accordance with Clause 4.3 (or earlier by mutual agreement between NTT and DoCoMo), is currently a director of the board of PLDT, an observer at meetings of the board of SMART, and an advisor to each of SMART Mancom, PLDT Mancom and Joint Mancom; (ii) as from the Effective Date, DoCoMo will have the right to appoint a senior technical advisor to SMART ("Senior Technical Advisor"), on terms and conditions (including as to cost) which are the same as, or substantially similar to, those set out in the Advisory Services Agreement. For the avoidance of doubt, the Senior Technical Advisor will constitute one of the Advisors to be provided by NTT and DoCoMo (together) as set out in Clause 9.1.4; (iii) the Senior Technical Advisor will automatically assume the role of COA upon the replacement of the existing COA in accordance with Clause 9.1.5(i). At such time, this new COA will, consistent with the roles of the previous COA, be entitled to be an observer at meetings of the board of SMART, an advisor to each of SMART Mancom, PLDT Mancom and Joint Mancom, and a director of the board of PLDT (provided DoCoMo has elected to nominate the new COA as one of its permitted nominee directors to be nominated to the PLDT board as provided for in Clause 6.2 of this Agreement, and the COA has been so nominated)and will in addition be a member or an advisor (as the case may be) to each of PLDT MRSB and SMART MRP, provided that, from time to time, the COA may delegate to another DoCoMo Adviser the right to attend meetings of PLDT MRSB or SMART MRP; and (iv) prior to becoming the new COA, the Senior Technical Advisor will be entitled to be an observer at meetings of the board of SMART, an advisor to each of SMART Mancom, PLDT Mancom and Joint Mancom, and a director of the board of PLDT (provided DoCoMo has elected to nominate the Senior Technical Advisor as one of its permitted nominees of directors to the PLDT board as provided for in Clause 6.2 of this Agreement, and the Senior Technical Advisor has been so nominated and has not assumed the role of the COA). If the Senior Technical Advisor has not been nominated as a director to the board of PLDT, he/she may attend as an observer at meetings of the board of PLDT for a period of not longer than eighteen (18) months from the date on which he/she is appointed Senior Technical Advisor pursuant to Clause 9.1.5(ii) above. If the Senior Technical Advisor has been nominated as a director to the board of PLDT, DoCoMo shall have as an alternative the right to send a Tokyo-based representative to attend as an observer at meetings of the board of PLDT for a period of not longer than eighteen (18) months from the date of this Agreement. 9.2 Lock-Up 17 9.2.1 Prior to and including the third anniversary of the Effective Date, DoCoMo shall not without the prior written consent of the FPC Parties and the FPC Parties shall not without the prior written consent of DoCoMo, Transfer, or create or permit to exist any Encumbrance on any of their respective PLDT Shares, other than an Encumbrance as set out in Schedule 3 hereto (the "Existing Encumbrances") or Transfer as permitted under the Shareholders Agreement. For the avoidance of doubt: (i) DoCoMo's consent is not required with respect to any Existing Encumbrances on any of the Parties' (other than DoCoMo's) respective PLDT Shares, provided such Existing Encumbrances have been previously permitted under clause 11(A) of the Shareholders Agreement; (ii) DoCoMo's consent is not required with respect to any Transfer pursuant to any rights of any third party under any Existing Encumbrances on any of the FPC Parties' respective PLDT Shares, provided such Existing Encumbrances and any third party rights of Transfer arising thereunder have been previously permitted by NTT; and (iii) nothing contained in this Clause 9.2 shall prevent NTT from transferring its PLDT Shares to DoCoMo, the FPC Parties or any third party in accordance with the provisions of this Agreement and the Existing Agreements. 9.2.2 In the event DoCoMo or a FPC Party receives a notice pursuant to clause 11(A)(ii)(c) of the Shareholders Agreement in relation to an Encumbrance or a Transfer other than those Existing Encumbrances or Transfers contemplated under Clauses 9.2.1(i) and 9.2.1(ii), the obligations of the Party receiving such a notice under Clause 9.2.1 shall automatically terminate. 10 Restriction on share acquisitions 10.1 Each of NTT and DoCoMo hereby agrees and warrants to each of the FPC Parties that: (a) it shall not, and shall procure that its representatives, advisers, and Subsidiaries and Affiliates and their respective representatives and advisers shall not, directly or indirectly, acquire, seek to acquire or enter into any arrangement concerning PLDT Shares which will or may result in NTT, DoCoMo and their respective Subsidiaries and Affiliates together holding, or having legal, beneficial or economic interests in PLDT Shares which represent in aggregate more than twenty-one per cent. (21%) of all PLDT Shares issued and outstanding from time to time, provided that NTT and DoCoMo shall not be liable for any breach of this Clause 10.1(a) if the aggregate holding of NTT, DoCoMo and their respective Subsidiaries and Affiliates exceeds such twenty-one per cent. (21%) limit as a result of any share repurchase or return of capital by PLDT which is conducted otherwise than on a basis which is pro rata for all holders of PLDT Shares; and (b) where the aggregate holding of NTT, DoCoMo and their respective Subsidiaries and Affiliates exceeds such twenty-one per cent. (21%) limit, the Acting Party shall notify promptly the FPC Parties of that fact setting out the extent of the excess and shall within twelve (12) months following a notice from FPC, sell or otherwise transfer its full legal and beneficial title in respect of all such number of PLDT Shares which represents the excess above such twenty-one per cent. (21%) limit and 18 pending completion of such sale or transfer, refrain from exercising any right attached to the number of PLDT Shares specified in the notice from FPC and all rights attached to the specified number of PLDT Shares held by it shall be suspended. 10.2 Subject to Clause 10.3, in the event of any breach of Clause 10.1, the FPC Parties shall have the right to terminate their respective rights and obligations under this Agreement and the Existing Agreements forthwith by written notice to each of PLDT, NTT and DoCoMo, provided that such termination shall be without prejudice to any right, benefit, liability or obligation which has accrued to the FPC Parties in respect of any matter, undertaking or condition under any such agreements and which has not been observed, performed or discharged in full prior to such termination. 10.3 In the event of any breach of Clause 10.1(a) as a result of some unintentional act by NTT, DoCoMo or any of their respective Subsidiaries or Affiliates, the FPC Parties shall have their respective rights to terminate their rights and obligations under this Agreement and the Existing Agreements at the end of the twelve (12) months following the notice from FPC under Clause 10.1(b), where within that twelve (12) months, the relevant parties have not sold or otherwise transferred their full legal and beneficial title in respect of all such number of PLDT Shares which represents the excess above such twenty-one per cent. (21%) limit. 10.4 Each of PLDT, NTT and DoCoMo hereby agrees that the restriction and right of termination in Clauses 10.1, 10.2 and 10.3 respectively are solely for the benefit of the FPC Parties and shall terminate only: 10.4.1 When: (i) the rights and obligations of the FPC Parties under this Agreement and the Existing Agreements terminate pursuant to Clause 10.2 or 10.3; (ii) the rights and obligations of DoCoMo and NTT and their respective Subsidiaries under this Agreement and the Shareholders Agreement terminate and the Strategic Arrangements (as defined under the Strategic Agreement) between NTT, DoCoMo and PLDT terminate, pursuant to Clause 13.2.1; (iii) the rights and obligations of the FPC Parties and their Subsidiaries under this Agreement and the Existing Agreements terminate pursuant to Clause 13.2.2; or (iv) this Agreement terminates pursuant to Clause 13.1; or 10.4.2 when FPC and its Subsidiaries and Affiliates together hold or have legal, beneficial or economic interests in PLDT Shares which represent in aggregate less than twenty-one per cent. (21%) of all PLDT Shares issued and outstanding from time to time; provided that (a) the restriction and right of termination in Clauses 10.1, 10.2 and 10.3 respectively shall not terminate where such parties together hold or have interests in PLDT Shares which represent in aggregate less than twenty-one per cent. (21%) but more than eighteen and a half per cent. (18.5%) of all PLDT Shares issued and outstanding from time to time; and (b) such parties restore their aggregate holdings of PLDT Shares to such twenty-one per cent. (21%) level (or more) within twelve (12) months of the date they first fall below the twenty-one per cent. (21%) level. 19 11 Support Each of NTT, DoCoMo and each of the FPC Parties hereby agrees and warrants that it will, to the extent permissible under applicable laws and regulations of the Philippines and other jurisdictions, cast its votes as a PLDT Shareholder in support of any resolution proposed at meetings of PLDT Shareholders by the board of directors of PLDT whose purpose is to safeguard PLDT from a Hostile Transferee, it being understood and agreed, however, that if, in the reasonable determination of NTT, DoCoMo, or a FPC Party such action would or might violate any applicable law or regulation, then such a Party shall not be bound by its obligation under this Clause 11. PLDT agrees that such a resolution of the board of the directors of PLDT will only be proposed if it is a reasonable resolution based on proper grounds, having regard to the interest of PLDT as a whole and the proper exercise by the directors of PLDT of their fiduciary duties to PLDT. For the purposes of this Clause 11, a "Hostile Transferee" shall mean any Person (other than NTT, DoCoMo, FPC or any of their respective Affiliates) determined to be so by the board of directors of PLDT and shall include, without limitation, a Person who announces an intention to acquire, seeks to acquire or acquires thirty per cent. (30%) or more of the PLDT Shares then issued and outstanding from time-to-time or having (by itself or together with itself) acquired thirty per cent. (30%) or more of such PLDT Shares announces an intention to acquire, seeks to acquire or acquires a further two per cent. (2%) of such PLDT Shares (a) at a price per share which is less than the fair market value of a PLDT Share as determined by the board of PLDT as advised by a professional financial advisor, (b) which is subject to conditions which are subjective or which could not reasonably be satisfied, (c) without making an offer for all PLDT Shares not held by it and/or its Affiliates and/or Persons who, pursuant to an agreement or understanding (whether formal or informal), actively cooperate to obtain or consolidate Control over PLDT, (d) whose offer for PLDT Shares is unlikely to succeed or (e) whose intention is otherwise not bona fide; provided that, no Person shall be a Hostile Transferee unless prior to making such determination, the board of directors of PLDT shall have used reasonable efforts to discuss with NTT and DoCoMo in good faith regarding whether such Person should be considered a Hostile Transferee. 12 Provision of PLDT's financial information 12.1 If DoCoMo and/or NTT Holding (together with DoCoMo, the "NTT Holding Group" for the purpose of this Clause 12) are required in the preparation of its statutory financial statements under and in accordance with GAAP in the United States ("U.S. GAAP") to reflect their respective interests in PLDT Shares using the equity method, PLDT shall provide DoCoMo with all financial information in relation to PLDT that is necessary to satisfy such reporting obligations, including the information below; (i) To be provided within ninety (90) calendar days following the end of each relevant quarterly fiscal period (ended on 31 March, 30 June, 30 September of every calendar year): (a) unaudited year-to-date consolidated financial statements in accordance with GAAP in the Philippines ("Philippines GAAP"); and (b) unaudited and summarized year-to-date consolidated financial statements in accordance with U.S. GAAP, which include at least PLDT's net income and shareholders' equity for the relevant fiscal period; 20 (ii) To be provided by no later than 10 April of every calendar year: (a) audited annual consolidated financial statements in accordance with Philippines GAAP in respect of the preceding calendar year; and (b) unaudited and summarized annual consolidated financial statements in accordance with U.S. GAAP, which at least include PLDT's net income and shareholders' equity in respect of the preceding calendar year; (iii) To be provided by no later than 10 September of every calendar year: (a) audited consolidated financial statements in accordance with U.S. GAAP in respect of the preceding calendar year; (b) audit report in accordance with the generally applicable auditing standards in the United States furnished and attached to Clause 12.1 (iii)(a) by PLDT's independent auditor; and (c) consent letter furnished by PLDT's independent auditor in respect of Clause 12.1(iii)(b); Once NTT Holding Group is no longer required to account for PLDT as an equity-method affiliate in its statutory financial statements under and pursuant to U.S. GAAP, PLDT shall provide year-to-date financial information specified in Clause 12.1(i) or (ii), depending on the timing of the change such NTT Holding Group's accounting treatment of PLDT, for the quarterly fiscal period immediately after the change. 12.2 DoCoMo shall ensure that all incremental costs and expenses reasonably incurred by PLDT and other members of the PLDT Group with respect to preparing and providing the U.S. GAAP-based information pursuant to Clauses 12.1(i), (ii) and/or (iii) will be reimbursed promptly and in full by the NTT Holding Group. 12.3 If NTT Holding Group is required to include separate financial statements of PLDT in its filings with the U.S. SEC pursuant to Regulation S-X, PLDT shall provide the documents specified in Clauses 12.1(iii)(a), (b) and (c) for three (3) fiscal years after the last fiscal year of the NTT Holding Group in which PLDT is significant to NTT Holding Group as determined pursuant to Regulation S-X. 12.4 DoCoMo hereby agrees and undertakes for itself and on behalf of NTT Holding that PLDT will not incur any liability whatsoever towards DoCoMo and/or NTT Holding in failing to perform any of PLDT's obligations under this Clause 12 where such failure arises from the default of any third party(ies), any event(s) beyond the control of PLDT or any event(s) not reasonably foreseeable by PLDT. 13 Termination 13.1 This Agreement shall continue in full force and effect without limit in point of time until the earliest of: 13.1.1 the termination of this Agreement pursuant to a written agreement of the Parties; 13.1.2 the adoption of an effective resolution or issuance of a binding order for the winding-up of PLDT other than to effect a scheme of merger or amalgamation; and 21 13.1.3 the termination of the Shareholders Agreement and the Strategic Agreement for whatever reason, provided that this Agreement shall cease to have effect as regards any Party who ceases to hold any PLDT Shares save for and only to the extent of provisions which are expressed to continue in force after termination. 13.2 The Parties who are parties to the Shareholders Agreement hereby agree to delete clauses 14(A) and 14(C) of the Shareholders Agreement thereof in its entirety, and the Parties agree as follows: 13.2.1 If DoCoMo and NTT and their respective Subsidiaries cease to own, in aggregate, full legal and beneficial title to PLDT Shares representing at least ten per cent. (10%) of all PLDT Shares issued and outstanding from time to time, their respective rights and obligations under this Agreement and the Shareholders Agreements shall terminate and the Strategic Arrangements (as defined in the Strategic Agreement) between NTT, DoCoMo and PLDT shall terminate pursuant to Section 12.2 thereof, provided that in the event that aggregate ownership of PLDT Shares of DoCoMo and NTT and their respective Subsidiaries is reduced below such ten per cent. (10%) threshold as a result of PLDT Shares which were not Outstanding (as defined in the Shareholders Agreement) (as defined in the Shareholders Agreement) becoming Outstanding, no rights and obligations under this Agreement and the Existing Agreements shall terminate unless, on the sixtieth (60th) calendar day following written notice by PLDT to both NTT and DoCoMo notifying that NTT and DoCoMo and their respective Subsidiaries have ceased to own, in aggregate, PLDT Shares representing at least ten per cent. (10%) of PLDT Shares issued and outstanding from time to time, NTT and DoCoMo and their respective Subsidiaries do not own, in aggregate, PLDT Shares amounting such ten per cent. (10%). 13.2.2 If the FPC Parties and their respective Subsidiaries cease to have, directly or indirectly, effective voting power in respect of PLDT Shares representing at least eighteen and a half per cent. (18.5%) of all PLDT Shares issued and outstanding from time to time, their respective rights and obligations under this Agreement and the Existing Agreements shall terminate, provided that in the event that effective voting power in respect of PLDT Shares of the FPC Parties and their respective Subsidiaries is reduced below such eighteen and a half per cent. (18.5%) threshold as a result of PLDT Shares which were not Outstanding (as defined in the Shareholders Agreement) becoming Outstanding, no rights and obligations under this Agreement and the Existing Agreements shall terminate unless, on the sixtieth (60th) calendar day following written notice by PLDT to the FPC Parties notifying that the FPC Parties and their respective Subsidiaries have ceased to have, directly or indirectly, effective voting power in respect of PLDT Shares representing at least eighteen and a half per cent. (18.5%) of all PLDT Shares issued and outstanding from time to time, the FPC Parties and their respective Subsidiaries do not have, directly or indirectly, effective voting power in respect of such eighteen and a half per cent. (18.5%). 13.3 Termination of this Agreement in relation to any Party shall be without prejudice to any right, benefit, liability or obligation which has accrued to such Party in respect of any matter, undertaking or condition under this Agreement and which has not been observed, performed or discharged in full by the Party prior to such termination. 22 14 General 14.1 Conflict with the Existing Agreements To the extent of any inconsistency between the provisions of this Agreement and the provisions of the Existing Agreements, the provisions of this Agreement shall prevail and accordingly the Parties shall exercise all their voting and other rights and powers in respect of PLDT so as to give effect to the provisions of this Agreement. 14.2 No partnership Nothing in this Agreement shall be deemed to constitute a partnership among the Parties nor constitute any Party the agent of any other Party for any purpose. Notwithstanding anything provision to the contrary in this Agreement, the obligations and liability of NTT and DoCoMo under this Agreement shall be several (but not joint and several or solidary), and the obligations and liability of PLDT and the FPC Parties under this Agreement shall be several (but not joint and several or solidary). 14.3 No Waiver No delay or omission by any Party to exercise any right or power under this Agreement or pursuant to applicable law shall impair such right or power to be construed as a waiver thereof. A waiver by any Party of any covenant or breach shall not be construed to be a waiver of any other covenant or succeeding breach. 14.4 Entire Agreement This Agreement contains the entire agreement among the Parties with respect to the subject matters hereof and supersedes all prior agreements and undertakings among the Parties relating to the subject matters hereof. 14.5 Variation No variation of this Agreement shall be effective unless in writing and signed by or on behalf of each of the Parties. 14.6 Assignment The Parties shall not assign or transfer all or any part of their rights or obligations under this Agreement nor any benefit arising under or out of this Agreement without the prior written consent of the other Parties (such consent not to be unreasonably withheld). 14.7 Further assurance At any time after this Agreement becomes effective, the Parties shall, and shall use all reasonable endeavours to procure that any necessary third Party shall, at the cost of the relevant Party execute such documents and do such acts and things as that Party may reasonably require for the purpose of giving to that Party the full benefit of all the provisions of this Agreement. 14.8 Invalidity If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, under any enactment or rule of law, such provision or part shall to that extent be deemed not to form part of this Agreement but the legality, validity and enforceability of the remainder of this Agreement shall not be affected. 23 14.9 Counterparts This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any Party may enter into this Agreement by signing any such counterpart. 14.10 Notices 14.10.1 Any notice or other communication in connection with this Agreement shall be in writing in English (a "Notice") and shall be sufficiently given or served if delivered or sent: In the case of PLDT, to: Address: Ramon Cojuangco Building Makati Avenue Makati City Metro Manila Philippines Fax: +632 888-0686 Attention: The Corporate Secretary in the case of FPC, to: Address: 24th Floor, Two Exchange Square, 8 Connaught Place Central Hong Kong Fax: +852 2810-4313 Attention: The Company Secretary in the case of Metro, to: Address: 10th Floor, MGO Building, Legazpi Corner Dela Rosa Street Legazpi Village Makati City Metro Manila Philippines Fax: +632 888 1011 or +632 888 1012 Attention: Att. Antonio A. Picazo The Corporate Secretary with a copy to FPC Address: 24th Floor, Two Exchange Square, 8 Connaught Place Central 24 Hong Kong Fax: +852 2810-4313 Attention: The Company Secretary in the case of MALH, to: Address: 10th Floor, MGO Building, Legazpi Corner Dela Rosa Street Legazpi Village Makati City Metro Manila Philippines Fax: +632 888 1011 or +632 888 1012 Attention: Att. Antonio A. Picazo The Corporate Secretary with a copy to FPC Address: 24th Floor, Two Exchange Square, 8 Connaught Place Central Hong Kong Fax: +852 2810-4313 Attention: The Company Secretary in the case of MPRI, to: Address: 18th Floor, Liberty Centre 104 H.V. de la Costa Street Salcedo Village Makati City Metro Manila Philippines Fax: +632 888 1011 or +632 888 1012 Attention: Att. Antonio A. Picazo The Corporate Secretary with a copy to FPC Address: 24th Floor, Two Exchange Square, 8 Connaught Place Central Hong Kong Fax: +852 2810-4313 25 Attention: The Company Secretary in the case of LBV, to: Address: Rokin 55 1012 KK Amsterdam the Netherlands Fax: +31 20 521 47 03 or 52 14 779 Attention: MeesPierson Intertrust B.V. for the attention of Mr. Gerard Jan van Spall/Mr. David Jaarsma with a copy to FPC Address: 24th Floor, Two Exchange Square, 8 Connaught Place Central Hong Kong Fax: +852 2810-4313 Attention: The Company Secretary in the case of MPAH, to: Address: 18th Floor, Liberty Centre 104 H.V. de la Costa Street Salcedo Village Makati City Metro Manila Philippines Fax: +632 888 1011 or +632 888 1012 Attention: Att. Antonio A. Picazo The Corporate Secretary with a copy to FPC Address: 24th Floor, Two Exchange Square, 8 Connaught Place Central Hong Kong Fax: +852 2810-4313 Attention: The Company Secretary in the case of NTT, to: Address: 1-6 Uchisaiwai-cho, 1-Chome Chiyoda-ku, Tokyo 100-8019, Japan 26 Fax: +813-3539-3079 Attention: General Manager, Legal Department with a copy to Skadden, Arps, Meagher & Flom LLP Address: 1-6-1 Roppongi, Minato-ku, Tokyo 106-6021, Japan Fax: +813-3568-2626 Attention: Managing Partner in the case of DoCoMo, to: Address: 41st floor, 11-1 Nagata-cho 2-Chome, Chiyoda-Ku, Tokyo 100-6150 Japan Fax: +81-3-5156-0204 Attention: Managing Director, Global Business Department or to such other address or fax number as the relevant Party may have notified to the other Parties in accordance with this Clause. 14.10.2 Any Notice may be delivered by hand or sent by fax or prepaid post (airmail in the case of international service). Without prejudice to the foregoing, any Notice shall conclusively be deemed to have been received on the next Business Day in the place to which it is sent (if sent by fax) or seventy-two (72) hours from the time of posting (if sent by post) or at the time of delivery (if delivered by hand). 14.11 Governing law This Agreement shall be governed by and construed in accordance with the laws of the Philippines. 14.12 Dispute resolution 14.12.1 Any dispute, controversy, claim or difference arising out of or in connection with this Agreement including any dispute regarding the breach, termination or validity hereof ("Dispute") shall, upon written request ("Request") of any Party, be referred to senior representatives of the relevant Parties for resolution through mutual consultation. The senior representatives shall meet as soon as practicable and attempt in good faith to resolve the Dispute. 14.12.2 Any Dispute that is not resolved within thirty (30) calendar days after receipt by a Party of a Request shall be referred to and finally settled by arbitration in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (the "UNCITRAL Arbitration Rules") as then in force, with such modifications as provided for herein; provided that, the foregoing shall not prevent any of the Parties hereto from seeking injunctive or similar preliminary or provisional relief from a court of competent jurisdiction in accordance with the applicable law. The arbitration shall have its seat in Singapore, where, unless otherwise directed by the arbitration tribunal, all hearings in the arbitration shall 27 take place. The arbitration proceedings shall be conducted in the English language. 14.12.3 The arbitration tribunal shall be composed of three arbitrators. The Party or Parties initiating arbitration (the "Claimant") shall (if more than one, jointly) appoint one (1) arbitrator in its or their notice of arbitration. The Party or Parties responding to the notice of arbitration (the "Respondent") shall (if more than one, jointly) appoint one (1) arbitrator within thirty (30) calendar days from receipt of the notice of arbitration. The two Party-appointed arbitrators shall, within thirty (30) calendar days from the appointment of the second arbitrator, appoint the third arbitrator who shall be the chairman of the arbitration tribunal. The third arbitrator shall not have the same citizenship or nationality as any of the Parties. In the event that the Parties constituting the Claimant and/or the Respondent (as the case may be) are unable to agree on their respective arbitrators, then all of the arbitrators shall be appointed by the International Court of Arbitration of the International Chamber of Commerce. In the event of any default in the appointment of the third arbitrator by the two Party-appointed arbitrators within the time limit specified herein the third arbitrator shall be appointed by the Secretary-General of the International Court of Arbitration of the International Chamber of Commerce. Every arbitrator must be and must remain, at all times, independent of the Parties involved in the arbitration. 14.12.4 The arbitration hearing shall commence as soon as is reasonably practicable and in any event not later than ninety (90) calendar days following the appointment of the last of the three (3) arbitrators and the award shall be rendered as soon as is reasonably practicable and in any event no later than thirty (30) calendar days following the closing of the arbitration proceedings. Notwithstanding Clause 14.11, any arbitration proceedings commenced under this Clause 14.12 shall be governed by the laws of Singapore. The arbitration tribunal shall have the power to extend any time period contained herein. 14.12.5 All direct costs of the arbitration proceedings, including fees and expenses of the arbitrators and the costs of translation for the hearing, shall be born equally by the Parties to the arbitration; other costs, including counsel and witness fees, shall be borne by the Party incurring such costs. The arbitration tribunal shall not be empowered to award punitive, multiple or exemplary or any other form of damages non-compensatory, and the Parties hereby waive any right to such damages. The arbitration tribunal shall have the authority to award any remedy or relief proposed by the Claimant or the Respondent in accordance with the provisions of this Agreement including, without limitation, a declaratory judgment or specific performance of any obligation created under this Agreement or an injunction. An award by the arbitrators shall be final and binding upon the Parties to the arbitration, and, to the fullest extent permitted under applicable laws, shall not be subject to appeal and the Parties hereby waive any right to appeal. The award may be entered as a judgment and enforced in any court of competent jurisdiction. Except to the extent 28 required by law or a court or administrative order or award, or for the enforcement of any arbitral award rendered hereunder, no party, arbitrator, representative, counsel, witness or other Person involved in the arbitration proceedings may disclose or confirm to any other Person any information about the arbitration proceedings, including the names of the parties and the arbitrators, the nature and amount of the claims, the financial conditions of any Party, documents prepared for the arbitration, testimony given at the hearing, the expected date of the hearing or the award made. 14.12.6 By agreeing to arbitration, the Parties do not intend to deprive any court of competent jurisdiction of the authority to issue a pre-arbitral injunction, pre-arbitral attachment or other order in aid of arbitration proceedings and the enforcement of any award. 14.12.7 Without prejudice to any provisional remedies in aid of arbitration as may be available under a court with competent jurisdiction, the arbitration tribunal shall have full authority to grant provisional remedies or to order any Party to request that a court modifies or vacates any preliminary or provisional relief previously issued by a court and to award damages for the failure of any Party to respect the arbitration tribunal's orders to that effect. 14.12.8 If at any time two or more arbitrations are commenced and are pending in relation to Disputes which arise out of or in connection with this Agreement and/or any of the Existing Agreements and it appears to the arbitral tribunal constituted in the arbitration that was initiated first in time (the "First Arbitration") that there are issues of fact or law common to the arbitrations and that it is expedient for the Disputes to be resolved in the same proceedings, and that no Party would be prejudiced materially (through undue delay or otherwise) as a result of the arbitrations being consolidated, then, upon the written request of any Party to any such arbitration, that arbitral tribunal (the "Consolidating Arbitral Tribunal") may, by procedural order, direct that the arbitration(s) to resolve any of the other Disputes shall be consolidated with the First Arbitration. If the Consolidating Arbitral Tribunal so orders, the Parties to each Dispute which is a subject of the Consolidating Arbitral Tribunal's order shall be treated as having consented to the Dispute being finally decided: (i) by the Consolidating Arbitral Tribunal; (ii) in accordance with the procedure, at the seat and in the language by which the First Arbitration is being conducted, save as otherwise agreed by all Parties to the consolidated proceedings or, in the absence of such agreement, as ordered by the Consolidating Arbitral Tribunal; and (iii) the parties agree to dismiss any arbitration, solely to the extent that the subject of such arbitration has been consolidated into, and survives as a part of, the First Arbitration. 14.12.9 This Clause 14.12 shall survive termination or expiry of this Agreement. 29 In witness whereof this Agreement has been duly executed. SIGNED by on behalf of PHILIPPINE LONG DISTANCE TELEPHONE COMPANY /s/ N. L. Nazareno in the presence of: SIGNED by on behalf of FIRST PACIFIC COMPANY LIMITED /s/ M. V. Pangilinan in the presence of: SIGNED by on behalf of METRO PACIFIC CORPORATION /s/ M. V. Pangilinan in the presence of: SIGNED by on behalf of METRO ASIA LINK HOLDINGS, INC. /s/ M. V. Pangilinan in the presence of: SIGNED by on behalf of METRO PACIFIC RESOURCES, INC. /s/ M. V. Pangilinan in the presence of: 30 SIGNED by on behalf of LAROUGE B.V. /s/ M. V. Pangilinan in the presence of: SIGNED by on behalf of METRO PACIFIC ASSETS HOLDINGS, INC. /s/ M. V. Pangilinan in the presence of: SIGNED by on behalf of NTT COMMUNICATIONS CORPORATION /s/ Hiromi Wasai in the presence of: SIGNED by on behalf of NTT DOCOMO, INC /s/ Masao Nakamura in the presence of: 31 Schedule 1 W-CDMA in-principle agreed terms 1.1 SMART shall, and PLDT shall ensure that SMART shall, roll out a nationwide W-CDMA service in the Philippines, subject to SMART successfully having obtained all necessary governmental licenses, permits and consents to adopt the W-CDMA for its third generation mobile communication services. 1.2 SMART shall, and PLDT shall ensure that SMART shall, use its best endeavours to maintain and roll out the W-CDMA frequencies in the following ranges throughout the Philippines: 1920 - 1980 MHz Uplink 2110 - 2170 MHz Downlink 1.3 SMART shall, and PLDT shall ensure that SMART shall, roll out the W-CDMA coverage in the Philippines in accordance to the following schedule, as far as practicable and having regard to market forces:
Metro Next 10 Largest Coverage of Manila Metropolitan Areas Population (%) ----------------------------------------------------------------------------------------------------- (i) within 9 months after the date |X| |X| - of the Approval ----------------------------------------------------------------------------------------------------- (ii) within 18 months after the date - |X| 40% of the Approval ----------------------------------------------------------------------------------------------------- (iii) within 24 months after the date - - 60% of the Approval ----------------------------------------------------------------------------------------------------- (iv) within 36 months after the date - - 80% of the Approval -----------------------------------------------------------------------------------------------------
1.4 The term "Next 10 Largest Metropolitan Areas" means Metro Cebu, Davao City, Zamboanga, Antipolo, General Santos, Cagayan De Oro, Bacolod, Iloilo, Baguio, Tarlac, Angeles, Iligan, and the term "Coverage of Population" means the proportion of the Philippines population from time to time which based on their normal place of residency, are potentially able to obtain connectivity to SMART's W-CDMA. 1.5 SMART shall, and PLDT shall ensure that SMART shall, procure handset terminals incorporating chipsets which enable such handsets to interconnect with DoCoMo's W-CDMA. 1.6 SMART shall, and PLDT shall ensure that SMART shall, periodically report to its management committee the status of its roll out of the W-CDMA, including, but not limited to, coverage, network capacity, traffic, service quality (quality status against target Key Performance Indicator), record of major fault, number of subscribers and sales forecasts. 1.7 SMART shall, and PLDT shall ensure that SMART shall, consult with DoCoMo concerning its overall roll out of the W-CDMA. 32 1.8 DoCoMo shall cooperate with the PLDT Group in the field of the collaboration through dispatch of the Advisors to be entered into between DoCoMo and the PLDT Group. 33 Schedule 2 Amended section 11.4 of the Strategic Agreement Section 11.4 i) In case PLDT intends to enter into any contractual arrangement with any Person relating to the operation of a Competing Business in Japan involving joint branding, the provision, production or marketing of telecommunications or multimedia products or services, or cooperation in, or sharing of, research and development of technology or other Intellectual Property, PLDT will: a) from the date of this Agreement until 30 June 2006, first provide NTT and if NTT declines, then provide DoCoMo, with the same opportunity to enter into such agreement with PLDT upon the same terms being considered by PLDT; and b) from 1 July 2006, first provide DoCoMo and if DoCoMo declines, then provide NTT, with the same opportunity to enter into such agreement with PLDT upon the same terms being considered by PLDT, provided always that PLDT will not be under any obligation to contract with NTT and/or DoCoMo with respect to any such Competing Business in Japan if, in the reasonable opinion of PLDT disclosed to NTT and/or DoCoMo (as the case may be) in reasonable detail, it will not fully realise its expected benefits under such arrangement by contracting with NTT or DoCoMo or it is necessary for PLDT to maintain a relationship with a Person other than NTT or DoCoMo pursuant to reasonable business arrangements in furtherance of PLDT's strategic objectives from time to time. ii) In case PLDT, SMART or SMART's Subsidiaries intends to enter into any contractual arrangement on or after 1 July 2006 with any Person who is engaged in a Competing Business in competition with DoCoMo (as assessed having regard to DoCoMo's then existing business) and who has been notified as such to PLDT in writing by DoCoMo (whether through the COA replaced by DoCoMo pursuant to Clause 4.3 or another duly authorised representative) (collectively, the "DoCoMo Competing Person"), in relation to the operation of a Competing Business in the Philippines, and involving joint branding, the provision, production or marketing of telecommunications or multimedia products or services, or cooperation in, or sharing of, research and development of technology or other Intellectual Property, PLDT will, or PLDT shall use its reasonable efforts to procure that SMART or its Subsidiaries will, first provide DoCoMo with the same opportunity to enter into such agreement with PLDT, SMART or SMART's Subsidiaries, as the case may be, upon the same terms being considered by PLDT, SMART or SMART's Subsidiaries. as the case may be; provided that PLDT will not be under any obligation to contract, or to cause SMART or SMART's Subsidiaries to contract, with DoCoMo with respect to any such Competing Business in the Philippines if, in the reasonable opinion of PLDT disclosed to NTT and/or DoCoMo (as the case may be) in reasonable detail, (i) it will not fully realise its expected benefits under such arrangement by contracting with DoCoMo or (ii) it is necessary for PLDT to maintain a relationship with a Person other than NTT or DoCoMo pursuant to reasonable business arrangements in furtherance of PLDT's strategic objectives from time to time or (iii) the board of PLDT, SMART or SMART's Subsidiaries, as the case may be, determines that to be in the best interests of its company to enter into such arrangements with a Person other than DoCoMo. 34 iii) Each of DoCoMo and PLDT agrees that it will, from time to time, discuss with the other strategic developments in their respective businesses, with a view to identifying opportunities for mutually beneficial future arrangements between DoCoMo, the PLDT Group and each of their respective Affiliates. 35 Schedule 3 The Existing Encumbrances Exchangeable Notes into PLDT Shares On 12 January 2005, First Pacific Finance Limited ("FPFL"), a wholly-owned subsidiary of FPC, entered into a subscription agreement with UBS AG, whereby UBS AG agreed to subscribe for U.S. $199,000,000 zero coupon guaranteed exchangeable notes due 2010, exchangeable into PLDT Shares (the "Exchangeable Notes"). The Exchangeable Notes are unconditionally and irrevocably guaranteed by FPC, and were issued at the issue price of 100 per cent. (100%) of the aggregate principal amount thereof, and in the denomination of US$10,000 each. The holder of each Exchangeable Note has the right to exchange such Exchangeable Note at any time during the exchange period for a pro rata share of the exchange property, initially comprising 340.9091 PLDT Shares (subject to adjustment) for each US$10,000 principal amount of Exchangeable Note (the "Exchange Property"). Assuming full exchange of the Exchangeable Notes at the initial value, the Exchangeable Notes will be exchanged into 6,784,091 PLDT Shares (subject to adjustment), representing approximately 4.0 per cent. (4%) of outstanding PLDT Shares as at 12 January 2005. NTT was notified of the proposed issue of Exchangeable Notes, and NTT issued a letter to FPC in response dated 6 December 2004 which, among other things, unconditionally and irrevocably waived any rights of NTT (including prohibitions on transfers and rights of first refusal) under the Shareholders Agreement relating to the issue of the Exchangeable Bonds and the transfer of PLDT Shares on exercise of exchange rights thereunder. The initial Exchange Property, being the underlying PLDT Shares, was deposited by LBV in a custody account maintained with The Hongkong and Shanghai Banking Corporation Limited as custodian. The Exchange Property is not subject to any direct security interest in favour of the holders of the Exchangeable Notes. LBV and UBS Limited have entered into an International Securities Lenders Association Global Master Lending Agreement dated 14 January 2005, and an International Securities Lenders Association Global Master Lending Agreement dated 18 January 2005 (each, a "Securities Lending Agreement" and together the "Securities Lending Agreements") in order to facilitate stock lending arrangements with respect to the PLDT Shares forming the initial Exchange Property. On 21 January 2005, 700,000 PLDT Shares were lent pursuant to the Securities Lending Agreement dated 18 January 2005, of which 417,000 PLDT Shares are outstanding as of 12 January 2006 and more PLDT Shares may be lent under the Securities Lending Agreements from time to time. On 14 July 2005, PLDT distributed dividends on the PLDT Shares held as Exchange Property of US $2,538,594.28. On 28 December 2005, PLDT distributed dividends on the PLDT Shares held as Exchange Property of US$2,681,963.69. Total dividends to date with respect to the PLDT Shares held as Exchange Property relating to the accounting year ended 31 December 2005 were US$5,220,557.97 which resulted in a capital distribution (as defined in the trust deed regulating the Exchangeable Notes) equivalent to US$1,265,911.77. In accordance with the terms and conditions of the Exchangeable Notes, this amount has been applied by LBV to purchase 36,671 additional PLDT Shares, on The Philippine Stock Exchange Inc., between 29 December 2005 to 3 January 2006, which have been added to the Exchange Property. Future dividends payments by PLDT may also give rise to additional PLDT Shares being acquired and added as Exchange Property under the terms and conditions of the Exchangeable Notes. 36 As of 4 January 2006, the holder of each Exchangeable Note had a right to exchange such Exchangeable Note at any time during the exchange period for a pro rata share of the Exchange Property, comprising 342.7519 PLDT Shares (subject to adjustment) for each US$10,000 principal amount of Exchangeable Notes. Assuming full exchange of the Exchangeable Notes at the revised amount of the Exchange Property, the Exchangeable Notes would be exchangeable into 6,820,762 PLDT Shares (subject to adjustment), representing approximately 3.8 per cent. of outstanding PLDT Shares as at 4 January 2006. Further details of the Exchangeable Notes are publicly available, including a detailed Schedule 13 D/A which was filed in the United States of America pursuant to the Securities Exchange Act (USA) on or about 18 January 2005. 37 -----END PRIVACY-ENHANCED MESSAGE-----