EXHIBIT 9.1
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of [ ],
1998, is entered into by and among Global Crossing Ltd., a company organized
under the laws of Bermuda (the "Company"), and those persons whose names appear
on the signature pages attached hereto. For purposes of this Agree ment, the
persons listed on Schedule A, together with those persons who, subsequent to the
date hereof, agree to be bound hereby, shall be referred to individually as a
"Stockholder" and collectively as the "Stockholders."
WHEREAS, the Stockholders are shareholders of Global Crossing Ltd,
LDC, a company organized under the laws of the Cayman Islands ("CaymansCo").
WHEREAS, CaymansCo is the owner of all of the issued and outstanding
shares of Common Stock (as defined below) of the Company.
WHEREAS, CaymansCo desires to distribute all of the shares of Common
Stock owned by it to its shareholders, including, without limitation, the
Stockholders, and to liquidate.
WHEREAS, it is a condition to the willingness of the Stockholders to
approve such distribution and liquidation that the Company enter into this
Agreement.
WHEREAS, the Company desires that CaymansCo make such distribution in
order to facilitate the Company's initial public offering of shares of Common
Stock.
WHEREAS, the parties to this Agreement desire to enter into this
Agreement for the purpose of regulating certain aspects of the Stockholders'
relationship with regard to the Company and each other on and after the date
hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
Section 1. Transfer of Securities. No Stockholder shall, directly
----------------------
or indirectly, sell (whether by involuntary or judicial sale or otherwise),
transfer, grant a security interest in, pledge, hypothecate, assign, give or
otherwise (voluntarily
or by operation of law) dispose of (any such act is hereinafter referred to as a
"Transfer") any Securities to any person (a "Transferee") other than a Transfer
made (a) to a Permitted Transferee, (b) in a manner that is not prohibited by
Sections 2, 3 or 4 hereof to a Transferee who agrees in writing to be bound by
this Agreement as if such person were a Stockholder, (c) by any bona fide third
party lender upon a foreclosure of a pledge of, or security interest granted in,
any Securities, (d) in a public offering pursuant to a registration statement
under the Securities Act or a Transfer pursuant to Rule 144 under the Securities
Act, or (e) in accordance with the provisions of this Agreement.
Section 2. Additional Restriction. No Stockholder shall Transfer
----------------------
any Securities to any person if such Transfer would, for purposes of section 541
et seq.of the Internal Revenue Code of 1986, as amended (the "Code"), result in
-- ---
more than 50% of the value of the outstanding capital stock of the Company being
owned, directly or indirectly (taking into account the applicable attribution
and constructive ownership rules under the Code), by 5 or fewer individuals.
Section 3. Right of First Refusal.
----------------------
(a) Prior to the second anniversary of the date of this Agreement, no
Stockholder may Transfer any Securities to any person unless (i) such Transfer
is permitted under Section 1 or (ii) prior to any such Transfer, such
Stockholder (the "Offeror") shall provide written notice (the "Notice") to the
Company, which notice shall set forth (A) confirmation that such Offeror intends
to Transfer all or certain of its Securities in a bona fide transaction, (B) the
name and address of each proposed transferee or purchaser (the "Offeree"), (C)
the number of Securities proposed to be Transferred (the "Offered Shares"), (D)
the proposed amount and form of consider ation to be paid for the Offered
Shares, and (E) all other material terms of the proposed Transfer. Within 15
days of receipt of the Notice, the Company may elect to buy all of the Offered
Shares at the price, and on terms and conditions no less favorable to the
Offeror than those set forth in the Notice by delivery of a written notice to
the Offeror (the "Company Election Notice"), which notice shall constitute the
binding agreement of the Company to purchase and pay for all of such shares at
the price and on the terms and conditions set forth in the Company Election
Notice. Within 90 days of delivery of the Company Election Notice, the Company
shall deliver a certified check payable to such Offeror, or to such other person
as such Offeror may request, in the amount of the purchase price (as calculated
below) of such Offered Shares to be purchased by the Company. Upon receipt of
payment for the
2
Offered Shares, such Offeror shall deliver certificates properly endorsed in
blank for transfer representing all such Offered Shares to the Company.
(b) If a Company Election Notice is not received by such Offeror from
the Company within the period specified in Section 3(a) or the Company elects to
purchase less than all of the Offered Shares or fails to deliver the purchase
price of the Offered Shares in accordance with the terms hereof, the Offeror
shall have the right to transfer, sell or otherwise dispose of the Securities
specified in the Notice to the Offeree, but only at a price and upon terms and
conditions no less favorable to the Offeror than those stated in the Notice and
only if such sale occurs on a date within 120 days from the date of the Company
Election Notice or, if no such notice is delivered, within 60 days of the date
of the Notice.
(c) For purposes of calculating the purchase price of any such
transfer, sale or disposition, if any portion of the consideration consists of
other than cash and/or readily marketable securities, the fair market value of
any non-cash consideration shall be determined by a nationally recognized
independent valuation consultant or appraiser (with experience evaluating such
type of property) selected by the Offeror and reasonably satisfactory to the
Company. All payments by the Company pursuant to this Section 3 shall be in
cash.
(d) The closing of the transactions contemplated by this Section 3
shall occur at the principal offices of the Company unless otherwise agreed to
in writing by the Company and the Offeror.
Section 4. Tag-Along Rights.
----------------
(a) 5% Tag-Along Rights.
-------------------
(i) Unless permitted under Section 1, if any 5% Holder (the
"5% Selling Stockholder"), directly or indirectly, at any time or from time to
time, enters into an agreement (whether oral or written) to Transfer, whether in
one transaction or a series of related transactions, five percent or more of the
outstanding Securities of the Company (a "5% Tag-Along Sale"), then each 5%
Holder other than the 5% Selling Stockholder (the "5% Other Holders") shall have
the right, but not the obligation, to participate in such 5% Tag-Along Sale by
selling the number of Securities respectively beneficially owned (as such term
is used in Section 13(d) of the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Section 13(d)")) by
3
him as calculated in the following manner. Such Securities beneficially owned by
the 5% Other Holders are hereinafter referred to collectively as the "5%
Stockholders' Shares." The number of Securities that the 5% Other Holders shall
be entitled to include in such 5% Tag-Along Sale (the "5% Stockholders'
Allotment") shall equal the product of (i) the total number of Securities
proposed to be Transferred pursuant to the 5% Tag-Along Sale or such greater
number of shares that the proposed purchaser in the 5% Tag-Along Sale shall
agree to purchase or otherwise acquire, times (ii) a fraction, the numerator of
which shall equal the aggregate number of 5% Stockholders' Shares on the date of
the 5% Sale Notice (as defined below), and the denominator of which shall equal
the sum of (A) the aggregate number of Securities beneficially owned by the 5%
Selling Stockholder on the date of the 5% Sale Notice plus (B) the aggregate
number of 5% Stockholders' Shares on the date of the 5% Sale Notice.
(ii) Any such sales by the 5% Other Holders shall be on the
same terms and conditions as the proposed 5% Tag-Along Sale by the 5% Selling
Stockholder.
(iii) The 5% Selling Stockholder shall promptly provide each of
the 5% Other Holders and the Company with written notice (the "5% Sale Notice")
not less than 30 days prior to the proposed date of the 5% Tag-Along Sale (the
"5% Tag-Along Sale Date"). In order to facilitate the prompt delivery of the 5%
Sale Notice, the Company hereby covenants to provide the 5% Selling Stockholder
participating in a 5% Tag-Along Sale access to the stock record books and
related records of the Company. Each 5% Sale Notice shall set forth: (A) the
name and address of each proposed transferee or purchaser of Securities in the
5% Tag-Along Sale; (B) the name and address of the 5% Selling Stockholder and
the number of Securities proposed to be Transferred by such 5% Selling
Stockholder; (C) the proposed amount and form of consideration to be paid for
such Securities and the terms and conditions of payment offered by each proposed
transferee or purchaser; (D) the number of 5% Stockholders' Shares beneficially
owned as of the close of business on the date of the 5% Sale Notice (the "5%
Notice Date") by the 5% Other Holder to whom the notice is sent and the
aggregate number of 5% Stockholders' Shares outstanding on the 5% Notice Date;
(E) the aggregate number of Securities beneficially owned as of the 5% Notice
Date by the 5% Selling Stockholder; (F) the number of Securities that the 5%
Other Holder is entitled to include in the 5% Tag-Along Sale (as computed in
accordance with the equation set forth below) assuming each 5% Other Holder
elected to sell the maximum number of 5% Stockholders' Shares possible; (G) the
number of 5% Stockholders' Shares in the 5% Stockholders'
4
Allotment; (H) confirmation that the proposed purchaser or transferee has been
informed of the "5% Tag-Along Rights" provided for herein and has agreed to
purchase Securities in accordance with the terms hereof; and (I) the 5% Tag-
Along Sale Date.
(iv) Each 5% Other Holder who wishes to participate in the 5%
Tag-Along Sale shall provide written notice (or oral notice confirmed in
writing) (the "5% Tag-Along Notice") to the 5% Selling Stockholder and the
Company not less than ten days prior to the 5% Tag-Along Sale Date. The 5% Tag-
Along Notice shall set forth the number of Securities that such 5% Other Holder
elects to include in the 5% Tag-Along Sale, which shall not exceed the product
of (A) the 5% Stockholders' Allotment times (B) a fraction, the numerator of
which is equal to the aggregate number of 5% Stockholders' Shares beneficially
owned as of the 5% Notice Date by such 5% Other Holder and the denominator of
which is the aggregate number of 5% Stockholders' Shares beneficially owned by
all of the 5% Other Holders as of the 5% Notice Date. The 5% Tag-Along Notice
shall also specify the aggregate number of additional Securities beneficially
owned as of the 5% Notice Date by such 5% Other Holder, if any, which such 5%
Other Holder desires also to include in the 5% Tag-Along Sale ("5% Additional
Shares") in the event there is an undersubscription for the entire 5%
Stockholders' Allotment. In the event there is an undersubscription by the 5%
Other Holders for the entire 5% Stockholders' Allotment, the 5% Selling
Stockholder participating in the 5% Tag-Along Sale shall apportion the
unsubscribed 5% Stockholders' Shares to 5% Other Holders whose 5% Tag-Along
Notices specified an amount of 5% Additional Shares, which apportion ment shall
be on a pro rata basis among such 5% Other Holders in accordance with the number
of 5% Additional Shares specified by all such 5% Other Holders in their 5% Tag-
Along Notices.
(v) The 5% Selling Stockholder shall determine the aggre gate
number of Securities to be sold by each participating 5% Other Holder or in any
given 5% Tag-Along Sale in accordance with the terms hereof, and the 5% Tag-
Along Notices given by the 5% Other Holders shall constitute their binding
agreements to sell such shares at the price and on the terms and conditions
applicable to such sale.
(vi) If a 5% Tag-Along Notice is not received by the 5%
Selling Stockholder participating in the 5% Tag-Along Sale from a 5% Other
Holder prior to the commencement of the ten day period specified above, the 5%
Selling Stockholder shall have the right to Transfer the number of Securities
specified in the 5% Sale Notice to the proposed purchaser or transferee without
any participation by
5
such 5% Other Holder (subject to the right of 5% Other Holders to sell 5%
Additional Shares in the event of an undersubscription as described above), but
only at a price and upon terms and conditions no more favorable to the 5%
Selling Stockholder than those stated in such 5% Sale Notice and only if such
sale occurs on a date within 90 days of the 5% Tag-Along Sale Date.
(vii) Notwithstanding the foregoing, this Section 4(a) shall
not apply to (A) any Transfer of Securities made pursuant to an effective
registration statement under the Securities Act or (B) with respect to any
Transfer in which PCG/GKW is the 5% Selling Stockholder, in the event that Xxxx
Xxxxxxx, other than with his written consent, (1) is not elected as a director
of the Board of Directors of the Company (the "Board") and (2) is not appointed
sole chairman of the Board (or, in the alternative, is not appointed co-chairman
of the Board in the event that Xxxxxxxx Xxxx is also appointed co-chairman of
the Board) or (C) any Transfer subject to Section 4(b) hereof.
(b) Change of Control Tag-Along Rights.
----------------------------------
(i) Unless permitted under Section 1, if one or more CoC
Holders (the "CoC Selling Stockholder"), at any time or from time to time,
enters into an agreement (whether oral or written) to Transfer, whether in one
transaction or a series of related transactions, any Securities which would
result in or have the effect of a Change of Control (a "CoC Tag-Along Sale"),
then each CoC Holder other than the CoC Selling Stockholder (the "CoC Other
Holders") shall have the right, but not the obligation, to participate in such
CoC Tag-Along Sale by selling the number of Securities respectively beneficially
owned by him as calculated in the following manner. Such Securities beneficially
owned by the CoC Other Holders are hereinafter referred to collectively as the
"CoC Stockholders' Shares." The number of Securities that each CoC Other Holder
shall be entitled to include in such CoC Tag-Along Sale (the "CoC Stockholders'
Allotment") shall equal the product of (i) the total number of Securities
beneficially owned by such CoC Other Holder times (ii) a fraction, the numerator
of which shall equal the aggregate number of Securities proposed to be
Transferred by the CoC Selling Stockholder, and the denominator of which shall
equal the aggregate number of Securities beneficially owned by the CoC Selling
Stockholder on the date of the CoC Sale Notice.
(ii) Any such sales by the CoC Other Holders shall be on the
same terms and conditions as the proposed CoC Tag-Along Sale by the CoC Selling
Stockholder.
6
(iii) The CoC Selling Stockholder shall provide each of the CoC
Other Holders and the Company with written notice (the "CoC Sale Notice")
promptly upon entering into any agreement for a CoC Tag-Along Sale and in any
event not less than 20 days prior to the proposed date of the CoC Tag-Along Sale
(the "CoC Tag-Along Sale Date"). In order to facilitate the prompt delivery of
the CoC Sale Notice, the Company hereby covenants to provide the CoC Selling
Stockholder participating in a CoC Tag-Along Sale access to the stock record
books and related records of the Company. Each CoC Sale Notice shall set forth:
(A) the name and address of each proposed transferee or purchaser of Securities
in the CoC Tag-Along Sale; (B) the name and address of the CoC Selling
Stockholder and the number of Securities proposed to be Transferred by such CoC
Selling Stockholder; (C) the proposed amount and form of consideration to be
paid for such Securities and the terms and conditions of payment offered by each
proposed transferee or purchaser; (D) the number of CoC Stockholders' Shares
beneficially owned as of the close of business on the date of the CoC Sale
Notice (the "CoC Notice Date") by the CoC Other Holder to whom the notice is
sent and the aggregate number of CoC Stockholders' Shares outstanding on the CoC
Notice Date; (E) the aggregate number of Securities beneficially owned as of the
CoC Notice Date by the CoC Selling Stock holder; (F) the number of CoC
Stockholders' Shares in such CoC Stockholders' Allotment; (G) confirmation that
the proposed purchaser or transferee has been informed of the "CoC Tag-Along
Rights" provided for herein and has agreed to purchase Securities in accordance
with the terms hereof; and (H) the CoC Tag-Along Sale Date.
(iv) Each CoC Other Holder who wishes to participate in the CoC
Tag-Along Sale shall provide written notice (or oral notice confirmed in
writing) (the "CoC Tag-Along Notice") to the CoC Selling Stockholder and the
Company on or before the later of the date (A) ten days prior to the CoC Tag-
Along Sale Date and (B) ten days after receipt by the CoC other Holder of the
CoC Tag-Along Notice. The CoC Tag-Along Notice shall set forth the number of
Securities that such CoC Other Holder elects to include in the CoC Tag-Along
Sale, which shall not exceed such CoC Other Holder's CoC Stockholders'
Allotment.
(v) The CoC Selling Stockholder shall determine the aggre gate
number of Securities to be sold by each participating CoC Other Holder or in any
given CoC Tag-Along Sale in accordance with the terms hereof, and the CoC Tag-
Along Notices given by the CoC Other Holders shall constitute their binding
agree-
7
ments to sell such shares at the price and on the terms and conditions
applicable to such sale.
(vi) If a CoC Tag-Along Notice is not received by the CoC
Selling Stockholder participating in the CoC Tag-Along Sale from a CoC Other
Holder prior to the commencement of the ten day period specified above, the CoC
Selling Stockholder shall have the right to Transfer the number of Securities
specified in the CoC Sale Notice to the proposed purchaser or transferee without
any partici pation by such CoC Other Holder, but only at a price and upon terms
and conditions no more favorable to the CoC Selling Stockholder than those
stated in such CoC Sale Notice and only if such sale occurs on a date within 90
days of the CoC Tag-Along Sale Date.
Section 5. PCG/GKW Appraisal Rights.
------------------------
(a) So long as PCG/GKW beneficially owns (as such term is used in
Section 13(d)) at least 15% of the outstanding Securities of the Company, any
person included in PCG/GKW shall be entitled to seek an appraisal of the fair
value of the Securities beneficially owned by such person in connection with any
merger or consolidation of the Company or the sale, lease or transfer of all or
substantially all of the assets of the Company (a "Transaction"), if such
holder, in his capacity as a shareholder of the Company, shall not have voted in
favor of or given consent with respect to such Transaction and beneficially owns
the Securities as to which appraisal is sought immediately prior to consummation
of the Transaction.
(b) The Company shall, not less than 30 days prior to the effective
date of a Transaction, notify PCG/GKW of the Transaction that appraisal rights
are available for any or all Securities held by PCG/GKW, and shall include in
such notice a copy of this Section 5. Xxxx Xxxxxxx, the chief executive
officer of PCG or the manager of GKW (or the appropriate executive officer or
manager of any Permitted Transferee thereof) may, within 20 days after the date
of mailing of such notice, demand in writing from the Company or the surviving
or resulting entity in the Transaction (the "Surviving Corporation"), as the
case may be, the appraisal of Securities beneficially owned by any person
included in PCG/GKW. Such demand will be sufficient if it reasonably informs
the Company or Surviving Corporation of the identity of the holder and that the
holder intends thereby to demand the appraisal of such holder's Securities. If
such notice did not notify holders of the effective date of the Transaction,
either (i) the Company shall send a second notice before the effective date of
the Transaction notifying PCG/GKW of the effective date of the
8
Transaction or (ii) the Company or Surviving Corporation shall send such a
second notice to PCG/GKW on or within 10 days after such effective date;
provided, however, that if such second notice is sent more than 20 days
-------- -------
following the sending of the first notice, such second notice need only be sent
to each holder who is entitled to appraisal rights and who has demanded
appraisal of such holder's Securities in accordance with this subsection.
(c) Within 60 days after the effective date of the Transaction, the
Company or Surviving Corporation or any holder who has complied with subsections
(a) and (b) of this section and who is otherwise entitled to appraisal rights,
may file a demand for arbitration in accordance with subsection (b) of this
section demanding a determination of the value of the Securities of all such
holders. Notwithstanding the foregoing, at any time within 45 days after the
effective date of the Transaction, any holder shall have the right to withdraw
his demand for appraisal and to accept the terms offered upon the Transaction.
(d) The arbitrator shall appraise the Securities, determining their
fair value exclusive of any element of value arising from the accomplishment or
expectation of the Transaction, together with a fair rate of interest, if any,
to be paid upon the amount determined to be the fair value. In determining such
fair value, the arbitrator shall take into account all relevant factors and
shall be determined in accordance with cases interpreting, or decided under,
Section 262 of the Delaware General Corporation Law. In determining the fair
rate of interest, the arbitrator may consider all relevant factors, including
the rate of interest which the Company or Surviving Corporation would have had
to pay to borrow money during the pendency of the arbitration. Upon application
by the Company or Surviving Corporation or by any holder entitled to participate
in the arbitration, the arbitrator shall permit discovery or other
prearbitration proceedings. Any holder who is entitled to appraisal rights and
who has demanded appraisal of such holder's Securities in accordance with the
provisions of subsection (b) of this section may participate fully in the
arbitration and the Company shall permit such holder and his representatives
access to the books, records and employees of the Company in connection with
such arbitration.
(e) The arbitrator shall direct the payment of the fair value of the
Securities, together with interest, if any, by the Company or Surviving
Corporation to the holders entitled thereto. Interest may be simple or compound,
as the arbitrator may direct. Payment shall be so made to each such holder, upon
the surrender of the certificates representing such Securities.
9
(f) The costs of the arbitration may be determined by the arbitrator
and taxed upon the parties as the arbitrator deems equitable in the
circumstances. Upon application of a holder, the arbitrator may order all or a
portion of the expenses incurred by any holder in connection with the
arbitrator, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the Securities entitled to an appraisal.
(g) From and after the effective date of the Transaction, no holder
who is entitled to appraisal rights and who has demanded appraisal of such
holder's Securities in accordance the provisions of subsection (b) of this
section shall be entitled to vote such Securities for any purpose or to receive
payment of dividends or other distributions on the Securities (except dividends
or other distributions payable to holders of record at a date which is prior to
the effective date of the Transaction); provided, however, that if no demand for
-------- -------
arbitration shall be filed within the time provided in subsection (c) of this
section, or if such holder shall deliver to the Company or Surviving Corporation
a written withdrawal of his demand for an appraisal and an acceptance of the
Transaction, either within 60 days after the effective date of the Transaction
as provided in subsection (b) of this section or thereafter with the written
approval of the Company or the Surviving Corporation, then the right of such
holder to an appraisal shall cease.
(h) Any demand for appraisal pursuant to this Section 5 shall be
submitted to binding arbitration with the American Arbitration Association
("AAA"). The arbitration shall commence as follows:
(i) Promptly following the giving of any notice of
arbitration, each party shall meet and attempt in good faith to select a single
arbitrator acceptable to both parties. If a single arbitrator is not selected by
mutual consent within five (5) business days after the giving of the notice of
arbitration, each party shall, within three (3) business days thereafter,
designate a representative and the two representatives shall, within three (3)
business days thereafter, select a single arbitrator acceptable to both
representatives. In the event that representatives fail to designate a single
arbitrator within said three (3) business day period, the rules of the AAA with
respect to the selection of an arbitrator shall apply. Notwithstanding any other
provision of this Section 5, the arbitrator shall be a person with demonstrable
knowledge regarding appraisal rights under the Delaware General Corporation Law.
(ii) The arbitration shall commence at a location in the County
of New York, New York to be chosen by the arbitrator and such arbitration
10
shall continue on each consecutive business day therefrom until fully concluded,
unless continued by the arbitrator for good cause shown, but in no event shall
such arbitration continue for more than six (6) business days from the
commencement thereof, and the time allocated for the arbitration shall be evenly
allocated between the holders and the Company. Except as expressly provided
herein, such arbitration shall be conducted in accordance with the commercial
rules and procedures of the AAA then in effect; provided, however, that in the
event of any inconsistency between the rules of the AAA and procedures and the
terms of this Agreement, the terms of this Agreement shall prevail.
(iii) The award of the arbitrator when made and executed by him
shall be final and binding and enforceable in any court of competent
jurisdiction. The arbitrator shall retain jurisdiction to determine any dispute
which may arise between the parties until such time as the arbitrator's decision
has been carried out in full.
(iv) Nothing contained herein shall in any way deprive any
party of their right to obtain specific performance as provided in Section 7(j)
hereof.
Section 6. Additional Provisions.
---------------------
(a) In the event a Transfer of any Securities has taken place in
violation of the provisions of this Agreement, including, without limitation,
requirements as to notice periods and the content of notices, such Transfer
shall be void and of no effect, and no distribution of any kind shall be paid by
the Company to the transferee in respect of such Securities (all such dividends
and distributions being deemed waived), and the voting rights, if any, of such
Securities on any matter whatsoever shall remain vested in the transferor,
during the period commencing with such party's initial failure of compliance and
ending when compliance shall have occurred.
(b) In order to facilitate the operation of the provisions of this
Agreement, the Memorandum of Association and Bye-Laws of the Company, each
Stockholder agrees to keep the Company informed of all Securities that are
owned, both of record or beneficially, by such Stockholder, and to respond
promptly to any request by the Company for such ownership information.
11
Section 7. Miscellaneous.
-------------
(a) After-Acquired Shares. All of the provisions of this Agreement
---------------------
shall apply to all Securities now owned or hereafter acquired any Stockholder.
(b) Rights of Transferees; Requirement to Become a Party. Any
----------------------------------------------------
Permitted Transferee that has agreed in writing to be bound by the terms of this
Agreement shall have the same rights hereunder as are given to, and shall be
subject to the same obligations as are imposed upon, the Stockholder by the
terms hereof with respect to the Securities that are the subject of the Transfer
to such person.
(c) Certain Definitions.
-------------------
(i) "BCLP" means, collectively, Xxxxxx Xxxxx, Xxxxxxxx Xxxx,
Xxxxx Xxx, Xxxxx Xxxxxx, Galenight Corp., a Delaware corporation, Ridgestone
Corp., a Delaware corporation, San Xxxxxxx Corp., a Delaware corporation, the
Xxxxx and Xxxxx Xxx Family Trust, a California trust, and any Permitted
Transferee of any such person.
(ii) "Business Day" means any day other than a Saturday,
Sunday or any other day on which commercial banks in Bermuda or New York, New
York are authorized by law to be closed for business.
(iii) "Change of Control" means the acquisition by any (A)
person other than a COC Holder or a Permitted Transferee thereof or (B) group
(as such term is used in Section 13(d)) other than a group consisting solely of
CoC Holders and Permitted Transferees thereof) of direct or indirect beneficial
ownership (as such term is used in Section 13(d)) of voting securities of the
Company representing 35% or more of the voting power of the outstanding voting
securities of the Company (regardless of whether such person or group's ability
to vote such securities is restricted by the Bye-Laws or other governing
documents of the Company).
(iv) "CIBC" means CIBC Wood Gundy (Capital ) SFC, Inc. a
_________ corporation, [2 partnerships]..
(v) "CoC Holder" means CIBC, MRCo, Continental and PCG/GKW
and any Permitted Transferee thereof.
12
(vi) "Common Stock" means the Common Stock, par value $.01 per
share, of the Company or any other shares of capital stock or other securities
into which such shares of Common Stock shall be reclassified or changed,
including, without limitation, by reason of a merger, consolidation, exchange,
reorganization or recapitalization. If the Common Stock has been so
reclassified or changed, or if the Company pays a dividend or makes a
distribution on the Common Stock in shares of capital stock or other securities,
or subdivides (or combines) its outstanding shares of Common Stock into a
greater (or smaller) number of shares of Common Stock, a share of Common Stock
shall be deemed to be such number of shares of capital stock and amount of other
securities to which a holder of a share of Common Stock outstanding immediately
prior to such change, reclassification, exchange, dividend, distribution,
subdivision or combination would be entitled.
(vii) "Continental" means Continental Casualty Company, a
_________ corporation, and any Permitted Transferee thereof.
(viii) "5% Holder" means CIBC and PCG/GKW and any Permitted
Transferee thereof.
(ix) "GKW" means GKW Unified Holdings, LLC, a Delaware limited
liability company.
(x) "MRCo" means MRCo., Inc., a Delaware corporation and any
Permitted Transferee thereof.
(xi) "PCG" means Pacific Capital Group, Inc., a California
corporation.
(xii) "PCG/GKW" means PCG, GKW and Xxxx Xxxxxxx and any
Permitted Transferee of any such person.
(xiii) "Permitted Transferee" means (A) in the case of a
Stockholder who is an individual, such Stockholder's spouse, parents, members of
his immediate family (as defined in Instruction 2 of Item 404(a) of Regulation
S-K promulgated by the United States Securities and Exchange Commission) or his
lineal descendants or to a trust the beneficiary of which is solely such
Stockholder or any of such persons, (B) the executors, administrators,
testamentary trustees, legatees or beneficiaries of a deceased Stockholder, (C)
in the case of a Stockholder that is a trust, the beneficiaries of such trust
(provided, that either the transferor retains the
---------
13
right to vote such Securities or PCG/GKW and CIBC consent in writing to such
Transfer), (D) in the case of a Stockholder that is a partnership or limited
liability company, any or all the partners of such partnership in accordance
with the terms of the partnership agreement of such partnership or any or all
the members of such limited liability company in accordance with the operating
agreement of such limited liability company, as the case may be, (E) in the case
of a Stockholder that is a corporation, an 80% or more owned subsidiary or a
person that owns 80% or more of the voting equity of such Stockholder or any
100% owned subsidiary of such person, or (F) in the case of any Stockholder, a
bona fide third party lender who receives the pledge of, or grant of a security
interest in, any or all Securities to secure indebtedness of such Stockholder
owing to such lender; provided, however, that each transferee pursuant to
-------- -------
clauses (A) through (E) agrees in writing to be bound by the terms of this
Agreement as if such person were a Stockholder.
(xiv) "person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
(xv) "Securities Act" means the Securities Act of 1933, as
amended.
(xvi) "Securities" shall mean and include, without limitation,
(A) the Common Stock, (B) any option, warrant or right to acquire Common Stock
and (C) any security or other instrument exchangeable for, or convertible into,
Common Stock.
(xvii) "Subsidiary" shall mean, as to any person, (A) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such person and/or one
or more Subsidiaries of such person and (B) any partnership, association, joint
venture or other entity in which such person and/or one or more Subsidiaries of
such person have more than a 50% equity interest therein.
(d) Owner of Securities. The person in whose name Securities are (i)
-------------------
registered in the stock books of the Company or (ii) reported as being
beneficially
14
owned pursuant to Section 6(b) hereof may be treated as the owner thereof for
all purposes under this Agreement, including without limitation, for the giving
of notices under this Agreement.
(e) Legend. So long as the provisions of this Agreement remain in
------
effect, all certificates evidencing Securities shall be endorsed with the
following legend:
THE SALE, TRANSFER, PLEDGE OR OTHER ENCUMBRANCE OF DISPOSITION OF THE
SECURITIES REPRESENTED BY THIS CERTIFI CATE IS SUBJECT TO AND RESTRICTED
BY A STOCKHOLDERS AGREEMENT DATED AS OF [ ], 1998, AS IT MAY BE
AMENDED FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS THEREOF (THE
"AGREEMENT"), WHICH CONTAINS RESTRICTIONS ON TRANSFER, RIGHTS OF FIRST
REFUSAL AND TAG-ALONG PROVISIONS. COPIES OF THE AGREEMENT MAY BE OBTAINED
FROM THE SECRETARY OF THE COMPANY.
At the request of any Stockholder, the Company shall reissue certificates
evidencing Securities without such legend in connection with a Transfer in a
public offering pursuant to a registration statement under the Securities Act or
a Transfer pursuant to Rule 144 under the Securities Act.
(f) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, air courier or
facsimile transmission:
(i) if to a Stockholder, at the most current address of the
Stockholder on the stock register of the Company;
(ii) if to the Company,
Global Crossing Ltd.
Wessex House
00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Attention: K. Xxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
15
With a copy (which shall not constitute notice) to:
Global Crossing Ltd.
000 Xxxxx Xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; three business days
after being timely dispatched delivery prepaid, if by air courier; and when
receipt acknowledged, if sent by facsimile transmission. Any of the above
addresses may be changed by notice made in accordance with this subsection.
(g) GOVERNING LAW; SUBMISSION TO JURISDICTION. EXCEPT AS EXPRESSLY
-----------------------------------------
PROVIDED IN SECTION 5 HEREOF, THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCOR DANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING, WITHOUT
LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW
AND RULE 327(b) OF THE NEW YORK CIVIL PRACTICE LAWS AND RULES. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH
OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY
AGREES TO ACCEPT, AT THE ADDRESS REFERRED TO IN SECTION 7(f) HEREOF, SERVICE OF
PROCESS IN ANY SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS WITH RESPECT TO
THIS AGREEMENT.
16
(h) Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of the parties hereto and their respective Permitted Transferees.
(i) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
without the written consent of (i) the Company and (ii) the holders of at least
a majority of the Securities owned by each of BCLP, CIBC, Continental, MRCo
and/or PCG/GKW, to the extent each such class or group is affected thereby.
(j) Specific Enforcement. Each of the parties hereto acknowledges and
--------------------
agrees that (i) monetary damages would be an inadequate remedy for a breach of
any of the provisions of this Agreement, (ii) in addition to being entitled to
exercise all of their rights granted by law, including recovery of damages, the
other parties shall therefore be entitled to specific performance of its rights
under this Agreement and (iii) in the event of any action for specific
performance it shall waive the defense that a remedy at law would be adequate.
(k) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(l) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(m) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
17
(n) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
(o) This Agreement Controls. Each of the parties hereto agrees that
-----------------------
to the extent, if any, that any provision of this Agreement conflicts with the
Company's Articles of Association, the provisions of this Agreement shall
control.
(p) $. All references to "$" mean United States dollars.
-
(q) Term. This Agreement shall terminate on the first to occur of (i)
----
the tenth anniversary of the date of this Agreement and (ii) such date as all
of the Stockholders shall agree.
Section 8. Stockholder Disclosure.
----------------------
(a) Disclosure upon Demand of the Board of Directors of the Company.
---------------------------------------------------------------
Each Stockholder shall upon demand by the Board of Directors of the Company
disclose to the Company (or, at such Stockholder's option to a law firm of
national repute in the United States which advises the Company) in writing such
information with respect to:
(i) such Stockholder's ownership of Controlled Shares (as
defined in the Bye-Laws of the Company) and the number of votes conferred by
such Shares;
(ii) those persons who may be treated as owning any of the
Controlled Shares held by such Stockholder; and
(iii) any other affiliation or relationship between such
Stockholder and any other stockholder of the Company known to such Stockholder,
in each case, as the Board of Directors of the Company shall reasonably deem
necessary or appropriate to comply with the provisions of Code to determine the
ownership of the Company for purposes of determining whether any Stockholder is
a "United States stockholder" of the Company within the meaning of Section 951
of the Code, or to comply with the requirements of any United States taxing
authority
18
or governmental agency which provisions or requirements are adopted or
promulgated after the date hereof.
(b) Standard of Care. In responding to such demands and preparing
----------------
such disclosures required by paragraph (a) above, each Stockholder shall
exercise due care and conduct a reasonable investigation. A Stockholder shall
be deemed to have satisfied such obligation if the Stockholder's conduct
conforms to the standards set forth in Section 9 hereof.
(c) Notice of Change of Ownership of a Stockholder. Each Stockholder
----------------------------------------------
shall give notice to the Company (or, at the Stockholder's option, to a law firm
of national repute in the United States which advises the Company which shall
treat all such information in the strictest of confidence) within ten days
following the date on which the Stockholder becomes aware that:
(i) in the case of a Stockholder that is a corporation (A) any
person that does not have beneficial ownership of 10% or more of the total value
of all of the shares in the share capital of such Stockholder becomes the
beneficial owner of 10% or more of the total value of all of the shares in the
share capital of such Stockholder, or (B) any person that has beneficial
ownership of 10% or more of all the shares in the share capital of a Stockholder
increases or decreases its ownership in the share capital of such Stockholder;
or
(ii) in the case of a Stockholder which is a partnership,
estate, trust, or any entity which is treated as a partnership, estate or trust
for U.S. federal income tax purposes, there has been a change in the
proportionate interest of the partners in the partnership or of the beneficial
owners of the trust or estate.
For purposes of this Section 8(c), beneficial ownership shall be determined in
accordance with Sections 318 and 958 of the Code. The notice to the Company (or
its law firm) shall specify the identity of such beneficial owner, and such
Stockholder shall furnish such other information as the Company shall reasonably
request in order for the Company to determine whether such change in beneficial
ownership could adversely affect the taxation of the Company or a U.S. Person
that is a stockholder of the Company under the Code or successor statutes.
"U.S. Person" shall mean an individual who is a citizen or resident of the
United States, a corporation, limited liability company or partnership created
or organized under the laws of the United States or any state thereof, or an
estate or trust, all of the income of which is
19
includable in gross income for United States federal income tax purposes,
regardless of its source.
(d) Response to Government Inquiries. If the Internal Revenue Service
--------------------------------
makes a written request to the Company for information regarding the number of
Controlled Shares owned by a Stockholder, such Stockholder shall Certify to the
Company (or, at the Stockholder's option, to a law firm of national repute in
the United States which acts for Holdings) the proportionate ownership interest,
by capital commitment, in the Stockholder of each direct owner other than a
foreign corporation less than 10 percent of the value of whose shares is owned
by a U.S. Person.
Section 9. Due Care. A Stockholder shall be deemed to have
--------
satisfied its obligation to exercise due care and to conduct a reasonable
investigation in preparing the certifications, statements or affidavits required
pursuant to 8(a) of this Agreement if the Stockholder:
(a) obtains from the Company a list of the Stockholders ("Stock holder
List");
(b) sends a copy of the Stockholder List to each direct owner of the
Stockholder other than a foreign corporation less than 10 percent of the value
of whose shares is owned by a U.S. Person ("Domestic Owner");
(c) in writing asks each Domestic Owner of the Stockholder to confirm
in writing whether the Domestic Owner or any person or entity related to the
Domestic Owner (other than a foreign corporation less than 10 percent of the
value of whose shares is owned by a U.S. Person) is an owner of or partner with
any entity listed on the Stockholder List, and the percentage or capital
interest of the Stockholder which the Domestic Owners owns;
(d) keeps in its records copies of the written confirmations given by
each Domestic Owner to these inquiries;
(e) informs the Company of the total amount which Domestic Owners of
the Stockholder have stated, in response to the Stockholder's inquiries, that
they own in each person on the Stockholder List and in each person on the Stock
holder List with which such Domestic Owner is a partner, which information shall
be based on the written responses made to the Stockholder by Domestic Owners to
the questions which the Stockholder asked the Domestic Owners and of any other
20
ownership by a Domestic Owner of an interest in a person on the Stockholder List
of which the Stockholder has actual knowledge;
(f) certifies to the Company any ownership of shares of common stock
of the Company which the Stockholder would be treated as owning by attribution
within the meaning of Section 958 of the Code of which the Stockholder has
actual knowledge;
(g) delivers to the Company (or, at the Stockholder's option, to the
Company's law firm of national repute in the United States which advises the
Company) a list of all direct owners of the Stockholder, and any indirect owners
of the Stockholder (other than a foreign corporation less than 10 percent of the
value of whose shares is owned by a U.S. Person) of which the Stockholder has
actual knowledge;
(h) if requested by the Company to enable the Company to determine the
proportionate ownership interest of a Domestic Owner of the Stockholder which is
also a shareholder or the Domestic Owner of another Stockholder, provides a
certification of the proportionate ownership interest (by capital commitment) in
the Stockholder of any Domestic Owner of the Stockholder; and
(i) responds to necessary inquiries (other than with regard to the
proportionate ownership of owners of a Stockholder) made by the Company relating
to the identity of an owner of the Stockholder to the extent the Stockholder has
or can reasonably obtain answers to such inquiries.
For purposes of determining a Stockholder's compliance with all information
reporting obligations for which the standard of "due care and reasonable
investiga tion" of this Section 9 is applicable, any entity or entities formed
for purposes of holding Share of the Company substantially owned by a single
entity shall be disregarded and the beneficial owner of any such entity shall be
considered Stockholders.
21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GLOBAL CROSSING LTD.
By:
--------------------------------
Name:
Title:
CIBC WOOD GUNDY (CAPITAL) SFC, INC.
By:
--------------------------------
Name:
Title:
[CIBC PARTNERSHIP I]
By:
--------------------------------
Name:
Title:
[CIBC PARTNERSHIP II]
By:
--------------------------------
Name:
Title:
S-1
CONTINENTAL CASUALTY COMPANY
By:
--------------------------------
Name:
Title:
MRCO, INC.
By:
--------------------------------
Name:
Title:
-----------------------------------
XXXX XXXXXXX
PACIFIC CAPITAL GROUP, INC.
By:
--------------------------------
Name:
Title:
GKW UNIFIED HOLDINGS, LLC
By:
--------------------------------
Name:
Title:
S-2
-----------------------------------
XXXXXX X. XXXXX
RIDGESTONE CORP.
By:
--------------------------------
Name:
Title:
-----------------------------------
XXXXX XXXXXX
GALENIGHT CORP.
By:
--------------------------------
Name:
Title:
-----------------------------------
XXXXX XXX
SAN XXXXXXX CORP.
By:
--------------------------------
Name:
Title:
S-3
XXXXX AND XXXXX XXX FAMILY TRUST
By:
--------------------------------
Name:
Title:
-----------------------------------
XXXXXXXX XXXX
S-4
