Dated ____________________________ 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
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
RESTATED SHAREHOLDERS AGREEMENT
THIS AGREEMENT is made the ____ day of ___________________ 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:
1. 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:
Page 1 of 42
"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
Page 5 of 42
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
Page 6 of 42
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 ***;
(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;
Page 8 of 42
(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.
Page 9 of 42
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
Page 10 of 42
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.
Page 11 of 42
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
Page 12 of 42
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
Page 14 of 42
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:
Page 15 of 42
(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
Page 16 of 42
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
Page 17 of 42
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.
Page 18 of 42
(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
***;
(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.
(v) The timing and proportions of payments under
the Fibre Option shall be the same as agreed
under Clause 7.1(a). ***
Page 19 of 42
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 ***.
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").
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.
Page 20 of 42
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 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.
Page 21 of 42
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.
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.
Page 22 of 42
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.
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.
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 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 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 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.
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
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 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 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.
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 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 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 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:
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
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
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.
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.
/s/ Xx XxXxxxxxx /s/ Xxxxxx X. Xxxxxxx
By___________________ By___________________
Name: Xx XxXxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer Title: Authorized Signatory
