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EXHIBIT 99.1
Dated 7 October 1999
(1) FLAG ATLANTIC HOLDINGS LIMITED
(2) GTS TRANSATLANTIC HOLDINGS, LTD.
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FURTHER RESTATED SHAREHOLDERS AGREEMENT
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION............................................1
2. PURPOSE.................................................................5
3. INCORPORATION, CAPITALIZATION AND COMPLETION............................5
4. GOVERNANCE.............................................................10
5. TRANSFER OF SHARES.....................................................14
6. CONSTRUCTION OF THE SYSTEM.............................................17
7. CAPACITY PURCHASE......................................................18
8. SYSTEM MARKETING.......................................................21
9. DIVIDEND AND INVESTMENT POLICIES.......................................22
10. AUDITORS AND ACCOUNTS..................................................23
11. DEADLOCK...............................................................24
12. BUSINESS PLAN..........................................................26
13. BUSINESS PRACTICES.....................................................27
14. TERM AND TERMINATION...................................................28
15. CONFIDENTIALITY........................................................31
16. PROPRIETARY RIGHTS.....................................................32
17. MUTUAL CO-OPERATION....................................................33
18. RESTRICTIONS ON ANNOUNCEMENTS..........................................34
19. NO PARTNERSHIP.........................................................34
20. REMEDIES...............................................................34
21. REPRESENTATIONS AND WARRANTIES.........................................35
22. ASSIGNMENT.............................................................35
23. ENTIRE AGREEMENT.......................................................36
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24. VARIATION..............................................................36
25. NOTICES................................................................36
26. WAIVER.................................................................38
27. GOVERNING LAW AND DISPUTE RESOLUTION...................................38
28. SEVERABILITY...........................................................39
29. SURVIVAL...............................................................39
ANNEXES
Annex 1 - Description of System
Annex 2 - Terms For Customer Marketing Agreement
Annex 3 - Form of Capacity Right of Use Agreement
Annex 4 - Technical Specifications for Subsea Element
Annex 5 - Technical Specifications for Backhaul Elements
Annex 6 - Key Commercial Terms
Annex 7 - Code of Business Conduct
Annex 8 - Arbitration Agreement
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RESTATED SHAREHOLDERS AGREEMENT
THIS AGREEMENT is made the 7th day of October 1999, by and between FLAG Atlantic
Holdings Limited, a company incorporated in Bermuda ("FLAG") and GTS
TransAtlantic Holdings, Ltd., a company incorporated in Bermuda ("GTS" and
together with FLAG the "Shareholders").
WITNESSETH:
WHEREAS, the Shareholders wish to participate in the construction, ownership and
commercial exploitation of a transatlantic cable system as described in Annex 1
hereto (as it may be amended from time to time) (the "System") and for such
purpose have established a joint venture company in Bermuda with the name of
FLAG Atlantic Limited (the "Company"); and
WHEREAS, the Shareholders executed a Shareholders Agreement dated 12 January
1999 which sets forth the terms on which the Company will be capitalized and
managed and defines the Shareholders respective rights and obligations as
shareholders of the Company, which Shareholders Agreement was restated in its
entirety on 8 July 1999; and
WHEREAS, the Shareholders wish to further restate and amend such Shareholders
Agreement in its entirety.
NOW, THEREFORE, in consideration of the premises the Shareholders hereby agree
as follows:
DEFINITIONS AND CONSTRUCTION
1.1 For purposes of this Agreement, the following terms shall have the
following meanings and terms defined elsewhere in this Agreement shall
have the meanings ascribed thereto:
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"Affiliate" shall mean, with respect to any entity, any company or other
entity controlling, controlled by or under common control with such first
entity. For purposes of this Agreement, "control" means the possession
directly or indirectly through Beneficial Ownership or otherwise of the
power to direct or cause the direction of the management or policies of a
company or other entity, whether through the ownership of voting
securities, by contract or otherwise and cognate terms shall have a
corresponding meaning. For purposes of this Agreement (other than Clause
5.2), each shareholder of GTS and all Affiliates of such shareholder
shall be deemed to be Affiliates of GTS.
"Agreement" shall mean this Agreement and the Annexes hereto.
"Ancillary Agreements" shall mean the Supply Contract, the Capacity
Agreements between the Company and any Shareholder or any Affiliate of a
Shareholder, and the agreements referred to in Clauses 3.3 (a)-(e) and
3.4.2.
"Beneficial Owner" shall mean with respect to any security any person
who, directly or indirectly, through any contract, or other legally
enforceable and irrevocable arrangement, understanding or relationship
(including, without limitation, by virtue of the control of any other
person) has or shares: (a) voting power which includes the power to vote,
or direct the voting of, such security: and/or (b) investment power which
includes the power to dispose, or to direct the disposition of, such
security. A person shall be deemed to be the Beneficial Owner of a
security if that person has the right to acquire beneficial ownership of
such security, as defined above, within 60 days of the date Beneficial
Ownership is determined, including but not limited to any right to
acquire (i) through the exercise of any option, warrant or right; (ii)
through the conversion of a security; or (iii) pursuant to the power to
revoke a trust, discretionary account, or similar arrangement; and
"Beneficial Ownership" has a similar meaning.
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"Board" shall mean the Board of Directors of the Company constituted in
accordance with the provisions of this Agreement.
"Capacity Agreements" shall mean the agreements entered into pursuant to
Clause 7.1 and the other agreements pursuant to which the Products (as
such term is defined in clause 8.2) of the Company are sold, such other
agreements being substantially in the form of Annex 3 as from time to
time amended or as otherwise approved by the Board.
"Construction Management Agreements" shall mean the contracts with FLAG,
GTS or any of their Affiliates referred to in Clause 3.3(a).
"Date of Financial Closure" shall mean the date on which the conditions
precedent specified in Clause 3.6 have been met and the Project Finance
is in place.
"Deadlock" shall mean any situation which has persisted for not less than
60 days in which
(i) by virtue of a substantial disagreement between the Shareholders,
whether at Board or Shareholder level or both, and which is
manifested by an equality of votes at any meeting of the Board or,
as the case may be, the Shareholders; or
(ii) by virtue of an inability to form a quorum at any meeting or
adjourned meeting of the Board or Shareholders a matter which is
reserved to the Board or the Shareholders in accordance with Clause
4.9 or 4.10 cannot be resolved.
"Expert" shall mean an independent consulting firm or individual chosen
in accordance with Clause 11.4.
"European Backhaul Element" shall be as described in Annex 5.
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"Facilities Management Agreement" shall mean the contract with FLAG, GTS
or any of their Affiliates referred to in Clause 3.3(d).
"Landing Station" shall mean a facility forming part of the Subsea
Element at and through which the subsea cable interfaces with the
European or United States Backhaul Element, as relevant.
"Lien" shall mean, with respect to any asset (a) any mortgage,
assignment, deposit arrangement, deed of trust, lien (statutory or
other), pledge, hypothecation, encumbrance, charge, expropriation (or
expropriatory claims), security interest or similar encumbrance in, on or
of such asset and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement
(or any financing lease having substantially the same economic effect as
any of the foregoing) relating to such asset.
"Project Finance" shall mean debt financing non-recourse to the
Shareholders provided to the Company by one or more reputable financial
institutions which will allow the Company to draw down up to such amount
as provided for in the initial Business Plan in order to finance the
construction of the System.
"Subsea Element" shall be as described in Annex 4.
"Supplier" shall mean Alcatel Submarine Networks.
"Supply Contract" shall mean the construction contract between the
Company and the Supplier for the construction of the Subsea Element
(excluding Landing Station construction) dated 20 September 1999 under
which the Supplier has (amongst other things) committed to increase the
capacity of the System to 2.4 terabits.
"United States Backhaul Element" shall be as described in Annex 5.
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1.2 References to any document (including this Agreement) are
references to that document as amended, consolidated, supplemented,
novated or replaced from time to time.
1.3 In the event of any conflict or inconsistency between this
Agreement and any Ancillary Agreement, this Agreement shall take
precedence except to the extent that such Ancillary Agreement
expressly provides otherwise.
2. PURPOSE
The purpose of the Company shall be the construction, ownership,
maintenance and operation of the System and such other ancillary
activities as the Shareholders may agree in writing.
3. INCORPORATION, CAPITALIZATION AND COMPLETION
3.1 The Shareholders have incorporated the Company under the laws of
Bermuda and have adopted Bye-Laws consistent with this Agreement.
In the event of any inconsistency between the terms of this
Agreement and the Memorandum of Association or Bye-Laws of the
Company, the terms of this Agreement shall prevail and the
Memorandum of Association or Bye-Laws, as relevant, shall be
amended to eliminate such inconsistency.
3.2 The authorized capital of the Company is initially US$12,000,
divided into 12,000 shares of US$1.00 each (the "Shares"). Each
Shareholder has on 12 January 1999 subscribed for 6,000 Shares at
par. Subject to satisfaction of the conditions precedent set forth
in Clause 3.6, each Shareholder shall make capital contributions
(or, if requested by the Board, subordinated loans), up to a
maximum of US$100,000,000 per Shareholder, pursuant to capital
calls made in accordance with the schedule to be agreed in
accordance with Clause 3.6(f) ("Committed Capital Contributions").
On the Date of Financial Closure each Shareholder shall deliver to
the Company an irrevocable letter of credit acceptable to the
Company's lenders to secure its obligations to
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make Committed Capital Contributions as required (the "Irrevocable
Letters of Credit").
3.3 The Shareholders shall use reasonable commercial endeavours to, or
shall cause the Company and/or their appropriate Affiliates to use
reasonable commercial endeavours to, as the case may be, take the
following actions or enter into the following agreements:
(a) construction management contracts between the Company and:
(i) FLAG, or an Affiliate of FLAG, pursuant to which FLAG
or such Affiliate will, to standards set forth in the
agreement, oversee the construction of the Subsea
Element (the "FLAG Construction Management
Agreement");
(ii) GTS, or an Affiliate of GTS, pursuant to which GTS or
such Affiliate will, to standards set forth in the
agreement, oversee the construction, acquisition
and/or installation of the European and the United
States Backhaul Elements (the "GTS Construction
Management Agreement");
(b) a customer marketing agreement, under which FLAG and/or
Affiliates of FLAG and GTS and /or Affiliates of GTS agree
to market the Products in accordance with terms set forth in
Annex 2;
(c) an arbitration agreement among the Shareholders and all
other parties (other than the Supplier) to the other
Ancillary Agreements, substantially in the form of Annex 8;
(d) a facilities management agreement among (1) FLAG or an
Affiliate of FLAG, (2) GTS or an Affiliate of GTS and (3)
the Company, under which FLAG, GTS and/or such Affiliates,
will operate, manage and maintain the System and under which
FLAG or its Affiliate will provide accounting and
administrative services to the Company;
(e) by 31 March 2000, backhaul agreements among the Company,
FLAG, GTS and Affiliates of FLAG and GTS, providing for the
acquisition by
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FLAG and GTS and/or their Affiliates of additional dark
fibre and/or duct space and/or wavelengths for purposes not
related to the Company in the European and United States
Backhaul Elements on [*******];
(f) a Capacity Agreement between the Company and GTS or an
Affiliate of GTS providing for the purchase by GTS or such
Affiliate of rights of use in the System as provided in
Clause 7.1;
(g) Capacity Agreements between the Company and FLAG or an
Affiliate of FLAG and/or such other purchasers as FLAG has
procured providing for the purchase of capacity in the
System as provided in Clause 7.2;
(h) develop and agree an optimum plan for System upgrades based
on foreseeable demand and the time required to effectuate
such upgrades, including appropriate trigger events; and
(i) agree and approve the initial Business Plan and the
construction budget as provided in Clause 12.
3.4
3.4.1 FLAG shall use its reasonable commercial endeavours in
co-operation with GTS to arrange Project Finance on behalf
of the Company; provided that agreement to the terms and
conditions of such Project Finance is subject to the
unanimous approval of the Shareholders.
3.4.2 GTS shall use its reasonable commercial endeavours to
arrange for the execution and delivery of construction or
acquisition or lease contracts between the Company and
third parties pursuant to which the ducts, fibre and
accommodations for the European Backhaul Element and United
States Backhaul Element will be constructed or acquired or
leased by such time as is necessary for the timely
completion of the construction of the System or such
earlier date as may be required in order to satisfy the
requirements of Clause 3.6(b).
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3.5
3.5.1 The Shareholders shall make shareholder loans to and/or
provide security on behalf of the Company (the "Loans") as
required for the period from 12 January 1999 up to the Date
of Financial Closure (up to a maximum aggregate amount of
US$5.5 million for each Shareholder), in order to satisfy
the Company's obligations under the Supply Contract and to
finance the costs of the DGMs referred to in Clause 8.5.
The Loans shall be repayable by the Company upon the Date
of Financial Closure.
3.5.2 The assets of the Company (including the work done under
the Supply Contract) shall be security for the Loans. In
the event that both parties have fulfilled their
obligations under this Clause 3.5 but Project Finance is
not secured and the Supplier terminates the Supply Contract
pursuant to the terms thereof, the work transferred to the
Company under the Supply Contract shall be jointly owned by
the Shareholders and each shall be free to use it as it
wishes.
3.6 The obligations of each Shareholder to make its Committed Capital
Contributions as provided in Clause 3.2, and of each Shareholder
and its Affiliates to proceed further with the construction of the
System and to purchase capacity on the System are subject to the
satisfaction of the following conditions by 12 October 1999:
(a) the delivery of the Irrevocable Letters of Credit;
(b) Project Finance is available subject only to conditions
precedent and the conditions precedent required to make the
first drawings under such Project Finance are satisfied;
(c) the Supplier shall have delivered a parent company guarantee
and a performance bond acceptable to each Shareholder
securing its obligations to the Company under the Supply
Contract;
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(d) the documents and agreements set forth in Clause 3.3 (other
than those agreements to be entered into pursuant to Clause
3.3(e)) have been executed or agreed and remain valid and
binding;
(e) letters of credit in favour of the Company as required by
Clause 7.3 shall have been delivered in respect of the
Capacity Agreements referred to in Clauses 3.3(f) and (g);
(f) the Shareholders have developed and agreed a schedule for
Committed Capital Contributions;
(g) there shall have been no change in control of the other
Shareholder from the date hereof;
(h) US$100 million of capacity sales (in addition to those
covered by Clauses 7.1 and 7.2), shall have been concluded;
and
(i) Global Telesystems Group Inc. ("GTSG") have received a
commitment, in a form satisfactory to GTSG, from the five
largest shareholders of FLAG Telecom Holdings Limited that
any change prior to 31 October 1999 (or termination of this
Agreement, if earlier) of more than 50% in the Beneficial
Ownership of FLAG will be subject to the purchaser being
willing to have the construction, operation and maintenance
of the System proceed in accordance with the terms hereof.
In the event that any condition precedent is not satisfied by the
date set forth above for such condition precedent, or such later
date as the Shareholders may agree in writing, the Shareholders
agree to terminate this Agreement as provided herein.
3.7 The Company may, with the approval of the Board, establish one or
more subsidiary companies for the purpose of fulfilling its
obligations as contemplated by this Agreement and the Ancillary
Agreements. Such subsidiary companies may own portions of the
System for regulatory and tax purposes.
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3.8 Each Shareholder shall pay its respective costs and expenses
relating to the consummation of the transactions contemplated
hereby. The costs of incorporation of the Company, including but
not limited to legal fees and expenses and registration fees, and
expenses incurred in negotiating and concluding agreements between
the Company and third parties, shall be borne by the Company.
4. GOVERNANCE
4.1 The Company shall be managed by a Board consisting of ten
Directors, half of whom shall be nominated by each Shareholder. A
quorum for Board meetings shall be two Directors appointed by each
Shareholder. The right to nominate a Director shall include the
right to require the removal of such Director and the right to
nominate a replacement for such Director.
4.2 One Director nominated by each Shareholder shall be co-chairman of
the Board, but for Bermuda law purposes, the Board shall name one
co-chairman as Chairman and one co-chairman as Deputy Chairman.
For the first year, the co-chairman nominated by FLAG shall be
Chairman and the co-chairman nominated by GTS shall be Deputy
Chairman. For each subsequent year, the positions shall be rotated
such that the positions of Chairman and Deputy Chairman are held by
nominees of the Shareholders in turn. Neither the Chairman nor the
Deputy Chairman shall have a casting vote.
4.3 The Shareholders shall vote their Shares to elect the persons
nominated by the Shareholders pursuant hereto and to remove any
Director where removal has been requested by the Shareholder that
nominated that Director. Each of the Shareholders further agrees
that (a) it will vote or cause to be voted all Shares owned by such
Shareholder, and otherwise act and in all other respects use its
reasonable commercial endeavours so as to comply, to cause its
Affiliates to comply, and to cause the Company to comply with and
act in
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a manner contemplated by the provisions of this Agreement and so as
to implement this Agreement; and (b) if any Director who is the
nominee of a Shareholder pursuant to this Clause for any reason
refuses to exercise his discretion in accordance with the terms of
this Agreement, such Shareholder shall forthwith take all action
within its power or control to remove and replace such Director.
4.4 Actions by the Board shall require the affirmative vote of a
majority of the Directors present at a duly organized meeting,
provided that such majority shall, except as provided in Clause
4.9(e), include at least two Directors nominated by each of the
Shareholders. The Board may also act by means of a written
resolution signed by all of the Directors.
4.5 The management of the Company shall be vested in the Board, which
may exercise all such powers and do all such things as may be
exercised or done by the Company and are not expressly or directly
required to be exercised or done by the Shareholders.
4.6 (a) The Board shall meet at such times as it shall determine, but
in any event not less than four times in any twelve month
period and, in addition, whenever requested in writing by at
least one Director, on not less than seven days' notice, such
request to specify the subjects to be addressed at such
meeting. All meetings of the Board of Directors shall be held
in such place (or by telephone conference call) as the Board
shall determine.
(b) Each Shareholder shall nominate a Director, both of whom
shall meet as frequently as necessary but at least bi-weekly
during the construction of the System to review the
operations of the Company and provide the full Board with a
report thereon and appropriate recommendations.
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4.7 Except as otherwise provided in the incorporating documents, the
Shareholders shall meet at least once a year.
4.8 The Company may contract out (to the Shareholders, Affiliates of
the Shareholders or third parties) such activities of the Company
as it deems appropriate.
4.9 The making or taking of any of the following decisions or actions,
as the case may be, or the implementation of any of the following
matters by the Company shall require the consent of the Board:
(a) changing the provisioning and/or implementation of System
upgrades (other than as agreed in accordance with Clause
3.3(h));
(b) change of pricing and Product range (provided that failure to
agree on a change of Product range shall not constitute a
Deadlock);
(c) purchases of assets other than in the ordinary course of
business and declaration and distribution of dividends (other
than as set forth herein);
(d) changing the marketing arrangements;
(e) managing and enforcing the Company's contractual rights and
obligations (except to the extent that authority has been
specifically delegated under the Ancillary Agreements),
including agreeing on appropriate amendments and waivers to
any of the Ancillary Agreements and initiating or settling
any significant litigation, provided that with respect to
litigation involving the Company and a Shareholder or the
Affiliate of a Shareholder, the Directors nominated by such
Shareholder shall not be entitled to vote;
(f) execution by the Company of any agreement with a Shareholder
or an Affiliate of a Shareholder or with a term of more than
one year or likely to require payments by or to the Company
or which may impose upon the Company liabilities exceeding in
the aggregate
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US $2,000,000, other than in accordance with the Business
Plan or as set forth herein;
(g) grants of Liens on the Company's assets;
(h) appointment and removal of officers of the Company;
(i) risk management issues; and
(j) the adoption of accounting policies and changes thereto.
4.10 Notwithstanding anything contained elsewhere in this Agreement to
the contrary, the making or taking of any of the following
decisions or actions, as the case may be, or the implementation of
any of the following matters by the Company shall require the
unanimous agreement of the Shareholders:
(a) annual updates and any interim amendments to the Business
Plan;
(b) capital calls in addition to Committed Capital Contributions;
(c) acceleration of or any significant variation in the schedule
for Committed Capital Contributions;
(d) issuances of notes, guarantees or other forms of indebtedness
not provided for in the Business Plan;
(e) pursuit of an activity or transaction outside the scope of
Clause 2, such as a new line of business, material
acquisition, joint venture or disposition of assets of the
Company;
(f) approval of any transfer or issuance of shares of the Company
except as provided for in Clause 5 or Clause 14.3;
(g) amalgamation, reorganisation or continuation, statutory or
otherwise, liquidation, winding-up, statutory or otherwise,
dissolution or termination of the existence of the Company
other than as provided for in this Agreement;
(h) admission of new shareholders other than as permitted in
accordance with Clause 5 or Clause 14.3;
(i) decommissioning of the System; and
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(j) agreeing to any variation, amendment or waiver of any
documentation, including but not limited to the credit
agreement, with respect to Project Finance.
5. TRANSFER OF SHARES
5.1 Neither Shareholder shall sell, assign, encumber, pledge or
otherwise transact with any of its Shares or any interest therein
except in accordance with this Clause 5 without the prior written
consent of the other Shareholder.
5.2 Either Shareholder may sell, transfer or otherwise dispose of all,
but not less than all, of its Shares to any Affiliate of such
Shareholder ("Permitted Transferee") which agrees in writing to be
bound by the terms of this Agreement as if the Permitted Transferee
were an original Shareholder, provided that the obligations of such
Affiliate hereunder shall be guaranteed by the transferring
Shareholder if required by the Company's lenders and if the
Permitted Transferee shall cease to be an Affiliate of such
Shareholder it shall be required to transfer such Shares back to
such Shareholder. Each Shareholder shall pledge its Shares to
lenders to the Company as security for the obligations of the
Company to such lenders if so required under the terms of the
Project Finance and, subject to any such pledge, may further pledge
its Shares to other lenders in order to raise funds necessary for
the fulfilment of its obligations under this Agreement.
5.3
5.3.1 If, after the Date of Financial Closure, one Shareholder
(the "Offeror") wishes to sell, transfer or otherwise
dispose of any or all of its Shares (the "Offered Shares")
other than in accordance with Clause 5.2, the Offeror shall
by notice first offer the Offered Shares to the other
Shareholder (the "Offeree"). Such offer shall set out the
price and all other terms and conditions and state that such
offer shall be
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deemed to be rejected if not accepted within 60 days of
notice of the offer to the Offeree.
5.3.2 The Offeree may within the validity period of the offer
notify the Offeror that the Offeree rejects the offer or
accepts the offer in its entirety. If the Offeree accepts
the offer, it shall within a period of 30 days after
notification of such acceptance purchase the Offered Shares.
5.3.3 If the Offered Shares shall have been rejected or deemed
rejected in accordance with the foregoing, or if the Offeree
fails to purchase the Offered Shares in accordance with the
foregoing, then the Offeror shall, within a period of 90
days thereafter, be at liberty to sell, transfer or
otherwise dispose of the Offered Shares to a third party on
terms no less favourable to the Offeror than those offered
to the Offeree, provided that such third party shall be
acceptable to the Offeree acting reasonably and to the
lenders to the Company and shall agree in writing to be
bound by the terms of this Agreement as if it were an
original party hereto. The Shareholders agree that it is
reasonable for an Offeree to withhold approval of a third
party it determines in good faith is not a suitable business
partner.
5.4 FLAG acknowledges and agrees that up to 50% of the Beneficial
Ownership of GTS may be transferred to IXC Communications Services
Europe Limited ("IXC") or its Affiliate or another United States
telecommunications operator acceptable to FLAG (acting reasonably
as provided in Clause 5.3.3). In such case IXC or such other
operator may assume GTS's rights and obligations regarding the
United States Backhaul Element and may become a party to the
customer marketing agreement executed in accordance with Clause
3.3(b).
5.5 If a Shareholder ceases to own at least 50% of the Shares in the
Company (except pursuant to Clause 5.2), then the following
provisions shall apply:
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(a) The first sentence of Clause 4.1 shall be deleted and the
following substituted therefor: The Company shall be managed
by a Board consisting of ten Directors. The owner of the
majority of Shares of the Company shall be entitled to
appoint one Director for each 10% of the Shares or fraction
thereof held by it; and the owner of the minority of the
Shares shall be entitled to appoint the remaining Directors;
provided that the owner of the minority of the Shares shall
in any event be entitled to appoint at least two Directors.
(b) Notwithstanding Clause 3.2, the obligation to make Committed
Capital Contributions shall be adjusted so that, going
forward, each Shareholder's percentage contribution to the
total Committed Capital Contributions required on a given
date shall be equal to its then current percentage Share
ownership.
(c) The following provisions shall be deleted: (i) the proviso in
the first sentence of Clause 4.4, (ii) Clauses 4.10 (a) and
(d) and (iii) Clause 12.4.
5.6 The Shareholders acknowledge and agree that (i) the Project Finance
is intended to be non-recourse to the Shareholders, except to the
extent of Share pledges, equity contribution obligations up to
US$100 million each, guarantees of up to US$100 million of the
Project Finance and the obligations of each to arrange a letter of
credit to support its equity contribution and guarantee and (ii)
with regard to such Share pledges, equity contribution obligations,
guarantees and letters of credit, it is intended that the
Shareholders be treated by the lenders, and treat one another,
equally. In the event that, notwithstanding the foregoing, the
lenders exercise any right or remedy under any such Share pledge,
guarantee or letter of credit and the effect of such exercise is
that (x) either Shareholder (the "Disfavoured Party") pays or
contributes an amount in excess of the amount paid or contributed
by the other Shareholder (the "Favoured Party") or (y) a greater
number of the
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Shares pledged by the Disfavoured Party are foreclosed upon or sold
than those pledged by the Favoured Party, the Shareholders will
make such adjustments between themselves as may be appropriate so
that the Shareholders shall be treated equally after giving effect
to such exercise of rights and remedies by the lenders, including
the making of a balancing payment by the Favoured Party to the
Disfavoured Party, the contribution by the Favoured Party of
additional amounts to the capital of the Company and/or transfer by
the Favoured Party of Shares in the Company to the Disfavoured
Party.
6. CONSTRUCTION OF THE SYSTEM
6.1 SUBSEA ELEMENT - FLAG or an Affiliate of FLAG, on behalf of the
Company, shall negotiate all contracts, in addition to the Supply
Contract, necessary for the construction of the Subsea Element.
FLAG will keep GTS fully informed on the progress of negotiations
for such contracts and in particular of any deviations from the
agreed design specifications of such contracts. FLAG or such
Affiliate shall be responsible, on behalf of the Company, to apply
for all necessary wayleaves, easements, permits, licenses and
consents required for the subsea element. FLAG or such Affiliate
will also construction manage the delivery of the Subsea Element as
provided in the FLAG Construction Management Agreement. The Company
shall pay FLAG or such Affiliate for providing these services such
portion of the project management fee for construction of the
System as the Shareholders may agree.
6.2 EUROPEAN BACKHAUL ELEMENT - GTS or an Affiliate of GTS, on behalf
of the Company, shall negotiate all construction, installation and
acquisition contracts for the European Backhaul Element. Such
contracts shall provide that such facilities shall comply with the
design specifications set forth in Annex 5. GTS will keep FLAG
fully informed on the progress of negotiations of the acquisition,
construction and installation contracts. GTS
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or such Affiliate shall be responsible, on behalf of the Company,
to apply for all necessary wayleaves, easements, permits, licenses
and consents required for the installation of the European Backhaul
Element. GTS or such Affiliate will also construction manage the
European Backhaul Element as provided in the relevant GTS
Construction Management Agreement. The Company shall pay GTS or
such Affiliate for providing these services such portion of the
project management fee for construction of the System as the
Shareholders may agree.
6.3 US BACKHAUL ELEMENT - GTS or an Affiliate of GTS, on behalf of the
Company, shall negotiate all construction, installation and
acquisition contracts for the United States Backhaul Element. Such
contracts shall provide that such facilities shall comply with the
design specifications set forth in Annex 5. GTS will keep FLAG
fully informed on progress of negotiations of the acquisition,
construction and installation contracts. GTS or such Affiliate
shall be responsible, on behalf of the Company, to apply for all
necessary wayleaves, easements, permits, licenses and consents
required for the installation or the United States Backhaul
Element. GTS or such Affiliate will also construction manage the
United States Backhaul Element as provided in the relevant GTS
Construction Management Agreement. The Company shall pay GTS or
such Affiliate for providing these services such portion of the
project management fee for construction of the System as the
Shareholders may agree.
7. CAPACITY PURCHASE
7.1
(a) GTS or an Affiliate shall purchase the exclusive right to use
a dark fibre pair and other rights set out in Annex 6 Part I
for the lifetime of the System [*******] in accordance with
the key commercial terms as set out in Annex 6 Part I. The
payment schedule shall be agreed between the Shareholders and
set forth in the relevant purchase agreement. All payments
will be made free and clear of all withholding taxes.
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(b) Subject to the following terms, FLAG or an affiliate of FLAG
is hereby granted the following options: either (i) the
option to purchase the products set out in Annex 6 Part I on
the same terms as those set out in clause 7.1(a) (the "Fibre
Option"); or (ii) the option to purchase up to [*******] of
the Company's Products on the System in accordance with the
key commercial terms as set out in Annex 6 Part II (the
"Capacity Option"). FLAG may exercise the Capacity Option or
the Fibre Option as follows:
(A) The Capacity Option
(i) The Capacity Option shall subsist from the date
of this Agreement until [*******];
(ii) The Capacity Option is exercisable from time to
time by notice in writing to the Company;
(iii) The Capacity Option may only be exercised in
lots; being four lots of [*******] and a final
lot of [*******];
(iv) The timing and proportion of payments for the
capacity shall be the same as that agreed under
Clause 7.1(a). [*******].
(B) The Fibre Option
(i) The Fibre Option shall subsist from the date of
this Agreement until [*******].
(ii) The Fibre Option is exercisable from time to
time by notice in writing to the company.
(iii) Upon exercise of the Fibre Option, the Capacity
Option and any agreements entered into pursuant
to the exercise of the Capacity Option shall be
immediately terminated.
(iv) Any payments made by FLAG or an Affiliate of
FLAG under the Capacity Option (or any agreement
entered into pursuant to the exercise of the
Capacity Option) shall be credited towards the
purchase price of the Fibre Option.
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(v) The timing and proportions of payments under the
Fibre Option shall be the same as agreed under
Clause 7.1(a). [*******].
7.2 FLAG shall buy, or bring purchasers to the Company for, the
Company's Products (as defined below) of value US$100 million
(excluding DGM sales) on arm's length commercial terms, paying for
this in accordance with a schedule to be agreed between the
Shareholders prior to the Date of Financial Closure. All payments
will be made free and clear of all withholding taxes. FLAG may
exercise its option in Clause 7.1 in satisfying any of its
obligations under this clause.
7.3 All presales referred to in Clauses 7.1, 7.2 and 7.6 shall be
documented under Capacity Agreements and secured with an
appropriate irrevocable letter of credit acceptable to the
Company's lenders (unless the purchaser is investment grade).
7.4 Each Shareholder and its Affiliates shall have the right to acquire
additional dark fibre and/or access to spare duct space and/or
wavelengths in the Backhaul Elements for purposes not related to
the Company [*******].
7.5 Each Shareholder and its Affiliates shall have the right to acquire
additional fibres and/or capacity in the European Interconnection
Link of the Subsea Element as described in Annex 4 upon payment to
the Company of [*******].
7.6
7.6.1 The Shareholders recognise that it would be valuable for the
Company to secure a major purchase commitment from Xxxx
Atlantic Corporation and/or its Affiliates ("Xxxx Atlantic")
and/or GTE, Inc. and/or its Affiliates ("GTE" and together
with Xxxx Atlantic "Xxxx Atlantic/GTE").
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7.6.2 The commitment by Xxxx Atlantic/GTE to purchase [*******] of
capacity will be a part of FLAG's US$100,000,000 commitment
under Clause 7.2 and will be on terms similar to those
outlined in Annex 6 Part II.
8. SYSTEM MARKETING
8.1 [*******].
8.2 The Company's products ("Products") are defined as and shall be
limited to rights of use or other non-ownership rights [*******] of
capacity and:
(a) between any of the following locations:
(i) London and New York;
(ii) Paris and New York;
(iii) New York and a European Landing Station;
(iv) London or Paris and a US Landing Station;
(v) Either US Landing Station and either European Landing
Station;
(b) of the following capacity sizes: (i) protected ring XXX-0,
XXX-0, XXX-00 and STM-64 and (ii) ring STM-64 optical
channels; and such modified or additional products as the
Board may at any time determine.
8.3
8.3.1 Except for sales pursuant to Clause 7 and at DGMs, the
Company will set prices as follows: the prices for the STM-1
Product will be set as [*******] (the "Base Price").
[*******].
8.3.2 Any Director may at any time request a review of prices,
including a change in the Base Price, the multipliers or the
pricing formula. The Board shall decide on such request
within 14 days of the same having been submitted. In the
event that the Board is unable to reach
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a decision on a change in pricing, then the matter shall be
referred to an Expert chosen in accordance with Clause 11.4
for decision who, notwithstanding Clause 11.6, shall decide
the issue within 30 days and whose determination will be
binding on the parties.
8.4 FLAG and GTS will be free to sell the Company's Products as
described in Clause 8.2(a)(iii) to (v) to customers who will
provide their own backhaul to or from a Landing Station and shall
cause the Company to permit such customers to connect their own
backhaul at the relevant Landing Station to the Subsea Element.
8.5 [*******]. FLAG and GTS will be present at each DGM. At the DGM the
Company will make available and target to sell such portion of the
capacity of the System as the Board shall determine. Each DGM will
be held at a mutually convenient location.
8.6 [*******].
8.7 Notwithstanding anything in Clause 8.6 to the contrary, any of the
Company's Products purchased or to be purchased by FLAG, GTS or
their Affiliates pursuant to Clause 7.1 or 7.2 may be used at any
time as a currency with which to acquire equity in other entities.
9. DIVIDEND AND INVESTMENT POLICIES
9.1 Subject to the requirements of Clauses 9.3 and 9.4, the Company's
lenders, the Business Plan and applicable law, the Board, upon
receipt of the Company's audited annual accounts for each year,
shall meet to declare and authorize the distribution of dividends,
which shall, unless the Board unanimously decides otherwise, be the
maximum amount distributable in respect of the earnings for such
year and available retained earnings from prior years.
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9.2 Enhancements, upgrades and improvements to the System shall be made
in accordance with the schedule to be agreed as provided in Clause
3.3(h), unless the Board otherwise agrees.
9.3 There shall be no declaration or distribution of dividends until
either:
(a) all funds advanced to the Company pursuant to the Project
Finance have been repaid; or
(b) the Shareholders have been released from any restrictions
imposed by the terms of the Project Finance on their freedom
to re-sell the capacity purchased by them (or their
Affiliates) in accordance with Clause 7.1(a) and (b);
9.4 The Shareholders shall procure that the Company promptly directs
any cash available to the Company under Clause "ninth" of section
8.12(b) of the Project Finance credit agreement towards the
re-payment of the "Term Loans" (as defined therein).
10. AUDITORS AND ACCOUNTS
10.1 The auditors of the Company shall be Xxxxxx Xxxxxxxx, or such other
first-class firm of accountants as may be agreed to by the
Shareholders.
10.2 The Company shall keep true and accurate accounts and records in
accordance with generally accepted accounting principles in the
United States and consistent with those adopted by the Shareholders
and their Affiliates. In the event of any inconsistencies in such
accounting policies, the policies recommended by the Company's
auditors shall be followed. The Shareholders shall cause the
Company to prepare and submit to each Shareholder, as soon as
practicable, but not later than three months after the end of each
financial year, complete annual financial statements including the
balance sheet and profit and loss statements of the Company in
respect of such financial year, certified by the Company's auditors
and prepared in accordance with such accounting principles and
practices.
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10.3 The financial year of the Company shall end on 31 December of each
year.
10.4 The Company shall provide the Shareholders with monthly management
accounts and other information on the Company's financial
performance and the Shareholders' interests. Further, the Company
shall provide the Shareholders with the necessary information and
documentation for the Shareholders to determine their tax
liabilities relating to any distributions (or deemed distributions)
with respect to Shareholders' Shares, or for other purposes that
may be required by any applicable government regulations. Such
documentation and information shall include, but not be limited to,
information with respect to the Company's tax liabilities and
copies of tax returns.
10.5 Within 30 days after the close of each quarterly period during its
financial year, the Company shall submit to each of the
Shareholders the unaudited balance sheet and profit and loss
statement of the Company in respect of such quarterly period.
10.6 All accounts and records of the Company shall be in English and
open to inspection by each of the Shareholders or by its duly
authorized representative during regular business hours.
11. DEADLOCK
11.1 In the event of a Deadlock, each Shareholder shall, within seven
days of the Deadlock having arisen, cause its nominees on the Board
to prepare and circulate to the other Shareholder a memorandum
setting out its position on the dispute and its reasons for
adopting such a position. Each such memorandum shall be considered
by the Chief Executive Officer of each Shareholder who shall meet
together within seven days of receipt of the memoranda and shall
use reasonable endeavours to resolve the Deadlock.
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11.2 If such Chief Executive Officers do so agree, they shall jointly
issue a statement setting out the terms of such agreement and each
Shareholder shall exercise the voting rights and other powers of
control available to it in relation to the Company to procure that
the terms of such Agreement are implemented and the Company shall
do all things within its power to implement such terms.
11.3 If such Chief Executive Officers do not so agree within 14 days of
their initial meeting, either Shareholder shall have the right to
refer the following matters to the relevant Expert, while a failure
to agree on matters which are not referred to below or otherwise
specifically provided for herein shall mean that the status quo
prevails with respect to such matters:
(a) Operational matters, including but not limited to the
selection of suppliers and acceptance of key deliverables;
and
(b) pricing and costing matters, including but not limited to
issues arising under Clause 8.
11.4 Whenever a matter is to be referred to an Expert for determination,
the matter in question shall be referred to an Expert agreed
between the Shareholders or, in default of agreement, if in
relation to an operational matter, an Expert nominated by the
President of the Institute of Electrical Engineers, or if in
relation to pricing, costing or marketing matters, an Expert
nominated by the President of the Institute of Chartered
Accountants of England and Wales.
11.5 Each of the Shareholders shall be entitled to provide the Expert
with such information and such written representations as may be
necessary to assist in the determination of the matter in question
provided such information and/or representations are made within 30
days of the date of referral. Each
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Shareholder shall simultaneously send copies of any correspondence
with the Expert to the other Shareholder.
11.6 The Expert shall be entitled to seek expert evidence at his
discretion as to the circumstances in which the matter has arisen
and the most expeditious method of its resolution and to rely upon
the same but before doing so shall disclose such evidence to the
Shareholders and give them an opportunity to make representations
with respect to the same. The Expert shall be required by the
Shareholders to reach a determination of the issues referred to him
as soon as is reasonably practicable and, in any event unless the
Shareholders otherwise agree, within 45 days of his appointment.
11.7 The Expert shall act as an expert and not as an arbitrator and his
decision shall be notified to both Shareholders simultaneously and
implemented as soon as is practicable upon notification. Unless
both Shareholders agree in writing prior to the appointment of the
Expert, the Expert's decision shall be final and binding upon the
Shareholders except in the case of fraud or manifest error and his
fees shall be paid by the Shareholders in equal shares unless the
Expert decides otherwise.
12. BUSINESS PLAN
12.1 FLAG shall in consultation with GTS prepare a rolling five-year
business plan for the Company together with an annual operating
budget (the "Business Plan") on an annual basis.
12.2 The initial Business Plan and construction budget shall be agreed
and approved by the Shareholders as provided in Clause 3.3(i). The
Business Plan will be revised each financial year and shall be
submitted to the Shareholders for approval not later than 30
October of each year and shall include a revised pro forma
consolidated balance sheet, a revised budgeted consolidated income
statement, and a revised pro forma consolidated statement of
changes
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in financial position of the Company for each month of the first
financial year and each quarter of each subsequent financial year
and shall be accompanied by a statement of all budgeted capital
expenditures to be incurred in such financial year, all presented
on the same basis, together with revised consolidated statements of
change in financial position of the Company for the next five years
in order to complete the Business Plan for the rolling five year
period, and shall be supported by the explanations, notes and
information upon which the projections underlying such Business
Plan have been based and how it is proposed to finance such capital
and other expenditures.
12.3 The Shareholders shall meet to discuss and agree such Business Plan
for the forthcoming year no later than 30 November of each year. In
the event that the Shareholders are unable to agree a Business
Plan, the Company will operate in accordance with the existing
Business Plan until such time as a new Business Plan is agreed. No
Deadlock shall exist with respect to failure to agree a Business
Plan until the expiration of the full five year term of the last
approved Business Plan.
12.4 If the Shareholders agree that an additional capital contribution
is required to finance the Business Plan, they will contribute that
capital equally.
13. BUSINESS PRACTICES
13.1 The Company shall at all times comply with all applicable laws and
regulations and shall conduct its business in accordance with the
code of business conduct attached hereto as Annex 7, in accordance
with the U.S. Foreign Corrupt Practices Act of 1977, as amended,
and in accordance with the U.S. Communications Act of 1934, as
amended by the U.S. Telecommunications Act of 1996 (the
"Communications Act"). Each Shareholder shall ensure that its and
its Affiliates' employees, agents and representatives who provide
services to or act for and on behalf of the Company are familiar
with and act in accordance with the code of business
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conduct set forth in Annex 7. The Company shall obtain all
necessary licences, approvals, permits and authorizations necessary
for the operation of its business.
13.2 The Company will permit officers and designated representatives of
any Shareholder to visit and inspect any of the properties of the
Company, and to examine and audit the books of record and account
of the Company and discuss the affairs, finances and accounts of
the Company with, and be advised as to the same by, its officers,
all at such reasonable times and intervals and to such reasonable
extent as such Shareholder may request.
13.3 The Company will pay all taxes, assessments and other governmental
charges of any kind imposed on or in respect of its income or any
of its businesses or assets, or in respect of taxes and other
amounts it is required by law to withhold from amounts paid by it
to its employees, before any penalty or interest accrues on the
amount payable and before any Lien on any of its property exists as
a result of non-payment; provided, however that the Company shall
not be required by this Clause 13.3 to pay any amount if it is
diligently contesting its alleged obligation to pay that amount in
good faith through appropriate proceedings and maintains
appropriate reserves or other provisions in respect of the
contested amount as may be required under generally accepted
accounting principles in the United States.
14. TERM AND TERMINATION
14.1 Unless earlier terminated pursuant to Clause 3.6, this Agreement
shall remain in effect until the earliest of (i) termination by
mutual consent, (ii) such time as all Shares are owned by one
Shareholder and/or its Affiliates and (iii) the dissolution of the
Company.
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14.2 In the event that this Agreement is terminated except pursuant to
Clause 14.1 (ii) or the Company is to be wound-up or liquidated
pursuant to this Clause, the following shall apply:
14.2.1 the Company shall undertake no new business or obligation
other than that already commenced or incurred or necessary
for the fulfilment of another obligation already incurred;
14.2.2 the Company shall diligently complete all obligations and
projects that may be outstanding at the date of termination
to the extent that such obligations are not assumed by one
or both of the Shareholders by mutual agreement;
14.2.3 upon completion of the obligations and projects in
accordance with Clause 14.2.2, the Company shall have no
right to or to the use of any intellectual property derived
from either Shareholder (or any Affiliate thereof) or
previously used by or in the course of business of the
Company and the Company shall promptly return to the
originating Shareholder all property (including without
limitation all confidential information and documents)
belonging to such Shareholder; and
14.2.4 on completion of the obligations and matters set out in
Clauses 14.2.1 through 14.2.3, the Shareholders shall
forthwith take all necessary and appropriate steps to
wind-up and liquidate the Company in such a way as to
maximise the return to the Shareholders.
14.3
14.3.1 If the Company's (or its relevant Affiliate's) application
for a cable landing licence by the FCC has been denied, or
the FCC has raised objections to granting such licence,
then (i) FLAG shall promptly notify GTS, (ii) the
Shareholders shall use their reasonable commercial
endeavours to resolve the objections of the FCC and (iii)
FLAG may, and upon receipt of notice given by GTS shall,
take or cause to be taken such action (which may include
divesting itself of a
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sufficient number of Shares without application of Clause
5, except that the transferee shall be acceptable to GTS
acting reasonably and to the lenders of the Company and
shall agree in writing to become a party to this Agreement
with such amendments as may be appropriate in the
circumstances. FLAG agrees that it is reasonable for GTS to
withhold approval of a third party it determines in good
faith is not a suitable business partner) as is necessary
to ensure that the Company is not deemed an affiliate of
Xxxx Atlantic Corporation for purposes of section 271 of
the Communications Act. If such licence has not been
granted by 31 March 2000, then GTS may require FLAG, by
notice in writing to FLAG within 14 days of that date, to
sell to GTS such number of Shares as is necessary to ensure
that the Company is not deemed an affiliate of Xxxx
Atlantic Corporation for purposes of section 271 of the
Communications Act at a price equal to fair market value.
Such fair market value of such Shares will be determined by
an independent investment banking firm of international
repute (the "Valuer") agreed by the Shareholders, or in
default of agreement within five days of such notice,
appointed by the President of the Institute of Chartered
Accountants of England and Wales. In determining such fair
market value, the Valuer will value the Company as a going
concern, taking into consideration the dilution or
departure, as the case may be, of FLAG as a shareholder and
the obligations of FLAG set forth in Clause 14.3.2, if
applicable. The Valuer will be instructed to render its
decision within 30 days or as soon as is practicable
thereafter. The purchase price shall be paid and the Shares
transferred as provided herein within seven days after
receipt by the Shareholders of the Valuer's report. The
foregoing, shall not apply if (a) FLAG can promptly
establish, to GTS's reasonable satisfaction, that the delay
in the Company's (or its Affiliate's) obtaining, or the
Company's (or its Affiliate's) failure to obtain, the
required cable landing licence from the FCC was not
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caused by the fact that the Company is an affiliate of Xxxx
Atlantic Corporation or (b) if on or before the deadline
for FLAG to take or cause to be taken the necessary action,
the Company or its Affiliate is granted the requested cable
landing licence or Xxxx Atlantic Corporation or its
Affiliate is granted relief by the FCC from the
restrictions contained in section 271 of the Communications
Act.
14.3.2 In the event that FLAG is required to sell all of its
Shares to GTS as provided in Clause 14.3.1, FLAG agrees
that it and its Affiliates will continue to fully
co-operate with the Company and provide such assistance to
the Company as may be required for the commercial success
of the Company. The Company shall compensate FLAG and its
Affiliates on reasonable arm's length commercial terms for
such assistance as is provided.
14.4 In no circumstances shall either Shareholder be liable to the other
Shareholder, whether in contract, tort or otherwise, for loss
(whether direct or indirect) of profits, business or anticipated
savings or for any indirect or consequential loss whatsoever.
15. CONFIDENTIALITY
15.1 Each Shareholder undertakes that it and its Affiliates, and its and
its Affiliates' employees, agents and representatives shall not,
without limit in point of time, divulge or communicate to any third
party (except as may be necessary for the performance of its
obligations under this Agreement or any Ancillary Agreement or to
enforce its rights hereunder; or as may be required by law or
regulatory process or by any stock exchange; or as may be required
in connection with any potential sale by a Shareholder of its
Shares as permitted herein, unless the potential purchaser is a
competitor of the Company, the other Shareholder or any Affiliates
thereof), or use for its own purpose any information about the
private affairs of the Company or the other
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Shareholder or its Affiliates, except such information as may have
come into public knowledge otherwise than by reason of a breach of
this undertaking.
15.2 Notwithstanding the foregoing, the Shareholders are entitled to
disclose the existence and terms of this Agreement to their
Affiliates, the Supplier and potential and actual lenders to and
financial advisers of the Company, the Shareholders and their
Affiliates, and GTS is entitled to disclose the terms of this
Agreement to IXC, provided that each of those parties has entered
into the same obligations of confidentiality as those contained
herein. Any other disclosure is subject to the prior written
agreement of the other Shareholder.
16. PROPRIETARY RIGHTS
16.1 Except as otherwise may be agreed in writing by the relevant
parties, no Shareholder or Affiliate of such Shareholder shall have
any interest in or right to use any name, trademark or logo
belonging to the other Shareholder or any of its Affiliates, except
that the name and domain name FLAG Atlantic may be used in
connection with the marketing and sale of the Company's Products.
16.2 In the event that a Shareholder and its Affiliates no longer own
Shares, any name, trademark or logo belonging to such Shareholder
or any of its Affiliates which was previously permitted to be used
shall no longer be used in connection with the Company.
16.3 For the purposes of this Clause "Intellectual Property" means any
and all patents, trade marks, rights in designs, copyrights and
topography rights, (whether registered or not and any applications
to register or rights to apply for registration of any of the
foregoing), rights in inventions, know-how, trade secrets and other
confidential information, rights in databases and all other
intellectual property rights of a similar or corresponding
character which may now or in the future subsist in any part of the
world.
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16.4 Each Shareholder shall, and shall cause its Affiliates to, provide
to the Company on a royalty-free basis such Intellectual Property
as the Company may require for the optimal performance of the
System to the extent that such Shareholder or any of its Affiliates
owns, or otherwise has a right to license, such Intellectual
Property. The other Shareholder and its Affiliates shall not have
any interest in or right to use any such Intellectual Property and
no Shareholder or its Affiliates shall by virtue of this Agreement
or its ownership of Shares have any interest in or right to use any
Intellectual Property developed by, or provided by third parties
to, the Company except in the performance of an Ancillary
Agreement.
16.5 In the event that a Shareholder and its Affiliates no longer own
Shares, the Company shall continue to have the right to use on a
royalty-free basis for the life of the System any Intellectual
Property essential to operation and maintenance of the System
belonging to such Shareholder or its Affiliates which was used by
the Company when such Shareholder or any of its Affiliates' owned
any Shares and to require physical or electronic transfer of such
Intellectual Property to a location specified by the other
Shareholder in a manner causing minimum disruption to the
continuing operation of the System.
17. MUTUAL CO-OPERATION
17.1 Each of the Shareholders agrees that it will use all reasonable
commercial endeavours to promote the business and profitability of
the Company.
17.2 Each of the Shareholders shall do and execute or procure to be done
and executed all such acts, deeds, documents and things as may be
within its power including (without prejudice to the generality of
the foregoing) the passing of resolutions (whether by the Board or
in general meeting of the
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Company) to give full effect to this Agreement and to procure that
all provisions of this Agreement are observed and performed.
17.3 Each of the Shareholders agrees with the other that this Agreement
is entered into between them and will be performed by each of them
in a spirit of mutual co-operation, trust and confidence and that
it will use all means reasonably available to it (including its
voting power whether direct or indirect, in relation to the
Company) to give effect to the objectives of this Agreement and to
ensure compliance by the Company with its obligations.
18. RESTRICTIONS ON ANNOUNCEMENTS
Each of the Shareholders undertakes that it will not, and that it will
cause its Affiliates not to (save as required by law or any applicable
regulatory body or stock exchange), make any announcement in connection
with this Agreement without the prior written consent of the other
Shareholder (which consent may not be unreasonably withheld and may be
given either generally or in a specific case or cases and may be subject
to conditions).
19. NO PARTNERSHIP
Nothing contained or implied in this Agreement shall constitute or be
deemed to constitute a partnership between the Shareholders and neither
Shareholder shall have any authority to bind or commit the other.
20. REMEDIES
Each Shareholder acknowledges and agrees that if either of them shall
breach any of the warranties, representations, indemnities, covenants,
agreements, undertakings, and obligations (for the purposes of this
Clause referred to as the "Agreed Terms") on each of their parts
contained in this Agreement or any other agreement entered into pursuant
to it, damages may not be an adequate remedy, in which case the
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Agreed Terms shall be enforceable by injunction, order for specific
performance or such other equitable relief as a court of competent
jurisdiction may see fit.
21. REPRESENTATIONS AND WARRANTIES
Each of the Shareholders represents and warrants to the other that:
21.1 Such Shareholder is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it has been
organized; and
21.2 The execution, delivery and performance by such Shareholder or any
of its Affiliates of this Agreement and such Ancillary Agreements
to which it is or will be a party have or will have been duly
authorized by all requisite corporate action, and this Agreement
and such Ancillary Agreements will not violate the provisions of
such Shareholder's or such Affiliate's, as relevant, constitutional
documents; or violate or constitute a material breach or constitute
an event of default under the provisions of any note of which such
Shareholder or such Affiliate is the maker or of any indenture,
agreement or other instrument to which such Shareholder or such
Affiliate is a party, or by which it is bound; or result in the
creation or imposition of any Lien of any nature whatsoever upon
any of its property or assets except as required to secure Project
Finance; or, to the best of such Shareholder's knowledge, of any
applicable law, regulation or order, including without limitation
any law, regulation or order relating to competition or securities
matters; and this Agreement constitutes a legal, valid and binding
obligation of such Shareholder, enforceable in accordance with its
terms.
22. ASSIGNMENT
Save as otherwise provided herein, the benefits and obligations conferred
by this Agreement upon each of the Shareholders are personal to that
Shareholder and shall not be, and shall not be capable of being,
assigned, delegated, transferred or otherwise disposed of without the
prior written consent of the other Shareholder
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save an assignment to a Permitted Transferee of that Shareholder's Shares
which has complied with Clause 5 and any attempted assignment,
delegation, transfer or other disposition in violation of this Clause
shall be void.
23. ENTIRE AGREEMENT
This Agreement (together with any documents referred to herein)
constitutes the whole agreement between the Shareholders and supersedes
any previous agreements, arrangements or understandings between them
relating to the subject matter hereof including but not limited to the
Shareholders Agreement dated 12 January 1999 as amended prior to the date
hereof. Each of the Shareholders acknowledges that it is not relying on
any statements, warranties or representations given or made by any of
them relating to the subject matter hereof, save as expressly set out in
this Agreement. This Agreement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together
shall constitute a single contract.
24. VARIATION
No variation or amendment to this Agreement shall be effective unless in
writing signed by authorised representatives of each of the Shareholders.
25. NOTICES
25.1 Any notice, request, demand or other communication required or
permitted hereunder shall be in writing and shall be sufficiently
given if in English, and delivered by hand or sent by prepaid
registered or certified mail (air mail if international), by
facsimile or by prepaid international courier of international
reputation addressed to the appropriate party at the following
address or to such other address or place as such party may from
time to time designate:
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if to FLAG: FLAG Atlantic Holdings Limited
The Emporium Xxxxxxxx
00 Xxxxx Xxxxxx - 0xx Xxxxx
Xxxxxxxx XX00, Xxxxxxx
Attention: Chairman and CEO
Tel: 0 000 000 0000
Fax: 0 000 000 0000
with a copy to: FLAG Telecom Limited
000 Xxxxx Xxxxxx - 0xx Xxxxx
Xxxxxx X0X 0XX
U.K.
Attention: General Counsel
Tel: 00 000 000 0000
Fax: 00 000 000 0000
if to GTS: GTS TransAtlantic Holdings, Ltd.
Xxxxxxx, Xxxx & Xxxxxxx
Xxxxxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Attention: Xxxxxx Xxxxxx
Tel: 0 000 000 0000
Fax: 0 000 000 0000
with a copy to: GTS
Xxxxxxxxxxxxxxxxx 0X
Xxxxxxxxx 0000
Xxxxxxx
Attention: Legal Director
Tel: 000 000 0000
Fax: 000 000 0000
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25.2 Any notice, request, demand or other communication given or made
pursuant to Clause 25.1 shall be deemed to have been received (i)
in the case of hand delivery or courier, on the date of receipt as
evidenced by a receipt of delivery from the recipient, (ii) in the
case of mail delivery, on the date which is seven days after the
mailing thereof and (iii) in the case of transmission by facsimile,
on the date of transmission with confirmed answer back. Each such
communication sent by facsimile shall be promptly confirmed by
notice in writing hand-delivered or sent by courier, mail or air
mail as provided herein, but failure to send such a confirmation
shall not affect the validity of such communication.
26. WAIVER
No failure of either Shareholder to exercise, and no delay in exercising,
any right or remedy in respect of any provision of this Agreement shall
operate as a waiver of such right or remedy.
27. GOVERNING LAW AND DISPUTE RESOLUTION
27.1 This Agreement shall be governed by and construed in accordance
with the laws of England and Wales without regard to the laws of
England and Wales governing conflicts of laws.
27.2 Except as otherwise provided herein, any dispute or controversy
arising under or in connection with this Agreement shall be finally
settled under the Rules of Arbitration of the International Chamber
of Commerce by one arbitrator appointed in accordance with such
Rules. The place of arbitration shall be London. The arbitration
shall be conducted in English. The decision and award resulting
from such arbitration shall be final and binding on the
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parties. Judgment upon the arbitration award may be rendered by any
court of competent jurisdiction, or application may be made to such
court for a judicial acceptance of the award and an order of
enforcement. Insofar as permissible under the applicable laws, the
parties hereby waive all rights to object to any action for
judgment or execution which may be brought before a court of
competent jurisdiction on an arbitration award or on a judgment
rendered thereon. This clause shall not restrict the right of
either Shareholder to seek injunctive relief, specific performance
or other equitable relief in any court of competent jurisdiction,
as provided in Clause 20.
28. SEVERABILITY
The invalidity or unenforceability for any reason of any part of this
Agreement shall not prejudice or affect the validity or enforceability of
the remainder of this Agreement. If further lawful performance of this
Agreement or any part of it shall be impossible due to a breach of any
applicable competition or anti-trust legislation or other applicable law,
the parties shall forthwith use their best endeavours to agree amendments
to this Agreement so as to comply with such legislation or other law.
29. SURVIVAL
The provisions of Clauses 14, 15, 16, 18, 20, 26 and 27 shall survive
the termination of this Agreement.
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IN WITNESS WHEREOF the parties have entered into this Agreement the date and
year first above written.
FLAG ATLANTIC HOLDINGS GTS TRANSATLANTIC
LIMITED HOLDINGS, LTD.
By /s/ Xxxxxx XxXxxxxxx By /s/ Xxxxxx X. Xxxxxxx
------------------------ --------------------------
Name: Xxxxxx XxXxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Authorized Signatory Title: Authorized Signatory
