Subject: [NEXTEL-1] Ampal Comm. Filed a Lawsuit Against Motorola Israel

From: [email-masked]
Date: Tue, 11 May 2004 13:51:18 -0400

Ampal Comm. Filed a Lawsuit Against Motorola Israel and Mr. 
Elisha Yanay Claiming Deprivation of Minority Interests, and the 
Conduct of Unlawful Transactions with Interested Parties 

Legal Writers / Business Editors TEL AVIV, Israel--(BUSINESS WIRE)--
May 10, 2004 Among Other Claims, the Minority Shareholders Are 
Demanding That Motorola Acquire Their Shares Based on a Valuation of 
$766 Million For MIRS 

The group of minority shareholders at MIRS Communications Ltd. 
("MIRS"), incorporated under Ampal Communications Limited 
Partnership ("Ampal Communications"), which holds - together - one 
third of the MIRS shares, filed today a lawsuit with the Tel Aviv 
District Court, against Motorola Israel Ltd. ("Motorola"), Mr. 
Elisha Yanay a senior Vice President at Motorola Inc. and Motorola's 
manager and Chairman of the Board, Mr. Peter Brome, senior executive 
at Motorola Inc., who serves as a Director at MIRS on behalf of 
Motorola, as well as additional parties, claiming financial damages 
incurred as a result of the deprivation of the minority 
shareholders, irregularities in the management of MIRS, breach of 
agreements and the conduct of unlawful transactions with interested 
parties. 

Ampal Communications consists of the following partners: Ampal 
Communication Holdings Company Ltd. - a subsidiary of Ampal American 
Israel Corp. (Nasdaq:AMPL) (75%), The Israel Mezzanine Fund LP - of 
the FIMI Funds Group (7.45%), Marinara Ltd. - owned by the Steinmetz 
Family (9%), Hapoalim Properties (Shares) Ltd. - of the Bank 
Hapoalim Group (7.45%) and Bradilor Ltd. (1%). 

MIRS is controlled (67%) by Motorola, a wholly-owned subsidiary 
(100%) of Motorola Inc. (NYSE:MOT). 

Ampal Communications invested in MIRS - a provider of cellular 
telecom services based on iDEN technology - in 1998, by acquiring 
one third of the company shares from Motorola, in return for $110 
million. The acquisition of MIRS shares by Ampal Communications was 
conducted as part of a spin-off of the MIRS Division from Motorola 
and its transformation into an independent company. The company 
shares held by Ampal Communications are cumulative and participating 
preferred shares, that offer - inter alia - the right to receive 
guaranteed dividends, in addition to liquidation preference 
mechanisms. 

According to the statement of claim, MIRS was intended to be an 
independent company, while being separated from the other activities 
of Motorola. This intention was reflected in numerous provisions in 
the acquisition and shareholders agreements. In actual fact, 
Motorola exploited its hold over the company, in order to prevent 
MIRS from gaining independence and detaching itself from Motorola. 
It consistently and blatantly breached the series of agreements it 
possesses with Ampal Communications, thereby leading to the collapse 
of Ampal Communications' defense provisions, as a minority 
shareholder in MIRS. 

The statement of claim also alleges that MIRS entered into 
transactions with interested parties and transactions requiring 
special authorization, without such authorization having been 
obtained, and on occasion also in contradiction to the acquisition 
and shareholders agreements and against the law. These transactions, 
made on the basis of unreasonably-elevated costs, were intended to 
exploit the resources of MIRS to the benefit of Motorola, while 
ignoring the repeated demands of Ampal Communications and its 
representatives on the MIRS' board of directors, and while depriving 
the minority interests of Ampal Communications in MIRS. In this 
manner, Motorola forced MIRS to acquire administrative services from 
Motorola, beyond the period of the establishment of the company, 
such as: Information technology infrastructure; finance services and 
procurement services; maintenance and installation services to MIRS' 
handsets and others. 

Moreover, the statement of claim alleges that Motorola breached the 
acquisition agreements, related to the maximum prices of 
communications infrastructure equipment and handsets that are sold 
to MIRS by Motorola and its affiliates. According to the acquisition 
agreements, MIRS was intended to enjoy the commercial conditions 
that exist between Motorola Inc. and Nextel (Nasdaq:NXTL), the 
largest US supplier of cellular telecom services using iDEN 
technology, to the effect that the equipment prices paid by MIRS 
would not exceed a maximum determined as "the price to Nextel + 
10%". In actual fact, the prices that MIRS was charged in certain 
cases, were higher than this maximum price. 

Motorola is also being sued for allegedly denying access to MIRS' 
documents and books, that were held and managed by Motorola, in 
contradiction to the acquisition and shareholders agreements, as 
well as for its alleged breach of its undertaking to distribute the 
promised annual dividends of $7.1 million to Ampal Communications, 
no later than March 31st 2004, as well as other matters. The 
promised annual dividend distribution is an undertaking by Motorola, 
to pay Ampal the said sum, in the event that such dividend is not 
distributed to Ampal Communications by MIRS. 

Moreover, in contradiction to the acquisition and shareholders 
agreements and to Motorola's undertaking, Motorola rendered the 
distribution of the annual dividend contingent upon Ampal 
Communications' signing of the MIRS financial statements for 2002 
and 2003. 

The Ampal Communications lawsuit is also being filed against 
executives and directors at MIRS, including Mr. Elisha Yanay, who 
serves as Chairman of the Board of Directors and CEO of Motorola 
Israel, while also serving as VP of Motorola Inc., Director at MIRS 
on behalf of Motorola and Chairman of the Board of Directors at 
MIRS; against Mr. Peter Brome, senior executive at Motorola Inc., 
who serves as a Director at MIRS on behalf of Motorola; against Mr. 
Rami Guzman, CFO at Motorola and Director at MIRS on behalf of 
Motorola; against Mr. Nathan Gidron, who serves as Manager of 
Service Stations at Motorola and as a Director at MIRS on behalf of 
Motorola; and against Mr. Shimon Tal, CEO of MIRS. 

On the declarative level, Ampal Communications is asking the Court 
to declare that the affairs of MIRS are being conducted in a manner 
that is discriminating against the group of minority shareholders in 
the company, to declare that Yanay and/or Brome and/or Guzman and/or 
Gidron and/or Tal, by virtue of their positions as executives at 
MIRS, are in breach of their duties toward the group of minority 
shareholders, and to declare that the acquisition and shareholders 
agreements are null and void. On the business level, the group of 
minority shareholders are asking the Court to instruct MIRS and/or 
Motorola and/or Yanay and/or Brome and/or Guzman and/or Gidron 
and/or Tal to acquire the Company shares held by Ampal 
Communications, according to one of three alternatives outlined in 
the statement of claim. 

About Ampal Communications 

Ampal Communications Limited Partnership was established in 1998 to 
incorporate several partners for the purpose of acquiring a one 
third interest in MIRS from Motorola. 

About Nextel 

Nextel Communications (Nasdaq:NXTL), a FORTUNE 200 company based in 
Reston, Va., is a leading provider of fully integrated wireless 
communications services and has built the largest guaranteed all-
digital wireless network in the country covering thousands of 
communities across the United States. Today 95 percent of FORTUNE 500
(R) companies are Nextel customers. Nextel and Nextel Partners, Inc. 
currently serve 294 of the top 300 U.S. markets where approximately 
251 million people live or work. 

About Motorola 

Motorola, Inc. (NYSE:MOT) is a global leader in wireless, broadband 
and automotive communications technologies that help make life 
smarter, safer, simpler, synchronized and fun. Sales in 2003 were 
US$27.1 billion. Motorola creates innovative technological solutions 
that benefit people at home, at work and on the move. The company 
also is a progressive corporate citizen dedicated to operating 
ethically, protecting the environment and supporting the communities 
in which it does business. For more information: www.motorola.com. 

CONTACT: Investor & Public Relations: Kwan Communications Zvi Rabin, 
+972-50-600140 [email-masked] or Gil-Ad Friedhaber, +972-55-754855 
[email-masked] 

Last Updated: May 10, 2004 11:15 EDT 

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