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Exhibit 10.2
SECOND AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
dated as of
March 24, 2000
by and between
GCT PACIFIC HOLDINGS, LTD.,
SCS (BERMUDA) LTD.,
MARUBENI PACIFIC CABLE LIMITED
and
PACIFIC CROSSING LTD.
Pacific Crossing Fiber-Optic Submarine Cable System
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TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS ................................................................ 2
Section 1.1 Definitions ................................................. 2
Section 1.2 Other Definitional Provisions ............................... 9
ARTICLE II - ORGANIZATION AND CAPITALIZATION ........................................... 10
Section 2.1 Formation of the Company .................................... 10
Section 2.2 Name ........................................................ 10
Section 2.3 Purpose ..................................................... 10
Section 2.4 Principal Place of Business; Registered Office .............. 10
Section 2.5 Share Capital ............................................... 10
Section 2.6 Share Register .............................................. 10
Section 2.7 Budgeted Capital Contributions .............................. 11
Section 2.8 New Capital ................................................. 11
Section 2.9 Use of Capital .............................................. 13
Section 2.10 Distribution Policy ......................................... 13
ARTICLE III - MANAGEMENT AND ADMINISTRATION ............................................ 13
Section 3.1 Board of Directors of the Company ........................... 13
Section 3.2 Requirements for Board Action ............................... 15
Section 3.3 Officers .................................................... 17
Section 3.4 Shareholders' Meetings ...................................... 18
Section 3.5 Accounting, Record Keeping and Reporting .................... 20
Section 3.7 Budgets ..................................................... 21
Section 3.8 Deposits and Withdrawals of Funds ........................... 21
ARTICLE IV - CERTAIN BUSINESS ARRANGEMENTS ............................................. 21
Section 4.1 Contracts for Services with Affiliates ...................... 21
ARTICLE V - TAX MATTERS ................................................................ 22
Section 5.1 Tax Matters ................................................. 22
Section 5.2 Partnership Election ........................................ 22
Section 5.3 Capital Accounts; Book Allocations .......................... 22
Section 5.4 Tax Allocations ............................................. 23
Section 5.5 Income Tax Information ...................................... 23
ARTICLE VI
[Intentionally omitted.] ...................................................... 23
ARTICLE VII - TRANSFER AND ASSIGNMENT .................................................. 23
Section 7.1 Transfer of Securities ...................................... 23
Section 7.2 Right of First Refusal ...................................... 24
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Section 7.3 Tag-Along Rights ............................................ 26
Section 7.4 Drag-Along Rights ........................................... 28
Section 7.5 Involuntary Transfers ....................................... 29
Section 7.6 Liability of Transferor ..................................... 29
Section 7.7 Prohibited Transfers ........................................ 30
Section 7.8 Expenses in Connection with Transfers ....................... 30
Section 7.9 Exit Rights of SCS .......................................... 30
ARTICLE VIII - REPRESENTATIONS, WARRANTIES AND COVENANTS ............................... 30
Section 8.1 Representations and Warranties .............................. 30
Section 8.2 Covenants ................................................... 31
ARTICLE IX ............................................................................. 32
ARTICLE X - CONFIDENTIALITY ............................................................ 32
Section 10.1 Confidentiality ............................................. 32
ARTICLE XI - DEFAULTS AND REMEDIES ..................................................... 33
Section 11.1 Defaults .................................................... 33
Section 11.2 Actions Upon Default ........................................ 33
Section 11.3 Option of Non-Defaulting Shareholders to Purchase Shares .... 34
Section 11.4 Other Remedies .............................................. 35
ARTICLE XII - DEADLOCK ................................................................. 35
Section 12.1 Deadlock .................................................... 35
ARTICLE XIII - TERMINATION AND DISSOLUTION ............................................. 36
Section 13.1 Termination ................................................. 36
Section 13.2 Winding-up .................................................. 36
ARTICLE XIV - MISCELLANEOUS ............................................................ 37
Section 14.1 After-Acquired Shares ....................................... 37
Section 14.2 Rights of Transferees; Requirement to Become a Party ........ 37
Section 14.3 Owner of Shares ............................................. 37
Section 14.4 Effect of Ceasing to Own an Interest in the Company ......... 37
Section 14.5 Conflict of Terms ........................................... 37
Section 14.6 Legend ...................................................... 37
Section 14.7 Notices ..................................................... 38
Section 14.8 Applicable Law; Forum Selection ............................. 38
Section 14.9 Arbitration ................................................. 38
Section 14.10 Amendment ................................................... 39
Section 14.11 Assignment .................................................. 39
Section 14.12 Expenses .................................................... 39
Section 14.13 Specific Enforcement ........................................ 39
Section 14.14 Headings .................................................... 39
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Section 14.15 Entire Agreement ............................................ 39
Section 14.16 Waivers ..................................................... 39
Section 14.17 Severability ................................................ 39
Section 14.18 No Third Party Beneficiaries ................................ 40
Section 14.19 Public Statements ........................................... 40
Section 14.20 $ ........................................................... 40
Section 14.21 Execution in Counterparts ................................... 40
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Schedule 1: Subscription of Shares; Percentage Share
Schedule 2: Capital Commitments
Schedule 3: Addresses for Notices
Exhibit A: Bye-Laws and Memorandum of Association
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SECOND AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
THIS SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT,
dated as of March 24, 2000 (as amended, supplemented or otherwise modified from
time to time, this "Agreement"), by and among (i) GCT PACIFIC HOLDINGS, LTD., a
company organized under the laws of Bermuda ("GCT"), (ii) SCS (BERMUDA) LTD., a
company organized under the laws of Bermuda ("SCS"), (iii) MARUBENI PACIFIC
CABLE LIMITED, a company organized under the laws of Bermuda ("Marubeni") and
(iv) PACIFIC CROSSING LTD., a company organized under the laws of Bermuda (the
"Company") amends, restates and supersedes in its entirety that certain Amended
and Restated Shareholders Agreement, dated as of July 8, 1998, by and among the
Company, GCT, SCS and Marubeni (the "First Amended and Restated Shareholders
Agreement").
W I T N E S S E T H:
WHEREAS, in connection with the establishment of the Company
and the parties' desire to plan and develop together the ownership and operation
of a subsea fiber optic ring cable system to be named "Pacific Crossing" or
"PC-1" connecting Japan and the United States (the "System"), the Company, GCT,
SCS, Marubeni and Marubeni Corporation, a corporation organized under the laws
of Japan, entered into that certain shareholders agreement, dated as of April 9,
1998 (the "Original Shareholders Agreement"), in order to set forth certain
understandings regarding the shareholders' relationship with the Company and
each other;
WHEREAS, the parties to the Original Shareholders Agreement
desired to amend various provisions of the Original Shareholders Agreement and,
as a result, the Company, GCT, SCS and Marubeni entered into the First Amended
and Restated Shareholders Agreement which amended, restated and superseded in
its entirety the Original Shareholders Agreement;
WHEREAS, the parties to the First Amended and Restated
Shareholders Agreement desire to amend various provisions of the First Amended
and Restated Shareholders Agreement and, as a result, desire to enter into this
Agreement;
WHEREAS, GCT is a subsidiary of Asia Global Crossing Holdings
Ltd., which in turn is a subsidiary of Global Crossing Ltd.; and
WHEREAS, GCT recently purchased the minority interests in SCS
and, as a result, SCS is wholly-owned by GCT;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and agreements hereinafter set forth, which the parties
hereto agree is good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree that the First Amended and Restated Shareholders Agreement is
hereby amended and restated and superseded in its entirety as follows:
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ARTICLE I - DEFINITIONS
Section 1.1 Definitions. As used herein, the following terms
shall have the following meanings:
"Additional Shares" shall have the meaning set forth in
Section 7.3(d).
"Affiliate" shall mean, with respect to any Person, any other
Person which directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with, such
Person; provided that the Company shall not be treated as an Affiliate
of any wholly-owned Subsidiary of the Company. For purposes of this
Agreement, the term "control" (and the derivative terms "controlling"
and "controlled") shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Second Amended and Restated
Shareholders Agreement, as amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
"Alternative Offer" shall have the meaning set forth in
Section 13.2(b).
"Auction Bank" shall have the meaning set forth in Section
13.2(b).
"Board of Directors" shall have the meaning set forth in
Section 3.1.
"Budgeted Capital Contribution" shall have the meaning set
forth in Section 2.7.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in Bermuda or the State
of New York are authorized or obligated by law or executive order to
close.
"Capacity" shall mean telecommunications capacity on the
System.
"Capacity Purchase Agreement" shall mean an agreement
providing for the sale, lease or other disposition of Capacity.
"Capital Account" shall have the meaning set forth in Section
5.3.
"Capital Call Date" shall mean each Business Day on which the
Shareholders are requested by the Company to make a Budgeted Capital
Contribution to the Company, which Business Day (a) shall be specified
by the Company in a Capital Call Notice delivered by the Company to
each of the Shareholders and (b) shall be no less than 15 days from the
date of delivery of such Capital Call Notice by the Company.
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"Capital Call Notice" shall mean a written notice requesting
that Capital Contributions be made by the Shareholders to the Company,
which notice shall (a) be delivered by the Company to each Shareholder,
(b) call for contributions to the Company by the Shareholders of all or
a portion of their Budgeted Capital Contributions, (c) specify the
Capital Call Date on which such Capital Contributions are to be made
and (d) specify the account of the Company to which the Capital
Contributions should be made available, all in accordance with Section
2.7.
"Capital Commitment" shall have the meaning set forth in
Section 2.7.
"Capital Contribution" shall mean, with respect to any
Shareholder, any contribution by such Shareholder to the Company in
accordance with the terms of Section 2.7 or Section 2.8.
"Capital Expenditure" shall mean for any period, with respect
to the Company, any expenditure (other than any expenditure made
pursuant to the Supply Contract) by the Company or any subsidiary
thereof for the acquisition or leasing (pursuant to a capital lease) of
fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period)
which should be capitalized under US GAAP on a consolidated balance
sheet of the Company and any subsidiaries thereof.
"Carrier" shall mean any telecommunications common carrier or
any Affiliate thereof.
"Chairman of the Board" shall have the meaning set forth in
Section 3.1.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended from time to time.
"Common Shares" means common shares of the Company.
"Company Business" shall have the meaning set forth in Section
2.3.
"Company Election Notice" shall have the meaning set forth in
Section 7.2(a).
"Company Sale" shall have the meaning set forth in Section
13.2(a).
"Confidential Information" shall have the meaning set forth in
Section 10.1.
"Construction Budget" shall mean the construction budget
setting forth all costs related to the design, development,
engineering, financing, acquisition, landing, completion, construction,
installation, testing and start-up of the System, as amended,
supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Construction Completion Date" shall mean the date on which
the construction of the System has been completed in accordance with
the terms of the Supply Contract and the System has become operational
and ready for commercial service.
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"Construction Costs" shall mean all costs related to the
design, development, engineering, financing, acquisition, installation,
construction, landing, completion, testing and start-up of the System
set forth in the Construction Budget.
"Construction Financing" shall mean all third party financing
incurred by the Company or any of its subsidiaries to pay Construction
Costs, including all commercial bank financing, vendor financing and
issuances of debt and equity securities by the Company or any
subsidiary of the Company for such purpose, including any refinancing
thereof, but excluding the Capital Contributions.
"Default Notice" shall have the meaning set forth in Section
11.1.
"Defaulting Shareholder" shall mean, as of any date of
determination, any Shareholder as to which an Event of Default shall
have occurred and be continuing.
"Deputy Chairman" shall have the meaning set forth in Section
3.1.
"Director" shall mean any Person duly elected to the Board of
Directors pursuant to Section 3.1.
"Director Designee" shall have the meaning set forth in
Section 3.1.
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
"Drag-Along Notice" shall have the meaning set forth in
Section 7.4(b).
"Drag-Along Notice Date" shall have the meaning set forth in
Section 7.4(b).
"Drag-Along Sale" shall have the meaning set forth in Section
7.4(a).
"Drag-Along Sale Date" shall have the meaning set forth in
Section 7.4(b).
"Event of Default" shall have the meaning set forth in Section
11.1.
"Exit Notice" shall have the meaning set forth in Section
7.9(d).
"Exit Shares" shall have the meaning set forth in Section
7.9(d).
"Failed Shareholder Meeting" shall have the meaning set forth
in Section 3.4(d).
"Financial Services Agreement" shall mean the Financial
Services Agreement, dated as of May 6, 1998, between Global Crossing
Development Co. and the Company, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Fiscal Quarter" shall mean each fiscal quarter comprising a
portion of any Fiscal Year.
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"Fiscal Year" shall mean the accounting year of the Company
commencing each year on January 1 and ending on the following December
31, or such other accounting year as the Company may from time to time
adopt. The Fiscal Year may differ from the Company's taxable year.
"Fully Subscribed Shareholder" shall have the meaning set
forth in Section 2.8(e).
"Further Capital Notice" shall have the meaning set forth in
Section 2.8(e).
"Independent Accountants" shall mean Xxxxxx Xxxxxxxx or such
other accounting firm as may be selected by the Board of Directors.
"Initial Configuration" shall mean the configuration of the
System contemplated pursuant to the Supply Agreement, prior to any
amendment or supplement thereto.
"Initiating Shareholders" shall have the meaning set forth in
Section 7.4(a).
"Intercompany Agreement" shall mean any agreement executed by
the Company or a Subsidiary of the Company (i) to which a Shareholder,
any Affiliate thereof or any Related Party thereto is also a party or
(ii) in which a Shareholder, any Affiliate thereof or any Related Party
thereto has a substantial financial interest.
"Interest or Percentage Interest" shall mean, with respect to
each Shareholder, its percentage interest in the Company, initially as
set forth next to its name on Schedule 1, so long as each Shareholder
pays its Subscription Price, makes its Budgeted Capital Contributions
in accordance with Section 2.7 and makes its pro rata portion of any
contributions of New Capital in the form of additional equity in
accordance with Section 2.8, and as such initial Percentage Interest
shall be adjusted to reflect the fact that any such Shareholder fails
to make any Budgeted Capital Contribution or its pro rata portions of
any such New Capital or makes a Budgeted Capital Contribution or New
Capital call on behalf of a Defaulting Shareholder in accordance with
the terms hereof; to the extent there are new Shareholders, then, with
respect to any Shareholder, it shall mean the percentage that results
from dividing the total value of such individual Shareholder's capital
and other contributions by the aggregate value of all the Shareholders'
capital and other contributions, as agreed between the Shareholders.
"Involuntary Transfer Notice" shall have the meaning set forth
in Section 7.5.
"Marketing Agreement" shall mean the Marketing Agreement,
dated as of May 6, 1998, between Global Crossing International Ltd. and
the Company, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof and of
the Construction Financing.
"New Capital" shall have the meaning set forth in Section
2.8(a).
"New Capital Notice" shall have the meaning set forth in
Section 2.8(c).
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"Notice" shall have the meaning set forth in Section 7.2(a).
"Notice Date" shall have the meaning set forth in Section
7.3(c).
"OA&M Agreements" shall mean the collective reference to (a)
the Operations, Administration and Maintenance Agreement, dated as of
August 20, 1999 between Global Crossing Network Center Ltd. and the
Company, and (b) the Operations and Maintenance Agreement, dated as of
August 20, 1999, between Global Access Limited and the Company, as each
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof and of the Construction Financing.
"Offeree" shall have the meaning set forth in Section 7.2(a).
"Offeree Election Notice" shall have the meaning set forth in
Section 7.2(b).
"Offeree Election Number" shall have the meaning set forth in
Section 7.2(b).
"Offered Shares" shall have the meaning set forth in Section
7.2(a).
"Offeror" shall have the meaning set forth in Section 7.2(a).
"Officers" shall have the meaning set forth in Section 3.3(a).
"Operating Budget" shall mean, for each Operating Year, the
operating budget setting forth all operating costs of the Company for
such Operating Year and adopted pursuant to the procedures described in
Section 3.7, as such operating budget may be amended, supplemented or
otherwise modified from time to time in accordance with the terms
hereof.
"Operating Year" shall mean (a) initially, the period
beginning on the initial date of commercial operation of the System and
ending on the next December 31 and (b) thereafter, each ensuing
calendar year.
"Other Holders" shall have the meaning set forth in Section
7.3(a).
"Partnership Election" shall have the meaning set forth in
Section 5.2.
"Permitted Transferee" shall have the meaning set forth in
Section 7.1(b).
"Person" shall mean any individual, partnership, joint
venture, corporation, limited liability company, limited duration
company, limited life company, association, trust or other enterprise
or a government, including any agency thereof.
"Principal Executive Officer" shall mean the President, the
Chief Financial Officer and each Senior Vice President (or the
equivalent thereof).
"Pro Rata Share" shall have the meaning set forth in Section
7.2(b).
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"Purchase Notice" shall have the meaning set forth in Section
7.2(b).
"Purchase Price" shall have the meaning set forth in Section
7.9(d).
"Recalled Shareholder Meeting" shall have the meaning set
forth in Section 3.4(d).
"Register" shall have the meaning set forth in Section 2.6(a).
"Related Party" means, with respect to any Shareholder (a) any
Affiliate of such Shareholder, (b) any Person in which such Shareholder
or Affiliate of such Shareholder has a substantial economic interest,
(c) any Person having a substantial economic interest in any such
Affiliate or (d) any Person in which a Person specified in clause (a),
(b) or (c) above has substantial economic interest.
"Sale Notice" shall have the meaning set forth in Section
7.3(c).
"Selling Shareholder" shall have the meaning set forth in
Section 7.3(a).
"Share Capital" shall have the meaning set forth in Section
2.5.
"Share Percentage" shall mean, at any time with respect to any
Shareholder, the percentage which the number of Common Shares owned by
such Shareholder then constitutes of the aggregate number of Common
Shares then outstanding.
"Shareholder" shall mean each of GCT, SCS and Marubeni and
each other Person, if any, that hereafter becomes a party to this
Agreement; a Shareholder that transfers all of its Shares in the
Company in accordance with the provisions of this Agreement shall cease
to be a Shareholder. The initial Shareholders will be GCT, SCS and
Marubeni.
"Shareholder Loans" shall have the meaning set forth in
Section 2.8(a).
"Shareholders' Allotment" shall have the meaning set forth in
Section 7.3.(a).
"Shareholders' Shares" shall have the meaning set forth in
Section 7.3.(a).
"Shares" shall mean (a) the shares representing the common
shares of the Company, (b) any security or other instrument (i)
received as a dividend on, or other payment made to holders of, such
shares (or any security or other instrument referred to in this
definition) or (ii) issued in connection with a split of such shares
(or any security or other instrument referred to in this definition) or
as a result of any exchange or reclassification of such shares (or any
security or other instrument referred to in this definition),
reorganization, recapitalization, consolidation or merger, (c) any
option, warrant or right to acquire such shares (or any security or
other instrument referred to in this definition) and (d) any security
or other instrument exchangeable for, or convertible into, such shares
(or any security or other instrument referred to in this definition).
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"Special Purpose Shareholder" shall have the meaning set forth
in Section 7.2(f).
"Subscription Notice" shall have the meaning set forth in
Section 2.8(d).
"Subscription Price" shall mean, with respect to the Shares
subscribed by each initial Shareholder, the amount paid by such initial
Shareholder for such Shares as set forth on Schedule 1 hereto under the
heading "Total Purchase Price."
"Subsidiary" shall mean, as to any person, (a) any corporation
more than 50% of whose stock of any class or classes having by 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.
"Supermajority Board Approval" shall have the meaning set
forth in Section 3.2(b).
"Supermajority Shareholder Approval" shall have the meaning
set forth in Section 3.4(f).
"Supply Contract" shall mean the Project Development and
Construction Contract, dated as of April 21, 1998, between Tyco
Submarine Systems Ltd. and the Company, as the same may be amended,
supplemented, amended and restated or otherwise modified from time to
time in accordance with the terms hereof and of the Construction
Financing.
"System" shall having the meaning ascribed to such term in the
recitals of this Agreement.
"System Contracts" shall mean the Supply Contract, the
Marketing Agreement, the OA&M Agreements and each other material
contract relating to the construction, operation or maintenance of the
System, but excluding Capacity Purchase Agreements.
"System Reconfiguration" shall have the meaning assigned
thereto in Section 3.2(b).
"Tag-Along Notice" shall have the meaning set forth in Section
7.3(d).
"Tag-Along Sale" shall have the meaning set forth in Section
7.3(a).
"Tag-Along Sale Date" shall have the meaning set forth in
Section 7.3(c).
"Termination Event" shall have the meaning set forth in
Section 13.1.
"Termination Notice" shall have the meaning set forth in
Section 11.2(c).
"Third Party" shall have the meaning set forth in Section
7.4(a).
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"Third Party Proposal" shall have the meaning set forth in
Section 7.4(f).
"Transfer" shall have the meaning set forth in Section 7.1(a).
"Transaction Documents" shall mean, collectively, this
Agreement, the System Contracts, the Financial Services Agreement, each
agreement relating to the Construction Financing and each other
agreement entered into by any Person which the Shareholders agree shall
be a Transaction Document.
"US GAAP" shall mean generally accepted accounting principles
in the United States of America in effect from time to time.
Section 1.2 Other Definitional Provisions. (a) Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in any other document made or delivered pursuant
hereto.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Article,
Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(d) Except as otherwise specified herein, each reference in
this Agreement to a Transaction Document shall be deemed (i) to include all
exhibits, annexes, schedules or other attachments thereto and (ii) to refer to
such Transaction Document as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms and the terms of this
Agreement.
(e) Each reference in this Agreement to a Person shall be
deemed to include such Person's permitted successors and assigns.
(f) The use of the word "including" in this Agreement means
"including, without limitation".
ARTICLE II - ORGANIZATION AND CAPITALIZATION
Section 2.1 Formation of the Company. Subject to the terms
and conditions hereof, the Shareholders have established the Company as an
exempted company limited under the laws of Bermuda. The Shareholders have taken,
or have caused to be taken, all such actions as may be required under the laws
of Bermuda in connection with the formation of the Company on the terms and
conditions set forth herein and the Shareholders agree to take, or cause to be
taken, all such actions as may be required under the laws of Bermuda in
connection with the continuation of the Company on the terms and conditions set
forth herein. The Company shall have an unlimited duration.
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Section 2.2 Name. The name of the Company shall be "Pacific
Crossing Ltd."
Section 2.3 Purpose. The Company's business shall be the
development, financing, construction, installation, operation, maintenance,
ownership of, and the sale, lease or other disposition of capacity on the
System, and all business related or reasonably incidental thereto, and the
Company may take any and all actions necessary, appropriate or consistent
therewith (collectively, the "Company Business"). The Company shall not engage
in any business other than the Company Business unless the Shareholders, by
unanimous written consent, grant their approval to engage in such other
business.
Section 2.4 Principal Place of Business; Registered Office.
The Company shall maintain its office and principal place of business at, and
its business shall be conducted from, Wessex House, 00 Xxxx Xxxxxx, Xxxxxxxx
XX00, Xxxxxxx. The address of the Company's registered office in Bermuda shall
be Xxxxx Xxxxx, 00 Xxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx. The Company's principal
place of business and registered office may be changed at any time by a vote of
the Board of Directors in accordance with Section 3.2(a).
Section 2.5 Share Capital. The authorized share capital of
the Company shall be $12,000 (the "Share Capital") and shall consist of
1,200,000 common shares having a par value of $.01 per share. In consideration
of each Shareholder paying the Subscription Price, the Company has issued to
each Shareholder the number of Common Shares set forth opposite such
Shareholder's name on Schedule 1 hereto. All Common Shares shall be identical
and shall entitle the holders thereof to the same rights and privileges. The
Shareholders shall have no personal liability for the debts or liabilities of
the Company beyond the amount, if any, of the Subscription Price unpaid by them
and shall not be required to contribute to the assets of the Company on a
winding up of the business of the Company.
Section 2.6 Share Register. (a) All Common Shares will be
issued in registered form only. All issued Common Shares shall be registered in
the Register of Shareholders (the "Register"), which shall be kept by the
President or by one or more persons designated for such purpose by the President
and the Register shall contain the name of each Shareholder, its address
including its country of residence or elected domicile, the number of Shares
held by it, the amount paid or agreed to be considered as paid on the Common
Shares, the date on which each Shareholder was entered into the Register and the
date at which any Shareholder ceased to be a member for one year after such
Shareholder was entered into the Register.
(b) Transfer of Shares shall be made in accordance with the
terms of this Agreement and the Bye-Laws of the Company, and shall be effected
by written instrument of transfer to be inscribed in the Register, such
instrument to be dated and signed by the transferor and the transferee or by
persons holding suitable powers of attorney to act therefor. The Board of
Directors shall accept and enter into the Register any Transfer effected in
accordance with the terms of this Agreement and the Bye-Laws of the Company and
pursuant to an agreement or agreements between the transferor and the
transferee, true and complete copies of which shall have been delivered to the
Company.
(c) Every Shareholder must provide the President with an
address to which all notices and announcements from the Company, the Board of
Directors or other Shareholders may be sent. Such address will also be entered
in the Register. Any Shareholder may, at any time, change its address as entered
in the Register by means of a written notification to the Company at its
registered office and,
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for so long as the registered office and principal place of business are not the
same address, also by written notification to the principal place of business or
to such other address as may be set by the President from time to time.
Section 2.7 Budgeted Capital Contributions. (a) Each
Shareholder agrees to make budgeted capital contributions in cash from time to
time ("Budgeted Capital Contributions") to the Company in an aggregate amount
not to exceed the amount set forth opposite its name on Schedule 2 hereto (as to
each Shareholder, its "Capital Commitment"). At any time and from time to time
after the date hereof, on any Capital Call Date, each Shareholder shall
contribute to the Company such portion of its unfunded Capital Commitment as
shall be specified by the Company in the Capital Call Notice delivered with
respect to such Capital Call Date; provided, however, that in no event shall any
Shareholder be required to make capital contributions in excess of its Capital
Commitment.
(b) In delivering a Capital Call Notice, the Company (i) will
call for Budgeted Capital Contributions from all Shareholders simultaneously and
pro rata in accordance with each Shareholder's Share Percentage and (ii) will
call only for such Budgeted Capital Contributions as are set forth in the
Construction Budget.
(c) Budgeted Capital Contributions by the Shareholders shall
be made in Dollars, by wire transfer of immediately available funds to the
account of the Company specified in the relevant Capital Call Notice. No
Shareholder shall be entitled to any interest or compensation by reason of its
Budgeted Capital Contributions or by reason of serving as a Shareholder. No
Shareholder shall be required to lend any funds to the Company. Each Shareholder
agrees to provide guarantees or other credit support for its unfunded Capital
Commitment to the extent required pursuant to the Construction Financing.
Section 2.8 New Capital. (a) In the event that the Company
from time to time requires capital in addition to the aggregate Capital
Commitments and the Board of Directors approves pursuant to Section 3.2(b) the
raising of additional capital ("New Capital") by the Company, each Shareholder
shall have the preferential right to subscribe to such New Capital in proportion
to its Share Percentage as of the date of the notice described in Section
2.8(c). All New Capital shall be in the form of loans to the Company
("Shareholder Loans"), unless the Board of Directors approves the issuance of
New Capital in a form other than debt. Shareholder Loans may be made directly by
a Shareholder or by an Affiliate of a Shareholder. No Shareholder shall
transfer, or allow any Affiliate of such Shareholder to transfer, any
Shareholder Loan except (i) to an Affiliate of such Shareholder or (ii)
concurrently with, in proportion to, and to the same party as, a Transfer of any
Shares by such Shareholder in accordance with Section 7.1. Each Shareholder
shall transfer, and shall cause any Affiliate of such Shareholder to transfer,
any Shareholder Loan concurrently with, in proportion to, and to the same party
as, a Transfer of any Shares by such Shareholder in accordance with Section 7.1.
If an Affiliate of a Shareholder shall cease to be an Affiliate of such
Shareholder, then, prior to such time, such Shareholder shall cause such
Affiliate to transfer any Shareholder Loans held by it to such Shareholder.
(b) The Shareholders acknowledge and agree that upon the
written request of any Shareholder, the Board of Directors shall promptly
determine whether or not to approve the issuance of New Capital and the terms of
such New Capital.
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(c) Promptly following a decision of the Board of Directors to
issue New Capital, the Company shall provide to each Shareholder a written
notice (a "New Capital Notice") specifying the total amount of the New Capital
proposed to be issued and the amount and terms of such New Capital for which
each Shareholder is entitled to subscribe.
(d) For a period of sixty (60) days following the date of the
New Capital Notice, each Shareholder may elect by written notice to the Company
(a "Subscription Notice") to subscribe for all or any portion of that amount of
New Capital for which the Shareholder is entitled to subscribe as set forth in
the New Capital Notice.
(e) At the end of such sixty (60) day period, (i) the Company
shall give to each Shareholder written notice of which Shareholders have
subscribed for New Capital and the amount of such New Capital for which each
such Shareholder has subscribed and (ii) in the event that any Shareholder does
not subscribe for the full amount of New Capital for which such Shareholder is
entitled to subscribe, the Company shall give to each Shareholder that had
subscribed for the full amount of New Capital for which it was entitled to
subscribe (a "Fully Subscribed Shareholder") written notice (a "Further Capital
Notice") specifying the amount of such unsubscribed New Capital. For a period of
fifteen (15) days from the date of any Further Capital Notice, each Fully
Subscribed Shareholder may elect, by giving a Further Subscription Notice to the
Company, to subscribe for additional unsubscribed New Capital, which shall be
allocated in the following order of priority: first, ratably to the Fully
Subscribed Shareholders in accordance with each Fully Subscribed Shareholder's
Share Percentage, to the extent the Fully Subscribed Shareholders have elected
to do so and second, if any Fully Subscribed Shareholders have subscribed for
more unsubscribed New Capital than has been allocated pursuant to the clause
first above, ratably to such Fully Subscribed Shareholders in accordance with
the unfulfilled subscriptions of such Fully Subscribed Shareholders.
(f) Each Subscription Notice shall constitute a binding
commitment of the Shareholder giving the same to purchase from the Company the
amount of New Capital set forth therein, at the price, by the date and on the
terms and conditions set forth in the Capital Notice, and shall be enforceable
by the Company against the subscribing Shareholder.
(g) Any New Capital in the form of debt shall have priority of
repayment of all principal and interest over any distribution of profits or any
distribution in return of capital by the Company to the Shareholders.
(h) The Company may issue any New Capital not subscribed for
by the Shareholders pursuant to this Section 2.8 to any other Person; provided
that such issuance shall have first been approved by the Board of Directors as
required by Section 3.2(b).
(i) Promptly following receipt by the Company of the New
Capital, the Company shall, and the Shareholders agree to take all actions
necessary to cause the Company to, execute all certificates, instruments,
amendments and other documents and take such other actions as are necessary or
desirable to effect the foregoing contribution to capital.
(j) In the event the New Capital is in the form of additional
equity, the number of Shares
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to be issued in connection with such New Capital shall be determined by the
Board of Directors at the time of the approval by the Board of Directors of a
decision to issue New Capital in a form other than debt.
Section 2.9 Use of Capital. Capital will be used for purposes
as the Board of Directors shall determine (consistent with the Construction
Budget (if applicable) and the then current Operating Budget), including for the
payment of Construction Costs.
Section 2.10 Distribution Policy. The Board of Directors shall
cause the Company to, at least semi-annually after the date of commercial
operation of the System, make a dividend to the Shareholders of 100% of the
amount of funds of the Company, which, in the reasonable determination of the
Board of Directors of the Company (which such determination shall be consistent
with the Operating Budgets of the Company and the Construction Financing
agreements and shall take into account amounts which are to be reserved for the
upgrade of the System pursuant to the Supply Contract), is available for the
payment of dividends or distributions, unless the holders of at least 75% of the
Common Shares agree in writing to a lesser amount (in which case such lesser
amount shall be paid to the Shareholders).
ARTICLE III - MANAGEMENT AND ADMINISTRATION
Section 3.1 Board of Directors of the Company.
(a)(i) The Company shall be managed by a board of directors
(the "Board of Directors") comprised of six (6) directors. Three (3) of
the initial Directors shall be nominated by GCT, one (1) of the initial
Directors shall be nominated by SCS and two (2) of the initial
Directors shall be nominated by Marubeni. In the event the respective
Share Percentage of the Shareholders change, including as a result of
the provisions of Section 2.8(j) or 11.2(b), or of the admission of
additional Shareholders as Shareholders of the Company, representation
on the Board of Directors (and, if necessary, the size of the Board of
Directors) shall be appropriately adjusted so that the Shareholders
shall have representation on the Board of Directors approximately
proportional to their respective ownership of outstanding Common
Shares. Directors nominated by a Shareholder shall be referred to as
such Shareholder's "Director Designees".
(ii) Each of the Shareholders hereby agrees to vote in favor
of, and to cause its Director Designees to vote in favor of, the
Director Designees of each other Shareholder for positions on the Board
of Directors. The Director Designees of GCT shall initially be: S.
Xxxxxxx Xxxxxx, Xx., Xxxxxx Xxxxx and Xxxx Xxxxxxx. The Director
Designee of SCS shall initially be: Xxxxx Xxxxxx. The Director
Designees of Marubeni shall initially be: Xxxxx Xxxxxx and Xxxxx Xxxxx.
Each Shareholder agrees not to take, and shall cause its Director
Designees not to take, any action to remove a Director Designee other
than in accordance with the following sentence (or in accordance with
Section 3.1(a)(i) as a result of a change in the respective Share
Percentage). As soon as practicable after receipt of a written request
from a Shareholder to remove a Director Designee of such Shareholder,
the other Shareholders agree to take, or cause to be taken by their
Director Designees, all appropriate action to effect the removal of
such
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Director Designee. Upon the removal, resignation or death of a Director
Designee, the Shareholder nominating such Director Designee shall
designate a replacement Director Designee, and the other Shareholders
agree to take, or cause to be taken by their respective Director
Designees, as soon as practicable after receipt of such designation,
all appropriate action to effect the election of such replacement
Director Designee.
(iii) Each Shareholder shall vote against or withhold consent
from any proposal to amend the Company's Memorandum of Association or
Bye-laws, current copies of which are attached hereto as Exhibit A, to
change the composition or character of the Board of Directors as set
forth in this Section 3.1, except to reflect the respective
proportionate Share Percentage and to be consistent with this
Agreement.
(iv) Each Shareholder agrees to vote or give written consent,
or to cause its Director Designees to vote or give written consent, for
the election of the person designated by GCT as Chairman of the Board
of Directors of the Company (the "Chairman of the Board") so long as
GCT owns more Common Shares than any other Shareholder and has not been
a Defaulting Shareholder. Each Shareholder agrees to vote or give
written consent, or to cause its Director Designees to vote or give
written consent, for the election of the person designated by Marubeni,
as Deputy Chairman of the Board of Directors of the Company (the
"Deputy Chairman") so long as Marubeni is the second largest
Shareholder of the Company and has not been a Defaulting Shareholder.
Each Shareholder agrees not to take, and shall cause its Director
Designees not to take, any action to remove either such persons as
Chairman of the Board or Deputy Chairman of the Board of Directors of
the Company during such period. The Chairman of the Board shall preside
over meetings of the Board of Directors but shall otherwise have no
additional voting or other rights in his capacity as such, including in
connection with any matters submitted to or voted upon by the Board of
Directors. In the absence of the Director then serving as Chairman of
the Board at any meeting of the Board of Directors, (A) the Chairman of
the Board for such meeting shall be the Director serving as Deputy
Chairman (or, in his absence, another Director nominated by the
Shareholder which nominated the Director then serving as Chairman of
the Board), and (B) the Board of Directors may continue to act in
accordance with the terms of this Agreement.
(v) Each Director shall serve for a term of the duration set
forth in the Bye-Laws or, if earlier, until the date of resignation or
removal of such Director or the date upon which the Shareholder that
nominated such Director ceases to be a Shareholder (or reduces its
interest such that it is no longer entitled to the same number of
Director Designees and chooses to remove such Director Designee as a
result); provided that, in the event that a Director resigns or is
removed prior to the end of the scheduled term of such outgoing
Director, the initial term for any Director which replaces such
outgoing Director on the Board of Directors shall be the remaining
scheduled term of such outgoing Director.
(vi) Any Director may resign by giving notice in writing to
the Secretary at the Registered Office. The Secretary will give written
notice to all the Shareholders.
Section 3.2 Requirements for Board Action. Except as provided in
Section 3.2(b) or mandatorily required by the laws of Bermuda, all actions taken
by the Board of Directors shall require
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the unanimous written consent of all Directors (excluding Directors appointed by
any Defaulting Shareholder) or the approval of a majority of all Directors
present or represented and entitled to vote on such actions at a meeting which
has been duly called and at which a quorum was present at the time such vote was
taken.
(b) The following actions shall require the unanimous written
consent of all Directors or the approval of at least 75% of the Directors
present or represented and entitled to vote on such actions at a meeting which
has been duly called and at which a quorum was present at the time such vote was
taken ("Supermajority Board Approval"), which the Shareholders agree and
acknowledge constitute matters outside the ordinary course of the Company's
business:
(i) subject to the provisions of Section 7.4, the merger or
consolidation of the Company with or into any other Person or of any
Person other than a Subsidiary of the Company, with or into the
Company, the sale of all or substantially all of the assets of the
Company or any material Subsidiary, the dissolution, liquidation,
reorganization or recapitalization of the Company or any similar
extraordinary corporate action or transaction involving the Company;
(ii) the incurrence of indebtedness by the Company or any of
its Subsidiaries in excess of $100 million in aggregate principal
amount, other than indebtedness originally incurred pursuant to the
Construction Financing;
(iii) refinancing of any indebtedness of the Company or any of
its Subsidiaries in excess of $100 million in outstanding principal
amount;
(iv) a fundamental change to the Company's business plan or
Construction Budget, or a change in the Company's marketing plan if
such change would result in a plan that is not a market-based, arms
length pricing plan;
(v) the approval of any Operating Budget for any Operating
Year in which the aggregate amount of costs budgeted to be incurred by
the Company is greater by 30% or more than the aggregate amount of
costs that were budgeted to be incurred by the Company in the Operating
Budget for the preceding Operating Year;
(vi) the execution, material amendment or termination of any
material System Contract or any other agreement or agreements involving
more than $50,000,000 (in each case which is not an Intercompany
Agreement or a Capacity Purchase Agreement) or the material amendment
or material extension of the foregoing prior to the end of its stated
term;
(vii) sales of assets by the Company and its Subsidiaries,
other than in the ordinary course of business or pursuant to the
Construction Budget or the then current Operating Budget, with a
purchase price or fair market value in excess of $25 million per year
in the aggregate or which are otherwise material to the business of the
Company and its Subsidiaries;
(viii) the execution of any Intercompany Agreement (or the
amendment or extension thereof) or the approval of any transaction or
series of related transactions between the Company
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or any of its Subsidiaries and a Shareholder, Affiliate of a
Shareholder or a Related party, other than transactions whose terms are
expressly provided for in the Transaction Documents;
(ix) the making of Capital Expenditures in excess of those set
forth in the then current Construction Budget or Operating Budget to
the extent such Capital Expenditures are not permitted to be made under
the Construction Financing (as amended, supplemented or otherwise
modified from time to time);
(x) the issuance of any New Capital Notice or the incurrence
of any indebtedness to any Shareholder or any Affiliate thereof or any
Related Party thereof;
(xi) with respect to any Intercompany Agreement that by its
terms allows the Company to elect to renew or terminate such agreement
upon the occurrence of some specified event or circumstance (as would
occur, by way of example, with an Intercompany Agreement that is
automatically renewable after a specified period of time, unless the
parties otherwise agree), any election by the Company to terminate or
not renew such Intercompany Agreement and any determination of whether
a default has occurred and whether and what actions should be taken in
respect thereof and the exercise of any right or option shall be
determined by a majority of the Directors nominated by the
disinterested Shareholders;
(xii) the transfer of any ownership interest in any Subsidiary
of the Company to any Person other than a wholly-owned Subsidiary of
the Company;
(xiii) the undertaking of any system upgrade to enhance the
System beyond its current design capability of 640 gbs;
(xiv) the adoption of or change in the Company's dividend
policy;
(xv) any amendment or other modification of the Company's
Memorandum of Association or Bye-Laws, except as required by Section
14.5;
(xvi) the expansion of the System by means of a material
geographical addition to the configuration of the System or a material
geographical reconfiguration of the System from the Initial
Configuration (any such event, a "System Reconfiguration"), if such
System Reconfiguration would cost in excess of $100 million; or
(xvii) a fundamental change in the Company Business.
(c) Each Shareholder, following a preliminary vote, agrees to
cause its Director Designees to vote against or withhold its written consent
from any proposal regarding any matter listed in the preceding subsection (b)
unless the appropriate percentage of the Directors of the Company (as specified
in such subsections), pursuant to such preliminary vote, has indicated it will
vote or give written consent in favor of such proposal.
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(d) Each Shareholder agrees to notify each other Shareholder
of any Intercompany Agreement entered into after the date hereof to which it or
any of its Affiliates or Related Parties will be party.
(e) Any action approved by the Board of Directors may be taken
by any authorized Director or officer of the Company on behalf of the Company
and any action so taken shall bind the Company. The Board of Directors, at its
discretion, may grant broad operating powers to any Principal Executive Officer
of the Company, including with respect to matters set forth in Section 3.2(b)
(so long as such grant is authorized pursuant to Supermajority Board Approval).
Except as otherwise provided herein, no Shareholder or Director or any other
Person shall have the authority to bind the Company.
Section 3.3 Officers. (a) The officers of the Company (the
"Officers") shall consist of a President, a Chief Financial Officer, and such
other officers, including Senior Vice Presidents, Vice Presidents, Treasurers,
Assistant Treasurers, Secretaries, and Assistant Secretaries as the Board of
Directors shall deem necessary from time to time. Each officer shall hold office
until such officer resigns or is removed.
(b) The Board of Directors shall elect all Principal Executive
Officers. Any Director may at any time call a special meeting of the Board of
Directors to vote upon the dismissal of any Principal Executive Officer if such
Director, in his or her reasonable business judgment (or the reasonable business
judgment of the Shareholder appointing such Director), believes that such
Principal Executive Officer should be dismissed. Following any such dismissal,
the succeeding Principal Executive Officer shall be elected by the Board of
Directors.
(c) The President shall be the primary operating officer of
the Company and shall be responsible for the general and executive management
and daily administration of the operations and business of the Company in
accordance with the terms and conditions of this Agreement, the Construction
Budget, the Operating Budget then in effect and the Memorandum of Association of
the Company, including decisions as to timing and delivery of Capital Call
Notices in accordance with Section 2.7 (but subject to Section 3.2(b)). The
President shall also carry into effect all orders and resolutions of the Board
of Directors.
(d) The Chief Financial Officer shall, subject to the terms
and conditions hereof, oversee and be responsible for financial matters
pertaining to the Company and its obligations under this Agreement, shall
oversee the preparation of financial statements for the Company and its related
obligations to the Shareholders and discharge such other duties as are set forth
herein or as may from time to time be delegated to the Chief Financial Officer
by the Board of Directors or the President. The Chief Financial Officer shall
present reports on the financial condition of the Company from time to time to
the President and, upon request of any Director, at the specified meeting of the
Board of Directors.
(e) All other officers shall have such duties as may from time
to time be delegated to them by the Board of Directors or the President.
(f) The Board of Directors may establish and fund a
compensation plan for the President, the Chief Financial Officer and other
officers specified by the President and approved by the
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Board of Directors. Such plan shall provide for such compensation of such
officers, including any signing bonuses, base salary, incentive bonuses and
severance, as shall be determined by the Board of Directors.
(g) Notwithstanding anything to the contrary contained in this
Section 3.3, Marubeni's Director Designees shall have the right to appoint one
Senior Vice President of the Company. In the event that the Senior Vice
President appointed by Marubeni's Director Designees is ever removed or resigns,
Marubeni's Director Designees shall have the right to appoint a new Senior Vice
President in substitute therefor.
Section 3.4 Shareholders' Meetings. (a) The annual general
meeting of Shareholders shall be held, in accordance with Bermuda law, in
Bermuda at the registered office of the Company, or at such other place as may
be specified in the notice of meeting, on the first Friday in the month of June
in each year. If such day is not a Business Day in Bermuda, the annual general
meeting shall be held on the next following Business Day in Bermuda. All
meetings other than annual general meetings shall be called special general
meetings.
(b) Other meetings of Shareholders may be held at such times
as may be determined by vote of the Board of Directors in accordance with
Section 3.2(a) and specified in the notice of meeting for such meetings. Any
Shareholder, or Shareholders together, holding not less than one-tenth of the
Common Shares (so long as it is not a Defaulting Shareholder) may at any time
request the Board of Directors to call a special general meeting of
Shareholders. The request must state the purpose of the meeting, must be signed
by the requesting Shareholder(s) and deposited at the registered office. The
Board of Directors shall call a special general meeting of Shareholders
immediately following receipt of any such request. If the Board of Directors
fail to convene a special general meeting twenty-one days from the date of
deposit of the request, the requesting Shareholder(s) may convene a special
general meeting in accordance with Bermuda law. Each notice of meeting shall
specify the purpose or purposes of the meeting and the matters to be considered
at such meeting.
(c) Written notice of the place, date and time of every
meeting of Shareholders, whether annual or special, shall be given to each
Shareholder not less than 15 days nor more than 60 days prior to the date of
such meeting unless (i) such notice is waived in writing by all the Shareholders
and (ii) all Shareholders are present or represented at such meeting. At any
meeting so called, the Shareholders shall transact only such business as was
specified in the notice for such meeting and any other business which all
Shareholders determine is prudent.
(d) A quorum of the Shareholders (without which a vote of the
Shareholders on any matter may not be held) will consist of Shareholders holding
at least 75% of the issued and outstanding Common Shares (excluding the Common
Shares of any Shareholder which is a Defaulting Shareholder). Shareholders may
participate in a meeting of Shareholders by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear and speak to each other, and such participation in a
meeting will constitute presence in person at the meeting; provided that all
actions approved by the Shareholders at any such meeting will be reduced to
writing in the form of resolutions and will be signed by all Shareholders
participating in such meeting. Each Shareholder agrees not to avoid any meeting
for the purpose of frustrating a quorum of the Shareholders. If (i) a meeting of
the Shareholders has been called in accordance with Section 3.4(c) and a quorum
has
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not been achieved (a "Failed Shareholder Meeting") and (ii) another meeting for
the purpose of transacting the same business as set forth in the notice with
respect to the Failed Shareholder Meeting (a "Recalled Shareholder Meeting") is
called in accordance with Section 3.4(c) upon at least 15 days prior written
notice to all Shareholders, then a quorum for the Recalled Shareholder Meeting
shall not require the Shareholders who failed to attend the Failed Shareholder
Meeting.
(e) Subject to Section 3.4(f) and any mandatory provisions of
Bermuda law, all actions which are required by such law to be taken or approved
by the Shareholders shall require the approval of Shareholders holding more than
50% of the issued and outstanding Common Shares (excluding the Common Shares of
any Defaulting Shareholder) by affirmative vote at a meeting of Shareholders
held pursuant to this Section 3.4. Shareholders may vote upon and approve the
matters described in Section 3.4(f). Actions of the Shareholders may also be
taken by the unanimous written consent of all Shareholders (other than
Defaulting Shareholders).
(f) The following actions shall require the approval of
Shareholders holding at least 75% (or 100% in the case of clause (ii) below) of
the outstanding Common Shares (excluding the Common Shares of any Defaulting
Shareholder) by affirmative vote at a meeting of Shareholders held pursuant to
this Section 3.4 ("Supermajority Shareholder Approval"):
(i) any action which results in the dilution of a
Shareholder's Share Percentage;
(ii) any material change in the Company Business;
(iii) any issuance, purchase or redemption by the
Company of any securities, including Shares, of the Company, or any
change, increase or reduction in the capitalization of the Company;
(iv) subject to the provisions of Section 7.4, any
merger or consolidation of the Company or any material Subsidiary with,
or acquisition of all or substantially all of the assets or capital
stock of the Company or any material Subsidiary by, another person or
other business combination or any dissolution, liquidation or
winding-up of the Company or any material Subsidiary;
(v) any amendment of the Memorandum of Association of
the Company; or
(vi) any filing of a voluntary petition in bankruptcy
or for reorganization or for the adoption of an arrangement or an
admission seeking the relief therein provided under any existing or
future law of any jurisdiction relating to bankruptcy, insolvency,
reorganization or relief of debtors.
(g) Any action approved by the Shareholders may be taken by
any authorized Director or officer of the Company on behalf of the Company and
any action so taken shall bind the Company. Except as otherwise provided herein,
no Shareholder or Director or any other Person shall have the authority to bind
the Company.
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Section 3.5 Accounting, Record Keeping and Reporting.
(a) The books and records of the Company shall be kept in
accordance with US GAAP, consistently applied. The Company shall keep books,
records and accounts with respect to (i) all sums of money received and expended
by the Company and the matters in respect of which the receipt and expenditure
take place, (ii) all sales and purchases of goods by the Company and (iii) the
assets and liabilities of the Company.
(b) The accounts of the Company shall be audited by the
Independent Accountants. The annual financial statements of the Company shall be
audited in accordance with generally accepted auditing standards in the United
States.
(c) The books of account of the Company shall be kept and
maintained at the principal place of business of the Company or at such other
place as the Board of Directors shall determine. If the records of account are
kept at someplace outside Bermuda, there shall be kept at an office of the
Company in Bermuda such records as will enable the Directors to ascertain with
reasonable accuracy the financial position of the Company at the end of each
three month period. Each of the Shareholders, through their respective
authorized representatives, shall have the right at such Shareholder's expense
to visit and inspect any of the operations and any of the properties and assets
of the Company, including the books of account of the Company, and to make
copies and take extracts therefrom, and to discuss its affairs, finances and
accounts with its officers and the Independent Accountants all at such
reasonable times and as often as may be reasonably requested.
(d) As soon as practicable following the end of each Fiscal
Year, the Company shall cause to be prepared for the Company and shall deliver
to the Shareholders and the Board of Directors not later than 90 days following
the end of such Fiscal Year a statement of the results of operations for the
Fiscal Year, a balance sheet as at the end of such Fiscal Year, a statement of
retained earnings or deficit and a statement of cash flows for such Fiscal Year,
together with all schedules and footnotes thereto and a report thereon of the
Independent Accountants.
(e) As soon as practicable after the end of each month and
Fiscal Quarter the Company shall cause to be prepared and the Company shall
deliver to each Shareholder not later than 30 days following the end of such
month or Fiscal Quarter, as the case may be, an operating report for the Company
for such period, which report shall detail, among other things, sales of
Capacity made in such period, expenses incurred in such period, compared to the
Construction Budget or Operating Budget then in effect, and all supporting
activities of the President and any other employees of the Company and other
operating data.
(f) Under the direction of the Board of Directors, the Company
shall prepare and file, or shall cause to be prepared, as applicable, all
reports prescribed by any governmental authority having jurisdiction over the
Company, or the System, as the case may be.
(g) In addition to the reports described above, the Company
shall furnish such other financial and supporting information to each
Shareholder and the Board of Directors in such detail and with such frequency as
the Board of Directors may reasonably require.
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Section 3.6 Intentionally Omitted.
Section 3.7 Budgets. (a) The Construction Budget may be
amended by the President, subject to the approval of the Board of Directors in
accordance with Section 3.2.
(b) At least 60 days prior to the beginning of each Operating
Year, the Chief Financial Officer will prepare and present an annual operating
budget for such Operating Year, which upon Board approval in accordance with
Section 3.2, shall be adopted by the Company as its annual Operating Budget for
such Operating Year. Each proposed operating budget shall, among other things,
set forth an estimate of the revenues and expenditures (together with a
contingency) of the Company for such Operating Year and shall be prepared
consistent with budgets being prepared by other similar international
telecommunication companies. Except as otherwise provided in the contingency (or
with respect to emergency expenditures), no expenditure shall be incurred by or
on behalf of the Company which is not contemplated, either specifically or
generally, by the Operating Budget then in effect. Operating Budgets may be
amended by the President, subject to the approval of the Board of Directors in
accordance with Section 3.2.
Section 3.8 Deposits and Withdrawals of Funds. Funds of the
Company shall be deposited in such banks or other depositories as shall be
designated from time to time by the Board of Directors. All withdrawals from any
such depository shall be made only as authorized by the Shareholders or the
Board of Directors and shall be made only by check, wire transfer, debit
memorandum or other written instruction.
ARTICLE IV - CERTAIN BUSINESS ARRANGEMENTS
Section 4.1 Contracts for Services with Affiliates. The
Company or a Subsidiary of the Company may from time to time with the approval
of the Shareholders or the Board of Directors as provided in Article III enter
into one or more contracts with any Shareholder or a Shareholder's Affiliates or
Related Parties to provide services that are necessary or appropriate for the
proper functioning of the Company, including services in connection with the
construction, operation and sale of capacity of the System.
ARTICLE V - TAX MATTERS
Section 5.1 Tax Matters.
(a) For purposes of all dealings with taxes, the Board of
Directors shall appoint an officer (who may be the Chief Financial Officer) who
shall serve as the Company "Tax Matters" officer.
(b) The Tax Matters officer shall cause to be prepared the tax
returns for the Company and shall provide copies of all such tax returns to the
Shareholders for their approval, not to be unreasonably withheld or delayed,
prior to the filing of such returns but in any event no later than the date
specified by the Board of Directors.
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(c) The Tax Matters officer shall cooperate with all
Shareholders and, for other than routine correspondence and communications,
shall promptly provide Shareholders with copies of notices or other materials
from, and inform Shareholders of discussions engaged in with, the U.S. Internal
Revenue Service or tax authorities of other jurisdictions and shall provide the
Shareholders with notice of all scheduled administrative proceedings or audits,
including meetings with agents of the Internal Revenue Service or other
authorities, technical advice conferences and appellate hearings as soon as
possible after receiving notice of the scheduling of proceedings. Each of the
Shareholders shall be entitled to participate at its own expense in any such
administrative proceedings or audits.
Section 5.2 Partnership Election. (a) GCT shall have the
right to make, or cause the Company or any of its Subsidiaries to make, all tax
elections of the Company or such Subsidiary, which GCT deems appropriate.
Additionally, at any time, the Company or any of its Subsidiaries shall, if so
requested by GCT, make an election to be classified as a partnership or a
disregarded entity, as the case may be, for United States federal income tax
purposes (a "Partnership Election") by filing an election on Internal Revenue
Service Form 8832 (or any successor form), all of which elections shall be
effective as of a date specified by GCT. The Partnership Election may be signed
by any Director or Officer of the Company who is authorized by the Board of
Directors to sign on behalf of the Company.
(b) This Agreement currently provides that the liquidation of
the Company will be effected by the sale of Shares. The Shareholders agree that
it may be in the interest of all parties to provide that any liquidation could
also be effected by a sale of assets. The Shareholders agree to negotiate in
good faith to consider whether such an alternative is acceptable and if so, to
enter into an amendment to this Agreement to provide for such alternative.
Section 5.3 Capital Accounts; Book Allocations. A capital
account (each a "Capital Account") shall be maintained for each Shareholder. The
Capital Account of each Shareholder shall be credited with the Subscription
Price paid by such Shareholder, increased by any allocation of income or gain
and by any additional capital contributions (other than Shareholder Loans) by
that Shareholder, and shall be reduced by any allocations of loss, expense or
deduction and by any distribution to that Shareholder. Except as otherwise
provided herein, all items of Company income, gain, loss, expense or deduction
shall be allocated to the Capital Accounts of the Shareholders in proportion to
their Share Percentage. The foregoing provisions relating to the maintenance of
Capital Accounts and allocations of Company income, gain, loss, expense or
deduction are intended to comply with U.S. Federal Treasury regulations Section
1.704-1(b) (including, without limitation, the "qualified income offset"
provisions contained therein), and shall be interpreted and applied in a manner
consistent with such U.S. Federal Treasury regulations. Additionally, the
foregoing allocation provisions shall be interpreted and applied in a manner
consistent with the "minimum gain chargeback" provisions set forth in U.S.
Federal Treasury regulations Sections 1.704-2(f) and 1.704-2(i)(4).
Section 5.4 Tax Allocations. Except as otherwise required by
the Code or the U.S. Federal Treasury regulations, all items of Company income,
gain, loss, expense, deduction and any other items shall be allocated among the
Shareholders for federal income tax purposes in the same proportions as they
share the corresponding items pursuant to Section 5.3.
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Section 5.5 Income Tax Information. The Shareholders agree to
use their reasonable best efforts to cause the Company to prepare and send, or
cause to be prepared and sent, by April 1 of each Fiscal Year and to each Person
who was a Shareholder at any time during such Fiscal Year, copies of such
information as may be required for applicable income tax reporting purposes,
including such information as a Shareholder may reasonably request for the
purpose of applying for refunds of withholding taxes.
ARTICLE VI
[Intentionally omitted.]
ARTICLE VII - TRANSFER AND ASSIGNMENT
Section 7.1 Transfer of Securities.
(a) Except as expressly permitted by paragraph (b) below, no
Shareholder shall, directly or indirectly, sell (whether by involuntary or
judicial sale or otherwise), transfer, create, incur, assume or suffer to exist
a lien on, 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 Shares to any person.
(b) A Shareholder may (i) transfer any Shares or any interest
therein or any rights to purchase Shares hereunder to an Affiliate of such
Shareholder; provided, however, in the event that such Affiliate shall cease to
be an Affiliate of such Shareholder, then, prior to such time, such Shareholder
shall cause such Affiliate to transfer any Shares or interests therein or rights
to purchase Shares held by it to such Shareholder, (ii) pledge any or all Shares
or grant a security interest therein to secure indebtedness under any
Construction Financing or pledge any or all Shares or grant a security interest
therein to secure indebtedness of the Shareholder owing to a bank or other
lender, provided that any such bank or other lender (other than pursuant to the
Construction Financing) pursuant to this clause (ii) shall acquire only a
security interest in the Shares entitling such bank or other lender only to the
proceeds from any sale of the Shares in accordance with the terms of this
Agreement and shall not acquire title to the Shares or any other rights incident
thereto, and, in the case of any foreclosure on the Shares by such bank or other
lender, the pledgee shall be considered an "Offeror" (as defined below) and
shall not be permitted to consummate the foreclosure without complying with the
provisions of Section 7.2 hereof or (iii) subject to the provisions of Section
7.2, sell, transfer, assign, give or otherwise dispose of any Shares to any
Person (any such transferee pursuant to clause (i), (ii) or (iii) above shall be
referred to herein as a "Permitted Transferee"); provided, however,
notwithstanding anything to the contrary contained in this paragraph, no
Transfer shall be permitted (w) to a Person who is at such time a Carrier, (x)
under clause (ii) or (iii) above to any Person prior to the Construction
Completion Date except if such Person is a Shareholder, (y) to any Person unless
the creditworthiness of such Person is reasonably satisfactory to a majority of
the non-transferring shareholders or (z) if, as a result thereof, the Company
would be subject to any requirements it was not subject to immediately prior to
such Transfer including, without limitation, under United States federal or
state securities laws or regulations. Notwithstanding the foregoing, in the case
of a Permitted Transferee of a Shareholder where such transferee is a United
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States resident or citizen, any Transfer pursuant to this paragraph (b) shall be
subject to the prior written consent of the Company, which consent shall be
granted unless, in the opinion of the Company, such transfer might result in the
Company or any Shareholder incurring any tax liability, the Company being
involved in any litigation, the Company being registered or regulated as an
investment company under the United States Investment Company Act of 1940, as
amended, or suffering any other pecuniary or fiscal disadvantage or other
adverse effect which the Company might not otherwise incur or suffer.
(c) In the event a Transfer of any Shares has taken place in
violation of the provisions of this Agreement, the Board of Directors shall
refuse to register such Transfer in the Register and 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 Shares (all such dividends and
distributions being deemed waived), and the voting rights, if any, of such
Shares on any matter whatsoever shall remain vested in the transferor during the
period commencing with such transferor's initial noncompliance and ending when
compliance shall have occurred.
(d) GCT hereby confirms the validity of that certain Charge
Over Shares, dated as of July 30, 1998, as amended, restated or otherwise
modified from time to time, between GCT and Deutsche Bank AG, New York Branch,
as Administrative Agent. Marubeni hereby confirms the validity of that certain
Charge Over Shares, dated as of July 30, 1998, as amended, restated or otherwise
modified from time to time, between Marubeni and Deutsche Bank AG, New York
Branch, as Administrative Agent. SCS hereby confirms the validity of that
certain Charge Over Shares, dated as of July 30, 1998, as amended, restated or
otherwise modified from time to time, between SCS and Deutsche Bank AG, New York
Branch, as Administrative Agent.
Section 7.2 Right of First Refusal.
(a) Prior to any Shareholder making any Transfer in accordance
with clause (iii) of Section 7.1(b), such Shareholder (the "Offeror") shall
provide written notice (the "Notice") to the Company, which notice shall set
forth (i) confirmation that such Offeror intends to Transfer all or certain of
its Shares in a bona fide transaction with a third party in accordance with
Section 7.1(b)(iii), (ii) the name and address of each proposed transferee or
purchaser and such other information as is reasonably necessary to determine
that such transferee or purchaser is not a Carrier, (iii) the number of Shares
proposed to be Transferred (the "Offered Shares"), (iv) the proposed amount and
form of consideration to be paid for the Offered Shares, and (v) all other
material terms of the proposed Transfer. The Company shall provide each other
Shareholder (each, an "Offeree") a copy of the Notice within five days of
receipt thereof. Within 45 days of receipt of the Notice, the Company shall (if
and only if requested by Offerees holding 75% of the Shares other than the
Offered Shares) elect to buy all of the Offered Shares at the price and on the
terms and conditions set forth in the Notice by delivery of a written notice to
the Offeror (the "Company Election Notice") with a copy to each Offeree, which
notice shall constitute the binding agreement of the Company to purchase all of
such shares at the price and on the terms and conditions set forth in the
Notice. Within 45 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 Offered Shares, such Offeror shall deliver instruments of
transfer properly endorsed in blank, together with the corresponding
certificate(s) representing all such Offered Shares to the Company.
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(b) Each Offeree may elect to buy all or any portion of the
Offered Shares at the price and upon the terms and conditions set forth in the
Notice in the event that the Company shall elect not to deliver a Company
Election Notice or shall fail to deliver the purchase price of the Offered
Shares in accordance with the terms hereof. Each Offeree shall make such
election by delivery of a written notice (the "Offeree Election Notice") to the
Offeror within 45 days of the date of receipt of the Notice by the Company,
which Offeree Election Notice, in the event that the Company shall elect not to
deliver a Company Election Notice or shall fail to deliver the purchase price of
the Offered Shares, shall constitute the binding agreement of each Offeree to
purchase the number of Offered Shares set forth in the Offeree Election Notice
(the "Offeree Election Number") at the price and upon the terms and conditions
set forth in the Notice. If more than one Offeree shall send an Offeree Election
Notice and the aggregate Offeree Election Numbers equal or exceed the number of
Offered Shares, then each Offeree shall be entitled to purchase (i) its pro rata
share (the "Pro Rata Share"), based upon the relative interests in the Shares of
the Company, on a fully diluted basis, held by all Offerees, of the Offered
Shares, to the extent the Offerees have elected to do so and (ii) its pro rata
share based on the unfulfilled Offeree Election Numbers of the remaining Offered
Shares and the Offeree Election Notice shall be deemed to be an election to
purchase such Shares. If the Company shall elect not to deliver a Company
Election Notice or shall fail to deliver the purchase price of the Offered
Shares in accordance with the terms hereof, the Offeror shall deliver written
notice thereof (the "Purchase Notice") to each Offeree who has submitted an
Offeree Election Notice. The Purchase Notice shall state the number of Offered
Shares to be acquired by each such Offeree and the closing date for such
transaction, which date shall not be less than 30 days from the date of delivery
of the Purchase Notice to all such Offerees. At such closing, each such Offeree
shall deliver to such Offeror, or to such other person as such Offeror may
request, by wire transfer of immediately available funds, the amount of the
purchase price (as calculated below) of the Offered Shares to be purchased by
such Offeree, to be held in escrow against delivery of the instruments of
transfer properly endorsed in blank, and the corresponding certificate(s)
representing all such Offered Shares. If any Offeree shall fail to deliver such
purchase price, then the other Offerees may purchase, pro rata, the Offered
Shares to have been purchased by such Offeree by wire transfer of immediately
available funds of the purchase price for such additional Offered Shares, to be
held in escrow against delivery of the instruments of transfer properly endorsed
in blank, and the corresponding certificate(s) representing all such Offered
Shares. Upon receipt of payment for all of the Offered Shares, such Offeror
shall deliver instruments of transfer properly endorsed in blank and the
corresponding certificates representing all such Offered Shares to the
respective Offerees.
(c) If a Company Election Notice or Offeree Election Notice is
not received by such Offeror from the Company or any Offeree within the
respective periods specified in paragraphs (a) and (b) above, or if the Company
or the Offerees elect to purchase less than all of the Offered Shares or fail 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 Shares specified in the Notice to the proposed purchaser or transferee in
accordance with the terms of this Agreement, 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
Notice.
(d) 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, at the expense of the Offeror,
by a nationally recognized independent valuation consultant or appraiser (with
experience
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evaluating such type of property) selected by the Offeror and reasonably
satisfactory to the Company or each Offeree, as the case may be. All payments by
the Company or Offerees pursuant to this Section 7.2 shall be in cash.
(e) The closing of the transactions contemplated by this
Section 7.2 shall occur at the principal place of business of the Company unless
otherwise agreed to in writing by the Company and the parties to such
transaction.
(f) The provisions of this Section 7.2, as well as the proviso
contained at the end of the first sentence of Section 7.1(b), shall apply to any
transfer of any capital stock or other equity securities of any Shareholder or
other entity where substantially all of such Shareholder's or other entity's
assets are directly or indirectly comprised of Shares (a "Special Purpose
Shareholder").
Section 7.3 Tag-Along Rights.
(a) If any holder of Shares (the "Selling Shareholder"), at
any time or from time to time, enters into an agreement (whether oral or
written) to transfer any Shares in accordance with clause (iii) of Section
7.1(b) (a "Tag-Along Sale"), then each Shareholder other than the Selling
Shareholder (the "Other Holders") shall have the right, but not the obligation,
to participate in such Tag-Along Sale by selling the number of Shares
respectively owned by such Other Holder as calculated in the following manner.
Such Shares owned by the Other Holders are hereinafter referred to collectively
as the "Shareholders' Shares." The number of Shares that the Other Holders shall
be entitled to include in such Tag-Along Sale (the "Shareholders' Allotment")
shall equal the product (rounded down to the nearest whole share) of (i) the
total number of Shares proposed to be Transferred pursuant to the Tag-Along Sale
or such greater number of shares that the proposed purchaser in the Tag-Along
Sale shall agree to purchase or otherwise acquire, times (ii) a fraction, the
numerator of which shall equal the aggregate number of Shareholders' Shares on
the date of the Sale Notice (as defined below), and the denominator of which
shall equal the sum of (A) the aggregate number of Shares owned by the Selling
Shareholder on the date of the Sale Notice plus (B) the aggregate number of
Shareholders' Shares on the date of the Sale Notice. For purposes of this
Section 7.3, the number and price of Shares shall be calculated on a fully
diluted basis. Any such sales by the Other Holders shall be on the same terms
and conditions as the proposed Tag-Along Sale by the Selling Shareholder,
provided, however, that no Other Holder shall be required to make any
representation, covenant or warranty in connection with the Tag-Along Sale,
other than as to its ownership and authority to sell, free of liens, claims and
encumbrances, the Shares proposed to be sold by it.
(b) Notwithstanding the foregoing, this Section 7.3 shall not
apply to any transfer to a Shareholder or the Company pursuant to Section 7.2
hereof.
(c) The Selling Shareholder shall promptly provide each of the
Other Holders and the Company with written notice (the "Sale Notice") not less
than 30 days prior to the proposed date of the Tag-Along Sale (the "Tag-Along
Sale Date"). In order to facilitate the prompt delivery of the Sale Notice, the
Company hereby covenants to provide the Selling Shareholder participating in a
Tag-Along Sale access to the Register of the Company. Each Sale Notice shall set
forth (i) the name and address of each proposed transferee or purchaser of
Shares in the Tag-Along Sale, (ii) the name and address of the Selling
Shareholder and the number of Shares proposed to be transferred by such Selling
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Shareholder, (iii) the proposed amount and form of consideration to be paid for
such Shares and the terms and conditions of payment offered by each proposed
transferee or purchaser, (iv) the number of Shareholders' Shares held of record
as of the close of business on the date of the Sale Notice (the "Notice Date")
by the Other Holders to whom the notice is sent, (v) the aggregate number of
Shares held of record as of the Notice Date by the Selling Shareholder, (vi) the
number of Shares that the Other Holder is entitled to include in the Tag-Along
Sale (as computed in accordance with the equation set forth above) assuming each
Other Holder elected to sell the maximum number of Shareholders' Shares
possible, (vii) the number of Shareholders' Shares in the Shareholders'
Allotment, (viii) confirmation that the proposed purchaser or transferee is not
a Carrier and has been informed of the "Tag-Along Rights" provided for herein
and has agreed to purchase Shares in accordance with the terms hereof, and (ix)
the Tag-Along Sale Date.
(d) Each Other Holder who wishes to participate in the
Tag-Along Sale shall provide written notice (or oral notice confirmed in
writing) (the "Tag-Along Notice") to the Selling Shareholder and the Company not
less than ten days prior to the Tag-Along Sale Date. The Tag-Along Notice shall
set forth the number of Shares that such Other Holder elects to include in the
Tag-Along Sale, which shall not exceed the product of (x) the Shareholders'
Allotment times (y) a fraction, the numerator of which is equal to the aggregate
number of Shareholders' Shares owned of record as of the Notice Date by such
Other Holder and the denominator of which is the aggregate number of
Shareholders' Shares owned of record by all of the Other Holders as of the
Notice Date. The Tag-Along Notice shall also specify the aggregate number of
additional Shares owned of record as of the Notice Date by such Other Holder, if
any, which such Other Holder desires also to include in the Tag-Along Sale
("Additional Shares") in the event there is an undersubscription for the entire
Shareholders' Allotment. In the event there is an undersubscription by the Other
Holders for the entire Shareholders' Allotment, the Selling Shareholder
participating in the Tag-Along Sale shall apportion the unsubscribed
Shareholders' Shares to Other Holders whose Tag-Along Notices specified an
amount of Additional Shares, which apportionment shall be on a pro rata basis
among such Other Holders in accordance with the number of Additional Shares
specified by all such Other Holders in their Tag-Along Notices.
(e) The Company shall determine the aggregate number of Shares
to be sold by each participating Other Holder or in any given Tag-Along Sale in
accordance with the terms hereof, and the Tag-Along Notices given by the Other
Holders shall constitute their binding agreements to sell such shares at the
price and on the terms and conditions applicable to such sale.
(f) If a Tag-Along Notice is not received by the Selling
Shareholder participating in the Tag-Along Sale from an Other Holder prior to
the ten day period specified above, the Selling Shareholder shall have the right
to Transfer the number of Shares specified in the Sale Notice to the proposed
purchaser or transferee without any participation by such Other Holder (subject
to the right of Other Holders to sell 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 Selling Shareholder than those stated in
such Sale Notice and only if such sale occurs on a date within 90 days of the
Tag-Along Sale Date.
(g) The provisions of this Section 7.3 shall apply to any
transfer of any capital stock or other equity securities of any Shareholder or
other entity where substantially all of such Shareholder's or other entity's
assets are directly or indirectly comprised of Shares.
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Section 7.4 Drag-Along Rights.
(a) Notwithstanding any other provision hereof, if
Shareholders holding 75% or more of the issued and outstanding Shares (the
"Initiating Shareholders") agree to sell (a "Drag-Along Sale") 100% of the
aggregate number of Shares then held by the Initiating Shareholders to any
person who is not an Affiliate of the Initiating Shareholders (a "Third Party"),
then upon the demand of the Initiating Shareholders, the other Shareholders
hereby agree to sell to such Third Party 100% of the Shares then held by them,
at a price per share and on terms and conditions no less favorable to such other
Shareholders than those on which the Initiating Shareholders have agreed to sell
their Shares to such Third Party, provided, however, that (i) no Shareholder
shall be obligated to participate in any Drag-Along Sale unless each Shareholder
is provided an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to such Shareholder, to the effect that the Drag-Along Sale is not
in violation of applicable Federal or state securities or other laws, (ii) no
Shareholder shall be required to make any representation, covenant or warranty
in connection with the Drag-Along Sale, other than as to its ownership and
authority to sell, free of liens, claims and encumbrances, the Shares proposed
to be sold by it and (iii) no Shareholder shall be required to accept any
consideration for its Shares other than cash and marketable securities.
(b) Prior to making any Drag-Along Sale, the Initiating
Shareholders shall promptly provide each Shareholder with written notice (the
"Drag-Along Notice") not more than 60 nor less than 30 days prior to the
proposed date of the Drag-Along Sale (the "Drag-Along Sale Date"). The
Drag-Along Notice shall set forth: (i) the name and address of the Third Party,
(ii) the proposed amount and form of consideration to be paid per share and the
terms and conditions of payment offered by the Third Party, (iii) the number of
shares of Shares held of record as of the close of business on the date of the
Drag-Along Sale Notice (the "Drag-Along Notice Date") by the Initiating
Shareholders, (iv) confirmation that the Initiating Shareholders are selling
100% of the aggregate number of shares of Shares then held by them to a Third
Party, and (v) the Drag-Along Sale Date.
(c) On the Drag-Along Sale Date, each Shareholder shall
deliver an instrument of transfer and the corresponding certificate or
certificates for all of its Shares, duly endorsed for transfer with signatures
guaranteed, to such Third Party in the manner and at the address indicated in
the Drag-Along Sale Notice and the Initiating Shareholders shall (i) cause each
Shareholder's pro rata share of the purchase price to be paid to such
Shareholder and (ii) deliver to each Shareholder the opinion of counsel
contemplated by Section 7.4(a) hereof.
(d) The provisions of this Section 7.4 shall apply regardless
of the form of consideration received in the Drag-Along Sale; provided, however,
that if the Initiating Shareholders have agreed to sell any Shares for non-cash
consideration, the proposed purchaser's offer shall include (or, at its option,
the Initiating Shareholders may otherwise provide) an option for the Shareholder
to participate in such Drag-Along Sale and to select as consideration for its
sale either its pro rata share of such non-cash consideration or cash in the
amount of the fair market value of such non-cash consideration, which fair
market value shall be determined by an internationally recognized independent
valuation consultant or appraiser (with experience evaluating such type of
property) to be selected by the Initiating Shareholders and reasonably
satisfactory to the Shareholders holding a majority of the outstanding shares of
Shares then held by Shareholders requesting the appraisal.
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(e) Any Shareholder who participates in the Drag-Along Sale
and receives its proportionate share of the purchase price therefrom who fails
to deliver an instrument of transfer properly endorsed in blank and
corresponding certificate or certificates for all of its Shares as described in
this Section 7.4, hereby appoints the President as its duly appointed
attorney-in-fact to execute an instrument of transfer and a suitable indemnity
in respect of the missing certificate(s) for its Shares. Furthermore, such
Shareholder shall for all purposes be deemed no longer to be a shareholder of
the Company, shall have no voting rights, shall not be entitled to any dividends
or other distributions in respect of the Company's Shares held by it (all such
dividends and distributions being deemed waived), shall have no other rights or
privileges granted to shareholders under this or any future agreement and, in
the event of liquidation of the Company, its rights with respect to any
consideration it would have received if it had complied with this Section 7.4,
if any, shall be subordinate to the rights of any equity holder.
(f) In the event that a proposal is made by a Third Party for
a merger or consolidation involving all of the Company's Shares or any of the
Company's Subsidiaries or to purchase all or substantially all of the Company's
assets (a "Third Party Proposal") and the Initiating Shareholders approves in
writing such Third Party Proposal, each Shareholder agrees to vote or give
written consent, or to cause its Director Designees to vote or give written
consent, in favor of such Third Party Proposal approved by the Initiating
Shareholders; provided that the other Shareholders shall not be required to take
any such action unless the price per share, and other terms and conditions of
such proposal, shall be no less favorable to the other Shareholders than those
applicable to the Initiating Shareholders; provided, further, that (i) no
Shareholder shall be obligated to take any such action unless each Shareholder
is provided an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to such Shareholder, to the effect that the Third Party Proposal is
not in violation of applicable Federal or state securities or other laws, (ii)
no Shareholder shall be required to make any representation, covenant or
warranty in connection with the Third Party Proposal, other than as to its
ownership and authority to transfer, free of liens, claims and encumbrances, the
shares of Shares proposed to be transferred by it and (iii) no Shareholder shall
be required to accept any consideration for its Shares other than cash and
readily marketable securities.
Section 7.5 Involuntary Transfers. In the event any or all of
a Shareholder's interest in the Company is transferred involuntarily, directly
or indirectly, by operation of law or otherwise, such Shareholder shall give
written notice (an "Involuntary Transfer Notice") promptly after receiving
knowledge thereof, and in any case within 15 days of such involuntary Transfer,
to the other Shareholders, with a copy to the transferee, stating the fact that
the involuntary Transfer occurred, the reason therefor, the date of such
Transfer, the name and address of the transferee and the interest acquired by
such transferee.
Section 7.6 Liability of Transferor. In the event that any
Shareholder proposes to make a Transfer permitted under this Article, such
Shareholder shall cause the transferee, prior to such Transfer, to execute one
or more instruments pursuant to which the transferee adopts and agrees to be
bound as a Shareholder to this Agreement and such transferring Shareholder shall
be released from the obligations hereunder (including its commitment under
Section 2.7) with respect to the interest represented by the transferred Shares
assumed by the transferee and, until the transferee executes said instrument(s),
such transfer shall not be valid and effective and the transferor shall remain
fully liable for the acts, omissions or defaults of the transferee with respect
to the interest represented by the
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proposed transferred Shares and the provisions of this Agreement, as if the
transferor were still a party hereto. No Transfer shall relieve the transferor
of responsibility for its own acts, omissions or defaults.
Section 7.7 Prohibited Transfers. Notwithstanding anything in
this Article VII to the contrary, no Shareholder may transfer its Shares (i) in
violation of applicable law and, in particular, without the permission of the
Bermuda Monetary Authority, as necessary, or (ii) in violation of any of the
provisions of the Company's Bye-Laws or Memorandum of Association.
Section 7.8 Expenses in Connection with Transfers. Each
Shareholder shall reimburse the Company for all reasonable expenses incurred by
the Company in connection with any Transfer proposed or effectuated by such
Shareholder.
Section 7.9 Exit Rights of SCS. At any time after the
Construction Completion Date, if any of the following events occurs:
(a) the Company fails to make 100% of the dividend
distributions available to be made in accordance with the provisions of
Section 2.10 because 75% or more of the Directors decided to distribute
less than 100% of such available dividend distributions as provided for
in such Section 2.10;
(b) the Company has disposed of the full capacity of the
System;
(c) seven (7) years have elapsed from the date of this
Agreement; or
(d) SCS's Share Percentage shall at any time fall below 10% as
a result of any action it has not approved or otherwise consented to;
then, SCS shall have, in its sole discretion and upon giving to all other
Shareholders written notice (hereinafter "Exit Notice"), the right to sell all
of its Shares ("Exit Shares") to the remaining Shareholders (if such remaining
Shareholders agree) for their fair market value in cash ("Purchase Price"). Upon
receipt of the Exit Notice, each Shareholder other than SCS shall have the right
to purchase from SCS a pro rata portion of the Exit Shares in proportion to its
respective Share Percentage. The procedural provisions of Section 7.2 shall
govern such offer and purchase. Upon the sale of the Exit Shares, SCS will no
longer be a party to this Agreement, and the provisions of Section 7.6 shall be
applicable. If the remaining Shareholders shall elect to purchase less than all
of the Exit Shares, then SCS shall have the right to engage a third party
adviser to sell the Exit Shares to persons other than the Shareholders in
accordance with the provisions of Section 7.1(b).
ARTICLE VIII - REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 8.1 Representations and Warranties. Each Shareholder
represents and warrants to each of the other Shareholders as of the date hereof
as follows:
(a) Such Shareholder is duly organized and validly existing
under the laws of the jurisdiction of its organization and has all requisite
power and authority to own, lease and operate its
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properties, to carry out its business as it is now being conducted and to
perform its obligations hereunder, and under its constituent documents, and to
consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by such
Shareholder of this Agreement and the other documents referenced herein to which
it is or is to be a party have been authorized by all necessary action on the
part of such Shareholder, and do not and will not: (i) require any
authorization, consent or approval that has not been given or obtained of such
Shareholder or to the best of its knowledge, any governmental authority, (ii)
violate any law, rule, regulation, order, or decree presently in effect and
having applicability to it, (iii) violate the organizational documents of such
Shareholder, (iv) violate any permit, concession, grant, franchise, license or
other governmental authorization, approval, judgment, order or decree, or any
mortgage, agreement, deed of trust, indenture or any other instrument to which
it is a party or by which it is bound or any of its properties or assets are
bound or which is otherwise applicable to it or (v) create or impose any liens,
mortgages, pledges, claims, security interests, charges or encumbrances or
obligations to create a lien, charge, pledge or mortgage.
(c) This Agreement is the legal and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms,
and any other document referenced herein to which it is or is to be a party,
when duly executed and delivered by the parties thereto, will be the legal and
binding obligation of such Shareholder enforceable against such Shareholder in
accordance with its terms.
(d) There is no litigation pending or, to such Shareholder's
knowledge, threatened to which such Shareholder or any of its Affiliates is a
party which, if adversely determined, would have a material adverse effect on
the financial condition or prospects or business of such Shareholder or the
Company.
(e) All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the intervention
of any person acting on behalf of such Shareholder in a manner that could give
rise to any valid claim against the Company or any other Shareholder for any
brokerage or finder's commission, fee or similar compensation.
(f) It is not the agent of any other Shareholder for any
purpose hereof, and no Shareholder is authorized to take any action on behalf of
any other Shareholder except as expressly set forth herein (except, in the case
SCS, where SCS is authorized to take action on behalf of GCT in GCT's capacity
as a shareholder of SCS).
Section 8.2 Covenants.
(a) Cooperation in Financing; Further Assurances. Each
Shareholder hereby undertakes to cooperate in good faith with all commercially
reasonable requests of the providers of the Construction Financing relating to
such Shareholder and its participation in the transactions contemplated by this
Agreement.
(b) Compliance with Laws. In the performance of their
obligations under this Agreement, the Shareholders and the Company shall, and
shall cause their respective directors, officers,
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employees and agents to, comply strictly with all applicable laws, regulations
and orders of all applicable jurisdictions.
(c) No Duty of Loyalty. The Shareholders and their Affiliates
shall have no fiduciary duty or other duty of loyalty to the Company or any
other Shareholder and shall be free to engage in business, or invest in
businesses, competitive with the Company.
ARTICLE IX
[INTENTIONALLY OMITTED]
ARTICLE X - CONFIDENTIALITY
Section 10.1 Confidentiality. Each of the Shareholders agrees
that materials disclosed to another Shareholder hereunder or under any
predecessor of this Agreement to evaluate various aspects of the transaction as
well as documents prepared by the Shareholders pursuant to this Agreement or
under any predecessor of this Agreement may contain proprietary confidential
information and trade secrets ("Confidential Information") and the disclosure or
unauthorized use of such Confidential Information could cause irreparable
injury. Each Shareholder agrees that all such Confidential Information provided
by another Shareholder will be used and disclosed only to officers, directors,
employees and advisors of a Shareholder who need to know such Confidential
Information for the purpose and to the limited extent necessary to evaluate the
business relationship herein described and to take the steps contemplated by
this Agreement (including without limitation, Article VII, so long as any
potential purchaser executes a confidentiality agreement agreeing to the
provisions set forth in this Article X) and such Confidential Information shall
not otherwise be disclosed to any other person. All extracts, digests, and
copies of such Confidential Information shall be maintained under strict control
by its recipient. The term "Confidential Information" shall not include such
portions of the Confidential Information which (i) is generally available to the
public or has become, after the time of discovery, part of the public domain by
publication or otherwise through no fault of the receiving party, (ii) was,
prior to the time of disclosure, already known to the receiving party and was
not acquired, directly or indirectly, from the disclosing party or its
representatives, (iii) is, after the time of disclosure, independently developed
by the receiving party and not as a result of disclosure of the Confidential
Information by the disclosing party to the receiving party, (iv) is, after the
time of disclosure, acquired in good faith without any restriction of
confidentiality from a third party who is under no secrecy obligation to the
disclosing party with respect thereto which is known to the receiving party or
(v) is no longer treated as confidential by the disclosing party. The provisions
of this Article X shall be also binding upon each shareholder of any Special
Purpose Shareholder.
ARTICLE XI - DEFAULTS AND REMEDIES
Section 11.1 Defaults. If any Shareholder:
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(a) commits a material breach of its obligations under this
Agreement, including its obligations under Section 2.7 which is not
cured within 10 Business Days after notice; or
(b) shall (i) fail generally to pay its debts as they become
due, (ii) admit in writing its inability to pay its debts generally as
they become due, (iii) commence a voluntary bankruptcy or insolvency
case or proceeding, (iv) consent to, or acquiesce in, the institution
of a bankruptcy or an insolvency proceeding against it or the entry of
a judgment, decree or order for relief against it in an involuntary
case or proceeding, (v) apply for, consent to or acquiesce in the
appointment of or taking possession by a custodian or its business or
of any part of its property, (vi) make a general assignment for the
benefit of its creditors or (vii) take any corporate action in
furtherance of or to facilitate, conditionally or otherwise, any of the
foregoing; or
(c) shall be subject to a judgment, decree or order of court
of competent jurisdiction which (i) is for relief against it in an
involuntary bankruptcy or insolvency case, (ii) appoints a custodian of
its business or for any part of its property or (iii) orders the
winding-up or liquidation of its affairs; and such judgment, decree or
order shall remain unstayed and in effect for a period of 30
consecutive days; or any bankruptcy or insolvency petition or
application shall be filed, or any bankruptcy case or insolvency
proceeding shall be commenced against it and such petition,
application, case or proceeding is not dismissed within 60 days;
then in the case of any event described in the foregoing subclauses (a), (b), or
(c) (each an "Event of Default") such Shareholder shall for the purposes hereof
be deemed a "Defaulting Shareholder." Shareholders which are not Defaulting
Shareholders shall for the purposes hereof be deemed "Non-Defaulting
Shareholders", and any Non-Defaulting Shareholder may (and the Company shall)
serve notice (a "Default Notice") on a Defaulting Shareholder of the occurrence
of an Event of Default.
Each Shareholder agrees that with respect to the payment of
its Budgeted Capital Contributions, time is of the essence, that any Event of
Default by any Shareholder would cause injury to the Company and to the other
Shareholders and that the amount of damages caused by any such injury would be
extremely difficult to calculate. Accordingly, the Shareholders agree that upon
any Event of Default by a Shareholder at any time, all of the succeeding
provisions of this Article XI shall apply.
Section 11.2 Actions Upon Default. (a) In the case of a
default described by Section 11.1(a) that is not a default caused by the failure
to fund a Budgeted Capital Contribution required pursuant to Section 2.7, the
Defaulting Shareholder shall have 90 days after the receipt of a Default Notice
within which to remedy the breach. During such 90 day period, the Shareholders
shall use their commercially reasonable efforts to resolve the matter to their
mutual satisfaction.
(b) In the case of a default described by Section 11.1(a) that
is a default caused by the failure to fund a Budgeted Capital Contribution
required pursuant to Section 2.7, the Defaulting Shareholder shall have five
Business Days after the designated Capital Call Date for such Budgeted Capital
Contribution to fund such Budgeted Capital Contribution. If, after such five day
period, the Defaulting Shareholder has not funded its required Budgeted Capital
Contribution, (i) the President shall promptly notify each Non-Defaulting
Shareholder of such failure and (ii) any Non-Defaulting Shareholder shall have
the right (but not the obligation), upon three days prior written notice to the
Defaulting Shareholder, to fund the unfunded portion of such Budgeted Capital
Contribution within 60
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Business Days after the designated Capital Call Date for such Budgeted Capital
Contribution. If a Non-Defaulting Shareholder funds the unfunded portion of such
Budgeted Capital Contribution, the Defaulting Shareholder, in its capacity as a
Shareholder, shall transfer Shares for no consideration to such Non-Defaulting
Shareholder, in its capacity as a Shareholder, such that after giving effect to
such transfer the Share Percentages of the Shareholders, in their capacities as
Shareholders, shall equal their respective Interests. Amounts contributed by a
Non- Defaulting Shareholder pursuant to this Section 11.2(b) shall not be, and
shall not be deemed to be, in respect of or in satisfaction of its Capital
Commitment hereunder. If, within 60 Business Days after the designated Capital
Call Date for such Budgeted Capital Contribution, a Defaulting Shareholder shall
not have made such Budgeted Capital Contribution (together with interest
thereon) and no Non-Defaulting Shareholder(s) shall have funded such Budgeted
Capital Contribution, then such Defaulting Shareholder's Interest shall be
reduced by half and each Non-Defaulting Shareholder's Interest shall be
increased by a ratable portion of such reduction. The Company shall cancel
Shares and issue new Shares to reflect the foregoing changes in Shareholders'
Interests.
(c) In the case of a default described by Section 11.1(b) or
Section 11.1(c), in the case of a default described by Section 11.1(a) that is
not a default caused by the failure to fund a Budgeted Capital Contribution
required pursuant to Section 2.7, if at the end of the applicable 90-day period
the Defaulting Shareholder has not remedied the default or the matter has not
otherwise been settled to the satisfaction of the Non-Defaulting Shareholders,
or in the case of a default described by Section 11.1(a) that is a default
caused by the failure to fund a Budgeted Capital Contribution required pursuant
to Section 2.7, if at the end of the applicable five day period, the Defaulting
Shareholder has not funded the required Budgeted Capital Contribution, then in
either case, the Non-Defaulting Shareholders shall have the right, at their
option, to (i) obtain money damages from the Defaulting Shareholder and/or (ii)
terminate this Agreement upon written notice (a "Termination Notice") to the
Defaulting Shareholder, in which event the provisions of Section XIII shall
apply, and/or (iii) exercise their purchase option pursuant to Section 11.3
below.
Section 11.3 Option of Non-Defaulting Shareholders to Purchase
Shares. (a) In addition to the remedies set out in Section 11.2, the
Non-Defaulting Shareholders may, within 90 days of their being so entitled,
purchase on a pro rata basis, the interest in the Company owned by the
Defaulting Shareholder for a price in cash equal to the lesser of (i) the fair
market value of such interest (as reduced pursuant to Section 11.2) at the end
of the most recently ended Fiscal Quarter and (ii) the amount of such interest
(as reduced pursuant to Section 11.2) less the amount owed to the Company in
respect of the Defaulting Shareholder's unpaid Budgeted Capital Contribution.
(b) If the Non-Defaulting Shareholders elect to purchase the
interest in the Company owned by the Defaulting Shareholder pursuant to this
Section 11.3 for a price less than that set forth in 11.3(a)(ii), the
Shareholders will attempt in good faith to determine the fair market value (on a
going concern basis) of the Company and the Shares. If the Shareholders cannot
agree on a valuation within 60 days after any Shareholder exercises its rights
under this Section 11.3, then the Company will retain an internationally known
investment banking firm to make an independent valuation of the fair market
value (on a going concern basis) of the Company and the Shares. The fees and
expenses of such investment banking firm will be borne by the Defaulting
Shareholder. The Defaulting Shareholder shall have the right to retain an
internationally known investment banking firm to make an independent
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valuation of the fair market value (on a going concern basis) of the Company and
the Shares. The fees and expenses of such investment banking firm shall be borne
by the Defaulting Shareholder.
(c) Each valuation of the Company and Shares pursuant to this
Section 11.3 shall take into account all of the relevant facts and circumstances
related to the Company at that time (including the price a willing buyer would
pay and a willing seller would accept in an arms-length transaction (including a
strategic premium), the number of Shareholders exiting the Company and the
ability of the Company to continue to maintain the System) and shall be
completed within one month after the relevant investment banking firm is
retained.
(d) If two investment banking firms are retained pursuant to
paragraph (b) above and the fair market values of the Company and the Shares as
determined by such investment banking firms differ by an amount which is less
than or equal to 20%, the fair market value of the Company and the Shares shall
be the average of such valuations. If the fair market values of the Company and
the Shares as determined by such investment banking firms differ by an amount
which is greater than 20%, such investment banking firms shall select a third
internationally recognized investment banking firm to determine the fair market
value (on a going concern basis) of the Company and the Shares, the fees and
expenses of which will be borne by the Shareholders in accordance with their
respective Interests. If the fair market value of the Company and the Shares as
determined by such third investment banking firm is between the fair market
values determined by the other two investment banking firms, the fair market
value of the Company and the Shares shall be the value determined by such third
investment banking firm. If the fair market value of the Company and the Shares
as determined by such third investment banking firm is greater than or equal to
the higher of the fair market values of the Company and the Shares as determined
by the other two investment banking firms or is less than or equal to the lower
of the fair market values of the Company and the Shares as determined by such
other investment banking firms, the fair market value of the Company and the
Shares shall be the average of the valuations of all three investment banking
firms.
Section 11.4 Other Remedies. The rights of the Shareholders
pursuant to this Article XI shall not be exclusive, but shall be in addition to
any other rights or remedies available to any of the Shareholders at law or in
equity.
ARTICLE XII - DEADLOCK
Section 12.1 Deadlock. If at any time there is a dispute or
disagreement which results in a Deadlock (as defined below), any Director or
Shareholder may notify each other Director or Shareholder (as the case may be)
that a Deadlock has occurred (a "Deadlock Notice"). Each Shareholder agrees that
upon delivery or receipt of a Deadlock Notice, it will use all reasonable
efforts to resolve such Deadlock within 60 days of the date of the Deadlock
Notice. If such Deadlock is not resolved within such 60 day period, then any
Shareholder may, by notice to the other Shareholders (the "Triggering Notice"),
initiate a Company Sale procedure pursuant to Section 13.2 below.
"Deadlock" means, at any time after three years from the date
hereof, any matter requiring the approval of 75% of the Directors or
Shareholders shall not have been approved by 75% of the Directors or
Shareholders but shall have been approved by at least 50% of the Directors or
Shareholders.
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ARTICLE XIII - TERMINATION AND DISSOLUTION
Section 13.1 Termination. This Agreement shall terminate and
the Company shall be liquidated upon the occurrence of any of the following
events (each a "Termination Event"):
(a) the Non-Defaulting Shareholders shall deliver a
Termination Notice pursuant to Section 11.2;
(b) by final, nonappealable court or other governmental order;
or
(c) by unanimous vote of the Shareholders.
Section 13.2 Winding-up. (a) Promptly after the occurrence of
a Termination Event or the delivery of a Triggering Notice, the Shareholders
shall seek to sell all of the issued and outstanding Shares to a buyer or buyers
(which may include a Shareholder or an Affiliate of a Shareholder) in accordance
with the provisions of this Section 13.2 (a "Company Sale"); provided that all
Shares shall be sold to such buyer or buyers at an identical price and on
identical terms.
(b) Following the occurrence of a Termination Event or the
delivery of a Triggering Notice, the Company and all Shareholders shall
cooperate in good faith in connection with such Company Sale and use their
reasonable efforts to assist in maximizing the consideration per share of the
Shares received by the Shareholders in such Company Sale. Promptly (and in any
event within 60 days), the Company will retain an internationally recognized
investment banking firm to assist in such Company Sale (the "Auction Bank"). The
Auction Bank will then conduct an auction in a commercially reasonable fashion
among potential purchasers identified by the Auction Bank, the Company and the
Shareholders, and will be instructed to obtain definitive bids for the Company
as soon as practical (and in any event within 180 days after it is retained by
the Company), which bids will be required to be for all of the outstanding
Shares and for consideration consisting entirely of cash. Following the
conclusion of the auction, the Company and the Shareholders will use their
reasonable best efforts to negotiate a Company Sale at the highest cash price
per Share that was offered (and to the party that made such offer) unless the
Board of Directors, by the affirmative vote of at least 75% of the Directors
determines that another offer (an "Alternative Offer") is in the best interests
of the Shareholders, in which case the Company and the Shareholders will use
their reasonable best efforts to negotiate a Company Sale to the party making
the Alternative Offer at the price specified in such Alternative Offer. Each
Shareholder shall sell to such purchaser all Shares then held by such
Shareholder on the terms and conditions contained in the definitive agreements
negotiated with such purchaser, and such sale shall be effected within 90 days
following identification of such purchaser by the Auction Bank, provided that
the consummation of such purchase and sale with respect to all Shareholders
shall be delayed to the extent necessary to comply with any regulatory filings
or other regulatory requirements applicable to the sale by any Shareholder.
(c) No sale of Shares may be triggered under this Section 13.2
unless the purchaser has agreed to purchase all of the then issued and
outstanding Shares and no Shareholder shall be required to sell less than all of
such Shareholder's Shares.
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ARTICLE XIV - MISCELLANEOUS
Section 14.1 After-Acquired Shares. All of the provisions of
this Agreement shall apply to (i) all Shares now owned or which may be
Transferred hereafter to, or owned by, any Shareholder, and (ii) all securities
and instruments (A) received by a Shareholder as a dividend on or other payment
made to holders of Shares, or (B) issued in connection with a split of Shares or
as a result of any exchange for or reclassification of Shares or a
reorganization, recapitalization, consolidation or merger.
Section 14.2 Rights of Transferees; Requirement to Become a
Party. If a Shareholder transfers any or all of its Shares to any Permitted
Transferee or other Person in compliance with this Agreement, such transferee
shall have the same rights hereunder as are given to, and shall be subject to
the same obligations as are imposed upon the Shareholder by the terms hereof
with respect to the Shares that are the subject of the Transfer. No Transfer
shall be in compliance with this Agreement or effective unless the transferee,
prior to such Transfer, agrees in writing to be bound by the terms of this
Agreement and to become a "Shareholder."
Section 14.3 Owner of Shares. The person in whose name Shares
are registered in the Register may be treated as the owner thereof for all
purposes, including without limitation, for the giving of notices under this
Agreement.
Section 14.4 Effect of Ceasing to Own an Interest in the
Company. If any Shareholder ceases to own any interest in the Company, such
Shareholder shall forthwith cease to be a party to this Agreement or a
Shareholder (without prejudice to any rights or obligations then existing or
accruing and on the basis that such Shareholder's obligations under Article X
shall continue to apply) and this Agreement shall be construed accordingly.
Section 14.5 Conflict of Terms. In the event that the terms of
this Agreement and the terms of any of the Company's Bye-Laws or Memorandum of
Association differ, the Shareholders shall take, and shall cause the Company and
its Board of Directors to take, such steps as are necessary to amend the
applicable Company's Bye-Laws or Memorandum of Association to reflect the terms
of this Agreement, so far as permitted by law. Until such time as the Bye-Laws
have been amended to reflect the terms of this Agreement, the terms of this
Agreement shall prevail as between the Shareholders, so far as permitted by law.
If any such amendment is not permitted by law, the applicable Company's Bye-Laws
or Memorandum of Association shall prevail.
Section 14.6 Legend. So long as the provisions of this
Agreement remain in effect, all certificates evidencing Shares issued after the
date hereof shall be endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS, AND THE SALE OR OTHER TRANSFER
THEREOF, OR ANY INTEREST THEREIN, MAY BE MADE ONLY IN A
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TRANSACTION NOT SUBJECT TO, OR PURSUANT TO AN EXEMPTION FROM,
THE REGISTRATION REQUIREMENTS OF SUCH ACT. THE SALE, TRANSFER,
PLEDGE OR OTHER ENCUMBRANCE OF DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO AND RESTRICTED
BY A SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT DATED
AS OF MARCH 24, 2000, 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, TAG-ALONG AND DRAG-ALONG PROVISIONS. COPIES OF THE
AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF THE COMPANY.
The Shareholders acknowledge that the Common Shares
outstanding as of the date hereof are endorsed with the legend referred to
above, except that reference is made to the Original Shareholders Agreement, as
amended, rather than this Second Amended and Restated Shareholders Agreement.
Section 14.7 Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
air courier or facsimile transmission to the persons and addresses set forth on
Schedule 3 hereto. 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.
Section 14.8 Applicable Law; Forum Selection. This Agreement
is governed by and shall be construed in accordance with the laws of the State
of New York (except to the extent the laws of Bermuda are mandatorily
applicable).
Section 14.9 Arbitration. The Shareholders agree that any
dispute arising out of or in connection with this Agreement or the transactions
contemplated hereby shall be submitted to arbitration. The Shareholders shall
negotiate in good faith and use all reasonable efforts to agree upon a
resolution of any dispute after receipt of written notice of such dispute from a
Shareholder. If the Shareholders cannot agree on an amicable settlement within
60 days from written submission of the matter by one Shareholder to another, the
matter shall be submitted to arbitration. The Shareholder invoking arbitration
shall select one arbitrator, the other Shareholder shall appoint one arbitrator,
and the two arbitrators so appointed shall select a third arbitrator. In the
event such arbitrators cannot agree upon a third arbitrator, a third arbitrator
shall be selected in accordance with the rules as then in effect of the American
Arbitration Association. The decision of two of the three arbitrators so
appointed as to the validity of any claim shall be conclusive and binding upon
the parties to this Agreement. Any such arbitration shall be held in New York,
New York under the international rules as then in effect of the American
Arbitration Association; provided that the arbitrators shall not have the powers
of amiable compfiteur or ex aequo et xxxx. The parties hereto intend that this
Agreement and any interpretation,
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construction or enforcement hereof by the arbitrators will be governed by the
specific terms of this Agreement. The official language of any such arbitration
will be English. Each party to any such arbitration shall pay its own expenses;
provided that the fees, costs and expenses of the third arbitrator shall be
borne equally by the Shareholder invoking arbitration, on the one hand, and the
other Shareholders, on the other hand.
Section 14.10 Amendment. No amendment, modification, waiver,
change or addition hereto shall be effective or binding on any party hereto
unless the same is in writing and signed by each of the parties hereto.
Section 14.11 Assignment. The provisions of this Agreement
shall be binding upon and shall inure to the benefit of the Shareholders and
their respective heirs, successors and permitted assigns. No transfer or
assignment of this Agreement shall be permitted unless the conditions set forth
in Article VII are satisfied.
Section 14.12 Expenses. Except as set forth in the
Construction Budget, each of the Shareholders shall be responsible for and pay
all expenses, costs and fees incurred or assumed by such Shareholder in
connection with the preparation, negotiation and execution of this Agreement,
compliance herewith and the consummation or the transactions contemplated
hereby.
Section 14.13 Specific Enforcement. Each of the parties hereto
acknowledges and agrees that (a) monetary damages would be an inadequate remedy
for a breach of any of the provisions of this Agreement, (b) 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 (c) in the event of any
action for specific performance it shall waive the defense that a remedy at law
would be adequate.
Section 14.14 Headings. The headings of this Agreement are for
reference only and shall not be deemed to form part of the text.
Section 14.15 Entire Agreement. This Agreement and the other
documents or instruments referred to herein when delivered, or required to be
delivered in connection herewith, constitute the entire agreement among the
Shareholders and supersede all prior agreements and undertakings, oral or
written, among them or between any of them with respect to the subject matter
hereof.
Section 14.16 Waivers. Any waiver, express or implied, by any
Shareholder of any right hereunder or of any failure to perform or breach hereof
by any other Shareholder shall not constitute or be deemed a waiver of any other
right hereunder or of any other failure to perform or breach hereof by any
Shareholder, whether of a similar or dissimilar nature, unless the same is in
writing and signed by each Shareholder.
Section 14.17 Severability. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of its other provisions. Following the determination that any
provision of this Agreement is unenforceable, the Shareholders shall negotiate
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in good faith a new provision that, as far as legally possible, most nearly
reflects the intent of the Shareholders and that restores this Agreement as
nearly as possible to its original intent and effect.
Section 14.18 No Third Party Beneficiaries. This Agreement is
solely for the benefit of the Shareholders and the Company, and their respective
successors and permitted assigns, and this Agreement shall not otherwise be
deemed to confer upon or give to any other third party any right, claim, cause
of action, or other interest herein.
Section 14.19 Public Statements. The parties shall consult
with each other prior to issuing any public announcement or statement with
respect to this Agreement or the transaction contemplated hereby.
Section 14.20 $. All references to "$" mean United States
dollars.
Section 14.21 Execution in Counterparts. This Agreement may be
executed in one or more counterparts and by one or more parties to any
counterpart, each of which shall be deemed an original and all of which together
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the Shareholders have entered into this
Agreement as of the day and year first above written.
GCT PACIFIC HOLDINGS, LTD.
By: /s/ K. XXXXXX XXXXXXX
-------------------------------------
Name: K. Xxxxxx Xxxxxxx
Title: President
SCS (BERMUDA) LTD.
By: /s/ XXXXXX XXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: E.V.P.
MARUBENI PACIFIC CABLE LIMITED
By: /s/ XXXXX XXXXX
-------------------------------------
Name: Xxxxx Xxxxx
Title:
PACIFIC CROSSING LTD.
By: /s/ K. XXXXXX XXXXXXX
-------------------------------------
Name: K. Xxxxxx Xxxxxxx
Title: Director
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IN WITNESS whereof this Agreement has been executed the date first above
written.
SIGNED by Xxxxx Xxxx )
for and on behalf of )
XXXXXXXXX TELECOMMUNICATIONS ) /s/ Xxxxx Xxxx
LIMITED )
in the presence of- )
SIGNED by Xxxxx Xxxx )
for and on behalf of )
XXXXXXXXX WHAMPOA LIMITED ) /s/ Xxxxx Xxxx
in the presence of- )
SIGNED by Xxxxxxxx Xxxx )
for and on behalf of )
GLOBAL CROSSING HOLDINGS LTD. ) /s/ Xxxxxxxx Xxxx
in the presence of- )
SIGNED by Xxxxx X. Xxxxxx )
for and on behalf of )
GLOBAL CROSSING LTD. ) /s/ Xxxxx X. Xxxxxx
in the presence of- Xxxxxx X. X'Xxxxx )
SIGNED by Aenti Xxxxx )
for and on behalf of )
NCL HOLDINGS LIMITED ) /s/ Aenti Xxxxx
in the presence of- )
48
Schedule 1 to
Shareholders Agreement
SUBSCRIPTION OF SHARES
Shareholder Number of Shares Percentage Interest Total Purchase Price
----------- ---------------- ------------------- --------------------
GCT 600,000 50% $6,000.00
SCS 174,000 14.5% $1,740.00
Marubeni 426,000 35.5% $4,260.00
49
Schedule 2 to
Shareholders Agreement
CAPITAL COMMITMENTS
Shareholder Capital Commitment
----------- ------------------
GCT $200,000,000
SCS $58,000,000
Marubeni $142,000,000
50
Schedule 3 to
Shareholders Agreement
ADDRESSES FOR NOTICES
GCT GCT Pacific Holdings, Ltd.
Wessex House, 45 Xxxx Street
Xxxxxxxx, XX EX, Bermuda
Tel: (000) 000-0000
Fax: (000) 000-0000
SCS SCS (Bermuda) Ltd.
Xxxxx Xxxxx
00 Xxxxx Xxxxxx
Xxxxxxxx XX00 Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Marubeni Marubeni Pacific Cable Limited
c/o Marubeni America Corporation
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
51
Exhibit A
BYE-LAWS
AND
MEMORANDUM OF ASSOCIATION
